[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 3652 Introduced in Senate (IS)]







110th CONGRESS
  2d Session
                                S. 3652

 To provide for financial market investigation, oversight, and reform.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

           September 29 (legislative day, September 17), 2008

 Ms. Cantwell (for herself and Mr. Lieberman) introduced the following 
 bill; which was read twice and referred to the Committee on Banking, 
                       Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
 To provide for financial market investigation, oversight, and reform.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Financial Market 
Investigation, Oversight, and Reform Act of 2008''.
            (1) Table of contents.--The table of contents for this Act 
        is as follows:

Sec. 1. Short title; table of contents.
Sec. 2. Establishing an independent, bipartisan Commission.
Sec. 3. Establishing a joint select committee on financial market 
                            oversight reform and investigations.
Sec. 4. Special Inspector General for financial markets oversight.

SEC. 2. ESTABLISHING AN INDEPENDENT, BIPARTISAN COMMISSION.

    (a) Commission Establishment.--There is established a temporary 
commission to be known as the Commission on Financial Regulatory Reform 
(referred to in this Act as the ``Commission''). The Commission shall 
review the financial regulatory structure and propose a comprehensive 
framework for fundamental reform of financial regulation in the United 
States.
    (b) Functions of the Commission.--
            (1) In general.--The Commission shall conduct a top-to-
        bottom review of the Nation's existing financial regulatory 
        structure and the contribution of the current structure to the 
        stability or instability of financial markets in order to 
        develop a comprehensive framework for--
                    (A) reforming the laws governing our Nation's 
                financial markets;
                    (B) strengthening and reconstituting regulatory 
                agencies; and
                    (C) improving transparency and oversight.
            (2) Analysis.--In the course of its activities, the 
        Commission shall analyze--
                    (A) the impact of the financial regulatory 
                structure on the health and stability of the United 
                States economy;
                    (B) the strength, sustainability, and 
                competitiveness of the Nation's financial institutions; 
                and
                    (C) the financial well-being of American taxpayers, 
                investors, and businesses.
            (3) Considerations.--The Commission shall review and 
        consider all aspects of financial regulation, including the 
        regulation of--
                    (A) bank holding companies, financial holding 
                companies, commercial banks, investment banks, thrifts, 
                credit unions, and industrial loan companies;
                    (B) payment and settlement systems;
                    (C) hedge funds, private equity funds, and the 
                markets for alternative investments;
                    (D) special purpose vehicles and off-balance sheet 
                financing for financial companies;
                    (E) the securitization of mortgages and other 
                assets;
                    (F) exchange-based, electronic, and over-the-
                counter markets for financial derivative products;
                    (G) the mortgage finance industry, including 
                mortgage brokers and mortgage lending institutions;
                    (H) equity markets, including short-selling 
                practices, and commodity futures markets; and
                    (I) the insurance industry and its role in the 
                financial markets.
    (c) Powers of the Commission.--
            (1) In general.--
                    (A) Hearings and evidence.--The Commission or, on 
                the authority of the Commission, any subcommittee or 
                member thereof, may, for the purpose of carrying out 
                this Act--
                            (i) hold such hearings and sit and act at 
                        such times and places, take such testimony, 
                        receive such evidence, administer such oaths; 
                        and
                            (ii) require the attendance and testimony 
                        of such witnesses and the production of such 
                        books, records, correspondence, memoranda, 
                        papers, and documents, as the Commission or 
                        such designated subcommittee or designated 
                        member may determine advisable.
                    (B) First meeting.--The first meeting of the 
                Commission shall occur not later than 30 days after the 
                date of enactment of this Act.
            (2) Contracting.--The Commission may, to such extent and in 
        such amounts as are provided in appropriation Acts, enter into 
        contracts to enable the Commission to discharge its duties 
        under this Act.
            (3) Information from federal agencies.--
                    (A) In general.--The Commission is authorized to 
                secure directly from any executive department, bureau, 
                agency, board, commission, office, independent 
                establishment, or instrumentality of the Government, 
                information, suggestions, estimates, and statistics for 
                the purposes of this Act. Each department, bureau, 
                agency, board, commission, office, independent 
                establishment, or instrumentality shall, to the extent 
                authorized by law, furnish such information, 
                suggestions, estimates, and statistics directly to the 
                Commission, upon request made by the chairman, the 
                chairman of any subcommittee created by a majority of 
                the Commission, or any member designated by a majority 
                of the Commission.
                    (B) Receipt, handling, storage, and 
                dissemination.--Information shall only be received, 
                handled, stored, and disseminated by members of the 
                Commission and its staff consistent with all applicable 
                statutes, regulations, and Executive orders.
            (4) Assistance from federal agencies.--
                    (A) General services administration.--The 
                Administrator of General Services shall provide to the 
                Commission on a reimbursable basis administrative 
                support and other services for the performance of the 
                Commission's functions.
                    (B) Other departments and agencies.--In addition to 
                the assistance prescribed in subparagraph (A), 
                departments and agencies of the United States may 
                provide to the Commission such services, funds, 
                facilities, staff, and other support services as they 
                may determine advisable and as may be authorized by 
                law.
            (5) Gifts.--The Commission may accept, use, and dispose of 
        gifts or donations of services or property.
            (6) Postal services.--The Commission may use the United 
        States mails in the same manner and under the same conditions 
        as departments and agencies of the United States.
    (d) Non-Applicability of Federal Advisory Committee Act.--
            (1) In general.--The Federal Advisory Committee Act (5 
        U.S.C. App.) shall not apply to the Commission.
            (2) Public meetings and release of public versions of 
        reports.--The Commission shall--
                    (A) hold public hearings and meetings to the extent 
                appropriate; and
                    (B) release public versions of the reports required 
                under this Act.
            (3) Public hearings.--Any public hearings of the Commission 
        shall be conducted in a manner consistent with the protection 
        of information provided to or developed for or by the 
        Commission as required by any applicable statute, regulation, 
        or Executive order.
    (e) Composition.--
            (1) In general.--The Commission shall be composed of 12 
        members, selected not later than 15 days after the date of 
        enactment of this Act, of whom--
                    (A) three persons shall be appointed by the 
                majority leader of the Senate, after consultation with 
                the Chairman of the Committee on Banking, Housing and 
                Urban Affairs;
                    (B) three persons shall be appointed by the 
                minority leader of the Senate, after consultation with 
                the ranking minority members of the Committee on 
                Banking, Housing and Urban Affairs;
                    (C) three persons shall be appointed by the Speaker 
                of the House of Representatives, after consultation 
                with the Chairman of the Committee on Financial 
                Services; and
                    (D) three persons shall be appointed by the 
                minority leader of the House of Representatives, after 
                consultation with the ranking minority member of the 
                Committee on Financial Services.
            (2) Qualifications.--An individual appointed may not be an 
        officer or employee of the Federal Government or any State or 
        local government. It is the sense of Congress that individuals 
        appointed to the Commission should be have national recognition 
        as financial sector experts, and may include former government 
        officials, private market participants, and representatives of 
        the academic community,
            (3) Officers.--Officers of the Commission are to be chosen 
        by the Commission's membership.
    (f) Final Report of Commission.--Not later than 120 days after the 
date of the enactment of this Act, the Commission shall submit to the 
President and Congress a final report containing such findings, 
conclusions, and recommendations for corrective measures as have been 
agreed to by a majority of committee members.
    (g) Compensation of Commission Staff.--
            (1) In general.--
                    (A) Appointment and compensation.--The chairman, in 
                consultation with vice chairman, in accordance with 
                rules agreed upon by the Commission, may appoint and 
                fix the compensation of a staff director and such other 
                personnel as may be necessary to enable the Commission 
                to carry out its functions, without regard to the 
                provisions of title 5, United States Code, governing 
                appointments in the competitive service, and without 
                regard to the provisions of chapter 51 and subchapter 
                III of chapter 53 of such title relating to 
                classification and General Schedule pay rates, except 
                that no rate of pay fixed under this subsection may 
                exceed the equivalent of that payable for a position at 
                level V of the Executive Schedule under section 5316 of 
                title 5, United States Code.
                    (B) Personnel as federal employees.--
                            (i) In general.--The executive director and 
                        any personnel of the Commission who are 
                        employees shall be employees under section 2105 
                        of title 5, United States Code, for purposes of 
                        chapters 63, 81, 83, 84, 85, 87, 89, and 90 of 
                        that title.
                            (ii) Members of commission.--Subparagraph 
                        (A) shall not be construed to apply to members 
                        of the Commission.
            (2) Detailees.--Any Federal Government employee may be 
        detailed to the Commission without reimbursement from the 
        Commission, and such detailee shall retain the rights, status, 
        and privileges of his or her regular employment without 
        interruption.
            (3) Consultant services.--The Commission is authorized to 
        procure the services of experts and consultants in accordance 
        with section 3109 of title 5, United States Code, but at rates 
        not to exceed the daily rate paid a person occupying a position 
        at level IV of the Executive Schedule under section 5315 of 
        title 5, United States Code.
    (h) Compensation and Travel Expenses.--
            (1) Compensation.--Each member of the Commission may be 
        compensated at not to exceed the daily equivalent of the annual 
        rate of basic pay in effect for a position at level IV of the 
        Executive Schedule under section 5315 of title 5, United States 
        Code, for each day during which that member is engaged in the 
        actual performance of the duties of the Commission.
            (2) Travel expenses.--While away from their homes or 
        regular places of business in the performance of services for 
        the Commission, members of the Commission shall be allowed 
        travel expenses, including per diem in lieu of subsistence, in 
        the same manner as persons employed intermittently in the 
        Government service are allowed expenses under section 5703(b) 
        of title 5, United States Code.
    (i) Reports of Commission; Termination.--
            (1) Interim reports.--The Commission may submit to the 
        President and Congress interim reports containing such 
        findings, conclusions, and recommendations for corrective 
        measures as have been agreed to by a majority of Commission 
        members.
            (2) Final report.--Not later than 4 months after the date 
        of the enactment of this Act, the Commission shall submit to 
        the President and Congress a final report containing such 
        findings, conclusions, and recommendations for corrective 
        measures as have been agreed to by a majority of Commission 
        members.
            (3) Termination.--
                    (A) In general.--The Commission, and all the 
                authorities of this Act, shall terminate 60 days after 
                the date on which the final report is submitted under 
                paragraph (2).
                    (B) Administrative activities before termination.--
                The Commission may use the 60-day period referred to in 
                subparagraph (A) for the purpose of concluding its 
                activities, including providing testimony to committees 
                of Congress concerning its reports and disseminating 
                the final report.
    (j) Funding.--
            (1) Transfer from the department of the treasury tarp 
        program.--Of the amounts authorized to be appropriated by this 
        Act and made available in public law for the, not to exceed 
        $5,000,000 shall be available for transfer to the Commission 
        for purposes of the activities of the Commission under this Act 
        and should include assistance for participating Federal 
        agencies.
            (2) Duration of availability.--Amounts made available to 
        the Commission under paragraph (1) shall remain available until 
        the termination of the Commission.

SEC. 3. ESTABLISHING A JOINT SELECT COMMITTEE ON FINANCIAL MARKET 
              OVERSIGHT REFORM AND INVESTIGATIONS.

    (a) Establishment and Composition.--
            (1) In general.--There is established a multi-disciplinary 
        Joint Select Committee on Financial Market Oversight Reform and 
        Investigations (referred to in this section as the ``joint 
        select committee''). The Senate majority leader, Senate 
        minority leader, the Speaker of the House, and House minority 
        leader shall jointly determine the number of members who shall 
        serve on the committee, with equal representation from each the 
        Senate and the House of Representatives, and from the majority 
        party and minority party.
            (2) Purpose.--The purpose of the joint select committee 
        shall be to conduct a full investigation of the causes of the 
        financial turmoil and propose corrective actions to the 
        appropriate committees of jurisdiction.
            (3) Vacancy.--A vacancy in the joint select committee shall 
        not affect the power of the remaining members to execute the 
        functions of the joint select committee, and shall be filled in 
        the same manner as the original selection.
            (4) Legislative authority.--The joint select committee 
        shall not have any legislative authority.
    (b) Investigation and Report.--
            (1) Investigation.--The joint select committee shall--
                    (A) conduct a full investigation of the causes of 
                the financial turmoil; and
                    (B) possess full investigative authority, including 
                subpoena power, to investigate misdeeds, manipulative 
                schemes, or malfeasance by executives and traders of 
                financial sector firms involved in the current 
                financial crisis, as well as failures of Federal 
                oversight agencies to meet their regulatory 
                responsibilities.
            (2) Report.--
                    (A) In general.--The joint select committee shall 
                submit to the appropriate committees of jurisdiction of 
                the House of Representatives and the Senate a report of 
                its findings and recommended corrective actions not 
                later than 12 months after the date of enactment of 
                this Act.
                    (B) Fraud.--The report shall include 
                recommendations whether to increase criminal and civil 
                penalties for fraud and malfeasance.
                    (C) Majority vote requirement.--No recommendation 
                shall be made by the joint select committee except upon 
                the majority vote of the members from each House, 
                respectively.
                    (D) Rules procedure.--Notwithstanding any other 
                provision of this section, any recommendation with 
                respect to the rules and procedures of one House that 
                only affects matters related solely to that House may 
                only be made and voted on by members of the joint 
                select committee from that House and, upon its adoption 
                by a majority of such members, shall be considered to 
                have been adopted by the full committee as a 
                recommendation of the joint select committee.
            (3) Hearings.--In conducting the investigation under 
        paragraph (1), the joint select committee shall hold not fewer 
        than 5 public hearings.
    (c) Resources.--The joint select committee may utilize the 
resources of the House of Representatives and Senate.
    (d) Dissolution.--The joint select committee shall cease to exist 
30 days after the submission of the report described in subsection 
(b)(2).

SEC. 4. SPECIAL INSPECTOR GENERAL FOR FINANCIAL MARKETS OVERSIGHT.

    (a) Purposes.--The purposes of this section are to--
            (1) provide for the appointment of an Inspector General to 
        conduct, supervise, and coordinate investigations into whether 
        ethics violations or conflicts of interest between regulators 
        and their regulated entities or markets may have affected 
        agency decision-making between January 2002 and August 2008; 
        and
            (2) use the forum of President's Council on Integrity and 
        Efficiency and Executive Council on Integrity and Efficiency to 
        share findings and best practices with regards to ethics, 
        conflicts of interest, oversight, and accountability.
    (b) Office of Inspector General.--There is established the Office 
of the Inspector General for Financial Markets Oversight.
    (c) Appointment of Inspector General; Removal.--
            (1) In general.--The head of the Office of the Inspector 
        General for Financial Markets Oversight (referred to in this 
        section as ``Inspector General'') shall be selected by and 
        among the Inspectors General of agencies and commissions set 
        forth in subsection (e)(3).
            (2) Timing.--The nomination of an individual as Inspector 
        General shall be made not later than 30 days after the date of 
        the enactment of this Act.
            (3) Removal.--The Inspector General shall be removable from 
        office in accordance with the provisions of section 3(b) of the 
        Inspector General Act of 1978 (5 U.S.C. App.).
            (4) Status.--For purposes of section 7324 of title 5, 
        United States Code, the Inspector General shall not be 
        considered an employee who determines policies to be pursued by 
        the United States in the nationwide administration of Federal 
        law.
            (5) Pay.--The annual rate of basic pay of the Inspector 
        General shall be the annual rate of basic pay provided for 
        positions at level IV of the Executive Schedule under section 
        5315 of title 5, United States Code.
    (d) Assistant Inspectors General.--The Inspector General shall, in 
accordance with applicable laws and regulations governing the civil 
service appoint an Assistant Inspector General for Investigations who 
shall have the responsibility for supervising the performance of 
investigative activities relating to possible ethics violations and or 
conflicts of interest at the respective agencies.
    (e) Duties.--
            (1) In general.--It shall be the duty of the Inspector 
        General to conduct, supervise, and coordinate investigations 
        into whether ethics violations or conflicts of interest between 
        regulators and their regulated entities or markets may have 
        affected agency decision-making between January 2002 and August 
        2008.
            (2) Additional duties.--In addition to the duties specified 
        in paragraph (1), the Inspector General shall also have the 
        duties and responsibilities of inspectors general under the 
        Inspector General Act of 1978.
            (3) Cooperation.--In carrying out the duties, 
        responsibilities, and authorities of the Inspector General 
        under this section, the Inspector General shall coordinate 
        with, and receive the cooperation of, each of the following:
                    (A) The Inspector General of the Securities and 
                Exchange Commission.
                    (B) The Inspector General of the Treasury 
                Department.
                    (C) The Inspector General of the Commodities 
                Futures Trading Commission.
                    (D) The Inspector General of the Board of Governors 
                of the Federal Reserve System.
                    (E) The Inspector General of the Office of the 
                Comptroller of the Currency.
                    (F) The Inspector General of the Federal Deposit 
                Insurance Corporation.
    (f) Powers and Authorities.--
            (1) Authorities.--In carrying out the duties specified in 
        subsection (e), the Inspector General shall have the 
        authorities provided in section 6 of the Inspector General Act 
        of 1978.
            (2) Duties.--The Inspector General shall carry out the 
        duties specified in subsection (e)(1) in accordance with 
        section 4(b)(1) of the Inspector General Act of 1978.
    (g) Personnel, Facilities, and Other Resources.--
            (1) Personnel.--The Inspector General may select, appoint, 
        and employ such officers and employees as may be necessary for 
        carrying out the duties of the Inspector General, subject to 
        the provisions of title 5, United States Code, governing 
        appointments in the competitive service, and the provisions of 
        chapter 51 and subchapter III of chapter 53 of such title, 
        relating to classification and General Schedule pay rates.
            (2) Services.--The Inspector General may obtain services as 
        authorized by section 3109 of title 5, United States Code, at 
        daily rates not to exceed the equivalent rate prescribed for 
        grade GS-15 of the General Schedule by section 5332 of such 
        title.
            (3) Information.--
                    (A) In general.--Upon request of the Inspector 
                General for information or assistance from any 
                department, agency, or other entity of the Federal 
                Government, the head of such entity shall, insofar as 
                is practicable and not in contravention of any existing 
                law, furnish such information or assistance to the 
                Inspector General, or an authorized designee.
                    (B) Report of noncooperation.--Whenever information 
                or assistance requested by the Inspector General is, in 
                the judgment of the Inspector General, unreasonably 
                refused or not provided, the Inspector General shall 
                report the circumstances to the appropriate committees 
                of Congress without delay.
    (h) Reports.--
            (1) In general.--Not later than March 30, 2009, the 
        Inspector General shall submit to the appropriate committees of 
        Congress a report on whether ethics violations or conflicts of 
        interest between regulators and their regulated entities or 
        markets may have affected agency decision-making between 
        January 2002 and August 2008.
            (2) Contents.--The report on the Inspector General findings 
        shall include recommendations on how to improve and strengthen 
        financial market regulatory agencies to avert future ethics 
        violations or conflicts of interest.
    (i) Appropriate Committees of Congress Defined.--In this section, 
the term ``appropriate committees of Congress'' means--
            (1) the Committees on Banking, Housing and Urban Affairs, 
        Homeland Security and Government Affairs, Finance, and 
        Judiciary of the Senate;
            (2) the Committees on Financial Services, Oversight and 
        Government Reform, and Judiciary of the House of 
        Representatives; and
            (3) the Joint Select Committee on Financial Market 
        Oversight Reform and Investigations.
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