The Dodd-Frank Act: Many Provisions of the Dodd-Frank Act Become Effective on July 21, 2011 — the One-Year Anniversary of Its Enactment

Sullivan & Cromwell LLP - July 17, 2011

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act” or the “Act”) was signed into law by President Obama on July 21, 2010. Many of its provisions became effective the next day (July 22, 2010), but many other provisions will become effective July 21, 2011 — the one-year anniversary of its enactment. The attached memorandum outlines the statutory provisions of the Act that become effective on, or require that an action be taken by a regulatory agency by, July 21, 2011 (or, with respect to Title VII, July 16, 2011) and the status of associated rulemakings, if any.

Several of the provisions that become effective July 21, 2011 do so by amendment to other existing statutes. In most cases, the Dodd-Frank Act does not explicitly require implementing regulations with respect to these provisions. Even where regulations are not expressly required, many of these automatically effective provisions create difficult interpretive issues for which regulatory guidance would be helpful or even essential. In some of these cases, therefore, the appropriate federal regulatory agencies either have proposed regulations implementing such provisions or otherwise announced that new regulations in connection therewith are on the agency’s rulemaking agenda.

For a number of other provisions that become effective July 21, 2011, the Dodd-Frank Act explicitly requires certain federal regulatory agencies to promulgate implementing regulations by July 21, 2011. The sheer magnitude of the regulatory rulemaking under the Act and the difficulty of the implementation and interpretive issues arising thereunder, as well as other demands, have made it impossible for the regulators to finalize all such rules by July 21, 2011. In any event, the Dodd-Frank Act provisions described in this memorandum will be in force on that date, irrespective of whether implementing regulations have been proposed, finalized or will be forthcoming in the future. Accordingly, there may be a period of uncertainty as institutions must abide by these newly effective statutory requirements even in the absence of regulations to help clarify the various interpretive issues that inevitably will arise given the breadth and scope of the Act. Some of these required regulations have been proposed, but final rules have not yet been adopted.