Finance Reform Act Affects State and Local Governments in Many Ways

By Gaffney, Susan | Government Finance Review, August 2010 | Go to article overview
Save to active project

Finance Reform Act Affects State and Local Governments in Many Ways


Gaffney, Susan, Government Finance Review


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.

On July 2 1 .2U! (!,President Obama signed the Wall Street Reíorm and Consumer Protection Act (PL 111-203. known as the DoddFrank Act). The law brings sweeping changes to the nations financial services industry, including new financial product consumer protection laws, new requirements for financial institutions, the regulation of previously unregulated financia) markets (such as swaps), and new responsibilities for credit rating agencies.

The law will affect state and locai 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 fSEC) cannot directly or indirectly involve itself with the GASB's budget, its technical agenda, or the setting of generally accepted accounting principles. The Government Accountability Office (GAO) is also to complete a study on the role and importance of the GASB and the manner in which it has been funded. The GAO must consult with state and local government representatives, including finance officers, for this report.

Limits Debit Card Interchange Fees. The Ac! requires the Federal Reserve to develop and implement "reasonable and proportional" interchange /ees for debii card transactions, in an effort to limit the amount of fees that issuing banks can charge merchants for such transactions. The House and Senate conference committee agreed to a carve-out from these regulations for federal, state, and local government-administered payment programs that use prepaid debit cards. The act also allows merchants to offer discounts to customers who pay with cash, checks, or debit cards, and to permit a minimum purchase threshold up to IU dollars.

Requires the Use of Universal Rating Symbols by Credit Rating Agencies for All Securities. The rating agencies must define and disclose each rating symbol, then apply the symbols uniformly to all securities (e.g.. a AA corporate rating means the same thing as Q AA municipal security rating). Furthermore, the rating must be based on the probability that an issuer will default or otherwise not make timely payments in accordance with the terms of the security.

Changes the Board Composition of the MSRB. Effective October 1.2010, the Municipal Securities Rulemaking Board (MSRB) must consist of a majority of independent board members who arc not associated with any broker, dealer, municipal securities dealer, or municipal advisor. Within the composition the independent board members, at least one must be a municipal securities issuer, at least one must be an institutional or retail investor, and at least one must be a member of the public who has knowledge of or experience in the municipal securities industry.

Regulates Financial Advisors. Municipal financial advisors must now register and be regulated by the MSRB. Before this law, non-broker/dealer municipal financial advisors ("including swap advisors, GIC brokers, and placement agents) have been unregulated.

Puts Fiduciary Responsibility on Municipal Financial Advisors. The MSRB will develop new fiduciary duty standards for municipal financial advisors (including swap advisors, GIC brokers, and placement agents), requiring that the interest of their clients rises above their own interest.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Finance Reform Act Affects State and Local Governments in Many Ways
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.