Dodd-Frank Act Finalizes Swap Pushout Rule

Wed, 07 Jul 2010 13:13:24 +0000

Posted by Annette L. Nazareth, Davis Polk & Wardwell LLP, on Wednesday, July 7, 2010

Editor's Note:

Annette Nazareth is a partner in the Financial Institutions Group at Davis Polk & Wardwell LLP. This post is based on a Davis Polk client memorandum by Ms. Nazareth, Daniel N. Budofsky, Robert L.D. Colby, Luigi L. De Ghenghi, John L. Douglas, Randall D. Guynn, Arthur S. Long, Reena Agrawal Sahni and Margaret E. Tahyar. Additional posts on the Dodd-Franks Act are available here.

On June 25, 2010, the Senate-House conference on the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Bill”) agreed on the final legislative text of the Bill, including Section 716 (the “Swap Pushout Rule”). The Swap Pushout Rule is a revised version of a provision originally introduced by Senator Blanche Lincoln (D–AR) to the Senate Agriculture Committee. The provision led to significant controversy, including the objections of several key politicians and regulators. The controversy continued through the early morning hours of June 25, when compromise language was finally agreed upon. The result is a provision that includes an unusual number of ambiguities and apparent contradictions.

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The Harvard Law School Forum on Corporate Governance

Dodd-Frank Act Finalizes Swap Pushout Rule