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Project on Government Oversight




POGO Recommended Transparency and Accountability Measures in the Dodd-Frank Wall Street Reform and Consumer Protection Act

July 15, 2010 


Whistleblower protections for financial industry employees

  • The bill establishes best-practices whistleblower protections for financial industry employees who help to expose violations of consumer laws and other wrongdoing.
  • Employees who experience retaliation as a result of their whistleblowing can file a complaint with the Department of Labor (DOL), and are eligible for reinstatement at their previous position, back-pay, and compensatory damages. Employees will be able to seek relief before a jury in district court.
  • The bill also extends Sarbanes-Oxley whistleblower protections to employees who work for subsidiaries and affiliates of publicly traded companies, and to employees of credit rating agencies designated as nationally recognized statistical rating organizations.

GAO audit of the Federal Reserve

  • The bill allows the Government Accountability Office (GAO) to audit some of the most important activities undertaken by the Federal Reserve, which at one point had lent out more than $2 trillion in response to the financial crisis. Specifically, the GAO will be authorized to conduct ongoing audits of credit facilities authorized under the Fed's 13(3) authority, open market transactions, and discount window lending programs, and a one-time audit of other emergency lending facilities.
  • The Fed would also be required to make key information about its open market transactions and discount window operations available to the public on its website.
  • In addition, the conference committee scaled back a broad FOIA exemption that would have unnecessarily restricted the public release of information on the Fed's lending programs, and passed an amendment introduced by Senator Patrick Leahy (D-VT) requiring the Fed Inspector General (IG) to examine how the exemption will limit the public's ability to access information on these programs.

Consumer financial protections

  • The bill creates a new Consumer Financial Protection Bureau (CFPB) that will be housed within the Federal Reserve, but will have: 1) an independent director appointed by the President and confirmed by the Senate, 2) a dedicated budget paid for under the Federal Reserve system, 3) the authority to autonomously write rules for all banks and non-banks offering consumer financial services or products, and 4) the authority to examine and enforce regulations for banks and credit unions with assets over $10 billion, and for all mortgage-related businesses (lenders, servicers, mortgage brokers, etc.), payday lenders, and student lenders. 

Rewards and protections for whistleblowers who make disclosures to the SEC and CFTC

  • The bill strengthens and expands the Securities and Exchange Commission's (SEC) authority to reward whistleblowers who provide the agency with tips. Specifically, the SEC can offer reward payments tied to any judicial or administrative action that results in sanctions of over $1 million, and the whistleblower can receive anywhere between 10 and 30 percent of the amount recovered (the current limit is 10 percent, and is only available for tips on insider trading). The bill also prohibits employers from retaliating against whistleblowers who participate in the program. Whistleblowers who experience retaliation can file for relief in district court, and are eligible for reinstatement, back-pay, and compensation for legal fees.
  • The conference committee replaced a broad FOIA exemption—which would have barred the public from obtaining information provided by the whistleblower, and could have prevented the whistleblower from accessing the information in order to establish a retaliation claim—with a much narrower exemption that strikes a better balance between whistleblower confidentiality, public access to information, and government accountability. In addition, the bill includes a provision requiring the SEC Inspector General to examine whether the SEC is publicizing the reward program, whether it is prompt in communicating with whistleblowers, and whether the award levels are appropriate to encourage whistleblowers to come forward with tips. The bill also includes a provision offered by Senator Leahy requiring the IG to study the impact of the FOIA exemption on incentivizing disclosures by whistleblowers and on public access to information.
  • The conference committee adopted a provision to create a separate office at the SEC to administer and enforce the whistleblower reward program.
  • The bill creates a nearly identical program at the Commodity Futures Trading Commission (CFTC).

Independence of financial regulatory agency watchdogs

  • The bill strengthens the independence of certain agency-appointed Inspectors General—including those at many financial regulatory agencies—by requiring them to report to the entire board or commission at their agencies, rather than an individual agency head. In addition, the bill requires a two-thirds vote of the entire board or commission in order to remove any of these IGs from office. These provisions were originally offered by Senators Chuck Grassley (R-IA) and Claire McCaskill (D-MO).

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO's investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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