Federal Reserve Disclosure Requirements and Other Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) was signed into law.8 The Dodd-Frank Act included legislative changes designed to promote transparency while protecting monetary policy independence and the efficacy of the Federal Reserve's liquidity programs and OMOs. In addition, the Dodd-Frank Act modified the Federal Reserve's authority to provide emergency liquidity to nondepository institutions under section 13(3) of the Federal Reserve Act and also specifically prohibits (with certain exceptions) lending through the discount window to institutions that are registered as swap dealers or major swap participants.
On December 1, 2010, the Federal Reserve posted to its public website detailed information about entities that received loans or other financial assistance under a section 13(3) credit facility between December 1, 2007, and July 21, 2010, and about persons or entities that participated in the agency MBS purchase program, used foreign currency liquidity swap lines, or borrowed through the Term Auction Facility (TAF) during that time frame. This disclosure, required by the Dodd-Frank Act, included more than 21,000 individual credit and other transactions conducted to stabilize markets during the financial crisis, restore the flow of credit to American families and businesses, and support economic recovery and job creation in the aftermath of the crisis. The Federal Reserve's disclosure about these transactions is available at https://www.federalreserve.gov/newsevents/reform_transaction.htm.
As required by the Dodd-Frank Act, the Federal Reserve also posted an audit webpage, available at https://www.federalreserve.gov/newsevents/reform_audit.htm. This page is updated as reports and other information become available.
The Dodd-Frank Act also established a framework for the delayed disclosure of information on entities that, after July 21, 2010, received a loan from the discount window under section 10B of the Federal Reserve Act or from a section 13(3) facility, or participated in OMO transactions. Generally, this framework requires the Federal Reserve to publicly disclose certain information about these discount window borrowers and OMO counterparties approximately two years after the relevant loan or transaction; information about borrowers under future section 13(3) facilities will be disclosed one year after the authorization for the facility is terminated. Information to be disclosed will include the names and identifying details of each borrower or counterparty, the amount borrowed, the interest rate paid, and information identifying the types and amounts of collateral pledged or assets transferred in connection with the borrowing or transaction. The disclosures of discount window borrowers and OMO counterparties commenced in September 2012; the information is available at https://www.federalreserve.gov/newsevents/reform_quarterly_transaction.htm and https://www.newyorkfed.org/markets/OMO_transaction_data.html.
The Dodd-Frank Act modified the Federal Reserve's authority to provide emergency liquidity to nondepository institutions under section 13(3) of the Federal Reserve Act in light of other amendments that provide the U.S. government with new authority to resolve failing, systemically important nonbank financial institutions in an orderly manner. Going forward, any emergency lending programs and facilities authorized by the Federal Reserve under section 13(3) of the Federal Reserve Act must have broad-based eligibility and must be approved by the Secretary of the Treasury, among several other limitations.
Section 716 of the Dodd-Frank Act prohibits the Federal Reserve from extending discount window credit to "swaps entities," subject to certain exceptions. A swaps entity includes a person that is registered as a swap dealer, security-based swap dealer, major swap participant, or major security-based swap participant under the Commodity Exchange Act or Securities Exchange Act of 1934, other than an insured depository institution that is registered as a major swap participant or major security-based swap participant.9 The provisions of section 716 became effective on July 16, 2013. Accordingly, in early July 2013 the Federal Reserve amended its Operating Circular No. 10, the standard lending agreement under which institutions borrow from the discount window, in order to comply with the requirements of section 716. Under the amended Operating Circular No. 10, each time that a borrower requests an advance, it must be, and is deemed to represent, that it is not a swaps entity (as defined above), or it is a swaps entity that is eligible to receive the advance pursuant to one or more subsections of section 716 of the Dodd-Frank Act.
8. The full text of the Dodd-Frank Act is available at https://www.gpo.gov/fdsys/pkg/BILLS-111hr4173enr/pdf/BILLS-111hr4173enr.pdf. Return to text
9. In June 2013, the Federal Reserve Board issued an interim final rule to clarify that uninsured U.S. branches and agencies of foreign banks are treated as insured depository institutions for purposes of section 716. The interim final rule also set out the process for state member banks and uninsured state branches and agencies of foreign banks to apply to the Board for the compliance transition period provided for in section 716. See 78 Fed. Reg. 34545 (June 10, 2013). Return to text