113 HR 5461 IH: Insurance Capital Standards Clarification Act of 2014
U.S. House of Representatives
2014-09-15
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 TILA</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>, 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>)</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 129C of TILA</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 2013</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 <external-xref legal-doc="usc" parsable-cite="usc/5/553">section 553</external-xref> 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>