We will discuss that a little bit later. I think that for law firms, there is certainly the possibility of representing whistleblowers. I think, in terms of what you do to get ready for it, I think to understand derivatives because if there is derivative transactions within the company the you are auditing or working with, you are really going to sharpen your skills set in derivatives, declaring of derivatives, reporting the derivatives, and the financial impact of derivatives because that’s certainly going to be an area where there is going to be a lot to do. Fortunately, this will not take statutory effect until July 21st, 2011, so you have some time to work on it. Probably, if I were sitting in most of seats and at your desks, I would probably start working on derivatives and make sure that you can communicate effectively with your existing and potential new clients on the requirements for derivatives.
How long do you believe it will take before financial services industry and enforcement professionals start to address the issues related to the mandate and the legislation?
I think, for what I understand, they’re getting started today, as we speak. As I mentioned earlier, the July 21, 2011 is the official switch-over, but it’s like Y2K, you can’t wait until the first day of the new year to switch your computers over and start working on the new software. Firms, from what I’ve understand are already working on this and are starting to organize themselves and starting to communicate within their various business units to find the topical hotspots where they really need to focus. I think they’re doing it today.
Do you think that Dodd-Frank is strictly a North American initiative? What will be the global impact on some of the other jurisdictions of the financial markets?
I’m glad you brought it up because I’ve been following the Canadian market for some time. I think the Canadian — there is a clause in there related to conflict minerals. Canada is such a large mineral and mining country with a lot of trade between the US and Canada, there is a clause in Dodd-Frank related to conflict minerals. It is really targeting Africa, especially South Africa, but it really targets area where there is armed conflict, to make sure that in some way that we are not contributing to armed conflict or terrorists groups. But the Canadians are very concerned about it because it’s going to require some of the smaller businesses that have mining and mineral concerns to have full disclosure of all the parties involved and make sure that they are not, in some way, in conflict with that clause on mining and mineral companies. So it’s going to affect the Canadian companies. I’ve already seen those companies discuss that. It is certainly going to affect South Africa and probably, Indonesia as well. It is adding the new element of safeguards where the US is not going to be involved in conflict minerals and not going to be involved in any business that includes graft, embezzlement in any way or financing terrorism. There are interesting aspects to this.
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I broke the sections down into the most important sections that I could determine. Again, I’m not using an outside third party; these are the things that came to mind, as I looked through the legislation.
I want to start with Mortgage Reform. Unlike some of the problems that we had in the past where lenders would simply issue mortgages without documents and without qualifying buyers and then sell those mortgages off, not holding them; certainly contribute to our financial crisis here in this country. Under Dodd-Frank, it’s going to require lenders to ensure that borrowers can repay. I think the “no-doc sort of loans” is going by the wayside. You are going to prove that you can repay the loan. It’s going to be required that the lender have all levels of assurance that you can pay the loan.
I think that as Ms. Warren, she is going to eliminate some of the language that was unclear. She is going to make it very straightforward, in terms of what you are going to be paying. If it’s an adjustable rate, I think in many cases eliminate, in certain markets eliminate adjustable rate loans, but it should be right straight up front under the new legislation of what you’re paying and when you pay it.
TASA, leaders in consumer expert witness referrals, presents: The Dodd-Frank Wall Street Reform & Consumer Protection Act: The Impact on Regulatory Mandates & Securities Litigation Pt. 5