The Federal Financial Forum

From: Bloomberg

Deutsche Bank AG (DBK) recently separated its U.S. investment bank from its bank holding company, removing it from supervision by the Federal Reserve.

So far, U.S. regulators have reacted passively to such moves by foreign banks to avoid the heightened capital requirements mandated by the Dodd-Frank Act.

That’s because Dodd-Frank failed to heed a fundamental law of architecture: Form must follow function. For financial regulation to be effective, it should focus on economic function, rather than legal form. If it doesn’t, institutions will quickly find new forms that free them of regulatory constraints. What walks like a duck and quacks like a duck must be regulated as a duck, even if it is legally a goose.

From: AP

TOPEKA, Kan. — Gov. Sam Brownback on Monday allowed bills revising how Kansas regulates banks and real estate appraisers to become law, but he refused to sign them as a protest against states being “coerced” by the federal government into making such changes.

For the second time in three days, the conservative Republican governor used obscure legislation to object to what he sees as the over-regulation of businesses. A Democratic critic suggested his latest actions were “borderline grandstanding.”

From: The Hill

By Peter Schroeder

Financial regulators on Tuesday finalized their blueprint for determining what financial institutions pose a systemic risk to the financial system.

The nation’s top financial watchdogs unanimously signed off on final rules that lay out how they will go about determining which financial institutions are so integral to the financial system that they must be subject to heightened regulations.

Treasury Secretary Timothy Geithner, who chairs the Financial Stability Oversight Council (FSOC), said the need to identify key firms became evident after the financial crisis swept up vital entities that previously fell between the cracks of traditional regulation.

WASHINGTON (AP) – To the chagrin of consumer groups, the House gave overwhelming bipartisan approval Monday to two bills easing requirements that President Barack Obama’s overhaul of financial regulations impose on some exotic financial instruments blamed for helping trigger the 2008 financial crisis.

Lawmakers of both parties said they were relaxing rules that would otherwise inhibit the ability of companies to manage the risks of prices and investments, ultimately reducing their profitability and job creation. Consumer groups said legislators were bowing to the interests of their corporate and finance-world contributors and taking steps that might prove harmful to the public.

In the attached letter to OMB, Commissioner O’ Malia of the CFTC has requested OMB review of a Commission’s regulation.

OMB not only has the constitutional authority to conduct such a review but in a number of instances Congress has passed specific legislation that directs OMB review of the regulations of independent agencies. To this end CRE has written a step-by-step method to guide OMB is the discharge of its responsibilities.

The essence of the CRE approach is:

Proposed CRE Program for OMB Review of Independent Agency Regulations . . . . .