The House passed by voice vote last night a substitute version of a bill (H.R. 2827) that would clarify what constitutes a municipal adviser and would exempt banks providing “traditional banking products” from the SEC’s proposed rule implementing the Dodd-Frank Act’s Section 975. The Senate still must pass the legislation.
The bill’s “traditional banking products” definition covers deposits, bankers acceptances, letters of credits, loans, certain loan participations and swap agreements. The legislation also exempts banks for trust services that are subject to a state or federal fiduciary duty, and extends to them the existing exemption for registered investment advisers.
ABA expressed concern in a memo to the Financial Services Committee on Sept. 11 that the well-intentioned substitute bill wouldn’t adequately cover the range of products and services that banks provide to municipalities. It also may not provide an exemption for the negotiations that banks regularly undertake with municipalities when booking loan products such as tax anticipation notes and revenue anticipation notes, ABA said.
Read the legislation.