I 111th CONGRESS 1st Session H. R. 2660 IN THE HOUSE OF REPRESENTATIVES June 2, 2009 Mr. Ellison introduced the following bill; which was referred to the Committee on Financial Services A BILL To amend the Federal Deposit Insurance Act to require the appropriate Federal banking agencies to prescribe capital standards for certain special purpose entities.

1.

Short title

This Act may be cited as the Regulatory Capital Enhancement Act of 2009.

2.

Regulation of Special purpose entities

The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is amended by inserting after section 38 the following new section:

38A

Capital standards for certain special purpose entities

(a)

In general

Each appropriate Federal banking agency shall prescribe capital standards, including a leverage limit and a risk-based capital requirement, for special purpose entities, or similar types of vehicles or entities, that are sponsored by insured depository institutions regulated by such agency. Such capital standards shall conform, to the extent practicable, with the capital standards prescribed for such institution under section 38(c). (b)

Additional measures

An appropriate Federal banking agency may, by regulation, establish any additional relevant capital measures for special purpose entities, or similar types of vehicles or entities, that are sponsored by insured depository institutions that such agency determines necessary to guard against the risk that such special purpose entities, or similar types of vehicles or entities, become undercapitalized. (c)

Determination of sponsorship

For purposes of subsection (a), a special purpose entity, or similar type of vehicle or entity, is sponsored by an insured depository institution if the finances of the special purpose entity, or similar type of vehicle or entity, and the insured depository institution are intertwined such that the failure of the special purpose entity, or similar type of vehicle or entity, would have a significant impact on the insured depository institution. (d)

Special purpose entity defined

The appropriate Federal banking agencies shall jointly define the term special purpose entity for purposes of this section. In defining such term, the appropriate Federal banking agencies shall focus on trusts and other legal entities established by or for an insured depository institution to fulfill narrow, specific, or temporary objectives, including— (1)the holding of financial assets transferred during a securitization process; (2)issuing applicable securities representing claims on such assets; (3)receiving and reinvesting cash flows from such assets; and (4)distributing proceeds to holders of the securities.

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