Senate Legislation Would Exempt Banks from Dodd-Frank Registration as Municipal Advisors

Bi-partisan Senate legislation would clarify the scope of the statutory and regulatory framework for the SEC registration of municipal advisors pursuant to Section 975 of the Dodd-Frank Act. The Municipal Advisors Relief Act, S. 710, introduced by Senator Mark Warner (D-VA) and co-sponsored by Senator Pat Toomey (R-PA), would exempt banks and savings and loans from regulation as municipal advisors under Section 975. A companion bill, H.R. 797, has been introduced in the House by Rep. Steve Stivers (R-OH) and Rep. Gwen Moore (R-WI)

In a letter to the Senators, the American Bankers Association said that Congress did not intend for banks and savings institutions that are already supervised and examined to be regulated as municipal advisors. Both the exemptions in Section 975 and the fact that examination authority was provided solely to the SEC support this view. The ABA believes that a complete exemption is required because these institutions provide such a broad array of traditional banking products and services to municipalities that any limited exemption will necessarily cover activities that should not be captured.

Without such an exemption, contended the ABA, these financial institutions would be subject to a new securities law regulatory scheme, including examination by the SEC, that is completely different from and duplicative of the comprehensive supervision and examination of such institutions by federal and state bank regulators