Implications of Financial Services Reform for the Commercial Real Estate Professional: Dodd-Frank Bill Imposes Substantial New Requirements and Restrictions and Significantly Reforms Regulation of the Securities Industry

Sullivan & Cromwell LLP - July 28, 2010

On July 21, 2010, President Obama signed into law a sweeping financial regulatory reform bill entitled the “Dodd-Frank Wall Street Reform and Consumer Protection Act,” or “Dodd-Frank.”

Arising out of the nation’s recent severe financial crisis, Dodd-Frank is intended to address perceived deficiencies and gaps in the regulatory framework for financial services in the United States, reduce the risk of bank failures and better equip the nation’s financial regulatory authorities to guard against or mitigate any future crises. Dodd-Frank implements far-reaching changes across the financial regulatory landscape.

The purpose of this memorandum is to summarize certain aspects of Dodd-Frank that may be of particular interest to commercial real estate industry professionals. This memorandum does not focus on issues generally applicable to publicly traded companies or to entities that are subject to regulation under the Bank Holding Company Act of 1956 (the “BHC Act”). On July 2, 2010, Sullivan & Cromwell LLP published a comprehensive memorandum (the “S&C Dodd-Frank Memorandum”) that contains a detailed summary of all of the significant provisions of Dodd-Frank. If you would like more information about a topic discussed in this memorandum or other topics concerning Dodd-Frank, you are encouraged to review the S&C Dodd-Frank Memorandum.

The summary provided in this memorandum is based on the House-Senate conference report to accompany H. R. 4173 (House Report 111-517).

Dodd-Frank defers many of the details of these reforms to future rulemakings by a variety of federal regulatory agencies. Among other things, the regulatory agencies will need to address numerous ambiguities in the statutory language.