113 HR 5461 EH: Insurance Capital Standards Clarification Act of 2014
U.S. House of Representatives
text/xml
EN
Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
1.
The table of contents for this Act is as follows:
Sec. 1. Table
of contents.
Title I—Insurance
Capital Standards
Sec. 101. Short
title.
Sec. 102. Clarification of application of leverage and risk-based capital
requirements.
Title
II—Collateralized loan obligations
Sec. 201. Short
title.
Sec. 202. Rules
of construction relating to collateralized loan obligations.
Title
III—Definition of Points and Fees in Mortgage Transactions
Sec. 301. Short
title.
Sec. 302. Definition of points and fees.
Sec. 303. Rulemaking.
Title IV—Business
Risk Mitigation and Price Stabilization
Sec. 401. Short
title.
Sec. 402. Margin requirements.
Sec. 403. Implementation.
<enum>I</enum>
<header>Insurance Capital Standards</header>
<section commented="no" display-inline="no-display-inline"
id="H791BCF7F57F34686BC203E2F8F5E66EF">
<enum>101.</enum>
<header display-inline="yes-display-inline">Short title</header>
<text display-inline="no-display-inline">This title may be cited as the <quote><short-title>Insurance Capital Standards Clarification Act of 2014</short-title></quote>.</text>
</section>
<section commented="no" display-inline="no-display-inline"
id="HCDF206BBFBF84ADDA9CDE1C2AEAAF184" section-type="subsequent-section">
<enum>102.</enum>
<header display-inline="yes-display-inline">Clarification of application of leverage
and risk-based capital requirements</header>
<text display-inline="no-display-inline">Section 171 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5371">12 U.S.C. 5371</external-xref>) is amended—</text>
<paragraph commented="no" display-inline="no-display-inline"
id="HD33B9B33E0254941834F7C1F954DE88A">
<enum>(1)</enum>
<text display-inline="yes-display-inline">in subsection (a), by adding at the end the following:</text>
<quoted-block display-inline="no-display-inline"
id="H3B685EB560F94C2A8443BA2F5026112A" style="OLC">
<paragraph commented="no" display-inline="no-display-inline"
id="H9C262B7936AA45A790F4D2D63658E333">
<enum>(4)</enum>
<header display-inline="yes-display-inline">Business of
insurance</header>
<text display-inline="yes-display-inline">The term <term>business of insurance</term> has the same meaning as in section 1002(3).</text>
</paragraph>
<paragraph commented="no" display-inline="no-display-inline"
id="HE96297C0759B4CF4BCDEFD60822BF975">
<enum>(5)</enum>
<header display-inline="yes-display-inline">Person regulated by a state
insurance regulator</header>
<text display-inline="yes-display-inline">The term <term>person regulated by a State insurance regulator</term> has the same meaning as in section 1002(22).</text>
</paragraph>
<paragraph commented="no" display-inline="no-display-inline"
id="HF067030E61B4440F93BDAB1D24A983CB">
<enum>(6)</enum>
<header display-inline="yes-display-inline">Regulated foreign subsidiary
and regulated foreign affiliate</header>
<text display-inline="yes-display-inline">The terms <quote>regulated foreign subsidiary</quote> and <quote>regulated foreign affiliate</quote> mean a person engaged in the business of insurance in a foreign country that is regulated by a foreign insurance regulatory authority that is a member of the International Association of Insurance Supervisors or other comparable foreign insurance regulatory authority as determined by the Board of Governors following consultation with the State insurance regulators, including the lead State insurance commissioner (or similar State official) of the insurance holding company system as determined by the procedures within the Financial Analysis Handbook adopted by the National Association of Insurance Commissioners, where the person, or its principal United States insurance affiliate, has its principal place of business or is domiciled, but only to the extent that—</text>
<subparagraph commented="no" display-inline="no-display-inline"
id="H3E1E21DF44E141A18DB0F44BED325145">
<enum>(A)</enum>
<text display-inline="yes-display-inline">such person acts in its capacity as a regulated insurance entity; and</text>
</subparagraph>
<subparagraph commented="no" display-inline="no-display-inline"
id="H1DA67FB1D3F44ADD9463CB075941CB20">
<enum>(B)</enum>
<text display-inline="yes-display-inline">the Board of Governors does not determine that the capital requirements in a specific foreign jurisdiction are inadequate.</text>
</subparagraph>
</paragraph>
<paragraph commented="no" display-inline="no-display-inline"
id="H3E617D6C46094E46B0E6022ADAD09902">
<enum>(7)</enum>
<header display-inline="yes-display-inline">Capacity as a regulated
insurance entity</header>
<text display-inline="yes-display-inline">The term <term>capacity as a regulated insurance entity</term>—</text>
<subparagraph commented="no" display-inline="no-display-inline"
id="H5A99B046AC394D899D216F5E0FF63431">
<enum>(A)</enum>
<text display-inline="yes-display-inline">includes any action or activity undertaken by a person regulated by a State insurance regulator or a regulated foreign subsidiary or regulated foreign affiliate of such person, as those actions relate to the provision of insurance, or other activities necessary to engage in the business of insurance; and</text>
</subparagraph>
<subparagraph commented="no" display-inline="no-display-inline"
id="HBE146722540344AEAE6E047E01E6B085">
<enum>(B)</enum>
<text display-inline="yes-display-inline">does not include any action or activity, including any financial activity, that is not regulated by a State insurance regulator or a foreign agency or authority and subject to State insurance capital requirements or, in the case of a regulated foreign subsidiary or regulated foreign affiliate, capital requirements imposed by a foreign insurance regulatory authority.</text>
</subparagraph>
</paragraph>
<after-quoted-block>; and</after-quoted-block>
</quoted-block>
</paragraph>
<paragraph commented="no" display-inline="no-display-inline"
id="H41E261BB11EF431196EAC43C95579A4C">
<enum>(2)</enum>
<text display-inline="yes-display-inline">by adding at the end the following new subsection:</text>
<quoted-block display-inline="no-display-inline"
id="H0805606538544D02A9D075D82AE308AA" style="OLC">
<subsection commented="no" display-inline="no-display-inline"
id="HEE09FEC0E5954841A05D762E5181CA1B">
<enum>(c)</enum>
<header display-inline="yes-display-inline">Clarification</header>
<paragraph commented="no" display-inline="no-display-inline"
id="H9F6CBCC3461043628DA7EE04984FCE11">
<enum>(1)</enum>
<header display-inline="yes-display-inline">In general</header>
<text display-inline="yes-display-inline">In establishing the minimum leverage capital requirements and minimum risk-based capital requirements on a consolidated basis for a depository institution holding company or a nonbank financial company supervised by the Board of Governors as required under paragraphs (1) and (2) of subsection (b), the appropriate Federal banking agencies shall not be required to include, for any purpose of this section (including in any determination of consolidation), a person regulated by a State insurance regulator or a regulated foreign subsidiary or a regulated foreign affiliate of such person engaged in the business of insurance, to the extent that such person acts in its capacity as a regulated insurance entity.</text>
</paragraph>
<paragraph commented="no" display-inline="no-display-inline"
id="HE576E5B1642E4FE6918E2E9B1B4DBEE9">
<enum>(2)</enum>
<header display-inline="yes-display-inline">Rule of construction on
board’s authority</header>
<text display-inline="yes-display-inline">This subsection shall not be construed to prohibit, modify, limit, or otherwise supersede any other provision of Federal law that provides the Board of Governors authority to issue regulations and orders relating to capital requirements for depository institution holding companies or nonbank financial companies supervised by the Board of Governors.</text>
</paragraph>
<paragraph commented="no" display-inline="no-display-inline"
id="HA2C38BC29E9B43C0AD4CBCBD0392B102">
<enum>(3)</enum>
<header display-inline="yes-display-inline">Rule of construction on
accounting principles</header>
<subparagraph commented="no" display-inline="no-display-inline"
id="HDE923555679A4101A0392DF634C297D8">
<enum>(A)</enum>
<header display-inline="yes-display-inline">In general</header>
<text display-inline="yes-display-inline">A depository institution holding company or nonbank financial company supervised by the Board of Governors of the Federal Reserve that is also a person regulated by a State insurance regulator that is engaged in the business of insurance that files financial statements with a State insurance regulator or the National Association of Insurance Commissioners utilizing only Statutory Accounting Principles in accordance with State law, shall not be required by the Board under the authority of this section or the authority of the Home Owners' Loan Act to prepare such financial statements in accordance with Generally Accepted Accounting Principles.</text>
</subparagraph>
<subparagraph commented="no" display-inline="no-display-inline"
id="HAB22A606FF3E488CB105A99157D30EC4">
<enum>(B)</enum>
<header display-inline="yes-display-inline">Preservation of
authority</header>
<text display-inline="yes-display-inline">Nothing in subparagraph (A) shall limit the authority of the Board under any other applicable provision of law to conduct any regulatory or supervisory activity of a depository institution holding company or non-bank financial company supervised by the Board of Governors, including the collection or reporting of any information on an entity or group-wide basis. Nothing in this paragraph shall excuse the Board from its obligations to comply with section 161(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (<external-xref legal-doc="usc" parsable-cite="usc/12/5361">12 U.S.C. 5361(a)</external-xref>) and section 10(b)(2) of the Home Owners' Loan Act (<external-xref legal-doc="usc" parsable-cite="usc/12/1467a">12 U.S.C. 1467a(b)(2)</external-xref>), as appropriate.</text>
</subparagraph>
</paragraph>
</subsection>
<after-quoted-block>.</after-quoted-block>
</quoted-block>
</paragraph>
</section>
<enum>II</enum>
<header>Collateralized loan obligations</header>
<section id="H6C2F6DB152AD45578C8E92DFBCA635CB">
<enum>201.</enum>
<header>Short title</header>
<text display-inline="no-display-inline">This title may be cited as the <quote><short-title>Restoring Proven Financing for American Employers Act</short-title></quote>.</text>
</section>
<section id="HF432A0539AEF456ABD4E53877D042B93">
<enum>202.</enum>
<header>Rules of construction relating to collateralized loan obligations</header>
<text display-inline="no-display-inline">Section 13(g) of the Bank Holding Company Act of 1956 (<external-xref legal-doc="usc" parsable-cite="usc/12/1851">12 U.S.C. 1851(g)</external-xref>) is amended by adding at the end the following new paragraphs:</text>
<quoted-block display-inline="no-display-inline"
id="HEBFB4FC2BEC1476DB9A39587F77C0A86" style="OLC">
<paragraph id="H404437665EFA4104AC49809F69F82F77">
<enum>(4)</enum>
<header>Collateralized loan obligations</header>
<subparagraph id="H83B79199ACE04ECD8A5C8FA3D509E907">
<enum>(A)</enum>
<header>Inapplicability to certain collateralized loan
obligations</header>
<text display-inline="yes-display-inline">Nothing in this section shall be construed to require the divestiture, prior to July 21, 2017, of any debt securities of collateralized loan obligations, if such debt securities were issued before January 31, 2014.</text>
</subparagraph>
<subparagraph id="H429AD246A8414B1BA94199A3CE8A2EE7">
<enum>(B)</enum>
<header>Ownership interest with respect to collateralized loan
obligations</header>
<text display-inline="yes-display-inline">A banking entity shall not be considered to have an ownership interest in a collateralized loan obligation because it acquires, has acquired, or retains a debt security in such collateralized loan obligation if the debt security has no indicia of ownership other than the right of the banking entity to participate in the removal for cause, or in the selection of a replacement after removal for cause or resignation, of an investment manager or investment adviser of the collateralized loan obligation.</text>
</subparagraph>
<subparagraph id="H9A85936836AB4FBC9723C357A080A491">
<enum>(C)</enum>
<header>Definitions</header>
<text>For purposes of this paragraph:</text> <clause id="H3BAA93EDF7A149F2A13022CCCFB1121C"> <enum>(i)</enum> <header>Collateralized loan obligation</header> <text display-inline="yes-display-inline">The term <term>collateralized loan obligation</term> means any issuing entity of an asset-backed security, as defined in section 3(a)(77) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78c">15 U.S.C. 78c(a)(77)</external-xref>), that is comprised primarily of commercial loans.</text>
</clause>
<clause id="HFADD9E806319431FB50538DCA4CB2762">
<enum>(ii)</enum>
<header>Removal for cause</header>
<text display-inline="yes-display-inline">An investment manager or investment adviser shall be deemed to be removed <term>for cause</term> if the investment manager or investment adviser is removed as a result of—</text>
<subclause id="H532DE23DBF254677A7FD30E8B517442A">
<enum>(I)</enum>
<text>a breach of a material term of the applicable management or advisory agreement or the agreement governing the collateralized loan obligation;</text>
</subclause>
<subclause id="H47362E49C9384944A6D3BA2A9C4BF7CE">
<enum>(II)</enum>
<text display-inline="yes-display-inline">the inability of the investment manager or investment adviser to continue to perform its obligations under any such agreement;</text>
</subclause>
<subclause id="H9E4199D7A3F34BD2BB3FCB0E4C208A94">
<enum>(III)</enum>
<text display-inline="yes-display-inline">any other action or inaction by the investment manager or investment adviser that has or could reasonably be expected to have a materially adverse effect on the collateralized loan obligation, if the investment manager or investment adviser fails to cure or take reasonable steps to cure such effect within a reasonable time; or</text>
</subclause>
<subclause id="H567A46C7C5284C75A9BA0BF487CA7325">
<enum>(IV)</enum>
<text>a comparable event or circumstance that threatens, or could reasonably be expected to threaten, the interests of holders of the debt securities.</text>
</subclause>
</clause>
</subparagraph>
</paragraph>
<after-quoted-block>.</after-quoted-block>
</quoted-block>
</section>
<enum>III</enum>
<header>Definition of Points and Fees in Mortgage Transactions</header>
<section id="HD37E0E30C76D4BA08B55D1408E248983" section-type="subsequent-section">
<enum>301.</enum>
<header>Short title</header>
<text display-inline="no-display-inline">This title may be cited as the <quote><short-title>Mortgage Choice Act of 2014</short-title></quote>.</text>
</section>
<section id="HFD774135A37E47B3B622CE51235F82D5" section-type="subsequent-section">
<enum>302.</enum>
<header>Definition of points and fees</header>
<subsection id="H20CF9312DF2C439C89DA6BA4F082477E">
<enum>(a)</enum>
<header>Amendment to section 103 of
<enum-in-header>TILA</enum-in-header></header>
<text display-inline="yes-display-inline">Section 103(bb)(4) of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1602">15 U.S.C. 1602(bb)(4)</external-xref>) is amended—</text>
<paragraph id="H5CBB3A303C9F4F068B2C7C0F937032A8">
<enum>(1)</enum>
<text>by striking <quote>paragraph (1)(B)</quote> and inserting <quote>paragraph (1)(A) and section 129C</quote>;</text>
</paragraph>
<paragraph id="H52ECFBC8A0A041BD941FC5E5A7A08434">
<enum>(2)</enum>
<text>in subparagraph (C)—</text> <subparagraph id="H6C967C3282CD4844BA0E025EA970557C"> <enum>(A)</enum> <text>by inserting <quote>and insurance</quote> after <quote>taxes</quote>;</text>
</subparagraph>
<subparagraph id="H39DDE59514BF49958DE5E65B97F65770">
<enum>(B)</enum>
<text>in clause (ii), by inserting <quote><short-title>, except as retained by a creditor or its affiliate as a result of their participation in an affiliated business arrangement (as defined in section 2(7) of the Real Estate Settlement Procedures Act of 1974 (<external-xref legal-doc="usc" parsable-cite="usc/12/2602">12 U.S.C. 2602(7)</external-xref>)</short-title></quote> after <quote>compensation</quote>; and</text>
</subparagraph>
<subparagraph id="H6828D47FA3044A5BAD997F732CA1139D">
<enum>(C)</enum>
<text display-inline="yes-display-inline">by striking clause (iii) and inserting the following:</text>
<quoted-block display-inline="no-display-inline"
id="H82EB3993599642C7A47884AFAF774C77" style="OLC">
<clause id="HA744DD453C07484794594450D0427278">
<enum>(iii)</enum>
<text display-inline="yes-display-inline">the charge is—</text> <subclause id="H2047A8996C02425FAE93B2E211D64EA6"> <enum>(I)</enum> <text>a bona fide third-party charge not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator; or</text>
</subclause>
<subclause id="HB9C72CA74B0646AC86F06D3206E97BC9">
<enum>(II)</enum>
<text>a charge set forth in section 106(e)(1);</text> </subclause> </clause> <after-quoted-block>; and</after-quoted-block> </quoted-block> </subparagraph> </paragraph> <paragraph id="HD4CD81FCADDF45B2BA3EFA00A89D6FAF"> <enum>(3)</enum> <text>in subparagraph (D)—</text>
<subparagraph id="HB541AB6A425C475CA90ABB0FB6D1318B">
<enum>(A)</enum>
<text>by striking <quote>accident,</quote>; and</text> </subparagraph> <subparagraph id="H8EB42B7915304AD497F3F5E5E8FFE930"> <enum>(B)</enum> <text>by striking <quote>or any payments</quote> and inserting <quote>and any payments</quote>.</text>
</subparagraph>
</paragraph>
</subsection>
<subsection id="H68EE3527271C45799C9F4C8231721558">
<enum>(b)</enum>
<header>Amendment to section 129<enum-in-header>C</enum-in-header> of
<enum-in-header>TILA</enum-in-header></header>
<text>Section 129C of the Truth in Lending Act (<external-xref legal-doc="usc" parsable-cite="usc/15/1639c">15 U.S.C. 1639c</external-xref>) is amended—</text>
<paragraph id="H6856E059BB714172B0C269597D04C0E7">
<enum>(1)</enum>
<text>in subsection (a)(5)(C), by striking <quote>103</quote> and all that follows through <quote>or mortgage originator)</quote> and inserting <quote>103(bb)(4)</quote>; and</text>
</paragraph>
<paragraph id="H3395BC0018304378BA7DFC5A1008B42E">
<enum>(2)</enum>
<text>in subsection (b)(2)(C)(i), by striking <quote>103</quote> and all that follows through <quote>or mortgage originator)</quote> and inserting <quote>103(bb)(4)</quote>.</text>
</paragraph>
</subsection>
</section>
<section id="H33E1493295514A6C8E3E0EC9B734422C">
<enum>303.</enum>
<header>Rulemaking</header>
<text display-inline="no-display-inline">Not later than the end of the 90-day period beginning on the date of the enactment of this Act, the Bureau of Consumer Financial Protection shall issue final regulations to carry out the amendments made by this Act, and such regulations shall be effective upon issuance.</text>
</section>
<enum>IV</enum>
<header>Business Risk Mitigation and Price Stabilization</header>
<section id="HD071C0D6A2B14DACB1D264F7F38DF95C" section-type="subsequent-section">
<enum>401.</enum>
<header>Short title</header>
<text display-inline="no-display-inline">This title may be cited as the <quote><short-title>Business Risk Mitigation and Price Stabilization Act of 2014</short-title></quote>.</text>
</section>
<section id="H304DEEF386754F6F91DBBAA77489B8AB">
<enum>402.</enum>
<header>Margin requirements</header>
<subsection id="H5F8B20F17E004281AD11CBAB4D47EB3A">
<enum>(a)</enum>
<header>Commodity Exchange Act amendment</header>
<text display-inline="yes-display-inline">Section 4s(e) of the Commodity Exchange Act (<external-xref legal-doc="usc" parsable-cite="usc/7/6s">7 U.S.C. 6s(e)</external-xref>), as added by section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline"
id="H9613A2EE06CB477B8FF6C35357DEDDC5" style="OLC">
<paragraph id="HDA7D8D05D9C1429991D4C69F4ECEEE8B">
<enum>(4)</enum>
<header>Applicability with respect to counterparties</header>
<text display-inline="yes-display-inline">The requirements of paragraphs (2)(A)(ii) and (2)(B)(ii), including the initial and variation margin requirements imposed by rules adopted pursuant to paragraphs (2)(A)(ii) and (2)(B)(ii), shall not apply to a swap in which a counterparty qualifies for an exception under section 2(h)(7)(A), or an exemption issued under section 4(c)(1) from the requirements of section 2(h)(1)(A) for cooperative entities as defined in such exemption, or satisfies the criteria in section 2(h)(7)(D).</text>
</paragraph>
<after-quoted-block>.</after-quoted-block>
</quoted-block>
</subsection>
<subsection id="HBC8920F415364AC4BBD14DEB1C23B27B">
<enum>(b)</enum>
<header>Securities Exchange Act amendment</header>
<text display-inline="yes-display-inline">Section 15F(e) of the Securities Exchange Act of 1934 (<external-xref legal-doc="usc" parsable-cite="usc/15/78o-10">15 U.S.C. 78o–10(e)</external-xref>), as added by section 764(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is amended by adding at the end the following new paragraph:</text>
<quoted-block display-inline="no-display-inline"
id="HEBB8AB93CE06456A89E3C56E06A80A30" style="OLC">
<paragraph id="HD3BC2270287F430EBA5749791D1DD69A">
<enum>(4)</enum>
<header>Applicability with respect to counterparties</header>
<text display-inline="yes-display-inline">The requirements of paragraphs (2)(A)(ii) and (2)(B)(ii) shall not apply to a security-based swap in which a counterparty qualifies for an exception under section 3C(g)(1) or satisfies the criteria in section 3C(g)(4).</text>
</paragraph>
<after-quoted-block>.</after-quoted-block>
</quoted-block>
</subsection>
</section>
<section display-inline="no-display-inline" id="H5024A2647677433686ACC86E2A28F26E"
section-type="subsequent-section">
<enum>403.</enum>
<header>Implementation</header>
<text display-inline="no-display-inline">The amendments made by this title to the Commodity Exchange Act shall be implemented—</text>
<paragraph id="H4BBD31A5E4014F1281A49F45D9FBA554">
<enum>(1)</enum>
<text>without regard to—</text> <subparagraph id="HF93DD8CA36C94775827EBC5CAEABD530"> <enum>(A)</enum> <text><external-xref legal-doc="usc-chapter" parsable-cite="usc-chapter/44/35">chapter 35</external-xref> of title 44, United States Code; and</text>
</subparagraph>
<subparagraph id="H1F37B699F60846FFAF7051D8115880F1">
<enum>(B)</enum>
<text>the notice and comment provisions of section 553 of title 5, United States Code;</text>
</subparagraph>
</paragraph>
<paragraph id="HB92A03120FF34858BAB6274B1D605029">
<enum>(2)</enum>
<text>through the promulgation of an interim final rule, pursuant to which public comment will be sought before a final rule is issued; and</text>
</paragraph>
<paragraph id="H870E10D96208457A885F80CD0EE45CEA">
<enum>(3)</enum>
<text>such that paragraph (1) shall apply solely to changes to rules and regulations, or proposed rules and regulations, that are limited to and directly a consequence of such amendments.</text>
</paragraph>
</section>
Passed the House of Representatives
September 16, 2014.
Karen L. Haas,
Clerk.