Finance Reform Act Affects State and Local Governments in Many Ways: The Wall Street Reform and Consumer Protection Act Includes Many Provisions Related to Municipal Securities, as Well as New Regulations for Advisors Hired by State and Local Governments

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On July 21, 2010, President Obama signed the Wall Street Reform and Consumer Protection Act (PL 111-203, known as the Dodd-Frank Act). The law brings sweeping changes to the nation's financial services industry, including new financial product consumer protection laws, new requirements for financial institutions, the regulation of previously unregulated financial markets (such as swaps), and new responsibilities for credit rating agencies.

The law will affect state and local governments in a variety of ways, both directly and indirectly. Most notably, it includes many provisions related to municipal securities, as well as new regulations for advisors hired by state and local governments--including public pension funds. An overview of some of the most significant provisions are highlighted below.

HIGHLIGHTS OF THE ACT

Assesses a New Bond Fee to Pay for GASB. A fee will be assessed on new bond issuances to provide a stable revenue stream to support the Governmental Accounting Standards Board (GASB). The amount remitted to the GASB cannot be greater than its annual budget, and the legislation states that the Securities and Exchange Commission (SEC) cannot directly or indirectly involve itself with the GASB's budget, its technical …