[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4173 Enrolled Bill (ENR)]
H.R.4173
One Hundred Eleventh Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the fifth day of January, two thousand and ten
An Act
To promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for
other purposes.
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 ``Dodd-Frank Wall
Street Reform and Consumer Protection Act''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Severability.
Sec. 4. Effective date.
Sec. 5. Budgetary effects.
Sec. 6. Antitrust savings clause.
TITLE I--FINANCIAL STABILITY
Sec. 101. Short title.
Sec. 102. Definitions.
Subtitle A--Financial Stability Oversight Council
Sec. 111. Financial Stability Oversight Council established.
Sec. 112. Council authority.
Sec. 113. Authority to require supervision and regulation of certain
nonbank financial companies.
Sec. 114. Registration of nonbank financial companies supervised by the
Board of Governors.
Sec. 115. Enhanced supervision and prudential standards for nonbank
financial companies supervised by the Board of Governors and
certain bank holding companies.
Sec. 116. Reports.
Sec. 117. Treatment of certain companies that cease to be bank holding
companies.
Sec. 118. Council funding.
Sec. 119. Resolution of supervisory jurisdictional disputes among member
agencies.
Sec. 120. Additional standards applicable to activities or practices for
financial stability purposes.
Sec. 121. Mitigation of risks to financial stability.
Sec. 122. GAO Audit of Council.
Sec. 123. Study of the effects of size and complexity of financial
institutions on capital market efficiency and economic growth.
Subtitle B--Office of Financial Research
Sec. 151. Definitions.
Sec. 152. Office of Financial Research established.
Sec. 153. Purpose and duties of the Office.
Sec. 154. Organizational structure; responsibilities of primary
programmatic units.
Sec. 155. Funding.
Sec. 156. Transition oversight.
Subtitle C--Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
Sec. 161. Reports by and examinations of nonbank financial companies by
the Board of Governors.
Sec. 162. Enforcement.
Sec. 163. Acquisitions.
Sec. 164. Prohibition against management interlocks between certain
financial companies.
Sec. 165. Enhanced supervision and prudential standards for nonbank
financial companies supervised by the Board of Governors and
certain bank holding companies.
Sec. 166. Early remediation requirements.
Sec. 167. Affiliations.
Sec. 168. Regulations.
Sec. 169. Avoiding duplication.
Sec. 170. Safe harbor.
Sec. 171. Leverage and risk-based capital requirements.
Sec. 172. Examination and enforcement actions for insurance and orderly
liquidation purposes.
Sec. 173. Access to United States financial market by foreign
institutions.
Sec. 174. Studies and reports on holding company capital requirements.
Sec. 175. International policy coordination.
Sec. 176. Rule of construction.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
Sec. 201. Definitions.
Sec. 202. Judicial review.
Sec. 203. Systemic risk determination.
Sec. 204. Orderly liquidation of covered financial companies.
Sec. 205. Orderly liquidation of covered brokers and dealers.
Sec. 206. Mandatory terms and conditions for all orderly liquidation
actions.
Sec. 207. Directors not liable for acquiescing in appointment of
receiver.
Sec. 208. Dismissal and exclusion of other actions.
Sec. 209. Rulemaking; non-conflicting law.
Sec. 210. Powers and duties of the Corporation.
Sec. 211. Miscellaneous provisions.
Sec. 212. Prohibition of circumvention and prevention of conflicts of
interest.
Sec. 213. Ban on certain activities by senior executives and directors.
Sec. 214. Prohibition on taxpayer funding.
Sec. 215. Study on secured creditor haircuts.
Sec. 216. Study on bankruptcy process for financial and nonbank
financial institutions
Sec. 217. Study on international coordination relating to bankruptcy
process for nonbank financial institutions
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS
Sec. 300. Short title.
Sec. 301. Purposes.
Sec. 302. Definition.
Subtitle A--Transfer of Powers and Duties
Sec. 311. Transfer date.
Sec. 312. Powers and duties transferred.
Sec. 313. Abolishment.
Sec. 314. Amendments to the Revised Statutes.
Sec. 315. Federal information policy.
Sec. 316. Savings provisions.
Sec. 317. References in Federal law to Federal banking agencies.
Sec. 318. Funding.
Sec. 319. Contracting and leasing authority.
Subtitle B--Transitional Provisions
Sec. 321. Interim use of funds, personnel, and property of the Office of
Thrift Supervision.
Sec. 322. Transfer of employees.
Sec. 323. Property transferred.
Sec. 324. Funds transferred.
Sec. 325. Disposition of affairs.
Sec. 326. Continuation of services.
Sec. 327. Implementation plan and reports.
Subtitle C--Federal Deposit Insurance Corporation
Sec. 331. Deposit insurance reforms.
Sec. 332. Elimination of procyclical assessments.
Sec. 333. Enhanced access to information for deposit insurance purposes.
Sec. 334. Transition reserve ratio requirements to reflect new
assessment base.
Sec. 335. Permanent increase in deposit and share insurance.
Sec. 336. Management of the Federal Deposit Insurance Corporation.
Subtitle D--Other Matters
Sec. 341. Branching.
Sec. 342. Office of Minority and Women Inclusion.
Sec. 343. Insurance of transaction accounts.
Subtitle E--Technical and Conforming Amendments
Sec. 351. Effective date.
Sec. 352. Balanced Budget and Emergency Deficit Control Act of 1985.
Sec. 353. Bank Enterprise Act of 1991.
Sec. 354. Bank Holding Company Act of 1956.
Sec. 355. Bank Holding Company Act Amendments of 1970.
Sec. 356. Bank Protection Act of 1968.
Sec. 357. Bank Service Company Act.
Sec. 358. Community Reinvestment Act of 1977.
Sec. 359. Crime Control Act of 1990.
Sec. 360. Depository Institution Management Interlocks Act.
Sec. 361. Emergency Homeowners' Relief Act.
Sec. 362. Federal Credit Union Act.
Sec. 363. Federal Deposit Insurance Act.
Sec. 364. Federal Home Loan Bank Act.
Sec. 365. Federal Housing Enterprises Financial Safety and Soundness Act
of 1992.
Sec. 366. Federal Reserve Act.
Sec. 367. Financial Institutions Reform, Recovery, and Enforcement Act
of 1989.
Sec. 368. Flood Disaster Protection Act of 1973.
Sec. 369. Home Owners' Loan Act.
Sec. 370. Housing Act of 1948.
Sec. 371. Housing and Community Development Act of 1992.
Sec. 372. Housing and Urban-Rural Recovery Act of 1983.
Sec. 373. National Housing Act.
Sec. 374. Neighborhood Reinvestment Corporation Act.
Sec. 375. Public Law 93-100.
Sec. 376. Securities Exchange Act of 1934.
Sec. 377. Title 18, United States Code.
Sec. 378. Title 31, United States Code.
TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Elimination of private adviser exemption; limited exemption
for foreign private advisers; limited intrastate exemption.
Sec. 404. Collection of systemic risk data; reports; examinations;
disclosures.
Sec. 405. Disclosure provision amendment.
Sec. 406. Clarification of rulemaking authority.
Sec. 407. Exemption of venture capital fund advisers.
Sec. 408. Exemption of and record keeping by private equity fund
advisers.
Sec. 409. Family offices.
Sec. 410. State and Federal responsibilities; asset threshold for
Federal registration of investment advisers.
Sec. 411. Custody of client assets.
Sec. 412. Adjusting the accredited investor standard.
Sec. 413. GAO study and report on accredited investors.
Sec. 414. GAO study on self-regulatory organization for private funds.
Sec. 415. Commission study and report on short selling.
Sec. 416. Transition period.
TITLE V--INSURANCE
Subtitle A--Office of National Insurance
Sec. 501. Short title.
Sec. 502. Federal Insurance Office.
Subtitle B--State-Based Insurance Reform
Sec. 511. Short title.
Sec. 512. Effective date.
PART I--Nonadmitted Insurance
Sec. 521. Reporting, payment, and allocation of premium taxes.
Sec. 522. Regulation of nonadmitted insurance by insured's home State.
Sec. 523. Participation in national producer database.
Sec. 524. Uniform standards for surplus lines eligibility.
Sec. 525. Streamlined application for commercial purchasers.
Sec. 526. GAO study of nonadmitted insurance market.
Sec. 527. Definitions.
PART II--Reinsurance
Sec. 531. Regulation of credit for reinsurance and reinsurance
agreements.
Sec. 532. Regulation of reinsurer solvency.
Sec. 533. Definitions.
PART III--Rule of Construction
Sec. 541. Rule of construction.
Sec. 542. Severability.
TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
Sec. 601. Short title.
Sec. 602. Definition.
Sec. 603. Moratorium and study on treatment of credit card banks,
industrial loan companies, and certain other companies under
the Bank Holding Company Act of 1956.
Sec. 604. Reports and examinations of holding companies; regulation of
functionally regulated subsidiaries.
Sec. 605. Assuring consistent oversight of permissible activities of
depository institution subsidiaries of holding companies.
Sec. 606. Requirements for financial holding companies to remain well
capitalized and well managed.
Sec. 607. Standards for interstate acquisitions.
Sec. 608. Enhancing existing restrictions on bank transactions with
affiliates.
Sec. 609. Eliminating exceptions for transactions with financial
subsidiaries.
Sec. 610. Lending limits applicable to credit exposure on derivative
transactions, repurchase agreements, reverse repurchase
agreements, and securities lending and borrowing transactions.
Sec. 611. Consistent treatment of derivative transactions in lending
limits.
Sec. 612. Restriction on conversions of troubled banks.
Sec. 613. De novo branching into States.
Sec. 614. Lending limits to insiders.
Sec. 615. Limitations on purchases of assets from insiders.
Sec. 616. Regulations regarding capital levels.
Sec. 617. Elimination of elective investment bank holding company
framework.
Sec. 618. Securities holding companies.
Sec. 619. Prohibitions on proprietary trading and certain relationships
with hedge funds and private equity funds.
Sec. 620. Study of bank investment activities.
Sec. 621. Conflicts of interest.
Sec. 622. Concentration limits on large financial firms.
Sec. 623. Interstate merger transactions.
Sec. 624. Qualified thrift lenders.
Sec. 625. Treatment of dividends by certain mutual holding companies.
Sec. 626. Intermediate holding companies.
Sec. 627. Interest-bearing transaction accounts authorized.
Sec. 628. Credit card bank small business lending.
TITLE VII--WALL STREET TRANSPARENCY AND ACCOUNTABILITY
Sec. 701. Short title.
Subtitle A--Regulation of Over-the-Counter Swaps Markets
PART I--Regulatory Authority
Sec. 711. Definitions.
Sec. 712. Review of regulatory authority.
Sec. 713. Portfolio margining conforming changes.
Sec. 714. Abusive swaps.
Sec. 715. Authority to prohibit participation in swap activities.
Sec. 716. Prohibition against Federal Government bailouts of swaps
entities.
Sec. 717. New product approval CFTC--SEC process.
Sec. 718. Determining status of novel derivative products.
Sec. 719. Studies.
Sec. 720. Memorandum.
PART II--Regulation of Swap Markets
Sec. 721. Definitions.
Sec. 722. Jurisdiction.
Sec. 723. Clearing.
Sec. 724. Swaps; segregation and bankruptcy treatment.
Sec. 725. Derivatives clearing organizations.
Sec. 726. Rulemaking on conflict of interest.
Sec. 727. Public reporting of swap transaction data.
Sec. 728. Swap data repositories.
Sec. 729. Reporting and recordkeeping.
Sec. 730. Large swap trader reporting.
Sec. 731. Registration and regulation of swap dealers and major swap
participants.
Sec. 732. Conflicts of interest.
Sec. 733. Swap execution facilities.
Sec. 734. Derivatives transaction execution facilities and exempt boards
of trade.
Sec. 735. Designated contract markets.
Sec. 736. Margin.
Sec. 737. Position limits.
Sec. 738. Foreign boards of trade.
Sec. 739. Legal certainty for swaps.
Sec. 740. Multilateral clearing organizations.
Sec. 741. Enforcement.
Sec. 742. Retail commodity transactions.
Sec. 743. Other authority.
Sec. 744. Restitution remedies.
Sec. 745. Enhanced compliance by registered entities.
Sec. 746. Insider trading.
Sec. 747. Antidisruptive practices authority.
Sec. 748. Commodity whistleblower incentives and protection.
Sec. 749. Conforming amendments.
Sec. 750. Study on oversight of carbon markets.
Sec. 751. Energy and environmental markets advisory committee.
Sec. 752. International harmonization.
Sec. 753. Anti-manipulation authority.
Sec. 754. Effective date.
Subtitle B--Regulation of Security-Based Swap Markets
Sec. 761. Definitions under the Securities Exchange Act of 1934.
Sec. 762. Repeal of prohibition on regulation of security-based swap
agreements.
Sec. 763. Amendments to the Securities Exchange Act of 1934.
Sec. 764. Registration and regulation of security-based swap dealers and
major security-based swap participants.
Sec. 765. Rulemaking on conflict of interest.
Sec. 766. Reporting and recordkeeping.
Sec. 767. State gaming and bucket shop laws.
Sec. 768. Amendments to the Securities Act of 1933; treatment of
security-based swaps.
Sec. 769. Definitions under the Investment Company Act of 1940.
Sec. 770. Definitions under the Investment Advisers Act of 1940.
Sec. 771. Other authority.
Sec. 772. Jurisdiction.
Sec. 773. Civil penalties.
Sec. 774. Effective date.
TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
Sec. 801. Short title.
Sec. 802. Findings and purposes.
Sec. 803. Definitions.
Sec. 804. Designation of systemic importance.
Sec. 805. Standards for systemically important financial market
utilities and payment, clearing, or settlement activities.
Sec. 806. Operations of designated financial market utilities.
Sec. 807. Examination of and enforcement actions against designated
financial market utilities.
Sec. 808. Examination of and enforcement actions against financial
institutions subject to standards for designated activities.
Sec. 809. Requests for information, reports, or records.
Sec. 810. Rulemaking.
Sec. 811. Other authority.
Sec. 812. Consultation.
Sec. 813. Common framework for designated clearing entity risk
management.
Sec. 814. Effective date.
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
Sec. 901. Short title.
Subtitle A--Increasing Investor Protection
Sec. 911. Investor Advisory Committee established.
Sec. 912. Clarification of authority of the Commission to engage in
investor testing.
Sec. 913. Study and rulemaking regarding obligations of brokers,
dealers, and investment advisers.
Sec. 914. Study on enhancing investment adviser examinations.
Sec. 915. Office of the Investor Advocate.
Sec. 916. Streamlining of filing procedures for self-regulatory
organizations.
Sec. 917. Study regarding financial literacy among investors.
Sec. 918. Study regarding mutual fund advertising.
Sec. 919. Clarification of Commission authority to require investor
disclosures before purchase of investment products and
services.
Sec. 919A. Study on conflicts of interest.
Sec. 919B. Study on improved investor access to information on
investment advisers and broker-dealers.
Sec. 919C. Study on financial planners and the use of financial
designations.
Sec. 919D. Ombudsman.
Subtitle B--Increasing Regulatory Enforcement and Remedies
Sec. 921. Authority to restrict mandatory pre-dispute arbitration.
Sec. 922. Whistleblower protection.
Sec. 923. Conforming amendments for whistleblower protection.
Sec. 924. Implementation and transition provisions for whistleblower
protection.
Sec. 925. Collateral bars.
Sec. 926. Disqualifying felons and other ``bad actors'' from Regulation
D offerings.
Sec. 927. Equal treatment of self-regulatory organization rules.
Sec. 928. Clarification that section 205 of the Investment Advisers Act
of 1940 does not apply to State-registered advisers.
Sec. 929. Unlawful margin lending.
Sec. 929A. Protection for employees of subsidiaries and affiliates of
publicly traded companies.
Sec. 929B. Fair Fund amendments.
Sec. 929C. Increasing the borrowing limit on Treasury loans.
Sec. 929D. Lost and stolen securities.
Sec. 929E. Nationwide service of subpoenas.
Sec. 929F. Formerly associated persons.
Sec. 929G. Streamlined hiring authority for market specialists.
Sec. 929H. SIPC Reforms.
Sec. 929I. Protecting confidentiality of materials submitted to the
Commission.
Sec. 929J. Expansion of audit information to be produced and exchanged.
Sec. 929K. Sharing privileged information with other authorities.
Sec. 929L. Enhanced application of antifraud provisions.
Sec. 929M. Aiding and abetting authority under the Securities Act and
the Investment Company Act.
Sec. 929N. Authority to impose penalties for aiding and abetting
violations of the Investment Advisers Act.
Sec. 929O. Aiding and abetting standard of knowledge satisfied by
recklessness.
Sec. 929P. Strengthening enforcement by the Commission.
Sec. 929Q. Revision to recordkeeping rule.
Sec. 929R. Beneficial ownership and short-swing profit reporting.
Sec. 929S. Fingerprinting.
Sec. 929T. Equal treatment of self-regulatory organization rules.
Sec. 929U. Deadline for completing examinations, inspections and
enforcement actions.
Sec. 929V. Security Investor Protection Act amendments.
Sec. 929W. Notice to missing security holders.
Sec. 929X. Short sale reforms.
Sec. 929Y. Study on extraterritorial private rights of action.
Sec. 929Z. GAO study on securities litigation.
Subtitle C--Improvements to the Regulation of Credit Rating Agencies
Sec. 931. Findings.
Sec. 932. Enhanced regulation, accountability, and transparency of
nationally recognized statistical rating organizations.
Sec. 933. State of mind in private actions.
Sec. 934. Referring tips to law enforcement or regulatory authorities.
Sec. 935. Consideration of information from sources other than the
issuer in rating decisions.
Sec. 936. Qualification standards for credit rating analysts.
Sec. 937. Timing of regulations.
Sec. 938. Universal ratings symbols.
Sec. 939. Removal of statutory references to credit ratings.
Sec. 939A. Review of reliance on ratings.
Sec. 939B. Elimination of exemption from fair disclosure rule.
Sec. 939C. Securities and Exchange Commission study on strengthening
credit rating agency independence.
Sec. 939D. Government Accountability Office study on alternative
business models.
Sec. 939E. Government Accountability Office study on the creation of an
independent professional analyst organization.
Sec. 939F. Study and rulemaking on assigned credit ratings.
Sec. 939G. Effect of Rule 436(g).
Sec. 939H. Sense of Congress.
Subtitle D--Improvements to the Asset-Backed Securitization Process
Sec. 941. Regulation of credit risk retention.
Sec. 942. Disclosures and reporting for asset-backed securities.
Sec. 943. Representations and warranties in asset-backed offerings.
Sec. 944. Exempted transactions under the Securities Act of 1933.
Sec. 945. Due diligence analysis and disclosure in asset-backed
securities issues.
Sec. 946. Study on the macroeconomic effects of risk retention
requirements.
Subtitle E--Accountability and Executive Compensation
Sec. 951. Shareholder vote on executive compensation disclosures.
Sec. 952. Compensation committee independence.
Sec. 953. Executive compensation disclosures.
Sec. 954. Recovery of erroneously awarded compensation.
Sec. 955. Disclosure regarding employee and director hedging.
Sec. 956. Enhanced compensation structure reporting.
Sec. 957. Voting by brokers.
Subtitle F--Improvements to the Management of the Securities and
Exchange Commission
Sec. 961. Report and certification of internal supervisory controls.
Sec. 962. Triennial report on personnel management.
Sec. 963. Annual financial controls audit.
Sec. 964. Report on oversight of national securities associations.
Sec. 965. Compliance examiners.
Sec. 966. Suggestion program for employees of the Commission.
Sec. 967. Commission organizational study and reform.
Sec. 968. Study on SEC revolving door.
Subtitle G--Strengthening Corporate Governance
Sec. 971. Proxy access.
Sec. 972. Disclosures regarding chairman and CEO structures.
Subtitle H--Municipal Securities
Sec. 975. Regulation of municipal securities and changes to the board of
the MSRB.
Sec. 976. Government Accountability Office study of increased disclosure
to investors.
Sec. 977. Government Accountability Office study on the municipal
securities markets.
Sec. 978. Funding for Governmental Accounting Standards Board.
Sec. 979. Commission Office of Municipal Securities.
Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters
Sec. 981. Authority to share certain information with foreign
authorities.
Sec. 982. Oversight of brokers and dealers.
Sec. 983. Portfolio margining.
Sec. 984. Loan or borrowing of securities.
Sec. 985. Technical corrections to Federal securities laws.
Sec. 986. Conforming amendments relating to repeal of the Public Utility
Holding Company Act of 1935.
Sec. 987. Amendment to definition of material loss and nonmaterial
losses to the Deposit Insurance Fund for purposes of Inspector
General reviews.
Sec. 988. Amendment to definition of material loss and nonmaterial
losses to the National Credit Union Share Insurance Fund for
purposes of Inspector General reviews.
Sec. 989. Government Accountability Office study on proprietary trading.
Sec. 989A. Senior investor protections.
Sec. 989B. Designated Federal entity inspectors general independence.
Sec. 989C. Strengthening Inspector General accountability.
Sec. 989D. Removal of Inspectors General of designated Federal entities.
Sec. 989E. Additional oversight of financial regulatory system.
Sec. 989F. GAO study of person to person lending.
Sec. 989G. Exemption for nonaccelerated filers.
Sec. 989H. Corrective responses by heads of certain establishments to
deficiencies identified by Inspectors General.
Sec. 989I. GAO study regarding exemption for smaller issuers.
Sec. 989J. Further promoting the adoption of the NAIC Model Regulations
that enhance protection of seniors and other consumers.
Subtitle J--Securities and Exchange Commission Match Funding
Sec. 991. Securities and Exchange Commission match funding.
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
Sec. 1001. Short title.
Sec. 1002. Definitions.
Subtitle A--Bureau of Consumer Financial Protection
Sec. 1011. Establishment of the Bureau of Consumer Financial Protection.
Sec. 1012. Executive and administrative powers.
Sec. 1013. Administration.
Sec. 1014. Consumer Advisory Board.
Sec. 1015. Coordination.
Sec. 1016. Appearances before and reports to Congress.
Sec. 1017. Funding; penalties and fines.
Sec. 1018. Effective date.
Subtitle B--General Powers of the Bureau
Sec. 1021. Purpose, objectives, and functions.
Sec. 1022. Rulemaking authority.
Sec. 1023. Review of Bureau regulations.
Sec. 1024. Supervision of nondepository covered persons.
Sec. 1025. Supervision of very large banks, savings associations, and
credit unions.
Sec. 1026. Other banks, savings associations, and credit unions.
Sec. 1027. Limitations on authorities of the Bureau; preservation of
authorities.
Sec. 1028. Authority to restrict mandatory pre-dispute arbitration.
Sec. 1029. Exclusion for auto dealers.
Sec. 1029A. Effective date.
Subtitle C--Specific Bureau Authorities
Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices.
Sec. 1032. Disclosures.
Sec. 1033. Consumer rights to access information.
Sec. 1034. Response to consumer complaints and inquiries.
Sec. 1035. Private education loan ombudsman.
Sec. 1036. Prohibited acts.
Sec. 1037. Effective date.
Subtitle D--Preservation of State Law
Sec. 1041. Relation to State law.
Sec. 1042. Preservation of enforcement powers of States.
Sec. 1043. Preservation of existing contracts.
Sec. 1044. State law preemption standards for national banks and
subsidiaries clarified.
Sec. 1045. Clarification of law applicable to nondepository institution
subsidiaries.
Sec. 1046. State law preemption standards for Federal savings
associations and subsidiaries clarified.
Sec. 1047. Visitorial standards for national banks and savings
associations.
Sec. 1048. Effective date.
Subtitle E--Enforcement Powers
Sec. 1051. Definitions.
Sec. 1052. Investigations and administrative discovery.
Sec. 1053. Hearings and adjudication proceedings.
Sec. 1054. Litigation authority.
Sec. 1055. Relief available.
Sec. 1056. Referrals for criminal proceedings.
Sec. 1057. Employee protection.
Sec. 1058. Effective date.
Subtitle F--Transfer of Functions and Personnel; Transitional Provisions
Sec. 1061. Transfer of consumer financial protection functions.
Sec. 1062. Designated transfer date.
Sec. 1063. Savings provisions.
Sec. 1064. Transfer of certain personnel.
Sec. 1065. Incidental transfers.
Sec. 1066. Interim authority of the Secretary.
Sec. 1067. Transition oversight.
Subtitle G--Regulatory Improvements
Sec. 1071. Small business data collection.
Sec. 1072. Assistance for economically vulnerable individuals and
families.
Sec. 1073. Remittance transfers.
Sec. 1074. Department of the Treasury study on ending the
conservatorship of Fannie Mae, Freddie Mac, and reforming the
housing finance system.
Sec. 1075. Reasonable fees and rules for payment card transactions.
Sec. 1076. Reverse mortgage study and regulations.
Sec. 1077. Report on private education loans and private educational
lenders.
Sec. 1078. Study and report on credit scores.
Sec. 1079. Review, report, and program with respect to exchange
facilitators.
Sec. 1079A. Financial fraud provisions.
Subtitle H--Conforming Amendments
Sec. 1081. Amendments to the Inspector General Act.
Sec. 1082. Amendments to the Privacy Act of 1974.
Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity Act
of 1982.
Sec. 1084. Amendments to the Electronic Fund Transfer Act.
Sec. 1085. Amendments to the Equal Credit Opportunity Act.
Sec. 1086. Amendments to the Expedited Funds Availability Act.
Sec. 1087. Amendments to the Fair Credit Billing Act.
Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and
Accurate Credit Transactions Act of 2003.
Sec. 1089. Amendments to the Fair Debt Collection Practices Act.
Sec. 1090. Amendments to the Federal Deposit Insurance Act.
Sec. 1091. Amendment to Federal Financial Institutions Examination
Council Act of 1978.
Sec. 1092. Amendments to the Federal Trade Commission Act.
Sec. 1093. Amendments to the Gramm-Leach-Bliley Act.
Sec. 1094. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 1095. Amendments to the Homeowners Protection Act of 1998.
Sec. 1096. Amendments to the Home Ownership and Equity Protection Act of
1994.
Sec. 1097. Amendments to the Omnibus Appropriations Act, 2009.
Sec. 1098. Amendments to the Real Estate Settlement Procedures Act of
1974.
Sec. 1098A. Amendments to the Interstate Land Sales Full Disclosure Act.
Sec. 1099. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 1100. Amendments to the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008.
Sec. 1100A. Amendments to the Truth in Lending Act.
Sec. 1100B. Amendments to the Truth in Savings Act.
Sec. 1100C. Amendments to the Telemarketing and Consumer Fraud and Abuse
Prevention Act.
Sec. 1100D. Amendments to the Paperwork Reduction Act.
Sec. 1100E. Adjustments for inflation in the Truth in Lending Act.
Sec. 1100F. Use of consumer reports.
Sec. 1100G. Small business fairness and regulatory transparency.
Sec. 1100H. Effective date.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
Sec. 1101. Federal Reserve Act amendments on emergency lending
authority.
Sec. 1102. Reviews of special Federal reserve credit facilities.
Sec. 1103. Public access to information.
Sec. 1104. Liquidity event determination.
Sec. 1105. Emergency financial stabilization.
Sec. 1106. Additional related amendments.
Sec. 1107. Federal Reserve Act amendments on Federal reserve bank
governance.
Sec. 1108. Federal Reserve Act amendments on supervision and regulation
policy.
Sec. 1109. GAO audit of the Federal Reserve facilities; publication of
Board actions.
TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
Sec. 1201. Short title.
Sec. 1202. Purpose.
Sec. 1203. Definitions.
Sec. 1204. Expanded access to mainstream financial institutions.
Sec. 1205. Low-cost alternatives to payday loans.
Sec. 1206. Grants to establish loan-loss reserve funds.
Sec. 1207. Procedural provisions.
Sec. 1208. Authorization of appropriations.
Sec. 1209. Regulations.
Sec. 1210. Evaluation and reports to Congress.
TITLE XIII--PAY IT BACK ACT
Sec. 1301. Short title.
Sec. 1302. Amendment to reduce TARP authorization.
Sec. 1303. Report.
Sec. 1304. Amendments to Housing and Economic Recovery Act of 2008.
Sec. 1305. Federal Housing Finance Agency report.
Sec. 1306. Repayment of unobligated ARRA funds.
TITLE XIV--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
Sec. 1400. Short title; designation as enumerated consumer law.
Subtitle A--Residential Mortgage Loan Origination Standards
Sec. 1401. Definitions.
Sec. 1402. Residential mortgage loan origination.
Sec. 1403. Prohibition on steering incentives.
Sec. 1404. Liability.
Sec. 1405. Regulations.
Sec. 1406. Study of shared appreciation mortgages.
Subtitle B--Minimum Standards For Mortgages
Sec. 1411. Ability to repay.
Sec. 1412. Safe harbor and rebuttable presumption.
Sec. 1413. Defense to foreclosure.
Sec. 1414. Additional standards and requirements.
Sec. 1415. Rule of construction.
Sec. 1416. Amendments to civil liability provisions.
Sec. 1417. Lender rights in the context of borrower deception.
Sec. 1418. Six-month notice required before reset of hybrid adjustable
rate mortgages.
Sec. 1419. Required disclosures.
Sec. 1420. Disclosures required in monthly statements for residential
mortgage loans.
Sec. 1421. Report by the GAO.
Sec. 1422. State attorney general enforcement authority.
Subtitle C--High-Cost Mortgages
Sec. 1431. Definitions relating to high-cost mortgages.
Sec. 1432. Amendments to existing requirements for certain mortgages.
Sec. 1433. Additional requirements for certain mortgages.
Subtitle D--Office of Housing Counseling
Sec. 1441. Short title.
Sec. 1442. Establishment of Office of Housing Counseling.
Sec. 1443. Counseling procedures.
Sec. 1444. Grants for housing counseling assistance.
Sec. 1445. Requirements to use HUD-certified counselors under HUD
programs.
Sec. 1446. Study of defaults and foreclosures.
Sec. 1447. Default and foreclosure database.
Sec. 1448. Definitions for counseling-related programs.
Sec. 1449. Accountability and transparency for grant recipients.
Sec. 1450. Updating and simplification of mortgage information booklet.
Sec. 1451. Home inspection counseling.
Sec. 1452. Warnings to homeowners of foreclosure rescue scams.
Subtitle E--Mortgage Servicing
Sec. 1461. Escrow and impound accounts relating to certain consumer
credit transactions.
Sec. 1462. Disclosure notice required for consumers who waive escrow
services.
Sec. 1463. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 1464. Truth in Lending Act amendments.
Sec. 1465. Escrows included in repayment analysis.
Subtitle F--Appraisal Activities
Sec. 1471. Property appraisal requirements.
Sec. 1472. Appraisal independence requirements.
Sec. 1473. Amendments relating to Appraisal Subcommittee of FFIEC,
Appraiser Independence Monitoring, Approved Appraiser
Education, Appraisal Management Companies, Appraiser Complaint
Hotline, Automated Valuation Models, and Broker Price
Opinions.
Sec. 1474. Equal Credit Opportunity Act amendment.
Sec. 1475. Real Estate Settlement Procedures Act of 1974 amendment
relating to certain appraisal fees.
Sec. 1476. GAO study on the effectiveness and impact of various
appraisal methods, valuation models and distributions
channels, and on the Home Valuation Code of conduct and the
Appraisal Subcommittee.
Subtitle G--Mortgage Resolution and Modification
Sec. 1481. Multifamily mortgage resolution program.
Sec. 1482. Home Affordable Modification Program guidelines.
Sec. 1483. Public availability of information of Making Home Affordable
Program.
Sec. 1484. Protecting tenants at foreclosure extension and
clarification.
Subtitle H--Miscellaneous Provisions
Sec. 1491. Sense of Congress regarding the importance of government-
sponsored enterprises reform to enhance the protection,
limitation, and regulation of the terms of residential
mortgage credit.
Sec. 1492. GAO study report on government efforts to combat mortgage
foreclosure rescue scams and loan modification fraud.
Sec. 1493. Reporting of mortgage data by State.
Sec. 1494. Study of effect of drywall presence on foreclosures.
Sec. 1495. Definition.
Sec. 1496. Emergency mortgage relief.
Sec. 1497. Additional assistance for Neighborhood Stabilization Program.
Sec. 1498. Legal assistance for foreclosure-related issues.
TITLE XV--MISCELLANEOUS PROVISIONS
Sec. 1501. Restrictions on use of United States funds for foreign
governments; protection of American taxpayers.
Sec. 1502. Conflict minerals.
Sec. 1503. Reporting requirements regarding coal or other mine safety.
Sec. 1504. Disclosure of payments by resource extraction issuers.
Sec. 1505. Study by the Comptroller General.
Sec. 1506. Study on core deposits and brokered deposits.
TITLE XVI--SECTION 1256 CONTRACTS
Sec. 1601. Certain swaps, etc., not treated as section 1256 contracts.
SEC. 2. DEFINITIONS.
As used in this Act, the following definitions shall apply, except
as the context otherwise requires or as otherwise specifically provided
in this Act:
(1) Affiliate.--The term ``affiliate'' has the same meaning as
in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
(2) Appropriate federal banking agency.--On and after the
transfer date, the term ``appropriate Federal banking agency'' has
the same meaning as in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), as amended by title III.
(3) Board of governors.--The term ``Board of Governors'' means
the Board of Governors of the Federal Reserve System.
(4) Bureau.--The term ``Bureau'' means the Bureau of Consumer
Financial Protection established under title X.
(5) Commission.--The term ``Commission'' means the Securities
and Exchange Commission, except in the context of the Commodity
Futures Trading Commission.
(6) Commodity futures terms.--The terms ``futures commission
merchant'', ``swap'', ``swap dealer'', ``swap execution facility'',
``derivatives clearing organization'', ``board of trade'',
``commodity trading advisor'', ``commodity pool'', and ``commodity
pool operator'' have the same meanings as given the terms in
section 1a of the Commodity Exchange Act (7 U.S.C. 1 et seq.).
(7) Corporation.--The term ``Corporation'' means the Federal
Deposit Insurance Corporation.
(8) Council.--The term ``Council'' means the Financial
Stability Oversight Council established under title I.
(9) Credit union.--The term ``credit union'' means a Federal
credit union, State credit union, or State-chartered credit union,
as those terms are defined in section 101 of the Federal Credit
Union Act (12 U.S.C. 1752).
(10) Federal banking agency.--The term--
(A) ``Federal banking agency'' means, individually, the
Board of Governors, the Office of the Comptroller of the
Currency, and the Corporation; and
(B) ``Federal banking agencies'' means all of the agencies
referred to in subparagraph (A), collectively.
(11) Functionally regulated subsidiary.--The term
``functionally regulated subsidiary'' has the same meaning as in
section 5(c)(5) of the Bank Holding Company Act of 1956 (12 U.S.C.
1844(c)(5)).
(12) Primary financial regulatory agency.--The term ``primary
financial regulatory agency'' means--
(A) the appropriate Federal banking agency, with respect to
institutions described in section 3(q) of the Federal Deposit
Insurance Act, except to the extent that an institution is or
the activities of an institution are otherwise described in
subparagraph (B), (C), (D), or (E);
(B) the Securities and Exchange Commission, with respect
to--
(i) any broker or dealer that is registered with the
Commission under the Securities Exchange Act of 1934, with
respect to the activities of the broker or dealer that
require the broker or dealer to be registered under that
Act;
(ii) any investment company that is registered with the
Commission under the Investment Company Act of 1940, with
respect to the activities of the investment company that
require the investment company to be registered under that
Act;
(iii) any investment adviser that is registered with
the Commission under the Investment Advisers Act of 1940,
with respect to the investment advisory activities of such
company and activities that are incidental to such advisory
activities;
(iv) any clearing agency registered with the Commission
under the Securities Exchange Act of 1934, with respect to
the activities of the clearing agency that require the
agency to be registered under such Act;
(v) any nationally recognized statistical rating
organization registered with the Commission under the
Securities Exchange Act of 1934;
(vi) any transfer agent registered with the Commission
under the Securities Exchange Act of 1934;
(vii) any exchange registered as a national securities
exchange with the Commission under the Securities Exchange
Act of 1934;
(viii) any national securities association registered
with the Commission under the Securities Exchange Act of
1934;
(ix) any securities information processor registered
with the Commission under the Securities Exchange Act of
1934;
(x) the Municipal Securities Rulemaking Board
established under the Securities Exchange Act of 1934;
(xi) the Public Company Accounting Oversight Board
established under the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7211 et seq.);
(xii) the Securities Investor Protection Corporation
established under the Securities Investor Protection Act of
1970 (15 U.S.C. 78aaa et seq.); and
(xiii) any security-based swap execution facility,
security-based swap data repository, security-based swap
dealer or major security-based swap participant registered
with the Commission under the Securities Exchange Act of
1934, with respect to the security-based swap activities of
the person that require such person to be registered under
such Act;
(C) the Commodity Futures Trading Commission, with respect
to--
(i) any futures commission merchant registered with the
Commodity Futures Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), with respect to the
activities of the futures commission merchant that require
the futures commission merchant to be registered under that
Act;
(ii) any commodity pool operator registered with the
Commodity Futures Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), with respect to the
activities of the commodity pool operator that require the
commodity pool operator to be registered under that Act, or
a commodity pool, as defined in that Act;
(iii) any commodity trading advisor or introducing
broker registered with the Commodity Futures Trading
Commission under the Commodity Exchange Act (7 U.S.C. 1 et
seq.), with respect to the activities of the commodity
trading advisor or introducing broker that require the
commodity trading adviser or introducing broker to be
registered under that Act;
(iv) any derivatives clearing organization registered
with the Commodity Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1 et seq.), with respect
to the activities of the derivatives clearing organization
that require the derivatives clearing organization to be
registered under that Act;
(v) any board of trade designated as a contract market
by the Commodity Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1 et seq.);
(vi) any futures association registered with the
Commodity Futures Trading Commission under the Commodity
Exchange Act (7 U.S.C. 1 et seq.);
(vii) any retail foreign exchange dealer registered
with the Commodity Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1 et seq.), with respect
to the activities of the retail foreign exchange dealer
that require the retail foreign exchange dealer to be
registered under that Act;
(viii) any swap execution facility, swap data
repository, swap dealer, or major swap participant
registered with the Commodity Futures Trading Commission
under the Commodity Exchange Act (7 U.S.C. 1 et seq.) with
respect to the swap activities of the person that require
such person to be registered under that Act; and
(ix) any registered entity under the Commodity Exchange
Act (7 U.S.C. 1 et seq.), with respect to the activities of
the registered entity that require the registered entity to
be registered under that Act;
(D) the State insurance authority of the State in which an
insurance company is domiciled, with respect to the insurance
activities and activities that are incidental to such insurance
activities of an insurance company that is subject to
supervision by the State insurance authority under State
insurance law; and
(E) the Federal Housing Finance Agency, with respect to
Federal Home Loan Banks or the Federal Home Loan Bank System,
and with respect to the Federal National Mortgage Association
or the Federal Home Loan Mortgage Corporation.
(13) Prudential standards.--The term ``prudential standards''
means enhanced supervision and regulatory standards developed by
the Board of Governors under section 165.
(14) Secretary.--The term ``Secretary'' means the Secretary of
the Treasury.
(15) Securities terms.--The--
(A) terms ``broker'', ``dealer'', ``issuer'', ``nationally
recognized statistical rating organization'', ``security'', and
``securities laws'' have the same meanings as in section 3 of
the Securities Exchange Act of 1934 (15 U.S.C. 78c);
(B) term ``investment adviser'' has the same meaning as in
section 202 of the Investment Advisers Act of 1940 (15 U.S.C.
80b-2); and
(C) term ``investment company'' has the same meaning as in
section 3 of the Investment Company Act of 1940 (15 U.S.C. 80a-
3).
(16) State.--The term ``State'' means any State, commonwealth,
territory, or possession of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, American Samoa, Guam, or the United
States Virgin Islands.
(17) Transfer date.--The term ``transfer date'' means the date
established under section 311.
(18) Other incorporated definitions.--
(A) Federal deposit insurance act.--The terms ``bank'',
``bank holding company'', ``control'', ``deposit'',
``depository institution'', ``Federal depository institution'',
``Federal savings association'', ``foreign bank'',
``including'', ``insured branch'', ``insured depository
institution'', ``national member bank'', ``national nonmember
bank'', ``savings association'', ``State bank'', ``State
depository institution'', ``State member bank'', ``State
nonmember bank'', ``State savings association'', and
``subsidiary'' have the same meanings as in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813).
(B) Holding companies.--The term--
(i) ``bank holding company'' has the same meaning as in
section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841);
(ii) ``financial holding company'' has the same meaning
as in section 2(p) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(p)); and
(iii) ``savings and loan holding company'' has the same
meaning as in section 10 of the Home Owners' Loan Act (12
U.S.C. 1467a(a)).
SEC. 3. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or
circumstance is held to be unconstitutional, the remainder of this Act,
the amendments made by this Act, and the application of the provisions
of such to any person or circumstance shall not be affected thereby.
SEC. 4. EFFECTIVE DATE.
Except as otherwise specifically provided in this Act or the
amendments made by this Act, this Act and such amendments shall take
effect 1 day after the date of enactment of this Act.
SEC. 5. BUDGETARY EFFECTS.
The budgetary effects of this Act, for the purpose of complying
with the Statutory Pay-As-You-Go-Act of 2010, shall be determined by
reference to the latest statement titled ``Budgetary Effects of PAYGO
Legislation'' for this Act, jointly submitted for printing in the
Congressional Record by the Chairmen of the House and Senate Budget
Committees, provided that such statement has been submitted prior to
the vote on passage in the House acting first on this conference report
or amendment between the Houses.
SEC. 6. ANTITRUST SAVINGS CLAUSE.
Nothing in this Act, or any amendment made by this Act, shall be
construed to modify, impair, or supersede the operation of any of the
antitrust laws, unless otherwise specified. For purposes of this
section, the term ``antitrust laws'' has the same meaning as in
subsection (a) of the first section of the Clayton Act, except that
such term includes section 5 of the Federal Trade Commission Act, to
the extent that such section 5 applies to unfair methods of
competition.
TITLE I--FINANCIAL STABILITY
SEC. 101. SHORT TITLE.
This title may be cited as the ``Financial Stability Act of 2010''.
SEC. 102. DEFINITIONS.
(a) In General.--For purposes of this title, unless the context
otherwise requires, the following definitions shall apply:
(1) Bank holding company.--The term ``bank holding company''
has the same meaning as in section 2 of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841). A foreign bank or company that is
treated as a bank holding company for purposes of the Bank Holding
Company Act of 1956, pursuant to section 8(a) of the International
Banking Act of 1978 (12 U.S.C. 3106(a)), shall be treated as a bank
holding company for purposes of this title.
(2) Chairperson.--The term ``Chairperson'' means the
Chairperson of the Council.
(3) Member agency.--The term ``member agency'' means an agency
represented by a voting member of the Council.
(4) Nonbank financial company definitions.--
(A) Foreign nonbank financial company.--The term ``foreign
nonbank financial company'' means a company (other than a
company that is, or is treated in the United States as, a bank
holding company) that is--
(i) incorporated or organized in a country other than
the United States; and
(ii) predominantly engaged in, including through a
branch in the United States, financial activities, as
defined in paragraph (6).
(B) U.S. nonbank financial company.--The term ``U.S.
nonbank financial company'' means a company (other than a bank
holding company, a Farm Credit System institution chartered and
subject to the provisions of the Farm Credit Act of 1971 (12
U.S.C. 2001 et seq.), or a national securities exchange (or
parent thereof), clearing agency (or parent thereof, unless the
parent is a bank holding company), security-based swap
execution facility, or security-based swap data repository
registered with the Commission, or a board of trade designated
as a contract market (or parent thereof), or a derivatives
clearing organization (or parent thereof, unless the parent is
a bank holding company), swap execution facility or a swap data
repository registered with the Commodity Futures Trading
Commission), that is--
(i) incorporated or organized under the laws of the
United States or any State; and
(ii) predominantly engaged in financial activities, as
defined in paragraph (6).
(C) Nonbank financial company.--The term ``nonbank
financial company'' means a U.S. nonbank financial company and
a foreign nonbank financial company.
(D) Nonbank financial company supervised by the board of
governors.--The term ``nonbank financial company supervised by
the Board of Governors'' means a nonbank financial company that
the Council has determined under section 113 shall be
supervised by the Board of Governors.
(5) Office of financial research.--The term ``Office of
Financial Research'' means the office established under section
152.
(6) Predominantly engaged.--A company is ``predominantly
engaged in financial activities'' if--
(A) the annual gross revenues derived by the company and
all of its subsidiaries from activities that are financial in
nature (as defined in section 4(k) of the Bank Holding Company
Act of 1956) and, if applicable, from the ownership or control
of one or more insured depository institutions, represents 85
percent or more of the consolidated annual gross revenues of
the company; or
(B) the consolidated assets of the company and all of its
subsidiaries related to activities that are financial in nature
(as defined in section 4(k) of the Bank Holding Company Act of
1956) and, if applicable, related to the ownership or control
of one or more insured depository institutions, represents 85
percent or more of the consolidated assets of the company.
(7) Significant institutions.--The terms ``significant nonbank
financial company'' and ``significant bank holding company'' have
the meanings given those terms by rule of the Board of Governors,
but in no instance shall the term ``significant nonbank financial
company'' include those entities that are excluded under paragraph
(4)(B).
(b) Definitional Criteria.--The Board of Governors shall establish,
by regulation, the requirements for determining if a company is
predominantly engaged in financial activities, as defined in subsection
(a)(6).
(c) Foreign Nonbank Financial Companies.--For purposes of the
application of subtitles A and C (other than section 113(b)) with
respect to a foreign nonbank financial company, references in this
title to ``company'' or ``subsidiary'' include only the United States
activities and subsidiaries of such foreign company, except as
otherwise provided.
Subtitle A--Financial Stability Oversight Council
SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ESTABLISHED.
(a) Establishment.--Effective on the date of enactment of this Act,
there is established the Financial Stability Oversight Council.
(b) Membership.--The Council shall consist of the following
members:
(1) Voting members.--The voting members, who shall each have 1
vote on the Council shall be--
(A) the Secretary of the Treasury, who shall serve as
Chairperson of the Council;
(B) the Chairman of the Board of Governors;
(C) the Comptroller of the Currency;
(D) the Director of the Bureau;
(E) the Chairman of the Commission;
(F) the Chairperson of the Corporation;
(G) the Chairperson of the Commodity Futures Trading
Commission;
(H) the Director of the Federal Housing Finance Agency;
(I) the Chairman of the National Credit Union
Administration Board; and
(J) an independent member appointed by the President, by
and with the advice and consent of the Senate, having insurance
expertise.
(2) Nonvoting members.--The nonvoting members, who shall serve
in an advisory capacity as a nonvoting member of the Council, shall
be--
(A) the Director of the Office of Financial Research;
(B) the Director of the Federal Insurance Office;
(C) a State insurance commissioner, to be designated by a
selection process determined by the State insurance
commissioners;
(D) a State banking supervisor, to be designated by a
selection process determined by the State banking supervisors;
and
(E) a State securities commissioner (or an officer
performing like functions), to be designated by a selection
process determined by such State securities commissioners.
(3) Nonvoting member participation.--The nonvoting members of
the Council shall not be excluded from any of the proceedings,
meetings, discussions, or deliberations of the Council, except that
the Chairperson may, upon an affirmative vote of the member
agencies, exclude the nonvoting members from any of the
proceedings, meetings, discussions, or deliberations of the Council
when necessary to safeguard and promote the free exchange of
confidential supervisory information.
(c) Terms; Vacancy.--
(1) Terms.--The independent member of the Council shall serve
for a term of 6 years, and each nonvoting member described in
subparagraphs (C), (D), and (E) of subsection (b)(2) shall serve
for a term of 2 years.
(2) Vacancy.--Any vacancy on the Council shall be filled in the
manner in which the original appointment was made.
(3) Acting officials may serve.--In the event of a vacancy in
the office of the head of a member agency or department, and
pending the appointment of a successor, or during the absence or
disability of the head of a member agency or department, the acting
head of the member agency or department shall serve as a member of
the Council in the place of that agency or department head.
(d) Technical and Professional Advisory Committees.--The Council
may appoint such special advisory, technical, or professional
committees as may be useful in carrying out the functions of the
Council, including an advisory committee consisting of State
regulators, and the members of such committees may be members of the
Council, or other persons, or both.
(e) Meetings.--
(1) Timing.--The Council shall meet at the call of the
Chairperson or a majority of the members then serving, but not less
frequently than quarterly.
(2) Rules for conducting business.--The Council shall adopt
such rules as may be necessary for the conduct of the business of
the Council. Such rules shall be rules of agency organization,
procedure, or practice for purposes of section 553 of title 5,
United States Code.
(f) Voting.--Unless otherwise specified, the Council shall make all
decisions that it is authorized or required to make by a majority vote
of the voting members then serving.
(g) Nonapplicability of FACA.--The Federal Advisory Committee Act
(5 U.S.C. App.) shall not apply to the Council, or to any special
advisory, technical, or professional committee appointed by the
Council, except that, if an advisory, technical, or professional
committee has one or more members who are not employees of or
affiliated with the United States Government, the Council shall publish
a list of the names of the members of such committee.
(h) Assistance From Federal Agencies.--Any department or agency of
the United States may provide to the Council and any special advisory,
technical, or professional committee appointed by the Council, such
services, funds, facilities, staff, and other support services as the
Council may determine advisable.
(i) Compensation of Members.--
(1) Federal employee members.--All members of the Council who
are officers or employees of the United States shall serve without
compensation in addition to that received for their services as
officers or employees of the United States.
(2) Compensation for non-federal member.--Section 5314 of title
5, United States Code, is amended by adding at the end the
following:
``Independent Member of the Financial Stability Oversight
Council (1).''.
(j) Detail of Government Employees.--Any employee of the Federal
Government may be detailed to the Council without reimbursement, and
such detail shall be without interruption or loss of civil service
status or privilege. An employee of the Federal Government detailed to
the Council shall report to and be subject to oversight by the Council
during the assignment to the Council, and shall be compensated by the
department or agency from which the employee was detailed.
SEC. 112. COUNCIL AUTHORITY.
(a) Purposes and Duties of the Council.--
(1) In general.--The purposes of the Council are--
(A) to identify risks to the financial stability of the
United States that could arise from the material financial
distress or failure, or ongoing activities, of large,
interconnected bank holding companies or nonbank financial
companies, or that could arise outside the financial services
marketplace;
(B) to promote market discipline, by eliminating
expectations on the part of shareholders, creditors, and
counterparties of such companies that the Government will
shield them from losses in the event of failure; and
(C) to respond to emerging threats to the stability of the
United States financial system.
(2) Duties.--The Council shall, in accordance with this title--
(A) collect information from member agencies, other Federal
and State financial regulatory agencies, the Federal Insurance
Office and, if necessary to assess risks to the United States
financial system, direct the Office of Financial Research to
collect information from bank holding companies and nonbank
financial companies;
(B) provide direction to, and request data and analyses
from, the Office of Financial Research to support the work of
the Council;
(C) monitor the financial services marketplace in order to
identify potential threats to the financial stability of the
United States;
(D) to monitor domestic and international financial
regulatory proposals and developments, including insurance and
accounting issues, and to advise Congress and make
recommendations in such areas that will enhance the integrity,
efficiency, competitiveness, and stability of the U.S.
financial markets;
(E) facilitate information sharing and coordination among
the member agencies and other Federal and State agencies
regarding domestic financial services policy development,
rulemaking, examinations, reporting requirements, and
enforcement actions;
(F) recommend to the member agencies general supervisory
priorities and principles reflecting the outcome of discussions
among the member agencies;
(G) identify gaps in regulation that could pose risks to
the financial stability of the United States;
(H) require supervision by the Board of Governors for
nonbank financial companies that may pose risks to the
financial stability of the United States in the event of their
material financial distress or failure, or because of their
activities pursuant to section 113;
(I) make recommendations to the Board of Governors
concerning the establishment of heightened prudential standards
for risk-based capital, leverage, liquidity, contingent
capital, resolution plans and credit exposure reports,
concentration limits, enhanced public disclosures, and overall
risk management for nonbank financial companies and large,
interconnected bank holding companies supervised by the Board
of Governors;
(J) identify systemically important financial market
utilities and payment, clearing, and settlement activities (as
that term is defined in title VIII);
(K) make recommendations to primary financial regulatory
agencies to apply new or heightened standards and safeguards
for financial activities or practices that could create or
increase risks of significant liquidity, credit, or other
problems spreading among bank holding companies, nonbank
financial companies, and United States financial markets;
(L) review and, as appropriate, may submit comments to the
Commission and any standard-setting body with respect to an
existing or proposed accounting principle, standard, or
procedure;
(M) provide a forum for--
(i) discussion and analysis of emerging market
developments and financial regulatory issues; and
(ii) resolution of jurisdictional disputes among the
members of the Council; and
(N) annually report to and testify before Congress on--
(i) the activities of the Council;
(ii) significant financial market and regulatory
developments, including insurance and accounting
regulations and standards, along with an assessment of
those developments on the stability of the financial
system;
(iii) potential emerging threats to the financial
stability of the United States;
(iv) all determinations made under section 113 or title
VIII, and the basis for such determinations;
(v) all recommendations made under section 119 and the
result of such recommendations; and
(vi) recommendations--
(I) to enhance the integrity, efficiency,
competitiveness, and stability of United States
financial markets;
(II) to promote market discipline; and
(III) to maintain investor confidence.
(b) Statements by Voting Members of the Council.--At the time at
which each report is submitted under subsection (a), each voting member
of the Council shall--
(1) if such member believes that the Council, the Government,
and the private sector are taking all reasonable steps to ensure
financial stability and to mitigate systemic risk that would
negatively affect the economy, submit a signed statement to
Congress stating such belief; or
(2) if such member does not believe that all reasonable steps
described under paragraph (1) are being taken, submit a signed
statement to Congress stating what actions such member believes
need to be taken in order to ensure that all reasonable steps
described under paragraph (1) are taken.
(c) Testimony by the Chairperson.--The Chairperson shall appear
before the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate at an annual hearing, after the report is
submitted under subsection (a)--
(1) to discuss the efforts, activities, objectives, and plans
of the Council; and
(2) to discuss and answer questions concerning such report.
(d) Authority To Obtain Information.--
(1) In general.--The Council may receive, and may request the
submission of, any data or information from the Office of Financial
Research, member agencies, and the Federal Insurance Office, as
necessary--
(A) to monitor the financial services marketplace to
identify potential risks to the financial stability of the
United States; or
(B) to otherwise carry out any of the provisions of this
title.
(2) Submissions by the office and member agencies.--
Notwithstanding any other provision of law, the Office of Financial
Research, any member agency, and the Federal Insurance Office, are
authorized to submit information to the Council.
(3) Financial data collection.--
(A) In general.--The Council, acting through the Office of
Financial Research, may require the submission of periodic and
other reports from any nonbank financial company or bank
holding company for the purpose of assessing the extent to
which a financial activity or financial market in which the
nonbank financial company or bank holding company participates,
or the nonbank financial company or bank holding company
itself, poses a threat to the financial stability of the United
States.
(B) Mitigation of report burden.--Before requiring the
submission of reports from any nonbank financial company or
bank holding company that is regulated by a member agency or
any primary financial regulatory agency, the Council, acting
through the Office of Financial Research, shall coordinate with
such agencies and shall, whenever possible, rely on information
available from the Office of Financial Research or such
agencies.
(C) Mitigation in case of foreign financial companies.--
Before requiring the submission of reports from a company that
is a foreign nonbank financial company or foreign-based bank
holding company, the Council shall, acting through the Office
of Financial Research, to the extent appropriate, consult with
the appropriate foreign regulator of such company and, whenever
possible, rely on information already being collected by such
foreign regulator, with English translation.
(4) Back-up examination by the board of governors.--If the
Council is unable to determine whether the financial activities of
a U.S. nonbank financial company pose a threat to the financial
stability of the United States, based on information or reports
obtained under paragraphs (1) and (3), discussions with management,
and publicly available information, the Council may request the
Board of Governors, and the Board of Governors is authorized, to
conduct an examination of the U.S. nonbank financial company for
the sole purpose of determining whether the nonbank financial
company should be supervised by the Board of Governors for purposes
of this title.
(5) Confidentiality.--
(A) In general.--The Council, the Office of Financial
Research, and the other member agencies shall maintain the
confidentiality of any data, information, and reports submitted
under this title.
(B) Retention of privilege.--The submission of any
nonpublicly available data or information under this subsection
and subtitle B shall not constitute a waiver of, or otherwise
affect, any privilege arising under Federal or State law
(including the rules of any Federal or State court) to which
the data or information is otherwise subject.
(C) Freedom of information act.--Section 552 of title 5,
United States Code, including the exceptions thereunder, shall
apply to any data or information submitted under this
subsection and subtitle B.
SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REGULATION OF
CERTAIN NONBANK FINANCIAL COMPANIES.
(a) U.S. Nonbank Financial Companies Supervised by the Board of
Governors.--
(1) Determination.--The Council, on a nondelegable basis and by
a vote of not fewer than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson, may determine
that a U.S. nonbank financial company shall be supervised by the
Board of Governors and shall be subject to prudential standards, in
accordance with this title, if the Council determines that material
financial distress at the U.S. nonbank financial company, or the
nature, scope, size, scale, concentration, interconnectedness, or
mix of the activities of the U.S. nonbank financial company, could
pose a threat to the financial stability of the United States.
(2) Considerations.--In making a determination under paragraph
(1), the Council shall consider--
(A) the extent of the leverage of the company;
(B) the extent and nature of the off-balance-sheet
exposures of the company;
(C) the extent and nature of the transactions and
relationships of the company with other significant nonbank
financial companies and significant bank holding companies;
(D) the importance of the company as a source of credit for
households, businesses, and State and local governments and as
a source of liquidity for the United States financial system;
(E) the importance of the company as a source of credit for
low-income, minority, or underserved communities, and the
impact that the failure of such company would have on the
availability of credit in such communities;
(F) the extent to which assets are managed rather than
owned by the company, and the extent to which ownership of
assets under management is diffuse;
(G) the nature, scope, size, scale, concentration,
interconnectedness, and mix of the activities of the company;
(H) the degree to which the company is already regulated by
1 or more primary financial regulatory agencies;
(I) the amount and nature of the financial assets of the
company;
(J) the amount and types of the liabilities of the company,
including the degree of reliance on short-term funding; and
(K) any other risk-related factors that the Council deems
appropriate.
(b) Foreign Nonbank Financial Companies Supervised by the Board of
Governors.--
(1) Determination.--The Council, on a nondelegable basis and by
a vote of not fewer than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson, may determine
that a foreign nonbank financial company shall be supervised by the
Board of Governors and shall be subject to prudential standards, in
accordance with this title, if the Council determines that material
financial distress at the foreign nonbank financial company, or the
nature, scope, size, scale, concentration, interconnectedness, or
mix of the activities of the foreign nonbank financial company,
could pose a threat to the financial stability of the United
States.
(2) Considerations.--In making a determination under paragraph
(1), the Council shall consider--
(A) the extent of the leverage of the company;
(B) the extent and nature of the United States related off-
balance-sheet exposures of the company;
(C) the extent and nature of the transactions and
relationships of the company with other significant nonbank
financial companies and significant bank holding companies;
(D) the importance of the company as a source of credit for
United States households, businesses, and State and local
governments and as a source of liquidity for the United States
financial system;
(E) the importance of the company as a source of credit for
low-income, minority, or underserved communities in the United
States, and the impact that the failure of such company would
have on the availability of credit in such communities;
(F) the extent to which assets are managed rather than
owned by the company and the extent to which ownership of
assets under management is diffuse;
(G) the nature, scope, size, scale, concentration,
interconnectedness, and mix of the activities of the company;
(H) the extent to which the company is subject to
prudential standards on a consolidated basis in its home
country that are administered and enforced by a comparable
foreign supervisory authority;
(I) the amount and nature of the United States financial
assets of the company;
(J) the amount and nature of the liabilities of the company
used to fund activities and operations in the United States,
including the degree of reliance on short-term funding; and
(K) any other risk-related factors that the Council deems
appropriate.
(c) Antievasion.--
(1) Determinations.--In order to avoid evasion of this title,
the Council, on its own initiative or at the request of the Board
of Governors, may determine, on a nondelegable basis and by a vote
of not fewer than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson, that--
(A) material financial distress related to, or the nature,
scope, size, scale, concentration, interconnectedness, or mix
of, the financial activities conducted directly or indirectly
by a company incorporated or organized under the laws of the
United States or any State or the financial activities in the
United States of a company incorporated or organized in a
country other than the United States would pose a threat to the
financial stability of the United States, based on
consideration of the factors in subsection (a)(2) or (b)(2), as
applicable;
(B) the company is organized or operates in such a manner
as to evade the application of this title; and
(C) such financial activities of the company shall be
supervised by the Board of Governors and subject to prudential
standards in accordance with this title, consistent with
paragraph (3).
(2) Report.--Upon making a determination under paragraph (1),
the Council shall submit a report to the appropriate committees of
Congress detailing the reasons for making such determination.
(3) Consolidated supervision of only financial activities;
establishment of an intermediate holding company.--
(A) Establishment of an intermediate holding company.--Upon
a determination under paragraph (1), the company that is the
subject of the determination may establish an intermediate
holding company in which the financial activities of such
company and its subsidiaries shall be conducted (other than the
activities described in section 167(b)(2)) in compliance with
any regulations or guidance provided by the Board of Governors.
Such intermediate holding company shall be subject to the
supervision of the Board of Governors and to prudential
standards under this title as if the intermediate holding
company were a nonbank financial company supervised by the
Board of Governors.
(B) Action of the board of governors.--To facilitate the
supervision of the financial activities subject to the
determination in paragraph (1), the Board of Governors may
require a company to establish an intermediate holding company,
as provided for in section 167, which would be subject to the
supervision of the Board of Governors and to prudential
standards under this title, as if the intermediate holding
company were a nonbank financial company supervised by the
Board of Governors.
(4) Notice and opportunity for hearing and final determination;
judicial review.--Subsections (d) through (h) shall apply to
determinations made by the Council pursuant to paragraph (1) in the
same manner as such subsections apply to nonbank financial
companies.
(5) Covered financial activities.--For purposes of this
subsection, the term ``financial activities''--
(A) means activities that are financial in nature (as
defined in section 4(k) of the Bank Holding Company Act of
1956);
(B) includes the ownership or control of one or more
insured depository institutions; and
(C) does not include internal financial activities
conducted for the company or any affiliate thereof, including
internal treasury, investment, and employee benefit functions.
(6) Only financial activities subject to prudential
supervision.--Nonfinancial activities of the company shall not be
subject to supervision by the Board of Governors and prudential
standards of the Board. For purposes of this Act, the financial
activities that are the subject of the determination in paragraph
(1) shall be subject to the same requirements as a nonbank
financial company supervised by the Board of Governors. Nothing in
this paragraph shall prohibit or limit the authority of the Board
of Governors to apply prudential standards under this title to the
financial activities that are subject to the determination in
paragraph (1).
(d) Reevaluation and Rescission.--The Council shall--
(1) not less frequently than annually, reevaluate each
determination made under subsections (a) and (b) with respect to
such nonbank financial company supervised by the Board of
Governors; and
(2) rescind any such determination, if the Council, by a vote
of not fewer than \2/3\ of the voting members then serving,
including an affirmative vote by the Chairperson, determines that
the nonbank financial company no longer meets the standards under
subsection (a) or (b), as applicable.
(e) Notice and Opportunity for Hearing and Final Determination.--
(1) In general.--The Council shall provide to a nonbank
financial company written notice of a proposed determination of the
Council, including an explanation of the basis of the proposed
determination of the Council, that a nonbank financial company
shall be supervised by the Board of Governors and shall be subject
to prudential standards in accordance with this title.
(2) Hearing.--Not later than 30 days after the date of receipt
of any notice of a proposed determination under paragraph (1), the
nonbank financial company may request, in writing, an opportunity
for a written or oral hearing before the Council to contest the
proposed determination. Upon receipt of a timely request, the
Council shall fix a time (not later than 30 days after the date of
receipt of the request) and place at which such company may appear,
personally or through counsel, to submit written materials (or, at
the sole discretion of the Council, oral testimony and oral
argument).
(3) Final determination.--Not later than 60 days after the date
of a hearing under paragraph (2), the Council shall notify the
nonbank financial company of the final determination of the
Council, which shall contain a statement of the basis for the
decision of the Council.
(4) No hearing requested.--If a nonbank financial company does
not make a timely request for a hearing, the Council shall notify
the nonbank financial company, in writing, of the final
determination of the Council under subsection (a) or (b), as
applicable, not later than 10 days after the date by which the
company may request a hearing under paragraph (2).
(f) Emergency Exception.--
(1) In general.--The Council may waive or modify the
requirements of subsection (e) with respect to a nonbank financial
company, if the Council determines, by a vote of not fewer than \2/
3\ of the voting members then serving, including an affirmative
vote by the Chairperson, that such waiver or modification is
necessary or appropriate to prevent or mitigate threats posed by
the nonbank financial company to the financial stability of the
United States.
(2) Notice.--The Council shall provide notice of a waiver or
modification under this subsection to the nonbank financial company
concerned as soon as practicable, but not later than 24 hours after
the waiver or modification is granted.
(3) International coordination.--In making a determination
under paragraph (1), the Council shall consult with the appropriate
home country supervisor, if any, of the foreign nonbank financial
company that is being considered for such a determination.
(4) Opportunity for hearing.--The Council shall allow a nonbank
financial company to request, in writing, an opportunity for a
written or oral hearing before the Council to contest a waiver or
modification under this subsection, not later than 10 days after
the date of receipt of notice of the waiver or modification by the
company. Upon receipt of a timely request, the Council shall fix a
time (not later than 15 days after the date of receipt of the
request) and place at which the nonbank financial company may
appear, personally or through counsel, to submit written materials
(or, at the sole discretion of the Council, oral testimony and oral
argument).
(5) Notice of final determination.--Not later than 30 days
after the date of any hearing under paragraph (4), the Council
shall notify the subject nonbank financial company of the final
determination of the Council under this subsection, which shall
contain a statement of the basis for the decision of the Council.
(g) Consultation.--The Council shall consult with the primary
financial regulatory agency, if any, for each nonbank financial company
or subsidiary of a nonbank financial company that is being considered
for supervision by the Board of Governors under this section before the
Council makes any final determination with respect to such nonbank
financial company under subsection (a), (b), or (c).
(h) Judicial Review.--If the Council makes a final determination
under this section with respect to a nonbank financial company, such
nonbank financial company may, not later than 30 days after the date of
receipt of the notice of final determination under subsection (d)(2),
(e)(3), or (f)(5), bring an action in the United States district court
for the judicial district in which the home office of such nonbank
financial company is located, or in the United States District Court
for the District of Columbia, for an order requiring that the final
determination be rescinded, and the court shall, upon review, dismiss
such action or direct the final determination to be rescinded. Review
of such an action shall be limited to whether the final determination
made under this section was arbitrary and capricious.
(i) International Coordination.--In exercising its duties under
this title with respect to foreign nonbank financial companies,
foreign-based bank holding companies, and cross-border activities and
markets, the Council shall consult with appropriate foreign regulatory
authorities, to the extent appropriate.
SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPANIES SUPERVISED BY
THE BOARD OF GOVERNORS.
Not later than 180 days after the date of a final Council
determination under section 113 that a nonbank financial company is to
be supervised by the Board of Governors, such company shall register
with the Board of Governors, on forms prescribed by the Board of
Governors, which shall include such information as the Board of
Governors, in consultation with the Council, may deem necessary or
appropriate to carry out this title.
SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK
FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF GOVERNORS AND
CERTAIN BANK HOLDING COMPANIES.
(a) In General.--
(1) Purpose.--In order to prevent or mitigate risks to the
financial stability of the United States that could arise from the
material financial distress, failure, or ongoing activities of
large, interconnected financial institutions, the Council may make
recommendations to the Board of Governors concerning the
establishment and refinement of prudential standards and reporting
and disclosure requirements applicable to nonbank financial
companies supervised by the Board of Governors and large,
interconnected bank holding companies, that--
(A) are more stringent than those applicable to other
nonbank financial companies and bank holding companies that do
not present similar risks to the financial stability of the
United States; and
(B) increase in stringency, based on the considerations
identified in subsection (b)(3).
(2) Recommended application of required standards.--In making
recommendations under this section, the Council may--
(A) differentiate among companies that are subject to
heightened standards on an individual basis or by category,
taking into consideration their capital structure, riskiness,
complexity, financial activities (including the financial
activities of their subsidiaries), size, and any other risk-
related factors that the Council deems appropriate; or
(B) recommend an asset threshold that is higher than
$50,000,000,000 for the application of any standard described
in subsections (c) through (g).
(b) Development of Prudential Standards.--
(1) In general.--The recommendations of the Council under
subsection (a) may include--
(A) risk-based capital requirements;
(B) leverage limits;
(C) liquidity requirements;
(D) resolution plan and credit exposure report
requirements;
(E) concentration limits;
(F) a contingent capital requirement;
(G) enhanced public disclosures;
(H) short-term debt limits; and
(I) overall risk management requirements.
(2) Prudential standards for foreign financial companies.--In
making recommendations concerning the standards set forth in
paragraph (1) that would apply to foreign nonbank financial
companies supervised by the Board of Governors or foreign-based
bank holding companies, the Council shall--
(A) give due regard to the principle of national treatment
and equality of competitive opportunity; and
(B) take into account the extent to which the foreign
nonbank financial company or foreign-based bank holding company
is subject on a consolidated basis to home country standards
that are comparable to those applied to financial companies in
the United States.
(3) Considerations.--In making recommendations concerning
prudential standards under paragraph (1), the Council shall--
(A) take into account differences among nonbank financial
companies supervised by the Board of Governors and bank holding
companies described in subsection (a), based on--
(i) the factors described in subsections (a) and (b) of
section 113;
(ii) whether the company owns an insured depository
institution;
(iii) nonfinancial activities and affiliations of the
company; and
(iv) any other factors that the Council determines
appropriate;
(B) to the extent possible, ensure that small changes in
the factors listed in subsections (a) and (b) of section 113
would not result in sharp, discontinuous changes in the
prudential standards established under section 165; and
(C) adapt its recommendations as appropriate in light of
any predominant line of business of such company, including
assets under management or other activities for which
particular standards may not be appropriate.
(c) Contingent Capital.--
(1) Study required.--The Council shall conduct a study of the
feasibility, benefits, costs, and structure of a contingent capital
requirement for nonbank financial companies supervised by the Board
of Governors and bank holding companies described in subsection
(a), which study shall include--
(A) an evaluation of the degree to which such requirement
would enhance the safety and soundness of companies subject to
the requirement, promote the financial stability of the United
States, and reduce risks to United States taxpayers;
(B) an evaluation of the characteristics and amounts of
contingent capital that should be required;
(C) an analysis of potential prudential standards that
should be used to determine whether the contingent capital of a
company would be converted to equity in times of financial
stress;
(D) an evaluation of the costs to companies, the effects on
the structure and operation of credit and other financial
markets, and other economic effects of requiring contingent
capital;
(E) an evaluation of the effects of such requirement on the
international competitiveness of companies subject to the
requirement and the prospects for international coordination in
establishing such requirement; and
(F) recommendations for implementing regulations.
(2) Report.--The Council shall submit a report to Congress
regarding the study required by paragraph (1) not later than 2
years after the date of enactment of this Act.
(3) Recommendations.--
(A) In general.--Subsequent to submitting a report to
Congress under paragraph (2), the Council may make
recommendations to the Board of Governors to require any
nonbank financial company supervised by the Board of Governors
and any bank holding company described in subsection (a) to
maintain a minimum amount of contingent capital that is
convertible to equity in times of financial stress.
(B) Factors to consider.--In making recommendations under
this subsection, the Council shall consider--
(i) an appropriate transition period for implementation
of a conversion under this subsection;
(ii) the factors described in subsection (b)(3);
(iii) capital requirements applicable to a nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a), and
subsidiaries thereof;
(iv) results of the study required by paragraph (1);
and
(v) any other factor that the Council deems
appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Council may make recommendations to
the Board of Governors concerning the requirement that each nonbank
financial company supervised by the Board of Governors and each
bank holding company described in subsection (a) report
periodically to the Council, the Board of Governors, and the
Corporation, the plan of such company for rapid and orderly
resolution in the event of material financial distress or failure.
(2) Credit exposure report.--The Council may make
recommendations to the Board of Governors concerning the
advisability of requiring each nonbank financial company supervised
by the Board of Governors and bank holding company described in
subsection (a) to report periodically to the Council, the Board of
Governors, and the Corporation on--
(A) the nature and extent to which the company has credit
exposure to other significant nonbank financial companies and
significant bank holding companies; and
(B) the nature and extent to which other such significant
nonbank financial companies and significant bank holding
companies have credit exposure to that company.
(e) Concentration Limits.--In order to limit the risks that the
failure of any individual company could pose to nonbank financial
companies supervised by the Board of Governors or bank holding
companies described in subsection (a), the Council may make
recommendations to the Board of Governors to prescribe standards to
limit such risks, as set forth in section 165.
(f) Enhanced Public Disclosures.--The Council may make
recommendations to the Board of Governors to require periodic public
disclosures by bank holding companies described in subsection (a) and
by nonbank financial companies supervised by the Board of Governors, in
order to support market evaluation of the risk profile, capital
adequacy, and risk management capabilities thereof.
(g) Short-term Debt Limits.--The Council may make recommendations
to the Board of Governors to require short-term debt limits to mitigate
the risks that an over-accumulation of such debt could pose to bank
holding companies described in subsection (a), nonbank financial
companies supervised by the Board of Governors, or the financial
system.
SEC. 116. REPORTS.
(a) In General.--Subject to subsection (b), the Council, acting
through the Office of Financial Research, may require a bank holding
company with total consolidated assets of $50,000,000,000 or greater or
a nonbank financial company supervised by the Board of Governors, and
any subsidiary thereof, to submit certified reports to keep the Council
informed as to--
(1) the financial condition of the company;
(2) systems for monitoring and controlling financial,
operating, and other risks;
(3) transactions with any subsidiary that is a depository
institution; and
(4) the extent to which the activities and operations of the
company and any subsidiary thereof, could, under adverse
circumstances, have the potential to disrupt financial markets or
affect the overall financial stability of the United States.
(b) Use of Existing Reports.--
(1) In general.--For purposes of compliance with subsection
(a), the Council, acting through the Office of Financial Research,
shall, to the fullest extent possible, use--
(A) reports that a bank holding company, nonbank financial
company supervised by the Board of Governors, or any
functionally regulated subsidiary of such company has been
required to provide to other Federal or State regulatory
agencies or to a relevant foreign supervisory authority;
(B) information that is otherwise required to be reported
publicly; and
(C) externally audited financial statements.
(2) Availability.--Each bank holding company described in
subsection (a) and nonbank financial company supervised by the
Board of Governors, and any subsidiary thereof, shall provide to
the Council, at the request of the Council, copies of all reports
referred to in paragraph (1).
(3) Confidentiality.--The Council shall maintain the
confidentiality of the reports obtained under subsection (a) and
paragraph (1)(A) of this subsection.
SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT CEASE TO BE BANK
HOLDING COMPANIES.
(a) Applicability.--This section shall apply to--
(1) any entity that--
(A) was a bank holding company having total consolidated
assets equal to or greater than $50,000,000,000 as of January
1, 2010; and
(B) received financial assistance under or participated in
the Capital Purchase Program established under the Troubled
Asset Relief Program authorized by the Emergency Economic
Stabilization Act of 2008; and
(2) any successor entity (as defined by the Board of Governors,
in consultation with the Council) to an entity described in
paragraph (1).
(b) Treatment.--If an entity described in subsection (a) ceases to
be a bank holding company at any time after January 1, 2010, then such
entity shall be treated as a nonbank financial company supervised by
the Board of Governors, as if the Council had made a determination
under section 113 with respect to that entity.
(c) Appeal.--
(1) Request for hearing.--An entity may request, in writing, an
opportunity for a written or oral hearing before the Council to
appeal its treatment as a nonbank financial company supervised by
the Board of Governors in accordance with this section. Upon
receipt of the request, the Council shall fix a time (not later
than 30 days after the date of receipt of the request) and place at
which such entity may appear, personally or through counsel, to
submit written materials (or, at the sole discretion of the
Council, oral testimony and oral argument).
(2) Decision.--
(A) Proposed decision.--A Council decision to grant an
appeal under this subsection shall be made by a vote of not
fewer than \2/3\ of the voting members then serving, including
an affirmative vote by the Chairperson. Not later than 60 days
after the date of a hearing under paragraph (1), the Council
shall submit a report to, and may testify before, the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives
on the proposed decision of the Council regarding an appeal
under paragraph (1), which report shall include a statement of
the basis for the proposed decision of the Council.
(B) Notice of final decision.--The Council shall notify the
subject entity of the final decision of the Council regarding
an appeal under paragraph (1), which notice shall contain a
statement of the basis for the final decision of the Council,
not later than 60 days after the later of--
(i) the date of the submission of the report under
subparagraph (A); or
(ii) if, not later than 1 year after the date of
submission of the report under subparagraph (A), the
Committee on Banking, Housing, and Urban Affairs of the
Senate or the Committee on Financial Services of the House
of Representatives holds one or more hearings regarding
such report, the date of the last such hearing.
(C) Considerations.--In making a decision regarding an
appeal under paragraph (1), the Council shall consider whether
the company meets the standards under section 113(a) or 113(b),
as applicable, and the definition of the term ``nonbank
financial company'' under section 102. The decision of the
Council shall be final, subject to the review under paragraph
(3).
(3) Review.--If the Council denies an appeal under this
subsection, the Council shall, not less frequently than annually,
review and reevaluate the decision.
SEC. 118. COUNCIL FUNDING.
Any expenses of the Council shall be treated as expenses of, and
paid by, the Office of Financial Research.
SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL DISPUTES AMONG
MEMBER AGENCIES.
(a) Request for Council Recommendation.--The Council shall seek to
resolve a dispute among 2 or more member agencies, if--
(1) a member agency has a dispute with another member agency
about the respective jurisdiction over a particular bank holding
company, nonbank financial company, or financial activity or
product (excluding matters for which another dispute mechanism
specifically has been provided under title X);
(2) the Council determines that the disputing agencies cannot,
after a demonstrated good faith effort, resolve the dispute without
the intervention of the Council; and
(3) any of the member agencies involved in the dispute--
(A) provides all other disputants prior notice of the
intent to request dispute resolution by the Council; and
(B) requests in writing, not earlier than 14 days after
providing the notice described in subparagraph (A), that the
Council seek to resolve the dispute.
(b) Council Recommendation.--The Council shall seek to resolve each
dispute described in subsection (a)--
(1) within a reasonable time after receiving the dispute
resolution request;
(2) after consideration of relevant information provided by
each agency party to the dispute; and
(3) by agreeing with 1 of the disputants regarding the entirety
of the matter, or by determining a compromise position.
(c) Form of Recommendation.--Any Council recommendation under this
section shall--
(1) be in writing;
(2) include an explanation of the reasons therefor; and
(3) be approved by the affirmative vote of \2/3\ of the voting
members of the Council then serving.
(d) Nonbinding Effect.--Any recommendation made by the Council
under subsection (c) shall not be binding on the Federal agencies that
are parties to the dispute.
SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVITIES OR
PRACTICES FOR FINANCIAL STABILITY PURPOSES.
(a) In General.--The Council may provide for more stringent
regulation of a financial activity by issuing recommendations to the
primary financial regulatory agencies to apply new or heightened
standards and safeguards, including standards enumerated in section
115, for a financial activity or practice conducted by bank holding
companies or nonbank financial companies under their respective
jurisdictions, if the Council determines that the conduct, scope,
nature, size, scale, concentration, or interconnectedness of such
activity or practice could create or increase the risk of significant
liquidity, credit, or other problems spreading among bank holding
companies and nonbank financial companies, financial markets of the
United States, or low-income, minority, or underserved communities.
(b) Procedure for Recommendations to Regulators.--
(1) Notice and opportunity for comment.--The Council shall
consult with the primary financial regulatory agencies and provide
notice to the public and opportunity for comment for any proposed
recommendation that the primary financial regulatory agencies apply
new or heightened standards and safeguards for a financial activity
or practice.
(2) Criteria.--The new or heightened standards and safeguards
for a financial activity or practice recommended under paragraph
(1)--
(A) shall take costs to long-term economic growth into
account; and
(B) may include prescribing the conduct of the activity or
practice in specific ways (such as by limiting its scope, or
applying particular capital or risk management requirements to
the conduct of the activity) or prohibiting the activity or
practice.
(c) Implementation of Recommended Standards.--
(1) Role of primary financial regulatory agency.--
(A) In general.--Each primary financial regulatory agency
may impose, require reports regarding, examine for compliance
with, and enforce standards in accordance with this section
with respect to those entities for which it is the primary
financial regulatory agency.
(B) Rule of construction.--The authority under this
paragraph is in addition to, and does not limit, any other
authority of a primary financial regulatory agency. Compliance
by an entity with actions taken by a primary financial
regulatory agency under this section shall be enforceable in
accordance with the statutes governing the respective
jurisdiction of the primary financial regulatory agency over
the entity, as if the agency action were taken under those
statutes.
(2) Imposition of standards.--The primary financial regulatory
agency shall impose the standards recommended by the Council in
accordance with subsection (a), or similar standards that the
Council deems acceptable, or shall explain in writing to the
Council, not later than 90 days after the date on which the Council
issues the recommendation, why the agency has determined not to
follow the recommendation of the Council.
(d) Report to Congress.--The Council shall report to Congress on--
(1) any recommendations issued by the Council under this
section;
(2) the implementation of, or failure to implement, such
recommendation on the part of a primary financial regulatory
agency; and
(3) in any case in which no primary financial regulatory agency
exists for the nonbank financial company conducting financial
activities or practices referred to in subsection (a),
recommendations for legislation that would prevent such activities
or practices from threatening the stability of the financial system
of the United States.
(e) Effect of Rescission of Identification.--
(1) Notice.--The Council may recommend to the relevant primary
financial regulatory agency that a financial activity or practice
no longer requires any standards or safeguards implemented under
this section.
(2) Determination of primary financial regulatory agency to
continue.--
(A) In general.--Upon receipt of a recommendation under
paragraph (1), a primary financial regulatory agency that has
imposed standards under this section shall determine whether
such standards should remain in effect.
(B) Appeal process.--Each primary financial regulatory
agency that has imposed standards under this section shall
promulgate regulations to establish a procedure under which
entities under its jurisdiction may appeal a determination by
such agency under this paragraph that standards imposed under
this section should remain in effect.
SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY.
(a) Mitigatory Actions.--If the Board of Governors determines that
a bank holding company with total consolidated assets of
$50,000,000,000 or more, or a nonbank financial company supervised by
the Board of Governors, poses a grave threat to the financial stability
of the United States, the Board of Governors, upon an affirmative vote
of not fewer than \2/3\ of the voting members of the Council then
serving, shall--
(1) limit the ability of the company to merge with, acquire,
consolidate with, or otherwise become affiliated with another
company;
(2) restrict the ability of the company to offer a financial
product or products;
(3) require the company to terminate one or more activities;
(4) impose conditions on the manner in which the company
conducts 1 or more activities; or
(5) if the Board of Governors determines that the actions
described in paragraphs (1) through (4) are inadequate to mitigate
a threat to the financial stability of the United States in its
recommendation, require the company to sell or otherwise transfer
assets or off-balance-sheet items to unaffiliated entities.
(b) Notice and Hearing.--
(1) In general.--The Board of Governors, in consultation with
the Council, shall provide to a company described in subsection (a)
written notice that such company is being considered for mitigatory
action pursuant to this section, including an explanation of the
basis for, and description of, the proposed mitigatory action.
(2) Hearing.--Not later than 30 days after the date of receipt
of notice under paragraph (1), the company may request, in writing,
an opportunity for a written or oral hearing before the Board of
Governors to contest the proposed mitigatory action. Upon receipt
of a timely request, the Board of Governors shall fix a time (not
later than 30 days after the date of receipt of the request) and
place at which such company may appear, personally or through
counsel, to submit written materials (or, at the discretion of the
Board of Governors, in consultation with the Council, oral
testimony and oral argument).
(3) Decision.--Not later than 60 days after the date of a
hearing under paragraph (2), or not later than 60 days after the
provision of a notice under paragraph (1) if no hearing was held,
the Board of Governors shall notify the company of the final
decision of the Board of Governors, including the results of the
vote of the Council, as described in subsection (a).
(c) Factors for Consideration.--The Board of Governors and the
Council shall take into consideration the factors set forth in
subsection (a) or (b) of section 113, as applicable, in making any
determination under subsection (a).
(d) Application to Foreign Financial Companies.--The Board of
Governors may prescribe regulations regarding the application of this
section to foreign nonbank financial companies supervised by the Board
of Governors and foreign-based bank holding companies--
(1) giving due regard to the principle of national treatment
and equality of competitive opportunity; and
(2) taking into account the extent to which the foreign nonbank
financial company or foreign-based bank holding company is subject
on a consolidated basis to home country standards that are
comparable to those applied to financial companies in the United
States.
SEC. 122. GAO AUDIT OF COUNCIL.
(a) Authority To Audit.--The Comptroller General of the United
States may audit the activities of--
(1) the Council; and
(2) any person or entity acting on behalf of or under the
authority of the Council, to the extent that such activities relate
to work for the Council by such person or entity.
(b) Access to Information.--
(1) In general.--Notwithstanding any other provision of law,
the Comptroller General shall, upon request and at such reasonable
time and in such reasonable form as the Comptroller General may
request, have access to--
(A) any records or other information under the control of
or used by the Council;
(B) any records or other information under the control of a
person or entity acting on behalf of or under the authority of
the Council, to the extent that such records or other
information is relevant to an audit under subsection (a); and
(C) the officers, directors, employees, financial advisors,
staff, working groups, and agents and representatives of the
Council (as related to the activities on behalf of the Council
of such agent or representative), at such reasonable times as
the Comptroller General may request.
(2) Copies.--The Comptroller General may make and retain copies
of such books, accounts, and other records, access to which is
granted under this section, as the Comptroller General considers
appropriate.
SEC. 123. STUDY OF THE EFFECTS OF SIZE AND COMPLEXITY OF FINANCIAL
INSTITUTIONS ON CAPITAL MARKET EFFICIENCY AND ECONOMIC GROWTH.
(a) Study Required.--
(1) In general.--The Chairperson of the Council shall carry out
a study of the economic impact of possible financial services
regulatory limitations intended to reduce systemic risk. Such study
shall estimate the benefits and costs on the efficiency of capital
markets, on the financial sector, and on national economic growth,
of--
(A) explicit or implicit limits on the maximum size of
banks, bank holding companies, and other large financial
institutions;
(B) limits on the organizational complexity and
diversification of large financial institutions;
(C) requirements for operational separation between
business units of large financial institutions in order to
expedite resolution in case of failure;
(D) limits on risk transfer between business units of large
financial institutions;
(E) requirements to carry contingent capital or similar
mechanisms;
(F) limits on commingling of commercial and financial
activities by large financial institutions;
(G) segregation requirements between traditional financial
activities and trading or other high-risk operations in large
financial institutions; and
(H) other limitations on the activities or structure of
large financial institutions that may be useful to limit
systemic risk.
(2) Recommendations.--The study required by this section shall
include recommendations for the optimal structure of any limits
considered in subparagraphs (A) through (E), in order to maximize
their effectiveness and minimize their economic impact.
(b) Report.--Not later than the end of the 180-day period beginning
on the date of enactment of this title, and not later than every 5
years thereafter, the Chairperson shall issue a report to the Congress
containing any findings and determinations made in carrying out the
study required under subsection (a).
Subtitle B--Office of Financial Research
SEC. 151. DEFINITIONS.
For purposes of this subtitle--
(1) the terms ``Office'' and ``Director'' mean the Office of
Financial Research established under this subtitle and the Director
thereof, respectively;
(2) the term ``financial company'' has the same meaning as in
title II, and includes an insured depository institution and an
insurance company;
(3) the term ``Data Center'' means the data center established
under section 154;
(4) the term ``Research and Analysis Center'' means the
research and analysis center established under section 154;
(5) the term ``financial transaction data'' means the structure
and legal description of a financial contract, with sufficient
detail to describe the rights and obligations between
counterparties and make possible an independent valuation;
(6) the term ``position data''--
(A) means data on financial assets or liabilities held on
the balance sheet of a financial company, where positions are
created or changed by the execution of a financial transaction;
and
(B) includes information that identifies counterparties,
the valuation by the financial company of the position, and
information that makes possible an independent valuation of the
position;
(7) the term ``financial contract'' means a legally binding
agreement between 2 or more counterparties, describing rights and
obligations relating to the future delivery of items of intrinsic
or extrinsic value among the counterparties; and
(8) the term ``financial instrument'' means a financial
contract in which the terms and conditions are publicly available,
and the roles of one or more of the counterparties are assignable
without the consent of any of the other counterparties (including
common stock of a publicly traded company, government bonds, or
exchange traded futures and options contracts).
SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED.
(a) Establishment.--There is established within the Department of
the Treasury the Office of Financial Research.
(b) Director.--
(1) In general.--The Office shall be headed by a Director, who
shall be appointed by the President, by and with the advice and
consent of the Senate.
(2) Term of service.--The Director shall serve for a term of 6
years, except that, in the event that a successor is not nominated
and confirmed by the end of the term of service of a Director, the
Director may continue to serve until such time as the next Director
is appointed and confirmed.
(3) Executive level.--The Director shall be compensated at
Level III of the Executive Schedule.
(4) Prohibition on dual service.--The individual serving in the
position of Director may not, during such service, also serve as
the head of any financial regulatory agency.
(5) Responsibilities, duties, and authority.--The Director
shall have sole discretion in the manner in which the Director
fulfills the responsibilities and duties and exercises the
authorities described in this subtitle.
(c) Budget.--The Director, in consultation with the Chairperson,
shall establish the annual budget of the Office.
(d) Office Personnel.--
(1) In general.--The Director, in consultation with the
Chairperson, may fix the number of, and appoint and direct, all
employees of the Office.
(2) Compensation.--The Director, in consultation with the
Chairperson, shall fix, adjust, and administer the pay for all
employees of the Office, without regard to chapter 51 or subchapter
III of chapter 53 of title 5, United States Code, relating to
classification of positions and General Schedule pay rates.
(3) Comparability.--Section 1206(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 1833b(a)) is amended--
(A) by striking ``Finance Board,'' and inserting ``Finance
Board, the Office of Financial Research, and the Bureau of
Consumer Financial Protection''; and
(B) by striking ``and the Office of Thrift Supervision,''.
(4) Senior executives.--Section 3132(a)(1)(D) of title 5,
United States Code, is amended by striking ``and the National
Credit Union Administration;'' and inserting ``the National Credit
Union Administration, the Bureau of Consumer Financial Protection,
and the Office of Financial Research;''.
(e) Assistance From Federal Agencies.--Any department or agency of
the United States may provide to the Office and any special advisory,
technical, or professional committees appointed by the Office, such
services, funds, facilities, staff, and other support services as the
Office may determine advisable. Any Federal Government employee may be
detailed to the Office without reimbursement, and such detail shall be
without interruption or loss of civil service status or privilege.
(f) Procurement of Temporary and Intermittent Services.--The
Director may procure temporary and intermittent services under section
3109(b) of title 5, United States Code, at rates for individuals which
do not exceed the daily equivalent of the annual rate of basic pay
prescribed for Level V of the Executive Schedule under section 5316 of
such title.
(g) Post-employment Prohibitions.--The Secretary, with the
concurrence of the Director of the Office of Government Ethics, shall
issue regulations prohibiting the Director and any employee of the
Office who has had access to the transaction or position data
maintained by the Data Center or other business confidential
information about financial entities required to report to the Office
from being employed by or providing advice or consulting services to a
financial company, for a period of 1 year after last having had access
in the course of official duties to such transaction or position data
or business confidential information, regardless of whether that entity
is required to report to the Office. For employees whose access to
business confidential information was limited, the regulations may
provide, on a case-by-case basis, for a shorter period of post-
employment prohibition, provided that the shorter period does not
compromise business confidential information.
(h) Technical and Professional Advisory Committees.--The Office, in
consultation with the Chairperson, may appoint such special advisory,
technical, or professional committees as may be useful in carrying out
the functions of the Office, and the members of such committees may be
staff of the Office, or other persons, or both.
(i) Fellowship Program.--The Office, in consultation with the
Chairperson, may establish and maintain an academic and professional
fellowship program, under which qualified academics and professionals
shall be invited to spend not longer than 2 years at the Office, to
perform research and to provide advanced training for Office personnel.
(j) Executive Schedule Compensation.--Section 5314 of title 5,
United States Code, is amended by adding at the end the following new
item:
``Director of the Office of Financial Research.''.
SEC. 153. PURPOSE AND DUTIES OF THE OFFICE.
(a) Purpose and Duties.--The purpose of the Office is to support
the Council in fulfilling the purposes and duties of the Council, as
set forth in subtitle A, and to support member agencies, by--
(1) collecting data on behalf of the Council, and providing
such data to the Council and member agencies;
(2) standardizing the types and formats of data reported and
collected;
(3) performing applied research and essential long-term
research;
(4) developing tools for risk measurement and monitoring;
(5) performing other related services;
(6) making the results of the activities of the Office
available to financial regulatory agencies; and
(7) assisting such member agencies in determining the types and
formats of data authorized by this Act to be collected by such
member agencies.
(b) Administrative Authority.--The Office may--
(1) share data and information, including software developed by
the Office, with the Council, member agencies, and the Bureau of
Economic Analysis, which shared data, information, and software--
(A) shall be maintained with at least the same level of
security as is used by the Office; and
(B) may not be shared with any individual or entity without
the permission of the Council;
(2) sponsor and conduct research projects; and
(3) assist, on a reimbursable basis, with financial analyses
undertaken at the request of other Federal agencies that are not
member agencies.
(c) Rulemaking Authority.--
(1) Scope.--The Office, in consultation with the Chairperson,
shall issue rules, regulations, and orders only to the extent
necessary to carry out the purposes and duties described in
paragraphs (1), (2), and (7) of subsection (a).
(2) Standardization.--Member agencies, in consultation with the
Office, shall implement regulations promulgated by the Office under
paragraph (1) to standardize the types and formats of data reported
and collected on behalf of the Council, as described in subsection
(a)(2). If a member agency fails to implement such regulations
prior to the expiration of the 3-year period following the date of
publication of final regulations, the Office, in consultation with
the Chairperson, may implement such regulations with respect to the
financial entities under the jurisdiction of the member agency.
This paragraph shall not supersede or interfere with the
independent authority of a member agency under other law to collect
data, in such format and manner as the member agency requires.
(d) Testimony.--
(1) In general.--The Director of the Office shall report to and
testify before the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House
of Representatives annually on the activities of the Office,
including the work of the Data Center and the Research and Analysis
Center, and the assessment of the Office of significant financial
market developments and potential emerging threats to the financial
stability of the United States.
(2) No prior review.--No officer or agency of the United States
shall have any authority to require the Director to submit the
testimony required under paragraph (1) or other congressional
testimony to any officer or agency of the United States for
approval, comment, or review prior to the submission of such
testimony. Any such testimony to Congress shall include a statement
that the views expressed therein are those of the Director and do
not necessarily represent the views of the President.
(e) Additional Reports.--The Director may provide additional
reports to Congress concerning the financial stability of the United
States. The Director shall notify the Council of any such additional
reports provided to Congress.
(f) Subpoena.--
(1) In general.--The Director may require from a financial
company, by subpoena, the production of the data requested under
subsection (a)(1) and section 154(b)(1), but only upon a written
finding by the Director that--
(A) such data is required to carry out the functions
described under this subtitle; and
(B) the Office has coordinated with the relevant primary
financial regulatory agency, as required under section
154(b)(1)(B)(ii).
(2) Format.--Subpoenas under paragraph (1) shall bear the
signature of the Director, and shall be served by any person or
class of persons designated by the Director for that purpose.
(3) Enforcement.--In the case of contumacy or failure to obey a
subpoena, the subpoena shall be enforceable by order of any
appropriate district court of the United States. Any failure to
obey the order of the court may be punished by the court as a
contempt of court.
SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBILITIES OF PRIMARY
PROGRAMMATIC UNITS.
(a) In General.--There are established within the Office, to carry
out the programmatic responsibilities of the Office--
(1) the Data Center; and
(2) the Research and Analysis Center.
(b) Data Center.--
(1) General duties.--
(A) Data collection.--The Data Center, on behalf of the
Council, shall collect, validate, and maintain all data
necessary to carry out the duties of the Data Center, as
described in this subtitle. The data assembled shall be
obtained from member agencies, commercial data providers,
publicly available data sources, and financial entities under
subparagraph (B).
(B) Authority.--
(i) In general.--The Office may, as determined by the
Council or by the Director in consultation with the
Council, require the submission of periodic and other
reports from any financial company for the purpose of
assessing the extent to which a financial activity or
financial market in which the financial company
participates, or the financial company itself, poses a
threat to the financial stability of the United States.
(ii) Mitigation of report burden.--Before requiring the
submission of a report from any financial company that is
regulated by a member agency, any primary financial
regulatory agency, a foreign supervisory authority, or the
Office shall coordinate with such agencies or authority,
and shall, whenever possible, rely on information available
from such agencies or authority.
(iii) Collection of financial transaction and position
data.--The Office shall collect, on a schedule determined
by the Director, in consultation with the Council,
financial transaction data and position data from financial
companies.
(C) Rulemaking.--The Office shall promulgate regulations
pursuant to subsections (a)(1), (a)(2), (a)(7), and (c)(1) of
section 153 regarding the type and scope of the data to be
collected by the Data Center under this paragraph.
(2) Responsibilities.--
(A) Publication.--The Data Center shall prepare and
publish, in a manner that is easily accessible to the public--
(i) a financial company reference database;
(ii) a financial instrument reference database; and
(iii) formats and standards for Office data, including
standards for reporting financial transaction and position
data to the Office.
(B) Confidentiality.--The Data Center shall not publish any
confidential data under subparagraph (A).
(3) Information security.--The Director shall ensure that data
collected and maintained by the Data Center are kept secure and
protected against unauthorized disclosure.
(4) Catalog of financial entities and instruments.--The Data
Center shall maintain a catalog of the financial entities and
instruments reported to the Office.
(5) Availability to the council and member agencies.--The Data
Center shall make data collected and maintained by the Data Center
available to the Council and member agencies, as necessary to
support their regulatory responsibilities.
(6) Other authority.--The Office shall, after consultation with
the member agencies, provide certain data to financial industry
participants and to the general public to increase market
transparency and facilitate research on the financial system, to
the extent that intellectual property rights are not violated,
business confidential information is properly protected, and the
sharing of such information poses no significant threats to the
financial system of the United States.
(c) Research and Analysis Center.--
(1) General duties.--The Research and Analysis Center, on
behalf of the Council, shall develop and maintain independent
analytical capabilities and computing resources--
(A) to develop and maintain metrics and reporting systems
for risks to the financial stability of the United States;
(B) to monitor, investigate, and report on changes in
systemwide risk levels and patterns to the Council and
Congress;
(C) to conduct, coordinate, and sponsor research to support
and improve regulation of financial entities and markets;
(D) to evaluate and report on stress tests or other
stability-related evaluations of financial entities overseen by
the member agencies;
(E) to maintain expertise in such areas as may be necessary
to support specific requests for advice and assistance from
financial regulators;
(F) to investigate disruptions and failures in the
financial markets, report findings, and make recommendations to
the Council based on those findings;
(G) to conduct studies and provide advice on the impact of
policies related to systemic risk; and
(H) to promote best practices for financial risk
management.
(d) Reporting Responsibilities.--
(1) Required reports.--Not later than 2 years after the date of
enactment of this Act, and not later than 120 days after the end of
each fiscal year thereafter, the Office shall prepare and submit a
report to Congress.
(2) Content.--Each report required by this subsection shall
assess the state of the United States financial system, including--
(A) an analysis of any threats to the financial stability
of the United States;
(B) the status of the efforts of the Office in meeting the
mission of the Office; and
(C) key findings from the research and analysis of the
financial system by the Office.
SEC. 155. FUNDING.
(a) Financial Research Fund.--
(1) Fund established.--There is established in the Treasury of
the United States a separate fund to be known as the ``Financial
Research Fund''.
(2) Fund receipts.--All amounts provided to the Office under
subsection (c), and all assessments that the Office receives under
subsection (d) shall be deposited into the Financial Research Fund.
(3) Investments authorized.--
(A) Amounts in fund may be invested.--The Director may
request the Secretary to invest the portion of the Financial
Research Fund that is not, in the judgment of the Director,
required to meet the needs of the Office.
(B) Eligible investments.--Investments shall be made by the
Secretary in obligations of the United States or obligations
that are guaranteed as to principal and interest by the United
States, with maturities suitable to the needs of the Financial
Research Fund, as determined by the Director.
(4) Interest and proceeds credited.--The interest on, and the
proceeds from the sale or redemption of, any obligations held in
the Financial Research Fund shall be credited to and form a part of
the Financial Research Fund.
(b) Use of Funds.--
(1) In general.--Funds obtained by, transferred to, or credited
to the Financial Research Fund shall be immediately available to
the Office, and shall remain available until expended, to pay the
expenses of the Office in carrying out the duties and
responsibilities of the Office.
(2) Fees, assessments, and other funds not government funds.--
Funds obtained by, transferred to, or credited to the Financial
Research Fund shall not be construed to be Government funds or
appropriated moneys.
(3) Amounts not subject to apportionment.--Notwithstanding any
other provision of law, amounts in the Financial Research Fund
shall not be subject to apportionment for purposes of chapter 15 of
title 31, United States Code, or under any other authority, or for
any other purpose.
(c) Interim Funding.--During the 2-year period following the date
of enactment of this Act, the Board of Governors shall provide to the
Office an amount sufficient to cover the expenses of the Office.
(d) Permanent Self-funding.--Beginning 2 years after the date of
enactment of this Act, the Secretary shall establish, by regulation,
and with the approval of the Council, an assessment schedule, including
the assessment base and rates, applicable to bank holding companies
with total consolidated assets of $50,000,000,000 or greater and
nonbank financial companies supervised by the Board of Governors, that
takes into account differences among such companies, based on the
considerations for establishing the prudential standards under section
115, to collect assessments equal to the total expenses of the Office.
SEC. 156. TRANSITION OVERSIGHT.
(a) Purpose.--The purpose of this section is to ensure that the
Office--
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and benefits
programs.
(b) Reporting Requirement.--
(1) In general.--The Office shall submit an annual report to
the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives that includes the plans described in paragraph (2).
(2) Plans.--The plans described in this paragraph are as
follows:
(A) Training and workforce development plan.--The Office
shall submit a training and workforce development plan that
includes, to the extent practicable--
(i) identification of skill and technical expertise
needs and actions taken to meet those requirements;
(ii) steps taken to foster innovation and creativity;
(iii) leadership development and succession planning;
and
(iv) effective use of technology by employees.
(B) Workplace flexibility plan.--The Office shall submit a
workforce flexibility plan that includes, to the extent
practicable--
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and childcare assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities; or
(x) any combination of the items described in clauses
(i) through (ix).
(C) Recruitment and retention plan.--The Office shall
submit a recruitment and retention plan that includes, to the
extent practicable, provisions relating to--
(i) the steps necessary to target highly qualified
applicant pools with diverse backgrounds;
(ii) streamlined employment application processes;
(iii) the provision of timely notification of the
status of employment applications to applicants; and
(iv) the collection of information to measure
indicators of hiring effectiveness.
(c) Expiration.--The reporting requirement under subsection (b)
shall terminate 5 years after the date of enactment of this Act.
(d) Rule of Construction.--Nothing in this section may be construed
to affect--
(1) a collective bargaining agreement, as that term is defined
in section 7103(a)(8) of title 5, United States Code, that is in
effect on the date of enactment of this Act; or
(2) the rights of employees under chapter 71 of title 5, United
States Code.
Subtitle C--Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
SEC. 161. REPORTS BY AND EXAMINATIONS OF NONBANK FINANCIAL
COMPANIES BY THE BOARD OF GOVERNORS.
(a) Reports.--
(1) In general.--The Board of Governors may require each
nonbank financial company supervised by the Board of Governors, and
any subsidiary thereof, to submit reports under oath, to keep the
Board of Governors informed as to--
(A) the financial condition of the company or subsidiary,
systems of the company or subsidiary for monitoring and
controlling financial, operating, and other risks, and the
extent to which the activities and operations of the company or
subsidiary pose a threat to the financial stability of the
United States; and
(B) compliance by the company or subsidiary with the
requirements of this title.
(2) Use of existing reports and information.--In carrying out
subsection (a), the Board of Governors shall, to the fullest extent
possible, use--
(A) reports and supervisory information that a nonbank
financial company or subsidiary thereof has been required to
provide to other Federal or State regulatory agencies;
(B) information otherwise obtainable from Federal or State
regulatory agencies;
(C) information that is otherwise required to be reported
publicly; and
(D) externally audited financial statements of such company
or subsidiary.
(3) Availability.--Upon the request of the Board of Governors,
a nonbank financial company supervised by the Board of Governors,
or a subsidiary thereof, shall promptly provide to the Board of
Governors any information described in paragraph (2).
(b) Examinations.--
(1) In general.--Subject to paragraph (2), the Board of
Governors may examine any nonbank financial company supervised by
the Board of Governors and any subsidiary of such company, to
inform the Board of Governors of--
(A) the nature of the operations and financial condition of
the company and such subsidiary;
(B) the financial, operational, and other risks of the
company or such subsidiary that may pose a threat to the safety
and soundness of such company or subsidiary or to the financial
stability of the United States;
(C) the systems for monitoring and controlling such risks;
and
(D) compliance by the company or such subsidiary with the
requirements of this title.
(2) Use of examination reports and information.--For purposes
of this subsection, the Board of Governors shall, to the fullest
extent possible, rely on reports of examination of any subsidiary
depository institution or functionally regulated subsidiary made by
the primary financial regulatory agency for that subsidiary, and on
information described in subsection (a)(2).
(c) Coordination With Primary Financial Regulatory Agency.--The
Board of Governors shall--
(1) provide reasonable notice to, and consult with, the primary
financial regulatory agency for any subsidiary before requiring a
report or commencing an examination of such subsidiary under this
section; and
(2) avoid duplication of examination activities, reporting
requirements, and requests for information, to the fullest extent
possible.
SEC. 162. ENFORCEMENT.
(a) In General.--Except as provided in subsection (b), a nonbank
financial company supervised by the Board of Governors and any
subsidiaries of such company (other than any depository institution
subsidiary) shall be subject to the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act (12
U.S.C. 1818), in the same manner and to the same extent as if the
company were a bank holding company, as provided in section 8(b)(3) of
the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(3)).
(b) Enforcement Authority for Functionally Regulated
Subsidiaries.--
(1) Referral.--If the Board of Governors determines that a
condition, practice, or activity of a depository institution
subsidiary or functionally regulated subsidiary of a nonbank
financial company supervised by the Board of Governors does not
comply with the regulations or orders prescribed by the Board of
Governors under this Act, or otherwise poses a threat to the
financial stability of the United States, the Board of Governors
may recommend, in writing, to the primary financial regulatory
agency for the subsidiary that such agency initiate a supervisory
action or enforcement proceeding. The recommendation shall be
accompanied by a written explanation of the concerns giving rise to
the recommendation.
(2) Back-up authority of the board of governors.--If, during
the 60-day period beginning on the date on which the primary
financial regulatory agency receives a recommendation under
paragraph (1), the primary financial regulatory agency does not
take supervisory or enforcement action against a subsidiary that is
acceptable to the Board of Governors, the Board of Governors (upon
a vote of its members) may take the recommended supervisory or
enforcement action, as if the subsidiary were a bank holding
company subject to supervision by the Board of Governors.
SEC. 163. ACQUISITIONS.
(a) Acquisitions of Banks; Treatment as a Bank Holding Company.--
For purposes of section 3 of the Bank Holding Company Act of 1956 (12
U.S.C. 1842), a nonbank financial company supervised by the Board of
Governors shall be deemed to be, and shall be treated as, a bank
holding company.
(b) Acquisition of Nonbank Companies.--
(1) Prior notice for large acquisitions.--Notwithstanding
section 4(k)(6)(B) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(k)(6)(B)), a bank holding company with total
consolidated assets equal to or greater than $50,000,000,000 or a
nonbank financial company supervised by the Board of Governors
shall not acquire direct or indirect ownership or control of any
voting shares of any company (other than an insured depository
institution) that is engaged in activities described in section
4(k) of the Bank Holding Company Act of 1956 having total
consolidated assets of $10,000,000,000 or more, without providing
written notice to the Board of Governors in advance of the
transaction.
(2) Exemptions.--The prior notice requirement in paragraph (1)
shall not apply with regard to the acquisition of shares that would
qualify for the exemptions in section 4(c) or section 4(k)(4)(E) of
the Bank Holding Company Act of 1956 (12 U.S.C. 1843(c) and
(k)(4)(E)).
(3) Notice procedures.--The notice procedures set forth in
section 4(j)(1) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(j)(1)), without regard to section 4(j)(3) of that Act, shall
apply to an acquisition of any company (other than an insured
depository institution) by a bank holding company with total
consolidated assets equal to or greater than $50,000,000,000 or a
nonbank financial company supervised by the Board of Governors, as
described in paragraph (1), including any such company engaged in
activities described in section 4(k) of that Act.
(4) Standards for review.--In addition to the standards
provided in section 4(j)(2) of the Bank Holding Company Act of 1956
(12 U.S.C. 1843(j)(2)), the Board of Governors shall consider the
extent to which the proposed acquisition would result in greater or
more concentrated risks to global or United States financial
stability or the United States economy.
(5) Hart-Scott-Rodino filing requirement.--Solely for purposes
of section 7A(c)(8) of the Clayton Act (15 U.S.C. 18a(c)(8)), the
transactions subject to the requirements of paragraph (1) shall be
treated as if Board of Governors approval is not required.
SEC. 164. PROHIBITION AGAINST MANAGEMENT INTERLOCKS BETWEEN CERTAIN
FINANCIAL COMPANIES.
A nonbank financial company supervised by the Board of Governors
shall be treated as a bank holding company for purposes of the
Depository Institutions Management Interlocks Act (12 U.S.C. 3201 et
seq.), except that the Board of Governors shall not exercise the
authority provided in section 7 of that Act (12 U.S.C. 3207) to permit
service by a management official of a nonbank financial company
supervised by the Board of Governors as a management official of any
bank holding company with total consolidated assets equal to or greater
than $50,000,000,000, or other nonaffiliated nonbank financial company
supervised by the Board of Governors (other than to provide a temporary
exemption for interlocks resulting from a merger, acquisition, or
consolidation).
SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK
FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF GOVERNORS AND
CERTAIN BANK HOLDING COMPANIES.
(a) In General.--
(1) Purpose.--In order to prevent or mitigate risks to the
financial stability of the United States that could arise from the
material financial distress or failure, or ongoing activities, of
large, interconnected financial institutions, the Board of
Governors shall, on its own or pursuant to recommendations by the
Council under section 115, establish prudential standards for
nonbank financial companies supervised by the Board of Governors
and bank holding companies with total consolidated assets equal to
or greater than $50,000,000,000 that--
(A) are more stringent than the standards and requirements
applicable to nonbank financial companies and bank holding
companies that do not present similar risks to the financial
stability of the United States; and
(B) increase in stringency, based on the considerations
identified in subsection (b)(3).
(2) Tailored application.--
(A) In general.--In prescribing more stringent prudential
standards under this section, the Board of Governors may, on
its own or pursuant to a recommendation by the Council in
accordance with section 115, differentiate among companies on
an individual basis or by category, taking into consideration
their capital structure, riskiness, complexity, financial
activities (including the financial activities of their
subsidiaries), size, and any other risk-related factors that
the Board of Governors deems appropriate.
(B) Adjustment of threshold for application of certain
standards.--The Board of Governors may, pursuant to a
recommendation by the Council in accordance with section 115,
establish an asset threshold above $50,000,000,000 for the
application of any standard established under subsections (c)
through (g).
(b) Development of Prudential Standards.--
(1) In general.--
(A) Required standards.--The Board of Governors shall
establish prudential standards for nonbank financial companies
supervised by the Board of Governors and bank holding companies
described in subsection (a), that shall include--
(i) risk-based capital requirements and leverage
limits, unless the Board of Governors, in consultation with
the Council, determines that such requirements are not
appropriate for a company subject to more stringent
prudential standards because of the activities of such
company (such as investment company activities or assets
under management) or structure, in which case, the Board of
Governors shall apply other standards that result in
similarly stringent risk controls;
(ii) liquidity requirements;
(iii) overall risk management requirements;
(iv) resolution plan and credit exposure report
requirements; and
(v) concentration limits.
(B) Additional standards authorized.--The Board of
Governors may establish additional prudential standards for
nonbank financial companies supervised by the Board of
Governors and bank holding companies described in subsection
(a), that include--
(i) a contingent capital requirement;
(ii) enhanced public disclosures;
(iii) short-term debt limits; and
(iv) such other prudential standards as the Board or
Governors, on its own or pursuant to a recommendation made
by the Council in accordance with section 115, determines
are appropriate.
(2) Standards for foreign financial companies.--In applying the
standards set forth in paragraph (1) to any foreign nonbank
financial company supervised by the Board of Governors or foreign-
based bank holding company, the Board of Governors shall--
(A) give due regard to the principle of national treatment
and equality of competitive opportunity; and
(B) take into account the extent to which the foreign
financial company is subject on a consolidated basis to home
country standards that are comparable to those applied to
financial companies in the United States.
(3) Considerations.--In prescribing prudential standards under
paragraph (1), the Board of Governors shall--
(A) take into account differences among nonbank financial
companies supervised by the Board of Governors and bank holding
companies described in subsection (a), based on--
(i) the factors described in subsections (a) and (b) of
section 113;
(ii) whether the company owns an insured depository
institution;
(iii) nonfinancial activities and affiliations of the
company; and
(iv) any other risk-related factors that the Board of
Governors determines appropriate;
(B) to the extent possible, ensure that small changes in
the factors listed in subsections (a) and (b) of section 113
would not result in sharp, discontinuous changes in the
prudential standards established under paragraph (1) of this
subsection;
(C) take into account any recommendations of the Council
under section 115; and
(D) adapt the required standards as appropriate in light of
any predominant line of business of such company, including
assets under management or other activities for which
particular standards may not be appropriate.
(4) Consultation.--Before imposing prudential standards or any
other requirements pursuant to this section, including notices of
deficiencies in resolution plans and more stringent requirements or
divestiture orders resulting from such notices, that are likely to
have a significant impact on a functionally regulated subsidiary or
depository institution subsidiary of a nonbank financial company
supervised by the Board of Governors or a bank holding company
described in subsection (a), the Board of Governors shall consult
with each Council member that primarily supervises any such
subsidiary with respect to any such standard or requirement.
(5) Report.--The Board of Governors shall submit an annual
report to Congress regarding the implementation of the prudential
standards required pursuant to paragraph (1), including the use of
such standards to mitigate risks to the financial stability of the
United States.
(c) Contingent Capital.--
(1) In general.--Subsequent to submission by the Council of a
report to Congress under section 115(c), the Board of Governors may
issue regulations that require each nonbank financial company
supervised by the Board of Governors and bank holding companies
described in subsection (a) to maintain a minimum amount of
contingent capital that is convertible to equity in times of
financial stress.
(2) Factors to consider.--In issuing regulations under this
subsection, the Board of Governors shall consider--
(A) the results of the study undertaken by the Council, and
any recommendations of the Council, under section 115(c);
(B) an appropriate transition period for implementation of
contingent capital under this subsection;
(C) the factors described in subsection (b)(3)(A);
(D) capital requirements applicable to the nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a), and
subsidiaries thereof; and
(E) any other factor that the Board of Governors deems
appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Board of Governors shall require each
nonbank financial company supervised by the Board of Governors and
bank holding companies described in subsection (a) to report
periodically to the Board of Governors, the Council, and the
Corporation the plan of such company for rapid and orderly
resolution in the event of material financial distress or failure,
which shall include--
(A) information regarding the manner and extent to which
any insured depository institution affiliated with the company
is adequately protected from risks arising from the activities
of any nonbank subsidiaries of the company;
(B) full descriptions of the ownership structure, assets,
liabilities, and contractual obligations of the company;
(C) identification of the cross-guarantees tied to
different securities, identification of major counterparties,
and a process for determining to whom the collateral of the
company is pledged; and
(D) any other information that the Board of Governors and
the Corporation jointly require by rule or order.
(2) Credit exposure report.--The Board of Governors shall
require each nonbank financial company supervised by the Board of
Governors and bank holding companies described in subsection (a) to
report periodically to the Board of Governors, the Council, and the
Corporation on--
(A) the nature and extent to which the company has credit
exposure to other significant nonbank financial companies and
significant bank holding companies; and
(B) the nature and extent to which other significant
nonbank financial companies and significant bank holding
companies have credit exposure to that company.
(3) Review.--The Board of Governors and the Corporation shall
review the information provided in accordance with this subsection
by each nonbank financial company supervised by the Board of
Governors and bank holding company described in subsection (a).
(4) Notice of deficiencies.--If the Board of Governors and the
Corporation jointly determine, based on their review under
paragraph (3), that the resolution plan of a nonbank financial
company supervised by the Board of Governors or a bank holding
company described in subsection (a) is not credible or would not
facilitate an orderly resolution of the company under title 11,
United States Code--
(A) the Board of Governors and the Corporation shall notify
the company of the deficiencies in the resolution plan; and
(B) the company shall resubmit the resolution plan within a
timeframe determined by the Board of Governors and the
Corporation, with revisions demonstrating that the plan is
credible and would result in an orderly resolution under title
11, United States Code, including any proposed changes in
business operations and corporate structure to facilitate
implementation of the plan.
(5) Failure to resubmit credible plan.--
(A) In general.--If a nonbank financial company supervised
by the Board of Governors or a bank holding company described
in subsection (a) fails to timely resubmit the resolution plan
as required under paragraph (4), with such revisions as are
required under subparagraph (B), the Board of Governors and the
Corporation may jointly impose more stringent capital,
leverage, or liquidity requirements, or restrictions on the
growth, activities, or operations of the company, or any
subsidiary thereof, until such time as the company resubmits a
plan that remedies the deficiencies.
(B) Divestiture.--The Board of Governors and the
Corporation, in consultation with the Council, may jointly
direct a nonbank financial company supervised by the Board of
Governors or a bank holding company described in subsection
(a), by order, to divest certain assets or operations
identified by the Board of Governors and the Corporation, to
facilitate an orderly resolution of such company under title
11, United States Code, in the event of the failure of such
company, in any case in which--
(i) the Board of Governors and the Corporation have
jointly imposed more stringent requirements on the company
pursuant to subparagraph (A); and
(ii) the company has failed, within the 2-year period
beginning on the date of the imposition of such
requirements under subparagraph (A), to resubmit the
resolution plan with such revisions as were required under
paragraph (4)(B).
(6) No limiting effect.--A resolution plan submitted in
accordance with this subsection shall not be binding on a
bankruptcy court, a receiver appointed under title II, or any other
authority that is authorized or required to resolve the nonbank
financial company supervised by the Board, any bank holding
company, or any subsidiary or affiliate of the foregoing.
(7) No private right of action.--No private right of action may
be based on any resolution plan submitted in accordance with this
subsection.
(8) Rules.--Not later than 18 months after the date of
enactment of this Act, the Board of Governors and the Corporation
shall jointly issue final rules implementing this subsection.
(e) Concentration Limits.--
(1) Standards.--In order to limit the risks that the failure of
any individual company could pose to a nonbank financial company
supervised by the Board of Governors or a bank holding company
described in subsection (a), the Board of Governors, by regulation,
shall prescribe standards that limit such risks.
(2) Limitation on credit exposure.--The regulations prescribed
by the Board of Governors under paragraph (1) shall prohibit each
nonbank financial company supervised by the Board of Governors and
bank holding company described in subsection (a) from having credit
exposure to any unaffiliated company that exceeds 25 percent of the
capital stock and surplus (or such lower amount as the Board of
Governors may determine by regulation to be necessary to mitigate
risks to the financial stability of the United States) of the
company.
(3) Credit exposure.--For purposes of paragraph (2), ``credit
exposure'' to a company means--
(A) all extensions of credit to the company, including
loans, deposits, and lines of credit;
(B) all repurchase agreements and reverse repurchase
agreements with the company, and all securities borrowing and
lending transactions with the company, to the extent that such
transactions create credit exposure for the nonbank financial
company supervised by the Board of Governors or a bank holding
company described in subsection (a);
(C) all guarantees, acceptances, or letters of credit
(including endorsement or standby letters of credit) issued on
behalf of the company;
(D) all purchases of or investment in securities issued by
the company;
(E) counterparty credit exposure to the company in
connection with a derivative transaction between the nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a) and the
company; and
(F) any other similar transactions that the Board of
Governors, by regulation, determines to be a credit exposure
for purposes of this section.
(4) Attribution rule.--For purposes of this subsection, any
transaction by a nonbank financial company supervised by the Board
of Governors or a bank holding company described in subsection (a)
with any person is a transaction with a company, to the extent that
the proceeds of the transaction are used for the benefit of, or
transferred to, that company.
(5) Rulemaking.--The Board of Governors may issue such
regulations and orders, including definitions consistent with this
section, as may be necessary to administer and carry out this
subsection.
(6) Exemptions.--This subsection shall not apply to any Federal
home loan bank. The Board of Governors may, by regulation or order,
exempt transactions, in whole or in part, from the definition of
the term ``credit exposure'' for purposes of this subsection, if
the Board of Governors finds that the exemption is in the public
interest and is consistent with the purpose of this subsection.
(7) Transition period.--
(A) In general.--This subsection and any regulations and
orders of the Board of Governors under this subsection shall
not be effective until 3 years after the date of enactment of
this Act.
(B) Extension authorized.--The Board of Governors may
extend the period specified in subparagraph (A) for not longer
than an additional 2 years.
(f) Enhanced Public Disclosures.--The Board of Governors may
prescribe, by regulation, periodic public disclosures by nonbank
financial companies supervised by the Board of Governors and bank
holding companies described in subsection (a) in order to support
market evaluation of the risk profile, capital adequacy, and risk
management capabilities thereof.
(g) Short-term Debt Limits.--
(1) In general.--In order to mitigate the risks that an over-
accumulation of short-term debt could pose to financial companies
and to the stability of the United States financial system, the
Board of Governors may, by regulation, prescribe a limit on the
amount of short-term debt, including off-balance sheet exposures,
that may be accumulated by any bank holding company described in
subsection (a) and any nonbank financial company supervised by the
Board of Governors.
(2) Basis of limit.--Any limit prescribed under paragraph (1)
shall be based on the short-term debt of the company described in
paragraph (1) as a percentage of capital stock and surplus of the
company or on such other measure as the Board of Governors
considers appropriate.
(3) Short-term debt defined.--For purposes of this subsection,
the term ``short-term debt'' means such liabilities with short-
dated maturity that the Board of Governors identifies, by
regulation, except that such term does not include insured
deposits.
(4) Rulemaking authority.--In addition to prescribing
regulations under paragraphs (1) and (3), the Board of Governors
may prescribe such regulations, including definitions consistent
with this subsection, and issue such orders, as may be necessary to
carry out this subsection.
(5) Authority to issue exemptions and adjustments.--
Notwithstanding the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.), the Board of Governors may, if it determines such
action is necessary to ensure appropriate heightened prudential
supervision, with respect to a company described in paragraph (1)
that does not control an insured depository institution, issue to
such company an exemption from or adjustment to the limit
prescribed under paragraph (1).
(h) Risk Committee.--
(1) Nonbank financial companies supervised by the board of
governors.--The Board of Governors shall require each nonbank
financial company supervised by the Board of Governors that is a
publicly traded company to establish a risk committee, as set forth
in paragraph (3), not later than 1 year after the date of receipt
of a notice of final determination under section 113(e)(3) with
respect to such nonbank financial company supervised by the Board
of Governors.
(2) Certain bank holding companies.--
(A) Mandatory regulations.--The Board of Governors shall
issue regulations requiring each bank holding company that is a
publicly traded company and that has total consolidated assets
of not less than $10,000,000,000 to establish a risk committee,
as set forth in paragraph (3).
(B) Permissive regulations.--The Board of Governors may
require each bank holding company that is a publicly traded
company and that has total consolidated assets of less than
$10,000,000,000 to establish a risk committee, as set forth in
paragraph (3), as determined necessary or appropriate by the
Board of Governors to promote sound risk management practices.
(3) Risk committee.--A risk committee required by this
subsection shall--
(A) be responsible for the oversight of the enterprise-wide
risk management practices of the nonbank financial company
supervised by the Board of Governors or bank holding company
described in subsection (a), as applicable;
(B) include such number of independent directors as the
Board of Governors may determine appropriate, based on the
nature of operations, size of assets, and other appropriate
criteria related to the nonbank financial company supervised by
the Board of Governors or a bank holding company described in
subsection (a), as applicable; and
(C) include at least 1 risk management expert having
experience in identifying, assessing, and managing risk
exposures of large, complex firms.
(4) Rulemaking.--The Board of Governors shall issue final rules
to carry out this subsection, not later than 1 year after the
transfer date, to take effect not later than 15 months after the
transfer date.
(i) Stress Tests.--
(1) By the board of governors.--
(A) Annual tests required.--The Board of Governors, in
coordination with the appropriate primary financial regulatory
agencies and the Federal Insurance Office, shall conduct annual
analyses in which nonbank financial companies supervised by the
Board of Governors and bank holding companies described in
subsection (a) are subject to evaluation of whether such
companies have the capital, on a total consolidated basis,
necessary to absorb losses as a result of adverse economic
conditions.
(B) Test parameters and consequences.--The Board of
Governors--
(i) shall provide for at least 3 different sets of
conditions under which the evaluation required by this
subsection shall be conducted, including baseline, adverse,
and severely adverse;
(ii) may require the tests described in subparagraph
(A) at bank holding companies and nonbank financial
companies, in addition to those for which annual tests are
required under subparagraph (A);
(iii) may develop and apply such other analytic
techniques as are necessary to identify, measure, and
monitor risks to the financial stability of the United
States;
(iv) shall require the companies described in
subparagraph (A) to update their resolution plans required
under subsection (d)(1), as the Board of Governors
determines appropriate, based on the results of the
analyses; and
(v) shall publish a summary of the results of the tests
required under subparagraph (A) or clause (ii) of this
subparagraph.
(2) By the company.--
(A) Requirement.--A nonbank financial company supervised by
the Board of Governors and a bank holding company described in
subsection (a) shall conduct semiannual stress tests. All other
financial companies that have total consolidated assets of more
than $10,000,000,000 and are regulated by a primary Federal
financial regulatory agency shall conduct annual stress tests.
The tests required under this subparagraph shall be conducted
in accordance with the regulations prescribed under
subparagraph (C).
(B) Report.--A company required to conduct stress tests
under subparagraph (A) shall submit a report to the Board of
Governors and to its primary financial regulatory agency at
such time, in such form, and containing such information as the
primary financial regulatory agency shall require.
(C) Regulations.--Each Federal primary financial regulatory
agency, in coordination with the Board of Governors and the
Federal Insurance Office, shall issue consistent and comparable
regulations to implement this paragraph that shall--
(i) define the term ``stress test'' for purposes of
this paragraph;
(ii) establish methodologies for the conduct of stress
tests required by this paragraph that shall provide for at
least 3 different sets of conditions, including baseline,
adverse, and severely adverse;
(iii) establish the form and content of the report
required by subparagraph (B); and
(iv) require companies subject to this paragraph to
publish a summary of the results of the required stress
tests.
(j) Leverage Limitation.--
(1) Requirement.--The Board of Governors shall require a bank
holding company with total consolidated assets equal to or greater
than $50,000,000,000 or a nonbank financial company supervised by
the Board of Governors to maintain a debt to equity ratio of no
more than 15 to 1, upon a determination by the Council that such
company poses a grave threat to the financial stability of the
United States and that the imposition of such requirement is
necessary to mitigate the risk that such company poses to the
financial stability of the United States. Nothing in this paragraph
shall apply to a Federal home loan bank.
(2) Considerations.--In making a determination under this
subsection, the Council shall consider the factors described in
subsections (a) and (b) of section 113 and any other risk-related
factors that the Council deems appropriate.
(3) Regulations.--The Board of Governors shall promulgate
regulations to establish procedures and timelines for complying
with the requirements of this subsection.
(k) Inclusion of Off-balance-sheet Activities in Computing Capital
Requirements.--
(1) In general.--In the case of any bank holding company
described in subsection (a) or nonbank financial company supervised
by the Board of Governors, the computation of capital for purposes
of meeting capital requirements shall take into account any off-
balance-sheet activities of the company.
(2) Exemptions.--If the Board of Governors determines that an
exemption from the requirement under paragraph (1) is appropriate,
the Board of Governors may exempt a company, or any transaction or
transactions engaged in by such company, from the requirements of
paragraph (1).
(3) Off-balance-sheet activities defined.--For purposes of this
subsection, the term ``off-balance-sheet activities'' means an
existing liability of a company that is not currently a balance
sheet liability, but may become one upon the happening of some
future event, including the following transactions, to the extent
that they may create a liability:
(A) Direct credit substitutes in which a bank substitutes
its own credit for a third party, including standby letters of
credit.
(B) Irrevocable letters of credit that guarantee repayment
of commercial paper or tax-exempt securities.
(C) Risk participations in bankers' acceptances.
(D) Sale and repurchase agreements.
(E) Asset sales with recourse against the seller.
(F) Interest rate swaps.
(G) Credit swaps.
(H) Commodities contracts.
(I) Forward contracts.
(J) Securities contracts.
(K) Such other activities or transactions as the Board of
Governors may, by rule, define.
SEC. 166. EARLY REMEDIATION REQUIREMENTS.
(a) In General.--The Board of Governors, in consultation with the
Council and the Corporation, shall prescribe regulations establishing
requirements to provide for the early remediation of financial distress
of a nonbank financial company supervised by the Board of Governors or
a bank holding company described in section 165(a), except that nothing
in this subsection authorizes the provision of financial assistance
from the Federal Government.
(b) Purpose of the Early Remediation Requirements.--The purpose of
the early remediation requirements under subsection (a) shall be to
establish a series of specific remedial actions to be taken by a
nonbank financial company supervised by the Board of Governors or a
bank holding company described in section 165(a) that is experiencing
increasing financial distress, in order to minimize the probability
that the company will become insolvent and the potential harm of such
insolvency to the financial stability of the United States.
(c) Remediation Requirements.--The regulations prescribed by the
Board of Governors under subsection (a) shall--
(1) define measures of the financial condition of the company,
including regulatory capital, liquidity measures, and other
forward-looking indicators; and
(2) establish requirements that increase in stringency as the
financial condition of the company declines, including--
(A) requirements in the initial stages of financial
decline, including limits on capital distributions,
acquisitions, and asset growth; and
(B) requirements at later stages of financial decline,
including a capital restoration plan and capital-raising
requirements, limits on transactions with affiliates,
management changes, and asset sales.
SEC. 167. AFFILIATIONS.
(a) Affiliations.--Nothing in this subtitle shall be construed to
require a nonbank financial company supervised by the Board of
Governors, or a company that controls a nonbank financial company
supervised by the Board of Governors, to conform the activities thereof
to the requirements of section 4 of the Bank Holding Company Act of
1956 (12 U.S.C. 1843).
(b) Requirement.--
(1) In general.--
(A) Board authority.--If a nonbank financial company
supervised by the Board of Governors conducts activities other
than those that are determined to be financial in nature or
incidental thereto under section 4(k) of the Bank Holding
Company Act of 1956, the Board of Governors may require such
company to establish and conduct all or a portion of such
activities that are determined to be financial in nature or
incidental thereto in or through an intermediate holding
company established pursuant to regulation of the Board of
Governors, not later than 90 days (or such longer period as the
Board of Governors may deem appropriate) after the date on
which the nonbank financial company supervised by the Board of
Governors is notified of the determination of the Board of
Governors under this section.
(B) Necessary actions.--Notwithstanding subparagraph (A),
the Board of Governors shall require a nonbank financial
company supervised by the Board of Governors to establish an
intermediate holding company if the Board of Governors makes a
determination that the establishment of such intermediate
holding company is necessary to--
(i) appropriately supervise activities that are
determined to be financial in nature or incidental thereto;
or
(ii) to ensure that supervision by the Board of
Governors does not extend to the commercial activities of
such nonbank financial company.
(2) Internal financial activities.--For purposes of this
subsection, activities that are determined to be financial in
nature or incidental thereto under section 4(k) of the Bank Holding
Company Act of 1956, as described in paragraph (1), shall not
include internal financial activities, including internal treasury,
investment, and employee benefit functions. With respect to any
internal financial activity engaged in for the company or an
affiliate and a non-affiliate of such company during the year prior
to the date of enactment of this Act, such company (or an affiliate
that is not an intermediate holding company or subsidiary of an
intermediate holding company) may continue to engage in such
activity, as long as not less than 2/3 of the assets or 2/3 of the
revenues generated from the activity are from or attributable to
such company or an affiliate, subject to review by the Board of
Governors, to determine whether engaging in such activity presents
undue risk to such company or to the financial stability of the
United States.
(3) Source of strength.--A company that directly or indirectly
controls an intermediate holding company established under this
section shall serve as a source of strength to its subsidiary
intermediate holding company.
(4) Parent company reports.--The Board of Governors may, from
time to time, require reports under oath from a company that
controls an intermediate holding company, and from the appropriate
officers or directors of such company, solely for purposes of
ensuring compliance with the provisions of this section, including
assessing the ability of the company to serve as a source of
strength to its subsidiary intermediate holding company pursuant to
paragraph (3) and enforcing such compliance.
(5) Limited parent company enforcement.--
(A) In general.--In addition to any other authority of the
Board of Governors, the Board of Governors may enforce
compliance with the provisions of this subsection that are
applicable to any company described in paragraph (1) that
controls an intermediate holding company under section 8 of the
Federal Deposit Insurance Act, and such company shall be
subject to such section (solely for such purposes) in the same
manner and to the same extent as if such company were a bank
holding company.
(B) Application of other act.--Any violation of this
subsection by any company that controls an intermediate holding
company may also be treated as a violation of the Federal
Deposit Insurance Act for purposes of subparagraph (A).
(C) No effect on other authority.--No provision of this
paragraph shall be construed as limiting any authority of the
Board of Governors or any other Federal agency under any other
provision of law.
(c) Regulations.--The Board of Governors--
(1) shall promulgate regulations to establish the criteria for
determining whether to require a nonbank financial company
supervised by the Board of Governors to establish an intermediate
holding company under subsection (b); and
(2) may promulgate regulations to establish any restrictions or
limitations on transactions between an intermediate holding company
or a nonbank financial company supervised by the Board of Governors
and its affiliates, as necessary to prevent unsafe and unsound
practices in connection with transactions between such company, or
any subsidiary thereof, and its parent company or affiliates that
are not subsidiaries of such company, except that such regulations
shall not restrict or limit any transaction in connection with the
bona fide acquisition or lease by an unaffiliated person of assets,
goods, or services.
SEC. 168. REGULATIONS.
The Board of Governors shall have authority to issue regulations to
implement subtitles A and C and the amendments made thereunder. Except
as otherwise specified in subtitle A or C, not later than 18 months
after the effective date of this Act, the Board of Governors shall
issue final regulations to implement subtitles A and C, and the
amendments made thereunder.
SEC. 169. AVOIDING DUPLICATION.
The Board of Governors shall take any action that the Board of
Governors deems appropriate to avoid imposing requirements under this
subtitle that are duplicative of requirements applicable to bank
holding companies and nonbank financial companies under other
provisions of law.
SEC. 170. SAFE HARBOR.
(a) Regulations.--The Board of Governors shall promulgate
regulations on behalf of, and in consultation with, the Council setting
forth the criteria for exempting certain types or classes of U.S.
nonbank financial companies or foreign nonbank financial companies from
supervision by the Board of Governors.
(b) Considerations.--In developing the criteria under subsection
(a), the Board of Governors shall take into account the factors for
consideration described in subsections (a) and (b) of section 113 in
determining whether a U.S. nonbank financial company or foreign nonbank
financial company shall be supervised by the Board of Governors.
(c) Rule of Construction.--Nothing in this section shall be
construed to require supervision by the Board of Governors of a U.S.
nonbank financial company or foreign nonbank financial company, if such
company does not meet the criteria for exemption established under
subsection (a).
(d) Revisions.--
(1) In general.--The Board of Governors shall, in consultation
with the Council, review the regulations promulgated under
subsection (a), not less frequently than every 5 years, and based
upon the review, the Board of Governors may revise such regulations
on behalf of, and in consultation with, the Council to update as
necessary the criteria set forth in such regulations.
(2) Transition period.--No revisions under paragraph (1) shall
take effect before the end of the 2-year period after the date of
publication of such revisions in final form.
(e) Report.--The Chairman of the Board of Governors and the
Chairperson of the Council shall submit a joint report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives not later than 30
days after the date of the issuance in final form of regulations under
subsection (a), or any subsequent revision to such regulations under
subsection (d), as applicable. Such report shall include, at a minimum,
the rationale for exemption and empirical evidence to support the
criteria for exemption.
SEC. 171. LEVERAGE AND RISK-BASED CAPITAL REQUIREMENTS.
(a) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Generally applicable leverage capital requirements.--The
term ``generally applicable leverage capital requirements'' means--
(A) the minimum ratios of tier 1 capital to average total
assets, as established by the appropriate Federal banking
agencies to apply to insured depository institutions under the
prompt corrective action regulations implementing section 38 of
the Federal Deposit Insurance Act, regardless of total
consolidated asset size or foreign financial exposure; and
(B) includes the regulatory capital components in the
numerator of that capital requirement, average total assets in
the denominator of that capital requirement, and the required
ratio of the numerator to the denominator.
(2) Generally applicable risk-based capital requirements.--The
term ``generally applicable risk-based capital requirements''
means--
(A) the risk-based capital requirements, as established by
the appropriate Federal banking agencies to apply to insured
depository institutions under the prompt corrective action
regulations implementing section 38 of the Federal Deposit
Insurance Act, regardless of total consolidated asset size or
foreign financial exposure; and
(B) includes the regulatory capital components in the
numerator of those capital requirements, the risk-weighted
assets in the denominator of those capital requirements, and
the required ratio of the numerator to the denominator.
(3) Definition of depository institution holding company.--The
term ``depository institution holding company'' means a bank
holding company or a savings and loan holding company (as those
terms are defined in section 3 of the Federal Deposit Insurance
Act) that is organized in the United States, including any bank or
savings and loan holding company that is owned or controlled by a
foreign organization, but does not include the foreign
organization.
(b) Minimum Capital Requirements.--
(1) Minimum leverage capital requirements.--The appropriate
Federal banking agencies shall establish minimum leverage capital
requirements on a consolidated basis for insured depository
institutions, depository institution holding companies, and nonbank
financial companies supervised by the Board of Governors. The
minimum leverage capital requirements established under this
paragraph shall not be less than the generally applicable leverage
capital requirements, which shall serve as a floor for any capital
requirements that the agency may require, nor quantitatively lower
than the generally applicable leverage capital requirements that
were in effect for insured depository institutions as of the date
of enactment of this Act.
(2) Minimum risk-based capital requirements.--The appropriate
Federal banking agencies shall establish minimum risk-based capital
requirements on a consolidated basis for insured depository
institutions, depository institution holding companies, and nonbank
financial companies supervised by the Board of Governors. The
minimum risk-based capital requirements established under this
paragraph shall not be less than the generally applicable risk-
based capital requirements, which shall serve as a floor for any
capital requirements that the agency may require, nor
quantitatively lower than the generally applicable risk-based
capital requirements that were in effect for insured depository
institutions as of the date of enactment of this Act.
(3) Investments in financial subsidiaries.--For purposes of
this section, investments in financial subsidiaries that insured
depository institutions are required to deduct from regulatory
capital under section 5136A of the Revised Statutes of the United
States or section 46(a)(2) of the Federal Deposit Insurance Act
need not be deducted from regulatory capital by depository
institution holding companies or nonbank financial companies
supervised by the Board of Governors, unless such capital deduction
is required by the Board of Governors or the primary financial
regulatory agency in the case of nonbank financial companies
supervised by the Board of Governors.
(4) Effective dates and phase-in periods.--
(A) Debt or equity instruments on or after may 19, 2010.--
For debt or equity instruments issued on or after May 19, 2010,
by depository institution holding companies or by nonbank
financial companies supervised by the Board of Governors, this
section shall be deemed to have become effective as of May 19,
2010.
(B) Debt or equity instruments issued before may 19,
2010.--For debt or equity instruments issued before May 19,
2010, by depository institution holding companies or by nonbank
financial companies supervised by the Board of Governors, any
regulatory capital deductions required under this section shall
be phased in incrementally over a period of 3 years, with the
phase-in period to begin on January 1, 2013, except as set
forth in subparagraph (C).
(C) Debt or equity instruments of smaller institutions.--
For debt or equity instruments issued before May 19, 2010, by
depository institution holding companies with total
consolidated assets of less than $15,000,000,000 as of December
31, 2009, and by organizations that were mutual holding
companies on May 19, 2010, the capital deductions that would be
required for other institutions under this section are not
required as a result of this section.
(D) Depository institution holding companies not previously
supervised by the board of governors.--For any depository
institution holding company that was not supervised by the
Board of Governors as of May 19, 2010, the requirements of this
section, except as set forth in subparagraphs (A) and (B),
shall be effective 5 years after the date of enactment of this
Act
(E) Certain bank holding company subsidiaries of foreign
banking organizations.--For bank holding company subsidiaries
of foreign banking organizations that have relied on
Supervision and Regulation Letter SR-01-1 issued by the Board
of Governors (as in effect on May 19, 2010), the requirements
of this section, except as set forth in subparagraph (A), shall
be effective 5 years after the date of enactment of this Act.
(5) Exceptions.--This section shall not apply to--
(A) debt or equity instruments issued to the United States
or any agency or instrumentality thereof pursuant to the
Emergency Economic Stabilization Act of 2008, and prior to
October 4, 2010;
(B) any Federal home loan bank; or
(C) any small bank holding company that is subject to the
Small Bank Holding Company Policy Statement of the Board of
Governors, as in effect on May 19, 2010.
(6) Study and report on small institution access to capital.--
(A) Study required.--The Comptroller General of the United
States, after consultation with the Federal banking agencies,
shall conduct a study of access to capital by smaller insured
depository institutions.
(B) Scope.--For purposes of this study required by
subparagraph (A), the term ``smaller insured depository
institution'' means an insured depository institution with
total consolidated assets of $5,000,000,000 or less.
(C) Report to congress.--Not later than 18 months after the
date of enactment of this Act, the Comptroller General of the
United States shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report
summarizing the results of the study conducted under
subparagraph (A), together with any recommendations for
legislative or regulatory action that would enhance the access
to capital of smaller insured depository institutions, in a
manner that is consistent with safe and sound banking
operations.
(7) Capital requirements to address activities that pose risks
to the financial system.--
(A) In general.--Subject to the recommendations of the
Council, in accordance with section 120, the Federal banking
agencies shall develop capital requirements applicable to
insured depository institutions, depository institution holding
companies, and nonbank financial companies supervised by the
Board of Governors that address the risks that the activities
of such institutions pose, not only to the institution engaging
in the activity, but to other public and private stakeholders
in the event of adverse performance, disruption, or failure of
the institution or the activity.
(B) Content.--Such rules shall address, at a minimum, the
risks arising from--
(i) significant volumes of activity in derivatives,
securitized products purchased and sold, financial
guarantees purchased and sold, securities borrowing and
lending, and repurchase agreements and reverse repurchase
agreements;
(ii) concentrations in assets for which the values
presented in financial reports are based on models rather
than historical cost or prices deriving from deep and
liquid 2-way markets; and
(iii) concentrations in market share for any activity
that would substantially disrupt financial markets if the
institution is forced to unexpectedly cease the activity.
SEC. 172. EXAMINATION AND ENFORCEMENT ACTIONS FOR INSURANCE AND
ORDERLY LIQUIDATION PURPOSES.
(a) Examinations for Insurance and Resolution Purposes.--Section
10(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1820(b)(3)) is
amended--
(1) by striking ``In addition'' and inserting the following:
``(A) In general.--In addition''; and
(2) by striking ``whenever the board of directors determines''
and all that follows through the period and inserting the
following: ``or nonbank financial company supervised by the Board
of Governors or a bank holding company described in section 165(a)
of the Financial Stability Act of 2010, whenever the Board of
Directors determines that a special examination of any such
depository institution is necessary to determine the condition of
such depository institution for insurance purposes, or of such
nonbank financial company supervised by the Board of Governors or
bank holding company described in section 165(a) of the Financial
Stability Act of 2010, for the purpose of implementing its
authority to provide for orderly liquidation of any such company
under title II of that Act, provided that such authority may not be
used with respect to any such company that is in a generally sound
condition.
``(B) Limitation.--Before conducting a special examination
of a nonbank financial company supervised by the Board of
Governors or a bank holding company described in section 165(a)
of the Financial Stability Act of 2010, the Corporation shall
review any available and acceptable resolution plan that the
company has submitted in accordance with section 165(d) of that
Act, consistent with the nonbinding effect of such plan, and
available reports of examination, and shall coordinate to the
maximum extent practicable with the Board of Governors, in
order to minimize duplicative or conflicting examinations.''.
(b) Enforcement Authority.--Section 8(t) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(t)) is amended--
(1) in paragraph (1), by inserting ``, any depository
institution holding company,'' before ``or any institution-
affiliated party'';
(2) in paragraph (2)--
(A) by striking ``or'' at the end of subparagraph (B);
(B) at the end of subparagraph (C), by striking the period
and inserting ``or''; and
(C) by inserting at the end the following new subparagraph:
``(D) the conduct or threatened conduct (including any acts
or omissions) of the depository institution holding company
poses a risk to the Deposit Insurance Fund, provided that such
authority may not be used with respect to a depository
institution holding company that is in generally sound
condition and whose conduct does not pose a foreseeable and
material risk of loss to the Deposit Insurance Fund;''; and
(3) by adding at the end the following:
``(6) Powers and duties with respect to depository institution
holding companies.--For purposes of exercising the backup authority
provided in this subsection--
``(A) the Corporation shall have the same powers with
respect to a depository institution holding company and its
affiliates as the appropriate Federal banking agency has with
respect to the holding company and its affiliates; and
``(B) the holding company and its affiliates shall have the
same duties and obligations with respect to the Corporation as
the holding company and its affiliates have with respect to the
appropriate Federal banking agency.''.
(c) Rule of Construction.--Nothing in this Act shall be construed
to limit or curtail the Corporation's current authority to examine or
bring enforcement actions with respect to any insured depository
institution or institution-affiliated party.
SEC. 173. ACCESS TO UNITED STATES FINANCIAL MARKET BY FOREIGN
INSTITUTIONS.
(a) Establishment of Foreign Bank Offices in the United States.--
Section 7(d)(3) of the International Banking Act of 1978 (12 U.S.C.
3105(d)(3)) is amended--
(1) in subparagraph (C), by striking ``and'' at the end;
(2) in subparagraph (D), by striking the period at the end of
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(E) for a foreign bank that presents a risk to the
stability of United States financial system, whether the home
country of the foreign bank has adopted, or is making
demonstrable progress toward adopting, an appropriate system of
financial regulation for the financial system of such home
country to mitigate such risk.''.
(b) Termination of Foreign Bank Offices in the United States.--
Section 7(e)(1) of the International Banking Act of 1978 (12 U.S.C.
3105(e)(1)) is amended--
(1) in subparagraph (A), by striking ``or'' at the end;
(2) in subparagraph (B), by striking the period at the end of
and inserting ``; or''; and
(3) by inserting after subparagraph (B), the following new
subparagraph:
``(C) for a foreign bank that presents a risk to the
stability of the United States financial system, the home
country of the foreign bank has not adopted, or made
demonstrable progress toward adopting, an appropriate system of
financial regulation to mitigate such risk.''.
(c) Registration or Succession to a United States Broker or Dealer
and Termination of Such Registration.--Section 15 of the Securities
Exchange Act of 1934 (15 U.S.C. 78o) is amended by adding at the end
the following new subsections:
``(k) Registration or Succession to a United States Broker or
Dealer.--In determining whether to permit a foreign person or an
affiliate of a foreign person to register as a United States broker or
dealer, or succeed to the registration of a United States broker or
dealer, the Commission may consider whether, for a foreign person, or
an affiliate of a foreign person that presents a risk to the stability
of the United States financial system, the home country of the foreign
person has adopted, or made demonstrable progress toward adopting, an
appropriate system of financial regulation to mitigate such risk.
``(l) Termination of a United States Broker or Dealer.--For a
foreign person or an affiliate of a foreign person that presents such a
risk to the stability of the United States financial system, the
Commission may determine to terminate the registration of such foreign
person or an affiliate of such foreign person as a broker or dealer in
the United States, if the Commission determines that the home country
of the foreign person has not adopted, or made demonstrable progress
toward adopting, an appropriate system of financial regulation to
mitigate such risk.''.
SEC. 174. STUDIES AND REPORTS ON HOLDING COMPANY CAPITAL
REQUIREMENTS.
(a) Study of Hybrid Capital Instruments.--The Comptroller General
of the United States, in consultation with the Board of Governors, the
Comptroller of the Currency, and the Corporation, shall conduct a study
of the use of hybrid capital instruments as a component of Tier 1
capital for banking institutions and bank holding companies. The study
shall consider--
(1) the current use of hybrid capital instruments, such as
trust preferred shares, as a component of Tier 1 capital;
(2) the differences between the components of capital permitted
for insured depository institutions and those permitted for
companies that control insured depository institutions;
(3) the benefits and risks of allowing such instruments to be
used to comply with Tier 1 capital requirements;
(4) the economic impact of prohibiting the use of such capital
instruments for Tier 1;
(5) a review of the consequences of disqualifying trust
preferred instruments, and whether it could lead to the failure or
undercapitalization of existing banking organizations;
(6) the international competitive implications prohibiting
hybrid capital instruments for Tier 1;
(7) the impact on the cost and availability of credit in the
United States from such a prohibition;
(8) the availability of capital for financial institutions with
less than $10,000,000,000 in total assets; and
(9) any other relevant factors relating to the safety and
soundness of our financial system and potential economic impact of
such a prohibition.
(b) Study of Foreign Bank Intermediate Holding Company Capital
Requirements.--The Comptroller General of the United States, in
consultation with the Secretary, the Board of Governors, the
Comptroller of the Currency, and the Corporation, shall conduct a study
of capital requirements applicable to United States intermediate
holding companies of foreign banks that are bank holding companies or
savings and loan holding companies. The study shall consider--
(1) current Board of Governors policy regarding the treatment
of intermediate holding companies;
(2) the principle of national treatment and equality of
competitive opportunity for foreign banks operating in the United
States;
(3) the extent to which foreign banks are subject on a
consolidated basis to home country capital standards comparable to
United States capital standards;
(4) potential effects on United States banking organizations
operating abroad of changes to United States policy regarding
intermediate holding companies;
(5) the impact on the cost and availability of credit in the
United States from a change in United States policy regarding
intermediate holding companies; and
(6) any other relevant factors relating to the safety and
soundness of our financial system and potential economic impact of
such a prohibition.
(c) Report.--Not later than 18 months after the date of enactment
of this Act, the Comptroller General of the United States shall submit
reports to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives summarizing the results of the studies required under
subsection (a). The reports shall include specific recommendations for
legislative or regulatory action regarding the treatment of hybrid
capital instruments, including trust preferred shares, and shall
explain the basis for such recommendations.
SEC. 175. INTERNATIONAL POLICY COORDINATION.
(a) By the President.--The President, or a designee of the
President, may coordinate through all available international policy
channels, similar policies as those found in United States law relating
to limiting the scope, nature, size, scale, concentration, and
interconnectedness of financial companies, in order to protect
financial stability and the global economy.
(b) By the Council.--The Chairperson of the Council, in
consultation with the other members of the Council, shall regularly
consult with the financial regulatory entities and other appropriate
organizations of foreign governments or international organizations on
matters relating to systemic risk to the international financial
system.
(c) By the Board of Governors and the Secretary.--The Board of
Governors and the Secretary shall consult with their foreign
counterparts and through appropriate multilateral organizations to
encourage comprehensive and robust prudential supervision and
regulation for all highly leveraged and interconnected financial
companies.
SEC. 176. RULE OF CONSTRUCTION.
No regulation or standard imposed under this title may be construed
in a manner that would lessen the stringency of the requirements of any
applicable primary financial regulatory agency or any other Federal or
State agency that are otherwise applicable. This title, and the rules
and regulations or orders prescribed pursuant to this title, do not
divest any such agency of any authority derived from any other
applicable law.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
SEC. 201. DEFINITIONS.
(a) In General.--In this title, the following definitions shall
apply:
(1) Administrative expenses of the receiver.--The term
``administrative expenses of the receiver'' includes--
(A) the actual, necessary costs and expenses incurred by
the Corporation as receiver for a covered financial company in
liquidating a covered financial company; and
(B) any obligations that the Corporation as receiver for a
covered financial company determines are necessary and
appropriate to facilitate the smooth and orderly liquidation of
the covered financial company.
(2) Bankruptcy code.--The term ``Bankruptcy Code'' means title
11, United States Code.
(3) Bridge financial company.--The term ``bridge financial
company'' means a new financial company organized by the
Corporation in accordance with section 210(h) for the purpose of
resolving a covered financial company.
(4) Claim.--The term ``claim'' means any right to payment,
whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured.
(5) Company.--The term ``company'' has the same meaning as in
section 2(b) of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(b)), except that such term includes any company described in
paragraph (11), the majority of the securities of which are owned
by the United States or any State.
(6) Court.--The term ``Court'' means the United States District
Court for the District of Columbia, unless the context otherwise
requires.
(7) Covered broker or dealer.--The term ``covered broker or
dealer'' means a covered financial company that is a broker or
dealer that--
(A) is registered with the Commission under section 15(b)
of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)); and
(B) is a member of SIPC.
(8) Covered financial company.--The term ``covered financial
company''--
(A) means a financial company for which a determination has
been made under section 203(b); and
(B) does not include an insured depository institution.
(9) Covered subsidiary.--The term ``covered subsidiary'' means
a subsidiary of a covered financial company, other than--
(A) an insured depository institution;
(B) an insurance company; or
(C) a covered broker or dealer.
(10) Definitions relating to covered brokers and dealers.--The
terms ``customer'', ``customer name securities'', ``customer
property'', and ``net equity'' in the context of a covered broker
or dealer, have the same meanings as in section 16 of the
Securities Investor Protection Act of 1970 (15 U.S.C. 78lll).
(11) Financial company.--The term ``financial company'' means
any company that--
(A) is incorporated or organized under any provision of
Federal law or the laws of any State;
(B) is--
(i) a bank holding company, as defined in section 2(a)
of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(a));
(ii) a nonbank financial company supervised by the
Board of Governors;
(iii) any company that is predominantly engaged in
activities that the Board of Governors has determined are
financial in nature or incidental thereto for purposes of
section 4(k) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(k)) other than a company described in clause
(i) or (ii); or
(iv) any subsidiary of any company described in any of
clauses (i) through (iii) that is predominantly engaged in
activities that the Board of Governors has determined are
financial in nature or incidental thereto for purposes of
section 4(k) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(k)) (other than a subsidiary that is an insured
depository institution or an insurance company); and
(C) is not a Farm Credit System institution chartered under
and subject to the provisions of the Farm Credit Act of 1971,
as amended (12 U.S.C. 2001 et seq.), a governmental entity, or
a regulated entity, as defined under section 1303(20) of the
Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4502(20)).
(12) Fund.--The term ``Fund'' means the Orderly Liquidation
Fund established under section 210(n).
(13) Insurance company.--The term ``insurance company'' means
any entity that is--
(A) engaged in the business of insurance;
(B) subject to regulation by a State insurance regulator;
and
(C) covered by a State law that is designed to specifically
deal with the rehabilitation, liquidation, or insolvency of an
insurance company.
(14) Nonbank financial company.--The term ``nonbank financial
company'' has the same meaning as in section 102(a)(4)(C).
(15) Nonbank financial company supervised by the board of
governors.--The term ``nonbank financial company supervised by the
Board of Governors'' has the same meaning as in section
102(a)(4)(D).
(16) SIPC.--The term ``SIPC'' means the Securities Investor
Protection Corporation.
(b) Definitional Criteria.--For purpose of the definition of the
term ``financial company'' under subsection (a)(11), no company shall
be deemed to be predominantly engaged in activities that the Board of
Governors has determined are financial in nature or incidental thereto
for purposes of section 4(k) of the Bank Holding Company Act of 1956
(12 U.S.C. 1843(k)), if the consolidated revenues of such company from
such activities constitute less than 85 percent of the total
consolidated revenues of such company, as the Corporation, in
consultation with the Secretary, shall establish by regulation. In
determining whether a company is a financial company under this title,
the consolidated revenues derived from the ownership or control of a
depository institution shall be included.
SEC. 202. JUDICIAL REVIEW.
(a) Commencement of Orderly Liquidation.--
(1) Petition to district court.--
(A) District court review.--
(i) Petition to district court.--Subsequent to a
determination by the Secretary under section 203 that a
financial company satisfies the criteria in section 203(b),
the Secretary shall notify the Corporation and the covered
financial company. If the board of directors (or body
performing similar functions) of the covered financial
company acquiesces or consents to the appointment of the
Corporation as receiver, the Secretary shall appoint the
Corporation as receiver. If the board of directors (or body
performing similar functions) of the covered financial
company does not acquiesce or consent to the appointment of
the Corporation as receiver, the Secretary shall petition
the United States District Court for the District of
Columbia for an order authorizing the Secretary to appoint
the Corporation as receiver.
(ii) Form and content of order.--The Secretary shall
present all relevant findings and the recommendation made
pursuant to section 203(a) to the Court. The petition shall
be filed under seal.
(iii) Determination.--On a strictly confidential basis,
and without any prior public disclosure, the Court, after
notice to the covered financial company and a hearing in
which the covered financial company may oppose the
petition, shall determine whether the determination of the
Secretary that the covered financial company is in default
or in danger of default and satisfies the definition of a
financial company under section 201(a)(11) is arbitrary and
capricious.
(iv) Issuance of order.--If the Court determines that
the determination of the Secretary that the covered
financial company is in default or in danger of default and
satisfies the definition of a financial company under
section 201(a)(11)--
(I) is not arbitrary and capricious, the Court
shall issue an order immediately authorizing the
Secretary to appoint the Corporation as receiver of the
covered financial company; or
(II) is arbitrary and capricious, the Court shall
immediately provide to the Secretary a written
statement of each reason supporting its determination,
and afford the Secretary an immediate opportunity to
amend and refile the petition under clause (i).
(v) Petition granted by operation of law.--If the Court
does not make a determination within 24 hours of receipt of
the petition--
(I) the petition shall be granted by operation of
law;
(II) the Secretary shall appoint the Corporation as
receiver; and
(III) liquidation under this title shall
automatically and without further notice or action be
commenced and the Corporation may immediately take all
actions authorized under this title.
(B) Effect of determination.--The determination of the
Court under subparagraph (A) shall be final, and shall be
subject to appeal only in accordance with paragraph (2). The
decision shall not be subject to any stay or injunction pending
appeal. Upon conclusion of its proceedings under subparagraph
(A), the Court shall provide immediately for the record a
written statement of each reason supporting the decision of the
Court, and shall provide copies thereof to the Secretary and
the covered financial company.
(C) Criminal penalties.--A person who recklessly discloses
a determination of the Secretary under section 203(b) or a
petition of the Secretary under subparagraph (A), or the
pendency of court proceedings as provided for under
subparagraph (A), shall be fined not more than $250,000, or
imprisoned for not more than 5 years, or both.
(2) Appeal of decisions of the district court.--
(A) Appeal to court of appeals.--
(i) In general.--Subject to clause (ii), the United
States Court of Appeals for the District of Columbia
Circuit shall have jurisdiction of an appeal of a final
decision of the Court filed by the Secretary or a covered
financial company, through its board of directors,
notwithstanding section 210(a)(1)(A)(i), not later than 30
days after the date on which the decision of the Court is
rendered or deemed rendered under this subsection.
(ii) Condition of jurisdiction.--The Court of Appeals
shall have jurisdiction of an appeal by a covered financial
company only if the covered financial company did not
acquiesce or consent to the appointment of a receiver by
the Secretary under paragraph (1)(A).
(iii) Expedition.--The Court of Appeals shall consider
any appeal under this subparagraph on an expedited basis.
(iv) Scope of review.--For an appeal taken under this
subparagraph, review shall be limited to whether the
determination of the Secretary that a covered financial
company is in default or in danger of default and satisfies
the definition of a financial company under section
201(a)(11) is arbitrary and capricious.
(B) Appeal to the supreme court.--
(i) In general.--A petition for a writ of certiorari to
review a decision of the Court of Appeals under
subparagraph (A) may be filed by the Secretary or the
covered financial company, through its board of directors,
notwithstanding section 210(a)(1)(A)(i), with the Supreme
Court of the United States, not later than 30 days after
the date of the final decision of the Court of Appeals, and
the Supreme Court shall have discretionary jurisdiction to
review such decision.
(ii) Written statement.--In the event of a petition
under clause (i), the Court of Appeals shall immediately
provide for the record a written statement of each reason
for its decision.
(iii) Expedition.--The Supreme Court shall consider any
petition under this subparagraph on an expedited basis.
(iv) Scope of review.--Review by the Supreme Court
under this subparagraph shall be limited to whether the
determination of the Secretary that the covered financial
company is in default or in danger of default and satisfies
the definition of a financial company under section
201(a)(11) is arbitrary and capricious.
(b) Establishment and Transmittal of Rules and Procedures.--
(1) In general.--Not later than 6 months after the date of
enactment of this Act, the Court shall establish such rules and
procedures as may be necessary to ensure the orderly conduct of
proceedings, including rules and procedures to ensure that the 24-
hour deadline is met and that the Secretary shall have an ongoing
opportunity to amend and refile petitions under subsection (a)(1).
(2) Publication of rules.--The rules and procedures established
under paragraph (1), and any modifications of such rules and
procedures, shall be recorded and shall be transmitted to--
(A) the Committee on the Judiciary of the Senate;
(B) the Committee on Banking, Housing, and Urban Affairs of
the Senate;
(C) the Committee on the Judiciary of the House of
Representatives; and
(D) the Committee on Financial Services of the House of
Representatives.
(c) Provisions Applicable to Financial Companies.--
(1) Bankruptcy code.--Except as provided in this subsection,
the provisions of the Bankruptcy Code and rules issued thereunder
or otherwise applicable insolvency law, and not the provisions of
this title, shall apply to financial companies that are not covered
financial companies for which the Corporation has been appointed as
receiver.
(2) This title.--The provisions of this title shall exclusively
apply to and govern all matters relating to covered financial
companies for which the Corporation is appointed as receiver, and
no provisions of the Bankruptcy Code or the rules issued thereunder
shall apply in such cases, except as expressly provided in this
title.
(d) Time Limit on Receivership Authority.--
(1) Baseline period.--Any appointment of the Corporation as
receiver under this section shall terminate at the end of the 3-
year period beginning on the date on which such appointment is
made.
(2) Extension of time limit.--The time limit established in
paragraph (1) may be extended by the Corporation for up to 1
additional year, if the Chairperson of the Corporation determines
and certifies in writing to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives that continuation of the
receivership is necessary--
(A) to--
(i) maximize the net present value return from the sale
or other disposition of the assets of the covered financial
company; or
(ii) minimize the amount of loss realized upon the sale
or other disposition of the assets of the covered financial
company; and
(B) to protect the stability of the financial system of the
United States.
(3) Second extension of time limit.--
(A) In general.--The time limit under this subsection, as
extended under paragraph (2), may be extended for up to 1
additional year, if the Chairperson of the Corporation, with
the concurrence of the Secretary, submits the certifications
described in paragraph (2).
(B) Additional report required.--Not later than 30 days
after the date of commencement of the extension under
subparagraph (A), the Corporation shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives describing the need for the extension and the
specific plan of the Corporation to conclude the receivership
before the end of the second extension.
(4) Ongoing litigation.--The time limit under this subsection,
as extended under paragraph (3), may be further extended solely for
the purpose of completing ongoing litigation in which the
Corporation as receiver is a party, provided that the appointment
of the Corporation as receiver shall terminate not later than 90
days after the date of completion of such litigation, if--
(A) the Council determines that the Corporation used its
best efforts to conclude the receivership in accordance with
its plan before the end of the time limit described in
paragraph (3);
(B) the Council determines that the completion of longer-
term responsibilities in the form of ongoing litigation
justifies the need for an extension; and
(C) the Corporation submits a report approved by the
Council not later than 30 days after the date of the
determinations by the Council under subparagraphs (A) and (B)
to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives, describing--
(i) the ongoing litigation justifying the need for an
extension; and
(ii) the specific plan of the Corporation to complete
the litigation and conclude the receivership.
(5) Regulations.--The Corporation may issue regulations
governing the termination of receiverships under this title.
(6) No liability.--The Corporation and the Deposit Insurance
Fund shall not be liable for unresolved claims arising from the
receivership after the termination of the receivership.
(e) Study of Bankruptcy and Orderly Liquidation Process for
Financial Companies.--
(1) Study.--
(A) In general.--The Administrative Office of the United
States Courts and the Comptroller General of the United States
shall each monitor the activities of the Court, and each such
Office shall conduct separate studies regarding the bankruptcy
and orderly liquidation process for financial companies under
the Bankruptcy Code.
(B) Issues to be studied.--In conducting the study under
subparagraph (A), the Administrative Office of the United
States Courts and the Comptroller General of the United States
each shall evaluate--
(i) the effectiveness of chapter 7 or chapter 11 of the
Bankruptcy Code in facilitating the orderly liquidation or
reorganization of financial companies;
(ii) ways to maximize the efficiency and effectiveness
of the Court; and
(iii) ways to make the orderly liquidation process
under the Bankruptcy Code for financial companies more
effective.
(2) Reports.--Not later than 1 year after the date of enactment
of this Act, in each successive year until the third year, and
every fifth year after that date of enactment, the Administrative
Office of the United States Courts and the Comptroller General of
the United States shall submit to the Committee on Banking,
Housing, and Urban Affairs and the Committee on the Judiciary of
the Senate and the Committee on Financial Services and the
Committee on the Judiciary of the House of Representatives separate
reports summarizing the results of the studies conducted under
paragraph (1).
(f) Study of International Coordination Relating to Bankruptcy
Process for Financial Companies.--
(1) Study.--
(A) In general.--The Comptroller General of the United
States shall conduct a study regarding international
coordination relating to the orderly liquidation of financial
companies under the Bankruptcy Code.
(B) Issues to be studied.--In conducting the study under
subparagraph (A), the Comptroller General of the United States
shall evaluate, with respect to the bankruptcy process for
financial companies--
(i) the extent to which international coordination
currently exists;
(ii) current mechanisms and structures for facilitating
international cooperation;
(iii) barriers to effective international coordination;
and
(iv) ways to increase and make more effective
international coordination.
(2) Report.--Not later than 1 year after the date of enactment
of this Act, the Comptroller General of the United States shall
submit to the Committee on Banking, Housing, and Urban Affairs and
the Committee on the Judiciary of the Senate and the Committee on
Financial Services and the Committee on the Judiciary of the House
of Representatives and the Secretary a report summarizing the
results of the study conducted under paragraph (1).
(g) Study of Prompt Corrective Action Implementation by the
Appropriate Federal Agencies.--
(1) Study.--The Comptroller General of the United States shall
conduct a study regarding the implementation of prompt corrective
action by the appropriate Federal banking agencies.
(2) Issues to be studied.--In conducting the study under
paragraph (1), the Comptroller General shall evaluate--
(A) the effectiveness of implementation of prompt
corrective action by the appropriate Federal banking agencies
and the resolution of insured depository institutions by the
Corporation; and
(B) ways to make prompt corrective action a more effective
tool to resolve the insured depository institutions at the
least possible long-term cost to the Deposit Insurance Fund.
(3) Report to council.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall submit a
report to the Council on the results of the study conducted under
this subsection.
(4) Council report of action.--Not later than 6 months after
the date of receipt of the report from the Comptroller General
under paragraph (3), the Council shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives
on actions taken in response to the report, including any
recommendations made to the Federal primary financial regulatory
agencies under section 120.
SEC. 203. SYSTEMIC RISK DETERMINATION.
(a) Written Recommendation and Determination.--
(1) Vote required.--
(A) In general.--On their own initiative, or at the request
of the Secretary, the Corporation and the Board of Governors
shall consider whether to make a written recommendation
described in paragraph (2) with respect to whether the
Secretary should appoint the Corporation as receiver for a
financial company. Such recommendation shall be made upon a
vote of not fewer than \2/3\ of the members of the Board of
Governors then serving and \2/3\ of the members of the board of
directors of the Corporation then serving.
(B) Cases involving brokers or dealers.--In the case of a
broker or dealer, or in which the largest United States
subsidiary (as measured by total assets as of the end of the
previous calendar quarter) of a financial company is a broker
or dealer, the Commission and the Board of Governors, at the
request of the Secretary, or on their own initiative, shall
consider whether to make the written recommendation described
in paragraph (2) with respect to the financial company. Subject
to the requirements in paragraph (2), such recommendation shall
be made upon a vote of not fewer than \2/3\ of the members of
the Board of Governors then serving and \2/3\ of the members of
the Commission then serving, and in consultation with the
Corporation.
(C) Cases involving insurance companies.--In the case of an
insurance company, or in which the largest United States
subsidiary (as measured by total assets as of the end of the
previous calendar quarter) of a financial company is an
insurance company, the Director of the Federal Insurance Office
and the Board of Governors, at the request of the Secretary or
on their own initiative, shall consider whether to make the
written recommendation described in paragraph (2) with respect
to the financial company. Subject to the requirements in
paragraph (2), such recommendation shall be made upon a vote of
not fewer than \2/3\ of the Board of Governors then serving and
the affirmative approval of the Director of the Federal
Insurance Office, and in consultation with the Corporation.
(2) Recommendation required.--Any written recommendation
pursuant to paragraph (1) shall contain--
(A) an evaluation of whether the financial company is in
default or in danger of default;
(B) a description of the effect that the default of the
financial company would have on financial stability in the
United States;
(C) a description of the effect that the default of the
financial company would have on economic conditions or
financial stability for low income, minority, or underserved
communities;
(D) a recommendation regarding the nature and the extent of
actions to be taken under this title regarding the financial
company;
(E) an evaluation of the likelihood of a private sector
alternative to prevent the default of the financial company;
(F) an evaluation of why a case under the Bankruptcy Code
is not appropriate for the financial company;
(G) an evaluation of the effects on creditors,
counterparties, and shareholders of the financial company and
other market participants; and
(H) an evaluation of whether the company satisfies the
definition of a financial company under section 201.
(b) Determination by the Secretary.--Notwithstanding any other
provision of Federal or State law, the Secretary shall take action in
accordance with section 202(a)(1)(A), if, upon the written
recommendation under subsection (a), the Secretary (in consultation
with the President) determines that--
(1) the financial company is in default or in danger of
default;
(2) the failure of the financial company and its resolution
under otherwise applicable Federal or State law would have serious
adverse effects on financial stability in the United States;
(3) no viable private sector alternative is available to
prevent the default of the financial company;
(4) any effect on the claims or interests of creditors,
counterparties, and shareholders of the financial company and other
market participants as a result of actions to be taken under this
title is appropriate, given the impact that any action taken under
this title would have on financial stability in the United States;
(5) any action under section 204 would avoid or mitigate such
adverse effects, taking into consideration the effectiveness of the
action in mitigating potential adverse effects on the financial
system, the cost to the general fund of the Treasury, and the
potential to increase excessive risk taking on the part of
creditors, counterparties, and shareholders in the financial
company;
(6) a Federal regulatory agency has ordered the financial
company to convert all of its convertible debt instruments that are
subject to the regulatory order; and
(7) the company satisfies the definition of a financial company
under section 201.
(c) Documentation and Review.--
(1) In general.--The Secretary shall--
(A) document any determination under subsection (b);
(B) retain the documentation for review under paragraph
(2); and
(C) notify the covered financial company and the
Corporation of such determination.
(2) Report to congress.--Not later than 24 hours after the date
of appointment of the Corporation as receiver for a covered
financial company, the Secretary shall provide written notice of
the recommendations and determinations reached in accordance with
subsections (a) and (b) to the Majority Leader and the Minority
Leader of the Senate and the Speaker and the Minority Leader of the
House of Representatives, the Committee on Banking, Housing, and
Urban Affairs of the Senate, and the Committee on Financial
Services of the House of Representatives, which shall consist of a
summary of the basis for the determination, including, to the
extent available at the time of the determination--
(A) the size and financial condition of the covered
financial company;
(B) the sources of capital and credit support that were
available to the covered financial company;
(C) the operations of the covered financial company that
could have had a significant impact on financial stability,
markets, or both;
(D) identification of the banks and financial companies
which may be able to provide the services offered by the
covered financial company;
(E) any potential international ramifications of resolution
of the covered financial company under other applicable
insolvency law;
(F) an estimate of the potential effect of the resolution
of the covered financial company under other applicable
insolvency law on the financial stability of the United States;
(G) the potential effect of the appointment of a receiver
by the Secretary on consumers;
(H) the potential effect of the appointment of a receiver
by the Secretary on the financial system, financial markets,
and banks and other financial companies; and
(I) whether resolution of the covered financial company
under other applicable insolvency law would cause banks or
other financial companies to experience severe liquidity
distress.
(3) Reports to congress and the public.--
(A) In general.--Not later than 60 days after the date of
appointment of the Corporation as receiver for a covered
financial company, the Corporation shall file a report with the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives--
(i) setting forth information on the financial
condition of the covered financial company as of the date
of the appointment, including a description of its assets
and liabilities;
(ii) describing the plan of, and actions taken by, the
Corporation to wind down the covered financial company;
(iii) explaining each instance in which the Corporation
waived any applicable requirements of part 366 of title 12,
Code of Federal Regulations (or any successor thereto) with
respect to conflicts of interest by any person in the
private sector who was retained to provide services to the
Corporation in connection with such receivership;
(iv) describing the reasons for the provision of any
funding to the receivership out of the Fund;
(v) setting forth the expected costs of the orderly
liquidation of the covered financial company;
(vi) setting forth the identity of any claimant that is
treated in a manner different from other similarly situated
claimants under subsection (b)(4), (d)(4), or (h)(5)(E),
the amount of any additional payment to such claimant under
subsection (d)(4), and the reason for any such action; and
(vii) which report the Corporation shall publish on an
online website maintained by the Corporation, subject to
maintaining appropriate confidentiality.
(B) Amendments.--The Corporation shall, on a timely basis,
not less frequently than quarterly, amend or revise and
resubmit the reports prepared under this paragraph, as
necessary.
(C) Congressional testimony.--The Corporation and the
primary financial regulatory agency, if any, of the financial
company for which the Corporation was appointed receiver under
this title shall appear before Congress, if requested, not
later than 30 days after the date on which the Corporation
first files the reports required under subparagraph (A).
(4) Default or in danger of default.--For purposes of this
title, a financial company shall be considered to be in default or
in danger of default if, as determined in accordance with
subsection (b)--
(A) a case has been, or likely will promptly be, commenced
with respect to the financial company under the Bankruptcy
Code;
(B) the financial company has incurred, or is likely to
incur, losses that will deplete all or substantially all of its
capital, and there is no reasonable prospect for the company to
avoid such depletion;
(C) the assets of the financial company are, or are likely
to be, less than its obligations to creditors and others; or
(D) the financial company is, or is likely to be, unable to
pay its obligations (other than those subject to a bona fide
dispute) in the normal course of business.
(5) GAO review.--The Comptroller General of the United States
shall review and report to Congress on any determination under
subsection (b), that results in the appointment of the Corporation
as receiver, including--
(A) the basis for the determination;
(B) the purpose for which any action was taken pursuant
thereto;
(C) the likely effect of the determination and such action
on the incentives and conduct of financial companies and their
creditors, counterparties, and shareholders; and
(D) the likely disruptive effect of the determination and
such action on the reasonable expectations of creditors,
counterparties, and shareholders, taking into account the
impact any action under this title would have on financial
stability in the United States, including whether the rights of
such parties will be disrupted.
(d) Corporation Policies and Procedures.--As soon as is practicable
after the date of enactment of this Act, the Corporation shall
establish policies and procedures that are acceptable to the Secretary
governing the use of funds available to the Corporation to carry out
this title, including the terms and conditions for the provision and
use of funds under sections 204(d), 210(h)(2)(G)(iv), and 210(h)(9).
(e) Treatment of Insurance Companies and Insurance Company
Subsidiaries.--
(1) In general.--Notwithstanding subsection (b), if an
insurance company is a covered financial company or a subsidiary or
affiliate of a covered financial company, the liquidation or
rehabilitation of such insurance company, and any subsidiary or
affiliate of such company that is not excepted under paragraph (2),
shall be conducted as provided under applicable State law.
(2) Exception for subsidiaries and affiliates.--The requirement
of paragraph (1) shall not apply with respect to any subsidiary or
affiliate of an insurance company that is not itself an insurance
company.
(3) Backup authority.--Notwithstanding paragraph (1), with
respect to a covered financial company described in paragraph (1),
if, after the end of the 60-day period beginning on the date on
which a determination is made under section 202(a) with respect to
such company, the appropriate regulatory agency has not filed the
appropriate judicial action in the appropriate State court to place
such company into orderly liquidation under the laws and
requirements of the State, the Corporation shall have the authority
to stand in the place of the appropriate regulatory agency and file
the appropriate judicial action in the appropriate State court to
place such company into orderly liquidation under the laws and
requirements of the State.
SEC. 204. ORDERLY LIQUIDATION OF COVERED FINANCIAL COMPANIES.
(a) Purpose of Orderly Liquidation Authority.--It is the purpose of
this title to provide the necessary authority to liquidate failing
financial companies that pose a significant risk to the financial
stability of the United States in a manner that mitigates such risk and
minimizes moral hazard. The authority provided in this title shall be
exercised in the manner that best fulfills such purpose, so that--
(1) creditors and shareholders will bear the losses of the
financial company;
(2) management responsible for the condition of the financial
company will not be retained; and
(3) the Corporation and other appropriate agencies will take
all steps necessary and appropriate to assure that all parties,
including management, directors, and third parties, having
responsibility for the condition of the financial company bear
losses consistent with their responsibility, including actions for
damages, restitution, and recoupment of compensation and other
gains not compatible with such responsibility.
(b) Corporation as Receiver.--Upon the appointment of the
Corporation under section 202, the Corporation shall act as the
receiver for the covered financial company, with all of the rights and
obligations set forth in this title.
(c) Consultation.--The Corporation, as receiver--
(1) shall consult with the primary financial regulatory agency
or agencies of the covered financial company and its covered
subsidiaries for purposes of ensuring an orderly liquidation of the
covered financial company;
(2) may consult with, or under subsection (a)(1)(B)(v) or
(a)(1)(L) of section 210, acquire the services of, any outside
experts, as appropriate to inform and aid the Corporation in the
orderly liquidation process;
(3) shall consult with the primary financial regulatory agency
or agencies of any subsidiaries of the covered financial company
that are not covered subsidiaries, and coordinate with such
regulators regarding the treatment of such solvent subsidiaries and
the separate resolution of any such insolvent subsidiaries under
other governmental authority, as appropriate; and
(4) shall consult with the Commission and the Securities
Investor Protection Corporation in the case of any covered
financial company for which the Corporation has been appointed as
receiver that is a broker or dealer registered with the Commission
under section 15(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78o(b)) and is a member of the Securities Investor
Protection Corporation, for the purpose of determining whether to
transfer to a bridge financial company organized by the Corporation
as receiver, without consent of any customer, customer accounts of
the covered financial company.
(d) Funding for Orderly Liquidation.--Upon its appointment as
receiver for a covered financial company, and thereafter as the
Corporation may, in its discretion, determine to be necessary or
appropriate, the Corporation may make available to the receivership,
subject to the conditions set forth in section 206 and subject to the
plan described in section 210(n)(9), funds for the orderly liquidation
of the covered financial company. All funds provided by the Corporation
under this subsection shall have a priority of claims under
subparagraph (A) or (B) of section 210(b)(1), as applicable, including
funds used for--
(1) making loans to, or purchasing any debt obligation of, the
covered financial company or any covered subsidiary;
(2) purchasing or guaranteeing against loss the assets of the
covered financial company or any covered subsidiary, directly or
through an entity established by the Corporation for such purpose;
(3) assuming or guaranteeing the obligations of the covered
financial company or any covered subsidiary to 1 or more third
parties;
(4) taking a lien on any or all assets of the covered financial
company or any covered subsidiary, including a first priority lien
on all unencumbered assets of the covered financial company or any
covered subsidiary to secure repayment of any transactions
conducted under this subsection;
(5) selling or transferring all, or any part, of such acquired
assets, liabilities, or obligations of the covered financial
company or any covered subsidiary; and
(6) making payments pursuant to subsections (b)(4), (d)(4), and
(h)(5)(E) of section 210.
SEC. 205. ORDERLY LIQUIDATION OF COVERED BROKERS AND DEALERS.
(a) Appointment of SIPC as Trustee.--
(1) Appointment.--Upon the appointment of the Corporation as
receiver for any covered broker or dealer, the Corporation shall
appoint, without any need for court approval, the Securities
Investor Protection Corporation to act as trustee for the
liquidation under the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.) of the covered broker or dealer.
(2) Actions by sipc.--
(A) Filing.--Upon appointment of SIPC under paragraph (1),
SIPC shall promptly file with any Federal district court of
competent jurisdiction specified in section 21 or 27 of the
Securities Exchange Act of 1934 (15 U.S.C. 78u, 78aa), an
application for a protective decree under the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) as to
the covered broker or dealer. The Federal district court shall
accept and approve the filing, including outside of normal
business hours, and shall immediately issue the protective
decree as to the covered broker or dealer.
(B) Administration by sipc.--Following entry of the
protective decree, and except as otherwise provided in this
section, the determination of claims and the liquidation of
assets retained in the receivership of the covered broker or
dealer and not transferred to the bridge financial company
shall be administered under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.) by SIPC, as trustee for
the covered broker or dealer.
(C) Definition of filing date.--For purposes of the
liquidation proceeding, the term ``filing date'' means the date
on which the Corporation is appointed as receiver of the
covered broker or dealer.
(D) Determination of claims.--As trustee for the covered
broker or dealer, SIPC shall determine and satisfy, consistent
with this title and with the Securities Investor Protection Act
of 1970 (15 U.S.C. 78aaa et seq.), all claims against the
covered broker or dealer arising on or before the filing date.
(b) Powers and Duties of SIPC.--
(1) In general.--Except as provided in this section, upon its
appointment as trustee for the liquidation of a covered broker or
dealer, SIPC shall have all of the powers and duties provided by
the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et
seq.), including, without limitation, all rights of action against
third parties, and shall conduct such liquidation in accordance
with the terms of the Securities Investor Protection Act of 1970
(15 U.S.C. 78aaa et seq.), except that SIPC shall have no powers or
duties with respect to assets and liabilities transferred by the
Corporation from the covered broker or dealer to any bridge
financial company established in accordance with this title.
(2) Limitation of powers.--The exercise by SIPC of powers and
functions as trustee under subsection (a) shall not impair or
impede the exercise of the powers and duties of the Corporation
with regard to--
(A) any action, except as otherwise provided in this
title--
(i) to make funds available under section 204(d);
(ii) to organize, establish, operate, or terminate any
bridge financial company;
(iii) to transfer assets and liabilities;
(iv) to enforce or repudiate contracts; or
(v) to take any other action relating to such bridge
financial company under section 210; or
(B) determining claims under subsection (e).
(3) Protective decree.--SIPC and the Corporation, in
consultation with the Commission, shall jointly determine the terms
of the protective decree to be filed by SIPC with any court of
competent jurisdiction under section 21 or 27 of the Securities
Exchange Act of 1934 (15 U.S.C. 78u, 78aa), as required by
subsection (a).
(4) Qualified financial contracts.--Notwithstanding any
provision of the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.) to the contrary (including section 5(b)(2)(C)
of that Act (15 U.S.C. 78eee(b)(2)(C))), the rights and obligations
of any party to a qualified financial contract (as that term is
defined in section 210(c)(8)) to which a covered broker or dealer
for which the Corporation has been appointed receiver is a party
shall be governed exclusively by section 210, including the
limitations and restrictions contained in section 210(c)(10)(B).
(c) Limitation on Court Action.--Except as otherwise provided in
this title, no court may take any action, including any action pursuant
to the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et
seq.) or the Bankruptcy Code, to restrain or affect the exercise of
powers or functions of the Corporation as receiver for a covered broker
or dealer and any claims against the Corporation as such receiver shall
be determined in accordance with subsection (e) and such claims shall
be limited to money damages.
(d) Actions by Corporation as Receiver.--
(1) In general.--Notwithstanding any other provision of this
title, no action taken by the Corporation as receiver with respect
to a covered broker or dealer shall--
(A) adversely affect the rights of a customer to customer
property or customer name securities;
(B) diminish the amount or timely payment of net equity
claims of customers; or
(C) otherwise impair the recoveries provided to a customer
under the Securities Investor Protection Act of 1970 (15 U.S.C.
78aaa et seq.).
(2) Net proceeds.--The net proceeds from any transfer, sale, or
disposition of assets of the covered broker or dealer, or proceeds
thereof by the Corporation as receiver for the covered broker or
dealer shall be for the benefit of the estate of the covered broker
or dealer, as provided in this title.
(e) Claims Against the Corporation as Receiver.--Any claim against
the Corporation as receiver for a covered broker or dealer for assets
transferred to a bridge financial company established with respect to
such covered broker or dealer--
(1) shall be determined in accordance with section 210(a)(2);
and
(2) may be reviewed by the appropriate district or territorial
court of the United States in accordance with section 210(a)(5).
(f) Satisfaction of Customer Claims.--
(1) Obligations to customers.--Notwithstanding any other
provision of this title, all obligations of a covered broker or
dealer or of any bridge financial company established with respect
to such covered broker or dealer to a customer relating to, or net
equity claims based upon, customer property or customer name
securities shall be promptly discharged by SIPC, the Corporation,
or the bridge financial company, as applicable, by the delivery of
securities or the making of payments to or for the account of such
customer, in a manner and in an amount at least as beneficial to
the customer as would have been the case had the actual proceeds
realized from the liquidation of the covered broker or dealer under
this title been distributed in a proceeding under the Securities
Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) without
the appointment of the Corporation as receiver and without any
transfer of assets or liabilities to a bridge financial company,
and with a filing date as of the date on which the Corporation is
appointed as receiver.
(2) Satisfaction of claims by sipc.--SIPC, as trustee for a
covered broker or dealer, shall satisfy customer claims in the
manner and amount provided under the Securities Investor Protection
Act of 1970 (15 U.S.C. 78aaa et seq.), as if the appointment of the
Corporation as receiver had not occurred, and with a filing date as
of the date on which the Corporation is appointed as receiver. The
Corporation shall satisfy customer claims, to the extent that a
customer would have received more securities or cash with respect
to the allocation of customer property had the covered financial
company been subject to a proceeding under the Securities Investor
Protection Act (15 U.S.C. 78aaa et seq.) without the appointment of
the Corporation as receiver, and with a filing date as of the date
on which the Corporation is appointed as receiver.
(g) Priorities.--
(1) Customer property.--As trustee for a covered broker or
dealer, SIPC shall allocate customer property and deliver customer
name securities in accordance with section 8(c) of the Securities
Investor Protection Act of 1970 (15 U.S.C. 78fff-2(c)).
(2) Other claims.--All claims other than those described in
paragraph (1) (including any unpaid claim by a customer for the
allowed net equity claim of such customer from customer property)
shall be paid in accordance with the priorities in section 210(b).
(h) Rulemaking.--The Commission and the Corporation, after
consultation with SIPC, shall jointly issue rules to implement this
section.
SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL ORDERLY
LIQUIDATION ACTIONS.
In taking action under this title, the Corporation shall--
(1) determine that such action is necessary for purposes of the
financial stability of the United States, and not for the purpose
of preserving the covered financial company;
(2) ensure that the shareholders of a covered financial company
do not receive payment until after all other claims and the Fund
are fully paid;
(3) ensure that unsecured creditors bear losses in accordance
with the priority of claim provisions in section 210;
(4) ensure that management responsible for the failed condition
of the covered financial company is removed (if such management has
not already been removed at the time at which the Corporation is
appointed receiver);
(5) ensure that the members of the board of directors (or body
performing similar functions) responsible for the failed condition
of the covered financial company are removed, if such members have
not already been removed at the time the Corporation is appointed
as receiver; and
(6) not take an equity interest in or become a shareholder of
any covered financial company or any covered subsidiary.
SEC. 207. DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINTMENT OF
RECEIVER.
The members of the board of directors (or body performing similar
functions) of a covered financial company shall not be liable to the
shareholders or creditors thereof for acquiescing in or consenting in
good faith to the appointment of the Corporation as receiver for the
covered financial company under section 203.
SEC. 208. DISMISSAL AND EXCLUSION OF OTHER ACTIONS.
(a) In General.--Effective as of the date of the appointment of the
Corporation as receiver for the covered financial company under section
202 or the appointment of SIPC as trustee for a covered broker or
dealer under section 205, as applicable, any case or proceeding
commenced with respect to the covered financial company under the
Bankruptcy Code or the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.) shall be dismissed, upon notice to the bankruptcy
court (with respect to a case commenced under the Bankruptcy Code), and
upon notice to SIPC (with respect to a covered broker or dealer) and no
such case or proceeding may be commenced with respect to a covered
financial company at any time while the orderly liquidation is pending.
(b) Revesting of Assets.--Effective as of the date of appointment
of the Corporation as receiver, the assets of a covered financial
company shall, to the extent they have vested in any entity other than
the covered financial company as a result of any case or proceeding
commenced with respect to the covered financial company under the
Bankruptcy Code, the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.), or any similar provision of State liquidation or
insolvency law applicable to the covered financial company, revest in
the covered financial company.
(c) Limitation.--Notwithstanding subsections (a) and (b), any order
entered or other relief granted by a bankruptcy court prior to the date
of appointment of the Corporation as receiver shall continue with the
same validity as if an orderly liquidation had not been commenced.
SEC. 209. RULEMAKING; NON-CONFLICTING LAW.
The Corporation shall, in consultation with the Council, prescribe
such rules or regulations as the Corporation considers necessary or
appropriate to implement this title, including rules and regulations
with respect to the rights, interests, and priorities of creditors,
counterparties, security entitlement holders, or other persons with
respect to any covered financial company or any assets or other
property of or held by such covered financial company, and address the
potential for conflicts of interest between or among individual
receiverships established under this title or under the Federal Deposit
Insurance Act. To the extent possible, the Corporation shall seek to
harmonize applicable rules and regulations promulgated under this
section with the insolvency laws that would otherwise apply to a
covered financial company.
SEC. 210. POWERS AND DUTIES OF THE CORPORATION.
(a) Powers and Authorities.--
(1) General powers.--
(A) Successor to covered financial company.--The
Corporation shall, upon appointment as receiver for a covered
financial company under this title, succeed to--
(i) all rights, titles, powers, and privileges of the
covered financial company and its assets, and of any
stockholder, member, officer, or director of such company;
and
(ii) title to the books, records, and assets of any
previous receiver or other legal custodian of such covered
financial company.
(B) Operation of the covered financial company during the
period of orderly liquidation.--The Corporation, as receiver
for a covered financial company, may--
(i) take over the assets of and operate the covered
financial company with all of the powers of the members or
shareholders, the directors, and the officers of the
covered financial company, and conduct all business of the
covered financial company;
(ii) collect all obligations and money owed to the
covered financial company;
(iii) perform all functions of the covered financial
company, in the name of the covered financial company;
(iv) manage the assets and property of the covered
financial company, consistent with maximization of the
value of the assets in the context of the orderly
liquidation; and
(v) provide by contract for assistance in fulfilling
any function, activity, action, or duty of the Corporation
as receiver.
(C) Functions of covered financial company officers,
directors, and shareholders.--The Corporation may provide for
the exercise of any function by any member or stockholder,
director, or officer of any covered financial company for which
the Corporation has been appointed as receiver under this
title.
(D) Additional powers as receiver.--The Corporation shall,
as receiver for a covered financial company, and subject to all
legally enforceable and perfected security interests and all
legally enforceable security entitlements in respect of assets
held by the covered financial company, liquidate, and wind-up
the affairs of a covered financial company, including taking
steps to realize upon the assets of the covered financial
company, in such manner as the Corporation deems appropriate,
including through the sale of assets, the transfer of assets to
a bridge financial company established under subsection (h), or
the exercise of any other rights or privileges granted to the
receiver under this section.
(E) Additional powers with respect to failing subsidiaries
of a covered financial company.--
(i) In general.--In any case in which a receiver is
appointed for a covered financial company under section
202, the Corporation may appoint itself as receiver of any
covered subsidiary of the covered financial company that is
organized under Federal law or the laws of any State, if
the Corporation and the Secretary jointly determine that--
(I) the covered subsidiary is in default or in
danger of default;
(II) such action would avoid or mitigate serious
adverse effects on the financial stability or economic
conditions of the United States; and
(III) such action would facilitate the orderly
liquidation of the covered financial company.
(ii) Treatment as covered financial company.--If the
Corporation is appointed as receiver of a covered
subsidiary of a covered financial company under clause (i),
the covered subsidiary shall thereafter be considered a
covered financial company under this title, and the
Corporation shall thereafter have all the powers and rights
with respect to that covered subsidiary as it has with
respect to a covered financial company under this title.
(F) Organization of bridge companies.--The Corporation, as
receiver for a covered financial company, may organize a bridge
financial company under subsection (h).
(G) Merger; transfer of assets and liabilities.--
(i) In general.--Subject to clauses (ii) and (iii), the
Corporation, as receiver for a covered financial company,
may--
(I) merge the covered financial company with
another company; or
(II) transfer any asset or liability of the covered
financial company (including any assets and liabilities
held by the covered financial company for security
entitlement holders, any customer property, or any
assets and liabilities associated with any trust or
custody business) without obtaining any approval,
assignment, or consent with respect to such transfer.
(ii) Federal agency approval; antitrust review.--With
respect to a transaction described in clause (i)(I) that
requires approval by a Federal agency--
(I) the transaction may not be consummated before
the 5th calendar day after the date of approval by the
Federal agency responsible for such approval;
(II) if, in connection with any such approval, a
report on competitive factors is required, the Federal
agency responsible for such approval shall promptly
notify the Attorney General of the United States of the
proposed transaction, and the Attorney General shall
provide the required report not later than 10 days
after the date of the request; and
(III) if notification under section 7A of the
Clayton Act is required with respect to such
transaction, then the required waiting period shall end
on the 15th day after the date on which the Attorney
General and the Federal Trade Commission receive such
notification, unless the waiting period is terminated
earlier under subsection (b)(2) of such section 7A, or
is extended pursuant to subsection (e)(2) of such
section 7A.
(iii) Setoff.--Subject to the other provisions of this
title, any transferee of assets from a receiver, including
a bridge financial company, shall be subject to such claims
or rights as would prevail over the rights of such
transferee in such assets under applicable noninsolvency
law.
(H) Payment of valid obligations.--The Corporation, as
receiver for a covered financial company, shall, to the extent
that funds are available, pay all valid obligations of the
covered financial company that are due and payable at the time
of the appointment of the Corporation as receiver, in
accordance with the prescriptions and limitations of this
title.
(I) Applicable noninsolvency law.--Except as may otherwise
be provided in this title, the applicable noninsolvency law
shall be determined by the noninsolvency choice of law rules
otherwise applicable to the claims, rights, titles, persons, or
entities at issue.
(J) Subpoena authority.--
(i) In general.--The Corporation, as receiver for a
covered financial company, may, for purposes of carrying
out any power, authority, or duty with respect to the
covered financial company (including determining any claim
against the covered financial company and determining and
realizing upon any asset of any person in the course of
collecting money due the covered financial company),
exercise any power established under section 8(n) of the
Federal Deposit Insurance Act, as if the Corporation were
the appropriate Federal banking agency for the covered
financial company, and the covered financial company were
an insured depository institution.
(ii) Rule of construction.--This subparagraph may not
be construed as limiting any rights that the Corporation,
in any capacity, might otherwise have to exercise any
powers described in clause (i) or under any other provision
of law.
(K) Incidental powers.--The Corporation, as receiver for a
covered financial company, may exercise all powers and
authorities specifically granted to receivers under this title,
and such incidental powers as shall be necessary to carry out
such powers under this title.
(L) Utilization of private sector.--In carrying out its
responsibilities in the management and disposition of assets
from the covered financial company, the Corporation, as
receiver for a covered financial company, may utilize the
services of private persons, including real estate and loan
portfolio asset management, property management, auction
marketing, legal, and brokerage services, if such services are
available in the private sector, and the Corporation determines
that utilization of such services is practicable, efficient,
and cost effective.
(M) Shareholders and creditors of covered financial
company.--Notwithstanding any other provision of law, the
Corporation, as receiver for a covered financial company, shall
succeed by operation of law to the rights, titles, powers, and
privileges described in subparagraph (A), and shall terminate
all rights and claims that the stockholders and creditors of
the covered financial company may have against the assets of
the covered financial company or the Corporation arising out of
their status as stockholders or creditors, except for their
right to payment, resolution, or other satisfaction of their
claims, as permitted under this section. The Corporation shall
ensure that shareholders and unsecured creditors bear losses,
consistent with the priority of claims provisions under this
section.
(N) Coordination with foreign financial authorities.--The
Corporation, as receiver for a covered financial company, shall
coordinate, to the maximum extent possible, with the
appropriate foreign financial authorities regarding the orderly
liquidation of any covered financial company that has assets or
operations in a country other than the United States.
(O) Restriction on transfers.--
(i) Selection of accounts for transfer.--If the
Corporation establishes one or more bridge financial
companies with respect to a covered broker or dealer, the
Corporation shall transfer to one of such bridge financial
companies, all customer accounts of the covered broker or
dealer, and all associated customer name securities and
customer property, unless the Corporation, after consulting
with the Commission and SIPC, determines that--
(I) the customer accounts, customer name
securities, and customer property are likely to be
promptly transferred to another broker or dealer that
is registered with the Commission under section 15(b)
of the Securities Exchange Act of 1934 (15 U.S.C.
73o(b)) and is a member of SIPC; or
(II) the transfer of the accounts to a bridge
financial company would materially interfere with the
ability of the Corporation to avoid or mitigate serious
adverse effects on financial stability or economic
conditions in the United States.
(ii) Transfer of property.--SIPC, as trustee for the
liquidation of the covered broker or dealer, and the
Commission shall provide any and all reasonable assistance
necessary to complete such transfers by the Corporation.
(iii) Customer consent and court approval not
required.--Neither customer consent nor court approval
shall be required to transfer any customer accounts or
associated customer name securities or customer property to
a bridge financial company in accordance with this section.
(iv) Notification of sipc and sharing of information.--
The Corporation shall identify to SIPC the customer
accounts and associated customer name securities and
customer property transferred to the bridge financial
company. The Corporation and SIPC shall cooperate in the
sharing of any information necessary for each entity to
discharge its obligations under this title and under the
Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa
et seq.) including by providing access to the books and
records of the covered financial company and any bridge
financial company established in accordance with this
title.
(2) Determination of claims.--
(A) In general.--The Corporation, as receiver for a covered
financial company, shall report on claims, as set forth in
section 203(c)(3). Subject to paragraph (4) of this subsection,
the Corporation, as receiver for a covered financial company,
shall determine claims in accordance with the requirements of
this subsection and regulations prescribed under section 209.
(B) Notice requirements.--The Corporation, as receiver for
a covered financial company, in any case involving the
liquidation or winding up of the affairs of a covered financial
company, shall--
(i) promptly publish a notice to the creditors of the
covered financial company to present their claims, together
with proof, to the receiver by a date specified in the
notice, which shall be not earlier than 90 days after the
date of publication of such notice; and
(ii) republish such notice 1 month and 2 months,
respectively, after the date of publication under clause
(i).
(C) Mailing required.--The Corporation as receiver shall
mail a notice similar to the notice published under clause (i)
or (ii) of subparagraph (B), at the time of such publication,
to any creditor shown on the books and records of the covered
financial company--
(i) at the last address of the creditor appearing in
such books;
(ii) in any claim filed by the claimant; or
(iii) upon discovery of the name and address of a
claimant not appearing on the books and records of the
covered financial company, not later than 30 days after the
date of the discovery of such name and address.
(3) Procedures for resolution of claims.--
(A) Decision period.--
(i) In general.--Prior to the 180th day after the date
on which a claim against a covered financial company is
filed with the Corporation as receiver, or such later date
as may be agreed as provided in clause (ii), the
Corporation shall notify the claimant whether it allows or
disallows the claim, in accordance with subparagraphs (B),
(C), and (D).
(ii) Extension of time.--By written agreement executed
not later than 180 days after the date on which a claim
against a covered financial company is filed with the
Corporation, the period described in clause (i) may be
extended by written agreement between the claimant and the
Corporation. Failure to notify the claimant of any
disallowance within the time period set forth in clause
(i), as it may be extended by agreement under this clause,
shall be deemed to be a disallowance of such claim, and the
claimant may file or continue an action in court, as
provided in paragraph (4).
(iii) Mailing of notice sufficient.--The requirements
of clause (i) shall be deemed to be satisfied if the notice
of any decision with respect to any claim is mailed to the
last address of the claimant which appears--
(I) on the books, records, or both of the covered
financial company;
(II) in the claim filed by the claimant; or
(III) in documents submitted in proof of the claim.
(iv) Contents of notice of disallowance.--If the
Corporation as receiver disallows any claim filed under
clause (i), the notice to the claimant shall contain--
(I) a statement of each reason for the
disallowance; and
(II) the procedures required to file or continue an
action in court, as provided in paragraph (4).
(B) Allowance of proven claim.--The receiver shall allow
any claim received by the receiver on or before the date
specified in the notice under paragraph (2)(B)(i), which is
proved to the satisfaction of the receiver.
(C) Disallowance of claims filed after end of filing
period.--
(i) In general.--Except as provided in clause (ii),
claims filed after the date specified in the notice
published under paragraph (2)(B)(i) shall be disallowed,
and such disallowance shall be final.
(ii) Certain exceptions.--Clause (i) shall not apply
with respect to any claim filed by a claimant after the
date specified in the notice published under paragraph
(2)(B)(i), and such claim may be considered by the receiver
under subparagraph (B), if--
(I) the claimant did not receive notice of the
appointment of the receiver in time to file such claim
before such date; and
(II) such claim is filed in time to permit payment
of such claim.
(D) Authority to disallow claims.--
(i) In general.--The Corporation may disallow any
portion of any claim by a creditor or claim of a security,
preference, setoff, or priority which is not proved to the
satisfaction of the Corporation.
(ii) Payments to undersecured creditors.--In the case
of a claim against a covered financial company that is
secured by any property or other asset of such covered
financial company, the receiver--
(I) may treat the portion of such claim which
exceeds an amount equal to the fair market value of
such property or other asset as an unsecured claim; and
(II) may not make any payment with respect to such
unsecured portion of the claim, other than in
connection with the disposition of all claims of
unsecured creditors of the covered financial company.
(iii) Exceptions.--No provision of this paragraph shall
apply with respect to--
(I) any extension of credit from any Federal
reserve bank, or the Corporation, to any covered
financial company; or
(II) subject to clause (ii), any legally
enforceable and perfected security interest in the
assets of the covered financial company securing any
such extension of credit.
(E) Legal effect of filing.--
(i) Statute of limitations tolled.--For purposes of any
applicable statute of limitations, the filing of a claim
with the receiver shall constitute a commencement of an
action.
(ii) No prejudice to other actions.--Subject to
paragraph (8), the filing of a claim with the receiver
shall not prejudice any right of the claimant to continue
any action which was filed before the date of appointment
of the receiver for the covered financial company.
(4) Judicial determination of claims.--
(A) In general.--Subject to subparagraph (B), a claimant
may file suit on a claim (or continue an action commenced
before the date of appointment of the Corporation as receiver)
in the district or territorial court of the United States for
the district within which the principal place of business of
the covered financial company is located (and such court shall
have jurisdiction to hear such claim).
(B) Timing.--A claim under subparagraph (A) may be filed
before the end of the 60-day period beginning on the earlier
of--
(i) the end of the period described in paragraph
(3)(A)(i) (or, if extended by agreement of the Corporation
and the claimant, the period described in paragraph
(3)(A)(ii)) with respect to any claim against a covered
financial company for which the Corporation is receiver; or
(ii) the date of any notice of disallowance of such
claim pursuant to paragraph (3)(A)(i).
(C) Statute of limitations.--If any claimant fails to file
suit on such claim (or to continue an action on such claim
commenced before the date of appointment of the Corporation as
receiver) prior to the end of the 60-day period described in
subparagraph (B), the claim shall be deemed to be disallowed
(other than any portion of such claim which was allowed by the
receiver) as of the end of such period, such disallowance shall
be final, and the claimant shall have no further rights or
remedies with respect to such claim.
(5) Expedited determination of claims.--
(A) Procedure required.--The Corporation shall establish a
procedure for expedited relief outside of the claims process
established under paragraph (3), for any claimant that
alleges--
(i) having a legally valid and enforceable or perfected
security interest in property of a covered financial
company or control of any legally valid and enforceable
security entitlement in respect of any asset held by the
covered financial company for which the Corporation has
been appointed receiver; and
(ii) that irreparable injury will occur if the claims
procedure established under paragraph (3) is followed.
(B) Determination period.--Prior to the end of the 90-day
period beginning on the date on which a claim is filed in
accordance with the procedures established pursuant to
subparagraph (A), the Corporation shall--
(i) determine--
(I) whether to allow or disallow such claim, or any
portion thereof; or
(II) whether such claim should be determined
pursuant to the procedures established pursuant to
paragraph (3);
(ii) notify the claimant of the determination; and
(iii) if the claim is disallowed, provide a statement
of each reason for the disallowance and the procedure for
obtaining a judicial determination.
(C) Period for filing or renewing suit.--Any claimant who
files a request for expedited relief shall be permitted to file
suit (or continue a suit filed before the date of appointment
of the Corporation as receiver seeking a determination of the
rights of the claimant with respect to such security interest
(or such security entitlement) after the earlier of--
(i) the end of the 90-day period beginning on the date
of the filing of a request for expedited relief; or
(ii) the date on which the Corporation denies the claim
or a portion thereof.
(D) Statute of limitations.--If an action described in
subparagraph (C) is not filed, or the motion to renew a
previously filed suit is not made, before the end of the 30-day
period beginning on the date on which such action or motion may
be filed in accordance with subparagraph (C), the claim shall
be deemed to be disallowed as of the end of such period (other
than any portion of such claim which was allowed by the
receiver), such disallowance shall be final, and the claimant
shall have no further rights or remedies with respect to such
claim.
(E) Legal effect of filing.--
(i) Statute of limitations tolled.--For purposes of any
applicable statute of limitations, the filing of a claim
with the receiver shall constitute a commencement of an
action.
(ii) No prejudice to other actions.--Subject to
paragraph (8), the filing of a claim with the receiver
shall not prejudice any right of the claimant to continue
any action which was filed before the appointment of the
Corporation as receiver for the covered financial company.
(6) Agreements against interest of the receiver.--No agreement
that tends to diminish or defeat the interest of the Corporation as
receiver in any asset acquired by the receiver under this section
shall be valid against the receiver, unless such agreement--
(A) is in writing;
(B) was executed by an authorized officer or representative
of the covered financial company, or confirmed in the ordinary
course of business by the covered financial company; and
(C) has been, since the time of its execution, an official
record of the company or the party claiming under the agreement
provides documentation, acceptable to the receiver, of such
agreement and its authorized execution or confirmation by the
covered financial company.
(7) Payment of claims.--
(A) In general.--Subject to subparagraph (B), the
Corporation as receiver may, in its discretion and to the
extent that funds are available, pay creditor claims, in such
manner and amounts as are authorized under this section, which
are--
(i) allowed by the receiver;
(ii) approved by the receiver pursuant to a final
determination pursuant to paragraph (3) or (5), as
applicable; or
(iii) determined by the final judgment of a court of
competent jurisdiction.
(B) Limitation.--A creditor shall, in no event, receive
less than the amount that the creditor is entitled to receive
under paragraphs (2) and (3) of subsection (d), as applicable.
(C) Payment of dividends on claims.--The Corporation as
receiver may, in its sole discretion, and to the extent
otherwise permitted by this section, pay dividends on proven
claims at any time, and no liability shall attach to the
Corporation as receiver, by reason of any such payment or for
failure to pay dividends to a claimant whose claim is not
proved at the time of any such payment.
(D) Rulemaking by the corporation.--The Corporation may
prescribe such rules, including definitions of terms, as the
Corporation deems appropriate to establish an interest rate for
or to make payments of post-insolvency interest to creditors
holding proven claims against the receivership estate of a
covered financial company, except that no such interest shall
be paid until the Corporation as receiver has satisfied the
principal amount of all creditor claims.
(8) Suspension of legal actions.--
(A) In general.--After the appointment of the Corporation
as receiver for a covered financial company, the Corporation
may request a stay in any judicial action or proceeding in
which such covered financial company is or becomes a party, for
a period of not to exceed 90 days.
(B) Grant of stay by all courts required.--Upon receipt of
a request by the Corporation pursuant to subparagraph (A), the
court shall grant such stay as to all parties.
(9) Additional rights and duties.--
(A) Prior final adjudication.--The Corporation shall abide
by any final, non-appealable judgment of any court of competent
jurisdiction that was rendered before the appointment of the
Corporation as receiver.
(B) Rights and remedies of receiver.--In the event of any
appealable judgment, the Corporation as receiver shall--
(i) have all the rights and remedies available to the
covered financial company (before the date of appointment
of the Corporation as receiver under section 202) and the
Corporation, including removal to Federal court and all
appellate rights; and
(ii) not be required to post any bond in order to
pursue such remedies.
(C) No attachment or execution.--No attachment or execution
may be issued by any court upon assets in the possession of the
Corporation as receiver for a covered financial company.
(D) Limitation on judicial review.--Except as otherwise
provided in this title, no court shall have jurisdiction over--
(i) any claim or action for payment from, or any action
seeking a determination of rights with respect to, the
assets of any covered financial company for which the
Corporation has been appointed receiver, including any
assets which the Corporation may acquire from itself as
such receiver; or
(ii) any claim relating to any act or omission of such
covered financial company or the Corporation as receiver.
(E) Disposition of assets.--In exercising any right, power,
privilege, or authority as receiver in connection with any
covered financial company for which the Corporation is acting
as receiver under this section, the Corporation shall, to the
greatest extent practicable, conduct its operations in a manner
that--
(i) maximizes the net present value return from the
sale or disposition of such assets;
(ii) minimizes the amount of any loss realized in the
resolution of cases;
(iii) mitigates the potential for serious adverse
effects to the financial system;
(iv) ensures timely and adequate competition and fair
and consistent treatment of offerors; and
(v) prohibits discrimination on the basis of race, sex,
or ethnic group in the solicitation and consideration of
offers.
(10) Statute of limitations for actions brought by receiver.--
(A) In general.--Notwithstanding any provision of any
contract, the applicable statute of limitations with regard to
any action brought by the Corporation as receiver for a covered
financial company shall be--
(i) in the case of any contract claim, the longer of--
(I) the 6-year period beginning on the date on
which the claim accrues; or
(II) the period applicable under State law; and
(ii) in the case of any tort claim, the longer of--
(I) the 3-year period beginning on the date on
which the claim accrues; or
(II) the period applicable under State law.
(B) Date on which a claim accrues.--For purposes of
subparagraph (A), the date on which the statute of limitations
begins to run on any claim described in subparagraph (A) shall
be the later of--
(i) the date of the appointment of the Corporation as
receiver under this title; or
(ii) the date on which the cause of action accrues.
(C) Revival of expired state causes of action.--
(i) In general.--In the case of any tort claim
described in clause (ii) for which the applicable statute
of limitations under State law has expired not more than 5
years before the date of appointment of the Corporation as
receiver for a covered financial company, the Corporation
may bring an action as receiver on such claim without
regard to the expiration of the statute of limitations.
(ii) Claims described.--A tort claim referred to in
clause (i) is a claim arising from fraud, intentional
misconduct resulting in unjust enrichment, or intentional
misconduct resulting in substantial loss to the covered
financial company.
(11) Avoidable transfers.--
(A) Fraudulent transfers.--The Corporation, as receiver for
any covered financial company, may avoid a transfer of any
interest of the covered financial company in property, or any
obligation incurred by the covered financial company, that was
made or incurred at or within 2 years before the date on which
the Corporation was appointed receiver, if--
(i) the covered financial company voluntarily or
involuntarily--
(I) made such transfer or incurred such obligation
with actual intent to hinder, delay, or defraud any
entity to which the covered financial company was or
became, on or after the date on which such transfer was
made or such obligation was incurred, indebted; or
(II) received less than a reasonably equivalent
value in exchange for such transferor obligation; and
(ii) the covered financial company voluntarily or
involuntarily--
(I) was insolvent on the date that such transfer
was made or such obligation was incurred, or became
insolvent as a result of such transfer or obligation;
(II) was engaged in business or a transaction, or
was about to engage in business or a transaction, for
which any property remaining with the covered financial
company was an unreasonably small capital;
(III) intended to incur, or believed that the
covered financial company would incur, debts that would
be beyond the ability of the covered financial company
to pay as such debts matured; or
(IV) made such transfer to or for the benefit of an
insider, or incurred such obligation to or for the
benefit of an insider, under an employment contract and
not in the ordinary course of business.
(B) Preferential transfers.--The Corporation as receiver
for any covered financial company may avoid a transfer of an
interest of the covered financial company in property--
(i) to or for the benefit of a creditor;
(ii) for or on account of an antecedent debt that was
owed by the covered financial company before the transfer
was made;
(iii) that was made while the covered financial company
was insolvent;
(iv) that was made--
(I) 90 days or less before the date on which the
Corporation was appointed receiver; or
(II) more than 90 days, but less than 1 year before
the date on which the Corporation was appointed
receiver, if such creditor at the time of the transfer
was an insider; and
(v) that enables the creditor to receive more than the
creditor would receive if--
(I) the covered financial company had been
liquidated under chapter 7 of the Bankruptcy Code;
(II) the transfer had not been made; and
(III) the creditor received payment of such debt to
the extent provided by the provisions of chapter 7 of
the Bankruptcy Code.
(C) Post-receivership transactions.--The Corporation as
receiver for any covered financial company may avoid a transfer
of property of the receivership that occurred after the
Corporation was appointed receiver that was not authorized
under this title by the Corporation as receiver.
(D) Right of recovery.--To the extent that a transfer is
avoided under subparagraph (A), (B), or (C), the Corporation
may recover, for the benefit of the covered financial company,
the property transferred or, if a court so orders, the value of
such property (at the time of such transfer) from--
(i) the initial transferee of such transfer or the
person for whose benefit such transfer was made; or
(ii) any immediate or mediate transferee of any such
initial transferee.
(E) Rights of transferee or obligee.--The Corporation may
not recover under subparagraph (D)(ii) from--
(i) any transferee that takes for value, including in
satisfaction of or to secure a present or antecedent debt,
in good faith, and without knowledge of the voidability of
the transfer avoided; or
(ii) any immediate or mediate good faith transferee of
such transferee.
(F) Defenses.--Subject to the other provisions of this
title--
(i) a transferee or obligee from which the Corporation
seeks to recover a transfer or to avoid an obligation under
subparagraph (A), (B), (C), or (D) shall have the same
defenses available to a transferee or obligee from which a
trustee seeks to recover a transfer or avoid an obligation
under sections 547, 548, and 549 of the Bankruptcy Code;
and
(ii) the authority of the Corporation to recover a
transfer or avoid an obligation shall be subject to
subsections (b) and (c) of section 546, section 547(c), and
section 548(c) of the Bankruptcy Code.
(G) Rights under this section.--The rights of the
Corporation as receiver under this section shall be superior to
any rights of a trustee or any other party (other than a
Federal agency) under the Bankruptcy Code.
(H) Rules of construction; definitions.--For purposes of--
(i) subparagraphs (A) and (B)--
(I) the term ``insider'' has the same meaning as in
section 101(31) of the Bankruptcy Code;
(II) a transfer is made when such transfer is so
perfected that a bona fide purchaser from the covered
financial company against whom applicable law permits
such transfer to be perfected cannot acquire an
interest in the property transferred that is superior
to the interest in such property of the transferee, but
if such transfer is not so perfected before the date on
which the Corporation is appointed as receiver for the
covered financial company, such transfer is made
immediately before the date of such appointment; and
(III) the term ``value'' means property, or
satisfaction or securing of a present or antecedent
debt of the covered financial company, but does not
include an unperformed promise to furnish support to
the covered financial company; and
(ii) subparagraph (B)--
(I) the covered financial company is presumed to
have been insolvent on and during the 90-day period
immediately preceding the date of appointment of the
Corporation as receiver; and
(II) the term ``insolvent'' has the same meaning as
in section 101(32) of the Bankruptcy Code.
(12) Setoff.--
(A) Generally.--Except as otherwise provided in this title,
any right of a creditor to offset a mutual debt owed by the
creditor to any covered financial company that arose before the
Corporation was appointed as receiver for the covered financial
company against a claim of such creditor may be asserted if
enforceable under applicable noninsolvency law, except to the
extent that--
(i) the claim of the creditor against the covered
financial company is disallowed;
(ii) the claim was transferred, by an entity other than
the covered financial company, to the creditor--
(I) after the Corporation was appointed as receiver
of the covered financial company; or
(II)(aa) after the 90-day period preceding the date
on which the Corporation was appointed as receiver for
the covered financial company; and
(bb) while the covered financial company was
insolvent (except for a setoff in connection with a
qualified financial contract); or
(iii) the debt owed to the covered financial company
was incurred by the covered financial company--
(I) after the 90-day period preceding the date on
which the Corporation was appointed as receiver for the
covered financial company;
(II) while the covered financial company was
insolvent; and
(III) for the purpose of obtaining a right of
setoff against the covered financial company (except
for a setoff in connection with a qualified financial
contract).
(B) Insufficiency.--
(i) In general.--Except with respect to a setoff in
connection with a qualified financial contract, if a
creditor offsets a mutual debt owed to the covered
financial company against a claim of the covered financial
company on or within the 90-day period preceding the date
on which the Corporation is appointed as receiver for the
covered financial company, the Corporation may recover from
the creditor the amount so offset, to the extent that any
insufficiency on the date of such setoff is less than the
insufficiency on the later of--
(I) the date that is 90 days before the date on
which the Corporation is appointed as receiver for the
covered financial company; or
(II) the first day on which there is an
insufficiency during the 90-day period preceding the
date on which the Corporation is appointed as receiver
for the covered financial company.
(ii) Definition of insufficiency.--In this
subparagraph, the term ``insufficiency'' means the amount,
if any, by which a claim against the covered financial
company exceeds a mutual debt owed to the covered financial
company by the holder of such claim.
(C) Insolvency.--The term ``insolvent'' has the same
meaning as in section 101(32) of the Bankruptcy Code.
(D) Presumption of insolvency.--For purposes of this
paragraph, the covered financial company is presumed to have
been insolvent on and during the 90-day period preceding the
date of appointment of the Corporation as receiver.
(E) Limitation.--Nothing in this paragraph (12) shall be
the basis for any right of setoff where no such right exists
under applicable noninsolvency law.
(F) Priority claim.--Except as otherwise provided in this
title, the Corporation as receiver for the covered financial
company may sell or transfer any assets free and clear of the
setoff rights of any party, except that such party shall be
entitled to a claim, subordinate to the claims payable under
subparagraphs (A), (B), (C), and (D) of subsection (b)(1), but
senior to all other unsecured liabilities defined in subsection
(b)(1)(E), in an amount equal to the value of such setoff
rights.
(13) Attachment of assets and other injunctive relief.--Subject
to paragraph (14), any court of competent jurisdiction may, at the
request of the Corporation as receiver for a covered financial
company, issue an order in accordance with Rule 65 of the Federal
Rules of Civil Procedure, including an order placing the assets of
any person designated by the Corporation under the control of the
court and appointing a trustee to hold such assets.
(14) Standards.--
(A) Showing.--Rule 65 of the Federal Rules of Civil
Procedure shall apply with respect to any proceeding under
paragraph (13), without regard to the requirement that the
applicant show that the injury, loss, or damage is irreparable
and immediate.
(B) State proceeding.--If, in the case of any proceeding in
a State court, the court determines that rules of civil
procedure available under the laws of the State provide
substantially similar protections of the right of the parties
to due process as provided under Rule 65 (as modified with
respect to such proceeding by subparagraph (A)), the relief
sought by the Corporation pursuant to paragraph (14) may be
requested under the laws of such State.
(15) Treatment of claims arising from breach of contracts
executed by the corporation as receiver.--Notwithstanding any other
provision of this title, any final and non-appealable judgment for
monetary damages entered against the Corporation as receiver for a
covered financial company for the breach of an agreement executed
or approved by the Corporation after the date of its appointment
shall be paid as an administrative expense of the receiver. Nothing
in this paragraph shall be construed to limit the power of a
receiver to exercise any rights under contract or law, including to
terminate, breach, cancel, or otherwise discontinue such agreement.
(16) Accounting and recordkeeping requirements.--
(A) In general.--The Corporation as receiver for a covered
financial company shall, consistent with the accounting and
reporting practices and procedures established by the
Corporation, maintain a full accounting of each receivership or
other disposition of any covered financial company.
(B) Annual accounting or report.--With respect to each
receivership to which the Corporation is appointed, the
Corporation shall make an annual accounting or report, as
appropriate, available to the Secretary and the Comptroller
General of the United States.
(C) Availability of reports.--Any report prepared pursuant
to subparagraph (B) and section 203(c)(3) shall be made
available to the public by the Corporation.
(D) Recordkeeping requirement.--
(i) In general.--The Corporation shall prescribe such
regulations and establish such retention schedules as are
necessary to maintain the documents and records of the
Corporation generated in exercising the authorities of this
title and the records of a covered financial company for
which the Corporation is appointed receiver, with due
regard for--
(I) the avoidance of duplicative record retention;
and
(II) the expected evidentiary needs of the
Corporation as receiver for a covered financial company
and the public regarding the records of covered
financial companies.
(ii) Retention of records.--Unless otherwise required
by applicable Federal law or court order, the Corporation
may not, at any time, destroy any records that are subject
to clause (i).
(iii) Records defined.--As used in this subparagraph,
the terms ``records'' and ``records of a covered financial
company'' mean any document, book, paper, map, photograph,
microfiche, microfilm, computer or electronically-created
record generated or maintained by the covered financial
company in the course of and necessary to its transaction
of business.
(b) Priority of Expenses and Unsecured Claims.--
(1) In general.--Unsecured claims against a covered financial
company, or the Corporation as receiver for such covered financial
company under this section, that are proven to the satisfaction of
the receiver shall have priority in the following order:
(A) Administrative expenses of the receiver.
(B) Any amounts owed to the United States, unless the
United States agrees or consents otherwise.
(C) Wages, salaries, or commissions, including vacation,
severance, and sick leave pay earned by an individual (other
than an individual described in subparagraph (G)), but only to
the extent of $11,725 for each individual (as indexed for
inflation, by regulation of the Corporation) earned not later
than 180 days before the date of appointment of the Corporation
as receiver.
(D) Contributions owed to employee benefit plans arising
from services rendered not later than 180 days before the date
of appointment of the Corporation as receiver, to the extent of
the number of employees covered by each such plan, multiplied
by $11,725 (as indexed for inflation, by regulation of the
Corporation), less the aggregate amount paid to such employees
under subparagraph (C), plus the aggregate amount paid by the
receivership on behalf of such employees to any other employee
benefit plan.
(E) Any other general or senior liability of the covered
financial company (which is not a liability described under
subparagraph (F), (G), or (H)).
(F) Any obligation subordinated to general creditors (which
is not an obligation described under subparagraph (G) or (H)).
(G) Any wages, salaries, or commissions, including
vacation, severance, and sick leave pay earned, owed to senior
executives and directors of the covered financial company.
(H) Any obligation to shareholders, members, general
partners, limited partners, or other persons, with interests in
the equity of the covered financial company arising as a result
of their status as shareholders, members, general partners,
limited partners, or other persons with interests in the equity
of the covered financial company.
(2) Post-receivership financing priority.--In the event that
the Corporation, as receiver for a covered financial company, is
unable to obtain unsecured credit for the covered financial company
from commercial sources, the Corporation as receiver may obtain
credit or incur debt on the part of the covered financial company,
which shall have priority over any or all administrative expenses
of the receiver under paragraph (1)(A).
(3) Claims of the united states.--Unsecured claims of the
United States shall, at a minimum, have a higher priority than
liabilities of the covered financial company that count as
regulatory capital.
(4) Creditors similarly situated.--All claimants of a covered
financial company that are similarly situated under paragraph (1)
shall be treated in a similar manner, except that the Corporation
may take any action (including making payments, subject to
subsection (o)(1)(D)(i)) that does not comply with this subsection,
if--
(A) the Corporation determines that such action is
necessary--
(i) to maximize the value of the assets of the covered
financial company;
(ii) to initiate and continue operations essential to
implementation of the receivership or any bridge financial
company;
(iii) to maximize the present value return from the
sale or other disposition of the assets of the covered
financial company; or
(iv) to minimize the amount of any loss realized upon
the sale or other disposition of the assets of the covered
financial company; and
(B) all claimants that are similarly situated under
paragraph (1) receive not less than the amount provided in
paragraphs (2) and (3) of subsection (d).
(5) Secured claims unaffected.--This section shall not affect
secured claims or security entitlements in respect of assets or
property held by the covered financial company, except to the
extent that the security is insufficient to satisfy the claim, and
then only with regard to the difference between the claim and the
amount realized from the security.
(6) Priority of expenses and unsecured claims in the orderly
liquidation of sipc member.--Where the Corporation is appointed as
receiver for a covered broker or dealer, unsecured claims against
such covered broker or dealer, or the Corporation as receiver for
such covered broker or dealer under this section, that are proven
to the satisfaction of the receiver under section 205(e), shall
have the priority prescribed in paragraph (1), except that--
(A) SIPC shall be entitled to recover administrative
expenses incurred in performing its responsibilities under
section 205 on an equal basis with the Corporation, in
accordance with paragraph (1)(A);
(B) the Corporation shall be entitled to recover any
amounts paid to customers or to SIPC pursuant to section
205(f), in accordance with paragraph (1)(B);
(C) SIPC shall be entitled to recover any amounts paid out
of the SIPC Fund to meet its obligations under section 205 and
under the Securities Investor Protection Act of 1970 (15 U.S.C.
78aaa et seq.), which claim shall be subordinate to the claims
payable under subparagraphs (A) and (B) of paragraph (1), but
senior to all other claims; and
(D) the Corporation may, after paying any proven claims to
customers under section 205 and the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.), and as
provided above, pay dividends on other proven claims, in its
discretion, and to the extent that funds are available, in
accordance with the priorities set forth in paragraph (1).
(c) Provisions Relating to Contracts Entered Into Before
Appointment of Receiver.--
(1) Authority to repudiate contracts.--In addition to any other
rights that a receiver may have, the Corporation as receiver for
any covered financial company may disaffirm or repudiate any
contract or lease--
(A) to which the covered financial company is a party;
(B) the performance of which the Corporation as receiver,
in the discretion of the Corporation, determines to be
burdensome; and
(C) the disaffirmance or repudiation of which the
Corporation as receiver determines, in the discretion of the
Corporation, will promote the orderly administration of the
affairs of the covered financial company.
(2) Timing of repudiation.--The Corporation, as receiver for
any covered financial company, shall determine whether or not to
exercise the rights of repudiation under this section within a
reasonable period of time.
(3) Claims for damages for repudiation.--
(A) In general.--Except as provided in paragraphs (4), (5),
and (6) and in subparagraphs (C), (D), and (E) of this
paragraph, the liability of the Corporation as receiver for a
covered financial company for the disaffirmance or repudiation
of any contract pursuant to paragraph (1) shall be--
(i) limited to actual direct compensatory damages; and
(ii) determined as of--
(I) the date of the appointment of the Corporation
as receiver; or
(II) in the case of any contract or agreement
referred to in paragraph (8), the date of the
disaffirmance or repudiation of such contract or
agreement.
(B) No liability for other damages.--For purposes of
subparagraph (A), the term ``actual direct compensatory
damages'' does not include--
(i) punitive or exemplary damages;
(ii) damages for lost profits or opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of qualified
financial contracts.--In the case of any qualified financial
contract or agreement to which paragraph (8) applies,
compensatory damages shall be--
(i) deemed to include normal and reasonable costs of
cover or other reasonable measures of damages utilized in
the industries for such contract and agreement claims; and
(ii) paid in accordance with this paragraph and
subsection (d), except as otherwise specifically provided
in this subsection.
(D) Measure of damages for repudiation or disaffirmance of
debt obligation.--In the case of any debt for borrowed money or
evidenced by a security, actual direct compensatory damages
shall be no less than the amount lent plus accrued interest
plus any accreted original issue discount as of the date the
Corporation was appointed receiver of the covered financial
company and, to the extent that an allowed secured claim is
secured by property the value of which is greater than the
amount of such claim and any accrued interest through the date
of repudiation or disaffirmance, such accrued interest pursuant
to paragraph (1).
(E) Measure of damages for repudiation or disaffirmance of
contingent obligation.--In the case of any contingent
obligation of a covered financial company consisting of any
obligation under a guarantee, letter of credit, loan
commitment, or similar credit obligation, the Corporation may,
by rule or regulation, prescribe that actual direct
compensatory damages shall be no less than the estimated value
of the claim as of the date the Corporation was appointed
receiver of the covered financial company, as such value is
measured based on the likelihood that such contingent claim
would become fixed and the probable magnitude thereof.
(4) Leases under which the covered financial company is the
lessee.--
(A) In general.--If the Corporation as receiver disaffirms
or repudiates a lease under which the covered financial company
is the lessee, the receiver shall not be liable for any damages
(other than damages determined pursuant to subparagraph (B))
for the disaffirmance or repudiation of such lease.
(B) Payments of rent.--Notwithstanding subparagraph (A),
the lessor under a lease to which subparagraph (A) would
otherwise apply shall--
(i) be entitled to the contractual rent accruing before
the later of the date on which--
(I) the notice of disaffirmance or repudiation is
mailed; or
(II) the disaffirmance or repudiation becomes
effective, unless the lessor is in default or breach of
the terms of the lease;
(ii) have no claim for damages under any acceleration
clause or other penalty provision in the lease; and
(iii) have a claim for any unpaid rent, subject to all
appropriate offsets and defenses, due as of the date of the
appointment which shall be paid in accordance with this
paragraph and subsection (d).
(5) Leases under which the covered financial company is the
lessor.--
(A) In general.--If the Corporation as receiver for a
covered financial company repudiates an unexpired written lease
of real property of the covered financial company under which
the covered financial company is the lessor and the lessee is
not, as of the date of such repudiation, in default, the lessee
under such lease may either--
(i) treat the lease as terminated by such repudiation;
or
(ii) remain in possession of the leasehold interest for
the balance of the term of the lease, unless the lessee
defaults under the terms of the lease after the date of
such repudiation.
(B) Provisions applicable to lessee remaining in
possession.--If any lessee under a lease described in
subparagraph (A) remains in possession of a leasehold interest
pursuant to clause (ii) of subparagraph (A)--
(i) the lessee--
(I) shall continue to pay the contractual rent
pursuant to the terms of the lease after the date of
the repudiation of such lease; and
(II) may offset against any rent payment which
accrues after the date of the repudiation of the lease,
any damages which accrue after such date due to the
nonperformance of any obligation of the covered
financial company under the lease after such date; and
(ii) the Corporation as receiver shall not be liable to
the lessee for any damages arising after such date as a
result of the repudiation, other than the amount of any
offset allowed under clause (i)(II).
(6) Contracts for the sale of real property.--
(A) In general.--If the receiver repudiates any contract
(which meets the requirements of subsection (a)(6)) for the
sale of real property, and the purchaser of such real property
under such contract is in possession and is not, as of the date
of such repudiation, in default, such purchaser may either--
(i) treat the contract as terminated by such
repudiation; or
(ii) remain in possession of such real property.
(B) Provisions applicable to purchaser remaining in
possession.--If any purchaser of real property under any
contract described in subparagraph (A) remains in possession of
such property pursuant to clause (ii) of subparagraph (A)--
(i) the purchaser--
(I) shall continue to make all payments due under
the contract after the date of the repudiation of the
contract; and
(II) may offset against any such payments any
damages which accrue after such date due to the
nonperformance (after such date) of any obligation of
the covered financial company under the contract; and
(ii) the Corporation as receiver shall--
(I) not be liable to the purchaser for any damages
arising after such date as a result of the repudiation,
other than the amount of any offset allowed under
clause (i)(II);
(II) deliver title to the purchaser in accordance
with the provisions of the contract; and
(III) have no obligation under the contract other
than the performance required under subclause (II).
(C) Assignment and sale allowed.--
(i) In general.--No provision of this paragraph shall
be construed as limiting the right of the Corporation as
receiver to assign the contract described in subparagraph
(A) and sell the property, subject to the contract and the
provisions of this paragraph.
(ii) No liability after assignment and sale.--If an
assignment and sale described in clause (i) is consummated,
the Corporation as receiver shall have no further liability
under the contract described in subparagraph (A) or with
respect to the real property which was the subject of such
contract.
(7) Provisions applicable to service contracts.--
(A) Services performed before appointment.--In the case of
any contract for services between any person and any covered
financial company for which the Corporation has been appointed
receiver, any claim of such person for services performed
before the date of appointment shall be--
(i) a claim to be paid in accordance with subsections
(a), (b), and (d); and
(ii) deemed to have arisen as of the date on which the
receiver was appointed.
(B) Services performed after appointment and prior to
repudiation.--If, in the case of any contract for services
described in subparagraph (A), the Corporation as receiver
accepts performance by the other person before making any
determination to exercise the right of repudiation of such
contract under this section--
(i) the other party shall be paid under the terms of
the contract for the services performed; and
(ii) the amount of such payment shall be treated as an
administrative expense of the receivership.
(C) Acceptance of performance no bar to subsequent
repudiation.--The acceptance by the Corporation as receiver for
services referred to in subparagraph (B) in connection with a
contract described in subparagraph (B) shall not affect the
right of the Corporation as receiver to repudiate such contract
under this section at any time after such performance.
(8) Certain qualified financial contracts.--
(A) Rights of parties to contracts.--Subject to subsection
(a)(8) and paragraphs (9) and (10) of this subsection, and
notwithstanding any other provision of this section, any other
provision of Federal law, or the law of any State, no person
shall be stayed or prohibited from exercising--
(i) any right that such person has to cause the
termination, liquidation, or acceleration of any qualified
financial contract with a covered financial company which
arises upon the date of appointment of the Corporation as
receiver for such covered financial company or at any time
after such appointment;
(ii) any right under any security agreement or
arrangement or other credit enhancement related to one or
more qualified financial contracts described in clause (i);
or
(iii) any right to offset or net out any termination
value, payment amount, or other transfer obligation arising
under or in connection with 1 or more contracts or
agreements described in clause (i), including any master
agreement for such contracts or agreements.
(B) Applicability of other provisions.--Subsection (a)(8)
shall apply in the case of any judicial action or proceeding
brought against the Corporation as receiver referred to in
subparagraph (A), or the subject covered financial company, by
any party to a contract or agreement described in subparagraph
(A)(i) with such covered financial company.
(C) Certain transfers not avoidable.--
(i) In general.--Notwithstanding subsection (a)(11),
(a)(12), or (c)(12), section 5242 of the Revised Statutes
of the United States, or any other provision of Federal or
State law relating to the avoidance of preferential or
fraudulent transfers, the Corporation, whether acting as
the Corporation or as receiver for a covered financial
company, may not avoid any transfer of money or other
property in connection with any qualified financial
contract with a covered financial company.
(ii) Exception for certain transfers.--Clause (i) shall
not apply to any transfer of money or other property in
connection with any qualified financial contract with a
covered financial company if the transferee had actual
intent to hinder, delay, or defraud such company, the
creditors of such company, or the Corporation as receiver
appointed for such company.
(D) Certain contracts and agreements defined.--For purposes
of this subsection, the following definitions shall apply:
(i) Qualified financial contract.--The term ``qualified
financial contract'' means any securities contract,
commodity contract, forward contract, repurchase agreement,
swap agreement, and any similar agreement that the
Corporation determines by regulation, resolution, or order
to be a qualified financial contract for purposes of this
paragraph.
(ii) Securities contract.--The term ``securities
contract''--
(I) means a contract for the purchase, sale, or
loan of a security, a certificate of deposit, a
mortgage loan, any interest in a mortgage loan, a group
or index of securities, certificates of deposit, or
mortgage loans or interests therein (including any
interest therein or based on the value thereof), or any
option on any of the foregoing, including any option to
purchase or sell any such security, certificate of
deposit, mortgage loan, interest, group or index, or
option, and including any repurchase or reverse
repurchase transaction on any such security,
certificate of deposit, mortgage loan, interest, group
or index, or option (whether or not such repurchase or
reverse repurchase transaction is a ``repurchase
agreement'', as defined in clause (v));
(II) does not include any purchase, sale, or
repurchase obligation under a participation in a
commercial mortgage loan unless the Corporation
determines by regulation, resolution, or order to
include any such agreement within the meaning of such
term;
(III) means any option entered into on a national
securities exchange relating to foreign currencies;
(IV) means the guarantee (including by novation) by
or to any securities clearing agency of any settlement
of cash, securities, certificates of deposit, mortgage
loans or interests therein, group or index of
securities, certificates of deposit or mortgage loans
or interests therein (including any interest therein or
based on the value thereof) or an option on any of the
foregoing, including any option to purchase or sell any
such security, certificate of deposit, mortgage loan,
interest, group or index, or option (whether or not
such settlement is in connection with any agreement or
transaction referred to in subclauses (I) through (XII)
(other than subclause (II)));
(V) means any margin loan;
(VI) means any extension of credit for the
clearance or settlement of securities transactions;
(VII) means any loan transaction coupled with a
securities collar transaction, any prepaid securities
forward transaction, or any total return swap
transaction coupled with a securities sale transaction;
(VIII) means any other agreement or transaction
that is similar to any agreement or transaction
referred to in this clause;
(IX) means any combination of the agreements or
transactions referred to in this clause;
(X) means any option to enter into any agreement or
transaction referred to in this clause;
(XI) means a master agreement that provides for an
agreement or transaction referred to in any of
subclauses (I) through (X), other than subclause (II),
together with all supplements to any such master
agreement, without regard to whether the master
agreement provides for an agreement or transaction that
is not a securities contract under this clause, except
that the master agreement shall be considered to be a
securities contract under this clause only with respect
to each agreement or transaction under the master
agreement that is referred to in any of subclauses (I)
through (X), other than subclause (II); and
(XII) means any security agreement or arrangement
or other credit enhancement related to any agreement or
transaction referred to in this clause, including any
guarantee or reimbursement obligation in connection
with any agreement or transaction referred to in this
clause.
(iii) Commodity contract.--The term ``commodity
contract'' means--
(I) with respect to a futures commission merchant,
a contract for the purchase or sale of a commodity for
future delivery on, or subject to the rules of, a
contract market or board of trade;
(II) with respect to a foreign futures commission
merchant, a foreign future;
(III) with respect to a leverage transaction
merchant, a leverage transaction;
(IV) with respect to a clearing organization, a
contract for the purchase or sale of a commodity for
future delivery on, or subject to the rules of, a
contract market or board of trade that is cleared by
such clearing organization, or commodity option traded
on, or subject to the rules of, a contract market or
board of trade that is cleared by such clearing
organization;
(V) with respect to a commodity options dealer, a
commodity option;
(VI) any other agreement or transaction that is
similar to any agreement or transaction referred to in
this clause;
(VII) any combination of the agreements or
transactions referred to in this clause;
(VIII) any option to enter into any agreement or
transaction referred to in this clause;
(IX) a master agreement that provides for an
agreement or transaction referred to in any of
subclauses (I) through (VIII), together with all
supplements to any such master agreement, without
regard to whether the master agreement provides for an
agreement or transaction that is not a commodity
contract under this clause, except that the master
agreement shall be considered to be a commodity
contract under this clause only with respect to each
agreement or transaction under the master agreement
that is referred to in any of subclauses (I) through
(VIII); or
(X) any security agreement or arrangement or other
credit enhancement related to any agreement or
transaction referred to in this clause, including any
guarantee or reimbursement obligation in connection
with any agreement or transaction referred to in this
clause.
(iv) Forward contract.--The term ``forward contract''
means--
(I) a contract (other than a commodity contract)
for the purchase, sale, or transfer of a commodity or
any similar good, article, service, right, or interest
which is presently or in the future becomes the subject
of dealing in the forward contract trade, or product or
byproduct thereof, with a maturity date that is more
than 2 days after the date on which the contract is
entered into, including a repurchase or reverse
repurchase transaction (whether or not such repurchase
or reverse repurchase transaction is a ``repurchase
agreement'', as defined in clause (v)), consignment,
lease, swap, hedge transaction, deposit, loan, option,
allocated transaction, unallocated transaction, or any
other similar agreement;
(II) any combination of agreements or transactions
referred to in subclauses (I) and (III);
(III) any option to enter into any agreement or
transaction referred to in subclause (I) or (II);
(IV) a master agreement that provides for an
agreement or transaction referred to in subclause (I),
(II), or (III), together with all supplements to any
such master agreement, without regard to whether the
master agreement provides for an agreement or
transaction that is not a forward contract under this
clause, except that the master agreement shall be
considered to be a forward contract under this clause
only with respect to each agreement or transaction
under the master agreement that is referred to in
subclause (I), (II), or (III); or
(V) any security agreement or arrangement or other
credit enhancement related to any agreement or
transaction referred to in subclause (I), (II), (III),
or (IV), including any guarantee or reimbursement
obligation in connection with any agreement or
transaction referred to in any such subclause.
(v) Repurchase agreement.--The term ``repurchase
agreement'' (which definition also applies to a reverse
repurchase agreement)--
(I) means an agreement, including related terms,
which provides for the transfer of one or more
certificates of deposit, mortgage related securities
(as such term is defined in section 3 of the Securities
Exchange Act of 1934), mortgage loans, interests in
mortgage-related securities or mortgage loans, eligible
bankers' acceptances, qualified foreign government
securities (which, for purposes of this clause, means a
security that is a direct obligation of, or that is
fully guaranteed by, the central government of a member
of the Organization for Economic Cooperation and
Development, as determined by regulation or order
adopted by the Board of Governors), or securities that
are direct obligations of, or that are fully guaranteed
by, the United States or any agency of the United
States against the transfer of funds by the transferee
of such certificates of deposit, eligible bankers'
acceptances, securities, mortgage loans, or interests
with a simultaneous agreement by such transferee to
transfer to the transferor thereof certificates of
deposit, eligible bankers' acceptances, securities,
mortgage loans, or interests as described above, at a
date certain not later than 1 year after such transfers
or on demand, against the transfer of funds, or any
other similar agreement;
(II) does not include any repurchase obligation
under a participation in a commercial mortgage loan,
unless the Corporation determines, by regulation,
resolution, or order to include any such participation
within the meaning of such term;
(III) means any combination of agreements or
transactions referred to in subclauses (I) and (IV);
(IV) means any option to enter into any agreement
or transaction referred to in subclause (I) or (III);
(V) means a master agreement that provides for an
agreement or transaction referred to in subclause (I),
(III), or (IV), together with all supplements to any
such master agreement, without regard to whether the
master agreement provides for an agreement or
transaction that is not a repurchase agreement under
this clause, except that the master agreement shall be
considered to be a repurchase agreement under this
subclause only with respect to each agreement or
transaction under the master agreement that is referred
to in subclause (I), (III), or (IV); and
(VI) means any security agreement or arrangement or
other credit enhancement related to any agreement or
transaction referred to in subclause (I), (III), (IV),
or (V), including any guarantee or reimbursement
obligation in connection with any agreement or
transaction referred to in any such subclause.
(vi) Swap agreement.--The term ``swap agreement''
means--
(I) any agreement, including the terms and
conditions incorporated by reference in any such
agreement, which is an interest rate swap, option,
future, or forward agreement, including a rate floor,
rate cap, rate collar, cross-currency rate swap, and
basis swap; a spot, same day-tomorrow, tomorrow-next,
forward, or other foreign exchange, precious metals, or
other commodity agreement; a currency swap, option,
future, or forward agreement; an equity index or equity
swap, option, future, or forward agreement; a debt
index or debt swap, option, future, or forward
agreement; a total return, credit spread or credit
swap, option, future, or forward agreement; a commodity
index or commodity swap, option, future, or forward
agreement; weather swap, option, future, or forward
agreement; an emissions swap, option, future, or
forward agreement; or an inflation swap, option,
future, or forward agreement;
(II) any agreement or transaction that is similar
to any other agreement or transaction referred to in
this clause and that is of a type that has been, is
presently, or in the future becomes, the subject of
recurrent dealings in the swap or other derivatives
markets (including terms and conditions incorporated by
reference in such agreement) and that is a forward,
swap, future, option, or spot transaction on one or
more rates, currencies, commodities, equity securities
or other equity instruments, debt securities or other
debt instruments, quantitative measures associated with
an occurrence, extent of an occurrence, or contingency
associated with a financial, commercial, or economic
consequence, or economic or financial indices or
measures of economic or financial risk or value;
(III) any combination of agreements or transactions
referred to in this clause;
(IV) any option to enter into any agreement or
transaction referred to in this clause;
(V) a master agreement that provides for an
agreement or transaction referred to in subclause (I),
(II), (III), or (IV), together with all supplements to
any such master agreement, without regard to whether
the master agreement contains an agreement or
transaction that is not a swap agreement under this
clause, except that the master agreement shall be
considered to be a swap agreement under this clause
only with respect to each agreement or transaction
under the master agreement that is referred to in
subclause (I), (II), (III), or (IV); and
(VI) any security agreement or arrangement or other
credit enhancement related to any agreement or
transaction referred to in any of subclauses (I)
through (V), including any guarantee or reimbursement
obligation in connection with any agreement or
transaction referred to in any such clause.
(vii) Definitions relating to default.--When used in
this paragraph and paragraphs (9) and (10)--
(I) the term ``default'' means, with respect to a
covered financial company, any adjudication or other
official decision by any court of competent
jurisdiction, or other public authority pursuant to
which the Corporation has been appointed receiver; and
(II) the term ``in danger of default'' means a
covered financial company with respect to which the
Corporation or appropriate State authority has
determined that--
(aa) in the opinion of the Corporation or such
authority--
(AA) the covered financial company is not
likely to be able to pay its obligations in the
normal course of business; and
(BB) there is no reasonable prospect that
the covered financial company will be able to
pay such obligations without Federal
assistance; or
(bb) in the opinion of the Corporation or such
authority--
(AA) the covered financial company has
incurred or is likely to incur losses that will
deplete all or substantially all of its
capital; and
(BB) there is no reasonable prospect that
the capital will be replenished without Federal
assistance.
(viii) Treatment of master agreement as one
agreement.--Any master agreement for any contract or
agreement described in any of clauses (i) through (vi) (or
any master agreement for such master agreement or
agreements), together with all supplements to such master
agreement, shall be treated as a single agreement and a
single qualified financial contact. If a master agreement
contains provisions relating to agreements or transactions
that are not themselves qualified financial contracts, the
master agreement shall be deemed to be a qualified
financial contract only with respect to those transactions
that are themselves qualified financial contracts.
(ix) Transfer.--The term ``transfer'' means every mode,
direct or indirect, absolute or conditional, voluntary or
involuntary, of disposing of or parting with property or
with an interest in property, including retention of title
as a security interest and foreclosure of the equity of
redemption of the covered financial company.
(x) Person.--The term ``person'' includes any
governmental entity in addition to any entity included in
the definition of such term in section 1, title 1, United
States Code.
(E) Clarification.--No provision of law shall be construed
as limiting the right or power of the Corporation, or
authorizing any court or agency to limit or delay, in any
manner, the right or power of the Corporation to transfer any
qualified financial contract or to disaffirm or repudiate any
such contract in accordance with this subsection.
(F) Walkaway clauses not effective.--
(i) In general.--Notwithstanding the provisions of
subparagraph (A) of this paragraph and sections 403 and 404
of the Federal Deposit Insurance Corporation Improvement
Act of 1991, no walkaway clause shall be enforceable in a
qualified financial contract of a covered financial company
in default.
(ii) Limited suspension of certain obligations.--In the
case of a qualified financial contract referred to in
clause (i), any payment or delivery obligations otherwise
due from a party pursuant to the qualified financial
contract shall be suspended from the time at which the
Corporation is appointed as receiver until the earlier of--
(I) the time at which such party receives notice
that such contract has been transferred pursuant to
paragraph (10)(A); or
(II) 5:00 p.m. (eastern time) on the business day
following the date of the appointment of the
Corporation as receiver.
(iii) Walkaway clause defined.--For purposes of this
subparagraph, the term ``walkaway clause'' means any
provision in a qualified financial contract that suspends,
conditions, or extinguishes a payment obligation of a
party, in whole or in part, or does not create a payment
obligation of a party that would otherwise exist, solely
because of the status of such party as a nondefaulting
party in connection with the insolvency of a covered
financial company that is a party to the contract or the
appointment of or the exercise of rights or powers by the
Corporation as receiver for such covered financial company,
and not as a result of the exercise by a party of any right
to offset, setoff, or net obligations that exist under the
contract, any other contract between those parties, or
applicable law.
(G) Certain obligations to clearing organizations.--In the
event that the Corporation has been appointed as receiver for a
covered financial company which is a party to any qualified
financial contract cleared by or subject to the rules of a
clearing organization (as defined in paragraph (9)(D)), the
receiver shall use its best efforts to meet all margin,
collateral, and settlement obligations of the covered financial
company that arise under qualified financial contracts (other
than any margin, collateral, or settlement obligation that is
not enforceable against the receiver under paragraph (8)(F)(i)
or paragraph (10)(B)), as required by the rules of the clearing
organization when due. Notwithstanding any other provision of
this title, if the receiver fails to satisfy any such margin,
collateral, or settlement obligations under the rules of the
clearing organization, the clearing organization shall have the
immediate right to exercise, and shall not be stayed from
exercising, all of its rights and remedies under its rules and
applicable law with respect to any qualified financial contract
of the covered financial company, including, without
limitation, the right to liquidate all positions and collateral
of such covered financial company under the company's qualified
financial contracts, and suspend or cease to act for such
covered financial company, all in accordance with the rules of
the clearing organization.
(H) Recordkeeping.--
(i) Joint rulemaking.--The Federal primary financial
regulatory agencies shall jointly prescribe regulations
requiring that financial companies maintain such records
with respect to qualified financial contracts (including
market valuations) that the Federal primary financial
regulatory agencies determine to be necessary or
appropriate in order to assist the Corporation as receiver
for a covered financial company in being able to exercise
its rights and fulfill its obligations under this paragraph
or paragraph (9) or (10).
(ii) Time frame.--The Federal primary financial
regulatory agencies shall prescribe joint final or interim
final regulations not later than 24 months after the date
of enactment of this Act.
(iii) Back-up rulemaking authority.--If the Federal
primary financial regulatory agencies do not prescribe
joint final or interim final regulations within the time
frame in clause (ii), the Chairperson of the Council shall
prescribe, in consultation with the Corporation, the
regulations required by clause (i).
(iv) Categorization and tiering.--The joint regulations
prescribed under clause (i) shall, as appropriate,
differentiate among financial companies by taking into
consideration their size, risk, complexity, leverage,
frequency and dollar amount of qualified financial
contracts, interconnectedness to the financial system, and
any other factors deemed appropriate.
(9) Transfer of qualified financial contracts.--
(A) In general.--In making any transfer of assets or
liabilities of a covered financial company in default, which
includes any qualified financial contract, the Corporation as
receiver for such covered financial company shall either--
(i) transfer to one financial institution, other than a
financial institution for which a conservator, receiver,
trustee in bankruptcy, or other legal custodian has been
appointed or which is otherwise the subject of a bankruptcy
or insolvency proceeding--
(I) all qualified financial contracts between any
person or any affiliate of such person and the covered
financial company in default;
(II) all claims of such person or any affiliate of
such person against such covered financial company
under any such contract (other than any claim which,
under the terms of any such contract, is subordinated
to the claims of general unsecured creditors of such
company);
(III) all claims of such covered financial company
against such person or any affiliate of such person
under any such contract; and
(IV) all property securing or any other credit
enhancement for any contract described in subclause (I)
or any claim described in subclause (II) or (III) under
any such contract; or
(ii) transfer none of the qualified financial
contracts, claims, property or other credit enhancement
referred to in clause (i) (with respect to such person and
any affiliate of such person).
(B) Transfer to foreign bank, financial institution, or
branch or agency thereof.--In transferring any qualified
financial contracts and related claims and property under
subparagraph (A)(i), the Corporation as receiver for the
covered financial company shall not make such transfer to a
foreign bank, financial institution organized under the laws of
a foreign country, or a branch or agency of a foreign bank or
financial institution unless, under the law applicable to such
bank, financial institution, branch or agency, to the qualified
financial contracts, and to any netting contract, any security
agreement or arrangement or other credit enhancement related to
one or more qualified financial contracts, the contractual
rights of the parties to such qualified financial contracts,
netting contracts, security agreements or arrangements, or
other credit enhancements are enforceable substantially to the
same extent as permitted under this section.
(C) Transfer of contracts subject to the rules of a
clearing organization.--In the event that the Corporation as
receiver for a financial institution transfers any qualified
financial contract and related claims, property, or credit
enhancement pursuant to subparagraph (A)(i) and such contract
is cleared by or subject to the rules of a clearing
organization, the clearing organization shall not be required
to accept the transferee as a member by virtue of the transfer.
(D) Definitions.--For purposes of this paragraph--
(i) the term ``financial institution'' means a broker
or dealer, a depository institution, a futures commission
merchant, a bridge financial company, or any other
institution determined by the Corporation, by regulation,
to be a financial institution; and
(ii) the term ``clearing organization'' has the same
meaning as in section 402 of the Federal Deposit Insurance
Corporation Improvement Act of 1991.
(10) Notification of transfer.--
(A) In general.--
(i) Notice.--The Corporation shall provide notice in
accordance with clause (ii), if--
(I) the Corporation as receiver for a covered
financial company in default or in danger of default
transfers any assets or liabilities of the covered
financial company; and
(II) the transfer includes any qualified financial
contract.
(ii) Timing.--The Corporation as receiver for a covered
financial company shall notify any person who is a party to
any contract described in clause (i) of such transfer not
later than 5:00 p.m. (eastern time) on the business day
following the date of the appointment of the Corporation as
receiver.
(B) Certain rights not enforceable.--
(i) Receivership.--A person who is a party to a
qualified financial contract with a covered financial
company may not exercise any right that such person has to
terminate, liquidate, or net such contract under paragraph
(8)(A) solely by reason of or incidental to the appointment
under this section of the Corporation as receiver for the
covered financial company (or the insolvency or financial
condition of the covered financial company for which the
Corporation has been appointed as receiver)--
(I) until 5:00 p.m. (eastern time) on the business
day following the date of the appointment; or
(II) after the person has received notice that the
contract has been transferred pursuant to paragraph
(9)(A).
(ii) Notice.--For purposes of this paragraph, the
Corporation as receiver for a covered financial company
shall be deemed to have notified a person who is a party to
a qualified financial contract with such covered financial
company, if the Corporation has taken steps reasonably
calculated to provide notice to such person by the time
specified in subparagraph (A).
(C) Treatment of bridge financial company.--For purposes of
paragraph (9), a bridge financial company shall not be
considered to be a financial institution for which a
conservator, receiver, trustee in bankruptcy, or other legal
custodian has been appointed, or which is otherwise the subject
of a bankruptcy or insolvency proceeding.
(D) Business day defined.--For purposes of this paragraph,
the term ``business day'' means any day other than any
Saturday, Sunday, or any day on which either the New York Stock
Exchange or the Federal Reserve Bank of New York is closed.
(11) Disaffirmance or repudiation of qualified financial
contracts.--In exercising the rights of disaffirmance or
repudiation of the Corporation as receiver with respect to any
qualified financial contract to which a covered financial company
is a party, the Corporation shall either--
(A) disaffirm or repudiate all qualified financial
contracts between--
(i) any person or any affiliate of such person; and
(ii) the covered financial company in default; or
(B) disaffirm or repudiate none of the qualified financial
contracts referred to in subparagraph (A) (with respect to such
person or any affiliate of such person).
(12) Certain security and customer interests not avoidable.--No
provision of this subsection shall be construed as permitting the
avoidance of any--
(A) legally enforceable or perfected security interest in
any of the assets of any covered financial company, except in
accordance with subsection (a)(11); or
(B) legally enforceable interest in customer property,
security entitlements in respect of assets or property held by
the covered financial company for any security entitlement
holder.
(13) Authority to enforce contracts.--
(A) In general.--The Corporation, as receiver for a covered
financial company, may enforce any contract, other than a
liability insurance contract of a director or officer, a
financial institution bond entered into by the covered
financial company, notwithstanding any provision of the
contract providing for termination, default, acceleration, or
exercise of rights upon, or solely by reason of, insolvency,
the appointment of or the exercise of rights or powers by the
Corporation as receiver, the filing of the petition pursuant to
section 202(a)(1), or the issuance of the recommendations or
determination, or any actions or events occurring in connection
therewith or as a result thereof, pursuant to section 203.
(B) Certain rights not affected.--No provision of this
paragraph may be construed as impairing or affecting any right
of the Corporation as receiver to enforce or recover under a
liability insurance contract of a director or officer or
financial institution bond under other applicable law.
(C) Consent requirement and ipso facto clauses.--
(i) In general.--Except as otherwise provided by this
section, no person may exercise any right or power to
terminate, accelerate, or declare a default under any
contract to which the covered financial company is a party
(and no provision in any such contract providing for such
default, termination, or acceleration shall be
enforceable), or to obtain possession of or exercise
control over any property of the covered financial company
or affect any contractual rights of the covered financial
company, without the consent of the Corporation as receiver
for the covered financial company during the 90 day period
beginning from the appointment of the Corporation as
receiver.
(ii) Exceptions.--No provision of this subparagraph
shall apply to a director or officer liability insurance
contract or a financial institution bond, to the rights of
parties to certain qualified financial contracts pursuant
to paragraph (8), or to the rights of parties to netting
contracts pursuant to subtitle A of title IV of the Federal
Deposit Insurance Corporation Improvement Act of 1991 (12
U.S.C. 4401 et seq.), or shall be construed as permitting
the Corporation as receiver to fail to comply with
otherwise enforceable provisions of such contract.
(D) Contracts to extend credit.--Notwithstanding any other
provision in this title, if the Corporation as receiver
enforces any contract to extend credit to the covered financial
company or bridge financial company, any valid and enforceable
obligation to repay such debt shall be paid by the Corporation
as receiver, as an administrative expense of the receivership.
(14) Exception for federal reserve banks and corporation
security interest.--No provision of this subsection shall apply
with respect to--
(A) any extension of credit from any Federal reserve bank
or the Corporation to any covered financial company; or
(B) any security interest in the assets of the covered
financial company securing any such extension of credit.
(15) Savings clause.--The meanings of terms used in this
subsection are applicable for purposes of this subsection only, and
shall not be construed or applied so as to challenge or affect the
characterization, definition, or treatment of any similar terms
under any other statute, regulation, or rule, including the Gramm-
Leach-Bliley Act, the Legal Certainty for Bank Products Act of
2000, the securities laws (as that term is defined in section
3(a)(47) of the Securities Exchange Act of 1934), and the Commodity
Exchange Act.
(16) Enforcement of contracts guaranteed by the covered
financial company.--
(A) In general.--The Corporation, as receiver for a covered
financial company or as receiver for a subsidiary of a covered
financial company (including an insured depository institution)
shall have the power to enforce contracts of subsidiaries or
affiliates of the covered financial company, the obligations
under which are guaranteed or otherwise supported by or linked
to the covered financial company, notwithstanding any
contractual right to cause the termination, liquidation, or
acceleration of such contracts based solely on the insolvency,
financial condition, or receivership of the covered financial
company, if--
(i) such guaranty or other support and all related
assets and liabilities are transferred to and assumed by a
bridge financial company or a third party (other than a
third party for which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has been appointed, or
which is otherwise the subject of a bankruptcy or
insolvency proceeding) within the same period of time as
the Corporation is entitled to transfer the qualified
financial contracts of such covered financial company; or
(ii) the Corporation, as receiver, otherwise provides
adequate protection with respect to such obligations.
(B) Rule of construction.--For purposes of this paragraph,
a bridge financial company shall not be considered to be a
third party for which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has been appointed, or
which is otherwise the subject of a bankruptcy or insolvency
proceeding.
(d) Valuation of Claims in Default.--
(1) In general.--Notwithstanding any other provision of Federal
law or the law of any State, and regardless of the method utilized
by the Corporation for a covered financial company, including
transactions authorized under subsection (h), this subsection shall
govern the rights of the creditors of any such covered financial
company.
(2) Maximum liability.--The maximum liability of the
Corporation, acting as receiver for a covered financial company or
in any other capacity, to any person having a claim against the
Corporation as receiver or the covered financial company for which
the Corporation is appointed shall equal the amount that such
claimant would have received if--
(A) the Corporation had not been appointed receiver with
respect to the covered financial company; and
(B) the covered financial company had been liquidated under
chapter 7 of the Bankruptcy Code, or any similar provision of
State insolvency law applicable to the covered financial
company.
(3) Special provision for orderly liquidation by sipc.--The
maximum liability of the Corporation, acting as receiver or in its
corporate capacity for any covered broker or dealer to any customer
of such covered broker or dealer, with respect to customer property
of such customer, shall be--
(A) equal to the amount that such customer would have
received with respect to such customer property in a case
initiated by SIPC under the Securities Investor Protection Act
of 1970 (15 U.S.C. 78aaa et seq.); and
(B) determined as of the close of business on the date on
which the Corporation is appointed as receiver.
(4) Additional payments authorized.--
(A) In general.--Subject to subsection (o)(1)(D)(i), the
Corporation, with the approval of the Secretary, may make
additional payments or credit additional amounts to or with
respect to or for the account of any claimant or category of
claimants of the covered financial company, if the Corporation
determines that such payments or credits are necessary or
appropriate to minimize losses to the Corporation as receiver
from the orderly liquidation of the covered financial company
under this section.
(B) Limitations.--
(i) Prohibition.--The Corporation shall not make any
payments or credit amounts to any claimant or category of
claimants that would result in any claimant receiving more
than the face value amount of any claim that is proven to
the satisfaction of the Corporation.
(ii) No obligation.--Notwithstanding any other
provision of Federal or State law, or the Constitution of
any State, the Corporation shall not be obligated, as a
result of having made any payment under subparagraph (A) or
credited any amount described in subparagraph (A) to or
with respect to, or for the account, of any claimant or
category of claimants, to make payments to any other
claimant or category of claimants.
(C) Manner of payment.--The Corporation may make payments
or credit amounts under subparagraph (A) directly to the
claimants or may make such payments or credit such amounts to a
company other than a covered financial company or a bridge
financial company established with respect thereto in order to
induce such other company to accept liability for such claims.
(e) Limitation on Court Action.--Except as provided in this title,
no court may take any action to restrain or affect the exercise of
powers or functions of the receiver hereunder, and any remedy against
the Corporation or receiver shall be limited to money damages
determined in accordance with this title.
(f) Liability of Directors and Officers.--
(1) In general.--A director or officer of a covered financial
company may be held personally liable for monetary damages in any
civil action described in paragraph (2) by, on behalf of, or at the
request or direction of the Corporation, which action is prosecuted
wholly or partially for the benefit of the Corporation--
(A) acting as receiver for such covered financial company;
(B) acting based upon a suit, claim, or cause of action
purchased from, assigned by, or otherwise conveyed by the
Corporation as receiver; or
(C) acting based upon a suit, claim, or cause of action
purchased from, assigned by, or otherwise conveyed in whole or
in part by a covered financial company or its affiliate in
connection with assistance provided under this title.
(2) Actions covered.--Paragraph (1) shall apply with respect to
actions for gross negligence, including any similar conduct or
conduct that demonstrates a greater disregard of a duty of care
(than gross negligence) including intentional tortious conduct, as
such terms are defined and determined under applicable State law.
(3) Savings clause.--Nothing in this subsection shall impair or
affect any right of the Corporation under other applicable law.
(g) Damages.--In any proceeding related to any claim against a
director, officer, employee, agent, attorney, accountant, or appraiser
of a covered financial company, or any other party employed by or
providing services to a covered financial company, recoverable damages
determined to result from the improvident or otherwise improper use or
investment of any assets of the covered financial company shall include
principal losses and appropriate interest.
(h) Bridge Financial Companies.--
(1) Organization.--
(A) Purpose.--The Corporation, as receiver for one or more
covered financial companies or in anticipation of being
appointed receiver for one or more covered financial companies,
may organize one or more bridge financial companies in
accordance with this subsection.
(B) Authorities.--Upon the creation of a bridge financial
company under subparagraph (A) with respect to a covered
financial company, such bridge financial company may--
(i) assume such liabilities (including liabilities
associated with any trust or custody business, but
excluding any liabilities that count as regulatory capital)
of such covered financial company as the Corporation may,
in its discretion, determine to be appropriate;
(ii) purchase such assets (including assets associated
with any trust or custody business) of such covered
financial company as the Corporation may, in its
discretion, determine to be appropriate; and
(iii) perform any other temporary function which the
Corporation may, in its discretion, prescribe in accordance
with this section.
(2) Charter and establishment.--
(A) Establishment.--Except as provided in subparagraph (H),
where the covered financial company is a covered broker or
dealer, the Corporation, as receiver for a covered financial
company, may grant a Federal charter to and approve articles of
association for one or more bridge financial company or
companies, with respect to such covered financial company which
shall, by operation of law and immediately upon issuance of its
charter and approval of its articles of association, be
established and operate in accordance with, and subject to,
such charter, articles, and this section.
(B) Management.--Upon its establishment, a bridge financial
company shall be under the management of a board of directors
appointed by the Corporation.
(C) Articles of association.--The articles of association
and organization certificate of a bridge financial company
shall have such terms as the Corporation may provide, and shall
be executed by such representatives as the Corporation may
designate.
(D) Terms of charter; rights and privileges.--Subject to
and in accordance with the provisions of this subsection, the
Corporation shall--
(i) establish the terms of the charter of a bridge
financial company and the rights, powers, authorities, and
privileges of a bridge financial company granted by the
charter or as an incident thereto; and
(ii) provide for, and establish the terms and
conditions governing, the management (including the bylaws
and the number of directors of the board of directors) and
operations of the bridge financial company.
(E) Transfer of rights and privileges of covered financial
company.--
(i) In general.--Notwithstanding any other provision of
Federal or State law, the Corporation may provide for a
bridge financial company to succeed to and assume any
rights, powers, authorities, or privileges of the covered
financial company with respect to which the bridge
financial company was established and, upon such
determination by the Corporation, the bridge financial
company shall immediately and by operation of law succeed
to and assume such rights, powers, authorities, and
privileges.
(ii) Effective without approval.--Any succession to or
assumption by a bridge financial company of rights, powers,
authorities, or privileges of a covered financial company
under clause (i) or otherwise shall be effective without
any further approval under Federal or State law,
assignment, or consent with respect thereto.
(F) Corporate governance and election and designation of
body of law.--To the extent permitted by the Corporation and
consistent with this section and any rules, regulations, or
directives issued by the Corporation under this section, a
bridge financial company may elect to follow the corporate
governance practices and procedures that are applicable to a
corporation incorporated under the general corporation law of
the State of Delaware, or the State of incorporation or
organization of the covered financial company with respect to
which the bridge financial company was established, as such law
may be amended from time to time.
(G) Capital.--
(i) Capital not required.--Notwithstanding any other
provision of Federal or State law, a bridge financial
company may, if permitted by the Corporation, operate
without any capital or surplus, or with such capital or
surplus as the Corporation may in its discretion determine
to be appropriate.
(ii) No contribution by the corporation required.--The
Corporation is not required to pay capital into a bridge
financial company or to issue any capital stock on behalf
of a bridge financial company established under this
subsection.
(iii) Authority.--If the Corporation determines that
such action is advisable, the Corporation may cause capital
stock or other securities of a bridge financial company
established with respect to a covered financial company to
be issued and offered for sale in such amounts and on such
terms and conditions as the Corporation may, in its
discretion, determine.
(iv) Operating funds in lieu of capital and
implementation plan.--Upon the organization of a bridge
financial company, and thereafter as the Corporation may,
in its discretion, determine to be necessary or advisable,
the Corporation may make available to the bridge financial
company, subject to the plan described in subsection
(n)(9), funds for the operation of the bridge financial
company in lieu of capital.
(H) Bridge brokers or dealers.--
(i) In general.--The Corporation, as receiver for a
covered broker or dealer, may approve articles of
association for one or more bridge financial companies with
respect to such covered broker or dealer, which bridge
financial company or companies shall, by operation of law
and immediately upon approval of its articles of
association--
(I) be established and deemed registered with the
Commission under the Securities Exchange Act of 1934
and a member of SIPC;
(II) operate in accordance with such articles and
this section; and
(III) succeed to any and all registrations and
memberships of the covered financial company with or in
any self-regulatory organizations.
(ii) Other requirements.--Except as provided in clause
(i), and notwithstanding any other provision of this
section, the bridge financial company shall be subject to
the Federal securities laws and all requirements with
respect to being a member of a self-regulatory
organization, unless exempted from any such requirements by
the Commission, as is necessary or appropriate in the
public interest or for the protection of investors.
(iii) Treatment of customers.--Except as otherwise
provided by this title, any customer of the covered broker
or dealer whose account is transferred to a bridge
financial company shall have all the rights, privileges,
and protections under section 205(f) and under the
Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa
et seq.), that such customer would have had if the account
were not transferred from the covered financial company
under this subparagraph.
(iv) Operation of bridge brokers or dealers.--
Notwithstanding any other provision of this title, the
Corporation shall not operate any bridge financial company
created by the Corporation under this title with respect to
a covered broker or dealer in such a manner as to adversely
affect the ability of customers to promptly access their
customer property in accordance with applicable law.
(3) Interests in and assets and obligations of covered
financial company.--Notwithstanding paragraph (1) or (2) or any
other provision of law--
(A) a bridge financial company shall assume, acquire, or
succeed to the assets or liabilities of a covered financial
company (including the assets or liabilities associated with
any trust or custody business) only to the extent that such
assets or liabilities are transferred by the Corporation to the
bridge financial company in accordance with, and subject to the
restrictions set forth in, paragraph (1)(B); and
(B) a bridge financial company shall not assume, acquire,
or succeed to any obligation that a covered financial company
for which the Corporation has been appointed receiver may have
to any shareholder, member, general partner, limited partner,
or other person with an interest in the equity of the covered
financial company that arises as a result of the status of that
person having an equity claim in the covered financial company.
(4) Bridge financial company treated as being in default for
certain purposes.--A bridge financial company shall be treated as a
covered financial company in default at such times and for such
purposes as the Corporation may, in its discretion, determine.
(5) Transfer of assets and liabilities.--
(A) Authority of corporation.--The Corporation, as receiver
for a covered financial company, may transfer any assets and
liabilities of a covered financial company (including any
assets or liabilities associated with any trust or custody
business) to one or more bridge financial companies, in
accordance with and subject to the restrictions of paragraph
(1).
(B) Subsequent transfers.--At any time after the
establishment of a bridge financial company with respect to a
covered financial company, the Corporation, as receiver, may
transfer any assets and liabilities of such covered financial
company as the Corporation may, in its discretion, determine to
be appropriate in accordance with and subject to the
restrictions of paragraph (1).
(C) Treatment of trust or custody business.--For purposes
of this paragraph, the trust or custody business, including
fiduciary appointments, held by any covered financial company
is included among its assets and liabilities.
(D) Effective without approval.--The transfer of any assets
or liabilities, including those associated with any trust or
custody business of a covered financial company, to a bridge
financial company shall be effective without any further
approval under Federal or State law, assignment, or consent
with respect thereto.
(E) Equitable treatment of similarly situated creditors.--
The Corporation shall treat all creditors of a covered
financial company that are similarly situated under subsection
(b)(1), in a similar manner in exercising the authority of the
Corporation under this subsection to transfer any assets or
liabilities of the covered financial company to one or more
bridge financial companies established with respect to such
covered financial company, except that the Corporation may take
any action (including making payments, subject to subsection
(o)(1)(D)(i)) that does not comply with this subparagraph, if--
(i) the Corporation determines that such action is
necessary--
(I) to maximize the value of the assets of the
covered financial company;
(II) to maximize the present value return from the
sale or other disposition of the assets of the covered
financial company; or
(III) to minimize the amount of any loss realized
upon the sale or other disposition of the assets of the
covered financial company; and
(ii) all creditors that are similarly situated under
subsection (b)(1) receive not less than the amount provided
under paragraphs (2) and (3) of subsection (d).
(F) Limitation on transfer of liabilities.--Notwithstanding
any other provision of law, the aggregate amount of liabilities
of a covered financial company that are transferred to, or
assumed by, a bridge financial company from a covered financial
company may not exceed the aggregate amount of the assets of
the covered financial company that are transferred to, or
purchased by, the bridge financial company from the covered
financial company.
(6) Stay of judicial action.--Any judicial action to which a
bridge financial company becomes a party by virtue of its
acquisition of any assets or assumption of any liabilities of a
covered financial company shall be stayed from further proceedings
for a period of not longer than 45 days (or such longer period as
may be agreed to upon the consent of all parties) at the request of
the bridge financial company.
(7) Agreements against interest of the bridge financial
company.--No agreement that tends to diminish or defeat the
interest of the bridge financial company in any asset of a covered
financial company acquired by the bridge financial company shall be
valid against the bridge financial company, unless such agreement--
(A) is in writing;
(B) was executed by an authorized officer or representative
of the covered financial company or confirmed in the ordinary
course of business by the covered financial company; and
(C) has been on the official record of the company, since
the time of its execution, or with which, the party claiming
under the agreement provides documentation of such agreement
and its authorized execution or confirmation by the covered
financial company that is acceptable to the receiver.
(8) No federal status.--
(A) Agency status.--A bridge financial company is not an
agency, establishment, or instrumentality of the United States.
(B) Employee status.--Representatives for purposes of
paragraph (1)(B), directors, officers, employees, or agents of
a bridge financial company are not, solely by virtue of service
in any such capacity, officers or employees of the United
States. Any employee of the Corporation or of any Federal
instrumentality who serves at the request of the Corporation as
a representative for purposes of paragraph (1)(B), director,
officer, employee, or agent of a bridge financial company shall
not--
(i) solely by virtue of service in any such capacity
lose any existing status as an officer or employee of the
United States for purposes of title 5, United States Code,
or any other provision of law; or
(ii) receive any salary or benefits for service in any
such capacity with respect to a bridge financial company in
addition to such salary or benefits as are obtained through
employment with the Corporation or such Federal
instrumentality.
(9) Funding authorized.--The Corporation may, subject to the
plan described in subsection (n)(9), provide funding to facilitate
any transaction described in subparagraph (A), (B), (C), or (D) of
paragraph (13) with respect to any bridge financial company, or
facilitate the acquisition by a bridge financial company of any
assets, or the assumption of any liabilities, of a covered
financial company for which the Corporation has been appointed
receiver.
(10) Exempt tax status.--Notwithstanding any other provision of
Federal or State law, a bridge financial company, its franchise,
property, and income shall be exempt from all taxation now or
hereafter imposed by the United States, by any territory,
dependency, or possession thereof, or by any State, county,
municipality, or local taxing authority.
(11) Federal agency approval; antitrust review.--If a
transaction involving the merger or sale of a bridge financial
company requires approval by a Federal agency, the transaction may
not be consummated before the 5th calendar day after the date of
approval by the Federal agency responsible for such approval with
respect thereto. If, in connection with any such approval a report
on competitive factors from the Attorney General is required, the
Federal agency responsible for such approval shall promptly notify
the Attorney General of the proposed transaction and the Attorney
General shall provide the required report within 10 days of the
request. If a notification is required under section 7A of the
Clayton Act with respect to such transaction, the required waiting
period shall end on the 15th day after the date on which the
Attorney General and the Federal Trade Commission receive such
notification, unless the waiting period is terminated earlier under
section 7A(b)(2) of the Clayton Act, or extended under section
7A(e)(2) of that Act.
(12) Duration of bridge financial company.--Subject to
paragraphs (13) and (14), the status of a bridge financial company
as such shall terminate at the end of the 2-year period following
the date on which it was granted a charter. The Corporation may, in
its discretion, extend the status of the bridge financial company
as such for no more than 3 additional 1-year periods.
(13) Termination of bridge financial company status.--The
status of any bridge financial company as such shall terminate upon
the earliest of--
(A) the date of the merger or consolidation of the bridge
financial company with a company that is not a bridge financial
company;
(B) at the election of the Corporation, the sale of a
majority of the capital stock of the bridge financial company
to a company other than the Corporation and other than another
bridge financial company;
(C) the sale of 80 percent, or more, of the capital stock
of the bridge financial company to a person other than the
Corporation and other than another bridge financial company;
(D) at the election of the Corporation, either the
assumption of all or substantially all of the liabilities of
the bridge financial company by a company that is not a bridge
financial company, or the acquisition of all or substantially
all of the assets of the bridge financial company by a company
that is not a bridge financial company, or other entity as
permitted under applicable law; and
(E) the expiration of the period provided in paragraph
(12), or the earlier dissolution of the bridge financial
company, as provided in paragraph (15).
(14) Effect of termination events.--
(A) Merger or consolidation.--A merger or consolidation,
described in paragraph (13)(A) shall be conducted in accordance
with, and shall have the effect provided in, the provisions of
applicable law. For the purpose of effecting such a merger or
consolidation, the bridge financial company shall be treated as
a corporation organized under the laws of the State of Delaware
(unless the law of another State has been selected by the
bridge financial company in accordance with paragraph (2)(F)),
and the Corporation shall be treated as the sole shareholder
thereof, notwithstanding any other provision of State or
Federal law.
(B) Charter conversion.--Following the sale of a majority
of the capital stock of the bridge financial company, as
provided in paragraph (13)(B), the Corporation may amend the
charter of the bridge financial company to reflect the
termination of the status of the bridge financial company as
such, whereupon the company shall have all of the rights,
powers, and privileges under its constituent documents and
applicable Federal or State law. In connection therewith, the
Corporation may take such steps as may be necessary or
convenient to reincorporate the bridge financial company under
the laws of a State and, notwithstanding any provisions of
Federal or State law, such State-chartered corporation shall be
deemed to succeed by operation of law to such rights, titles,
powers, and interests of the bridge financial company as the
Corporation may provide, with the same effect as if the bridge
financial company had merged with the State-chartered
corporation under provisions of the corporate laws of such
State.
(C) Sale of stock.--Following the sale of 80 percent or
more of the capital stock of a bridge financial company, as
provided in paragraph (13)(C), the company shall have all of
the rights, powers, and privileges under its constituent
documents and applicable Federal or State law. In connection
therewith, the Corporation may take such steps as may be
necessary or convenient to reincorporate the bridge financial
company under the laws of a State and, notwithstanding any
provisions of Federal or State law, the State-chartered
corporation shall be deemed to succeed by operation of law to
such rights, titles, powers and interests of the bridge
financial company as the Corporation may provide, with the same
effect as if the bridge financial company had merged with the
State-chartered corporation under provisions of the corporate
laws of such State.
(D) Assumption of liabilities and sale of assets.--
Following the assumption of all or substantially all of the
liabilities of the bridge financial company, or the sale of all
or substantially all of the assets of the bridge financial
company, as provided in paragraph (13)(D), at the election of
the Corporation, the bridge financial company may retain its
status as such for the period provided in paragraph (12) or may
be dissolved at the election of the Corporation.
(E) Amendments to charter.--Following the consummation of a
transaction described in subparagraph (A), (B), (C), or (D) of
paragraph (13), the charter of the resulting company shall be
amended to reflect the termination of bridge financial company
status, if appropriate.
(15) Dissolution of bridge financial company.--
(A) In general.--Notwithstanding any other provision of
Federal or State law, if the status of a bridge financial
company as such has not previously been terminated by the
occurrence of an event specified in subparagraph (A), (B), (C),
or (D) of paragraph (13)--
(i) the Corporation may, in its discretion, dissolve
the bridge financial company in accordance with this
paragraph at any time; and
(ii) the Corporation shall promptly commence
dissolution proceedings in accordance with this paragraph
upon the expiration of the 2-year period following the date
on which the bridge financial company was chartered, or any
extension thereof, as provided in paragraph (12).
(B) Procedures.--The Corporation shall remain the receiver
for a bridge financial company for the purpose of dissolving
the bridge financial company. The Corporation as receiver for a
bridge financial company shall wind up the affairs of the
bridge financial company in conformity with the provisions of
law relating to the liquidation of covered financial companies
under this title. With respect to any such bridge financial
company, the Corporation as receiver shall have all the rights,
powers, and privileges and shall perform the duties related to
the exercise of such rights, powers, or privileges granted by
law to the Corporation as receiver for a covered financial
company under this title and, notwithstanding any other
provision of law, in the exercise of such rights, powers, and
privileges, the Corporation shall not be subject to the
direction or supervision of any State agency or other Federal
agency.
(16) Authority to obtain credit.--
(A) In general.--A bridge financial company may obtain
unsecured credit and issue unsecured debt.
(B) Inability to obtain credit.--If a bridge financial
company is unable to obtain unsecured credit or issue unsecured
debt, the Corporation may authorize the obtaining of credit or
the issuance of debt by the bridge financial company--
(i) with priority over any or all of the obligations of
the bridge financial company;
(ii) secured by a lien on property of the bridge
financial company that is not otherwise subject to a lien;
or
(iii) secured by a junior lien on property of the
bridge financial company that is subject to a lien.
(C) Limitations.--
(i) In general.--The Corporation, after notice and a
hearing, may authorize the obtaining of credit or the
issuance of debt by a bridge financial company that is
secured by a senior or equal lien on property of the bridge
financial company that is subject to a lien, only if--
(I) the bridge financial company is unable to
otherwise obtain such credit or issue such debt; and
(II) there is adequate protection of the interest
of the holder of the lien on the property with respect
to which such senior or equal lien is proposed to be
granted.
(ii) Hearing.--The hearing required pursuant to this
subparagraph shall be before a court of the United States,
which shall have jurisdiction to conduct such hearing and
to authorize a bridge financial company to obtain secured
credit under clause (i).
(D) Burden of proof.--In any hearing under this paragraph,
the Corporation has the burden of proof on the issue of
adequate protection.
(E) Qualified financial contracts.--No credit or debt
obtained or issued by a bridge financial company may contain
terms that impair the rights of a counterparty to a qualified
financial contract upon a default by the bridge financial
company, other than the priority of such counterparty's
unsecured claim (after the exercise of rights) relative to the
priority of the bridge financial company's obligations in
respect of such credit or debt, unless such counterparty
consents in writing to any such impairment.
(17) Effect on debts and liens.--The reversal or modification
on appeal of an authorization under this subsection to obtain
credit or issue debt, or of a grant under this section of a
priority or a lien, does not affect the validity of any debt so
issued, or any priority or lien so granted, to an entity that
extended such credit in good faith, whether or not such entity knew
of the pendency of the appeal, unless such authorization and the
issuance of such debt, or the granting of such priority or lien,
were stayed pending appeal.
(i) Sharing Records.--If the Corporation has been appointed as
receiver for a covered financial company, other Federal regulators
shall make all records relating to the covered financial company
available to the Corporation, which may be used by the Corporation in
any manner that the Corporation determines to be appropriate.
(j) Expedited Procedures for Certain Claims.--
(1) Time for filing notice of appeal.--The notice of appeal of
any order, whether interlocutory or final, entered in any case
brought by the Corporation against a director, officer, employee,
agent, attorney, accountant, or appraiser of the covered financial
company, or any other person employed by or providing services to a
covered financial company, shall be filed not later than 30 days
after the date of entry of the order. The hearing of the appeal
shall be held not later than 120 days after the date of the notice
of appeal. The appeal shall be decided not later than 180 days
after the date of the notice of appeal.
(2) Scheduling.--The court shall expedite the consideration of
any case brought by the Corporation against a director, officer,
employee, agent, attorney, accountant, or appraiser of a covered
financial company or any other person employed by or providing
services to a covered financial company. As far as practicable, the
court shall give such case priority on its docket.
(3) Judicial discretion.--The court may modify the schedule and
limitations stated in paragraphs (1) and (2) in a particular case,
based on a specific finding that the ends of justice that would be
served by making such a modification would outweigh the best
interest of the public in having the case resolved expeditiously.
(k) Foreign Investigations.--The Corporation, as receiver for any
covered financial company, and for purposes of carrying out any power,
authority, or duty with respect to a covered financial company--
(1) may request the assistance of any foreign financial
authority and provide assistance to any foreign financial authority
in accordance with section 8(v) of the Federal Deposit Insurance
Act, as if the covered financial company were an insured depository
institution, the Corporation were the appropriate Federal banking
agency for the company, and any foreign financial authority were
the foreign banking authority; and
(2) may maintain an office to coordinate foreign investigations
or investigations on behalf of foreign financial authorities.
(l) Prohibition on Entering Secrecy Agreements and Protective
Orders.--The Corporation may not enter into any agreement or approve
any protective order which prohibits the Corporation from disclosing
the terms of any settlement of an administrative or other action for
damages or restitution brought by the Corporation in its capacity as
receiver for a covered financial company.
(m) Liquidation of Certain Covered Financial Companies or Bridge
Financial Companies.--
(1) In general.--Except as specifically provided in this
section, and notwithstanding any other provision of law, the
Corporation, in connection with the liquidation of any covered
financial company or bridge financial company with respect to which
the Corporation has been appointed as receiver, shall--
(A) in the case of any covered financial company or bridge
financial company that is a stockbroker, but is not a member of
the Securities Investor Protection Corporation, apply the
provisions of subchapter III of chapter 7 of the Bankruptcy
Code, in respect of the distribution to any customer of all
customer name security and customer property and member
property, as if such covered financial company or bridge
financial company were a debtor for purposes of such
subchapter; or
(B) in the case of any covered financial company or bridge
financial company that is a commodity broker, apply the
provisions of subchapter IV of chapter 7 the Bankruptcy Code,
in respect of the distribution to any customer of all customer
property and member property, as if such covered financial
company or bridge financial company were a debtor for purposes
of such subchapter.
(2) Definitions.--For purposes of this subsection--
(A) the terms ``customer'', ``customer name security'', and
``customer property and member property'' have the same
meanings as in sections 741 and 761 of title 11, United States
Code; and
(B) the terms ``commodity broker'' and ``stockbroker'' have
the same meanings as in section 101 of the Bankruptcy Code.
(n) Orderly Liquidation Fund.--
(1) Establishment.--There is established in the Treasury of the
United States a separate fund to be known as the ``Orderly
Liquidation Fund'', which shall be available to the Corporation to
carry out the authorities contained in this title, for the cost of
actions authorized by this title, including the orderly liquidation
of covered financial companies, payment of administrative expenses,
the payment of principal and interest by the Corporation on
obligations issued under paragraph (5), and the exercise of the
authorities of the Corporation under this title.
(2) Proceeds.--Amounts received by the Corporation, including
assessments received under subsection (o), proceeds of obligations
issued under paragraph (5), interest and other earnings from
investments, and repayments to the Corporation by covered financial
companies, shall be deposited into the Fund.
(3) Management.--The Corporation shall manage the Fund in
accordance with this subsection and the policies and procedures
established under section 203(d).
(4) Investments.--At the request of the Corporation, the
Secretary may invest such portion of amounts held in the Fund that
are not, in the judgment of the Corporation, required to meet the
current needs of the Corporation, in obligations of the United
States having suitable maturities, as determined by the
Corporation. The interest on and the proceeds from the sale or
redemption of such obligations shall be credited to the Fund.
(5) Authority to issue obligations.--
(A) Corporation authorized to issue obligations.--Upon
appointment by the Secretary of the Corporation as receiver for
a covered financial company, the Corporation is authorized to
issue obligations to the Secretary.
(B) Secretary authorized to purchase obligations.--The
Secretary may, under such terms and conditions as the Secretary
may require, purchase or agree to purchase any obligations
issued under subparagraph (A), and for such purpose, the
Secretary is authorized to use as a public debt transaction the
proceeds of the sale of any securities issued under chapter 31
of title 31, United States Code, and the purposes for which
securities may be issued under chapter 31 of title 31, United
States Code, are extended to include such purchases.
(C) Interest rate.--Each purchase of obligations by the
Secretary under this paragraph shall be upon such terms and
conditions as to yield a return at a rate determined by the
Secretary, taking into consideration the current average yield
on outstanding marketable obligations of the United States of
comparable maturity, plus an interest rate surcharge to be
determined by the Secretary, which shall be greater than the
difference between--
(i) the current average rate on an index of corporate
obligations of comparable maturity; and
(ii) the current average rate on outstanding marketable
obligations of the United States of comparable maturity.
(D) Secretary authorized to sell obligations.--The
Secretary may sell, upon such terms and conditions as the
Secretary shall determine, any of the obligations acquired
under this paragraph.
(E) Public debt transactions.--All purchases and sales by
the Secretary of such obligations under this paragraph shall be
treated as public debt transactions of the United States, and
the proceeds from the sale of any obligations acquired by the
Secretary under this paragraph shall be deposited into the
Treasury of the United States as miscellaneous receipts.
(6) Maximum obligation limitation.--The Corporation may not, in
connection with the orderly liquidation of a covered financial
company, issue or incur any obligation, if, after issuing or
incurring the obligation, the aggregate amount of such obligations
outstanding under this subsection for each covered financial
company would exceed--
(A) an amount that is equal to 10 percent of the total
consolidated assets of the covered financial company, based on
the most recent financial statement available, during the 30-
day period immediately following the date of appointment of the
Corporation as receiver (or a shorter time period if the
Corporation has calculated the amount described under
subparagraph (B)); and
(B) the amount that is equal to 90 percent of the fair
value of the total consolidated assets of each covered
financial company that are available for repayment, after the
time period described in subparagraph (A).
(7) Rulemaking.--The Corporation and the Secretary shall
jointly, in consultation with the Council, prescribe regulations
governing the calculation of the maximum obligation limitation
defined in this paragraph.
(8) Rule of construction.--
(A) In general.--Nothing in this section shall be construed
to affect the authority of the Corporation under subsection (a)
or (b) of section 14 or section 15(c)(5) of the Federal Deposit
Insurance Act (12 U.S.C. 1824, 1825(c)(5)), the management of
the Deposit Insurance Fund by the Corporation, or the
resolution of insured depository institutions, provided that--
(i) the authorities of the Corporation contained in
this title shall not be used to assist the Deposit
Insurance Fund or to assist any financial company under
applicable law other than this Act;
(ii) the authorities of the Corporation relating to the
Deposit Insurance Fund, or any other responsibilities of
the Corporation under applicable law other than this title,
shall not be used to assist a covered financial company
pursuant to this title; and
(iii) the Deposit Insurance Fund may not be used in any
manner to otherwise circumvent the purposes of this title.
(B) Valuation.--For purposes of determining the amount of
obligations under this subsection--
(i) the Corporation shall include as an obligation any
contingent liability of the Corporation pursuant to this
title; and
(ii) the Corporation shall value any contingent
liability at its expected cost to the Corporation.
(9) Orderly liquidation and repayment plans.--
(A) Orderly liquidation plan.--Amounts in the Fund shall be
available to the Corporation with regard to a covered financial
company for which the Corporation is appointed receiver after
the Corporation has developed an orderly liquidation plan that
is acceptable to the Secretary with regard to such covered
financial company, including the provision and use of funds,
including taking any actions specified under section 204(d) and
subsection (h)(2)(G)(iv) and (h)(9) of this section, and
payments to third parties. The orderly liquidation plan shall
take into account actions to avoid or mitigate potential
adverse effects on low income, minority, or underserved
communities affected by the failure of the covered financial
company, and shall provide for coordination with the primary
financial regulatory agencies, as appropriate, to ensure that
such actions are taken. The Corporation may, at any time, amend
any orderly liquidation plan approved by the Secretary with the
concurrence of the Secretary.
(B) Mandatory repayment plan.--
(i) In general.--No amount authorized under paragraph
(6)(B) may be provided by the Secretary to the Corporation
under paragraph (5), unless an agreement is in effect
between the Secretary and the Corporation that--
(I) provides a specific plan and schedule to
achieve the repayment of the outstanding amount of any
borrowing under paragraph (5); and
(II) demonstrates that income to the Corporation
from the liquidated assets of the covered financial
company and assessments under subsection (o) will be
sufficient to amortize the outstanding balance within
the period established in the repayment schedule and
pay the interest accruing on such balance within the
time provided in subsection (o)(1)(B).
(ii) Consultation with and report to congress.--The
Secretary and the Corporation shall--
(I) consult with the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives on
the terms of any repayment schedule agreement; and
(II) submit a copy of the repayment schedule
agreement to the Committees described in subclause (I)
before the end of the 30-day period beginning on the
date on which any amount is provided by the Secretary
to the Corporation under paragraph (5).
(10) Implementation expenses.--
(A) In general.--Reasonable implementation expenses of the
Corporation incurred after the date of enactment of this Act
shall be treated as expenses of the Council.
(B) Requests for reimbursement.--The Corporation shall
periodically submit a request for reimbursement for
implementation expenses to the Chairperson of the Council, who
shall arrange for prompt reimbursement to the Corporation of
reasonable implementation expenses.
(C) Definition.--As used in this paragraph, the term
``implementation expenses''--
(i) means costs incurred by the Corporation beginning
on the date of enactment of this Act, as part of its
efforts to implement this title that do not relate to a
particular covered financial company; and
(ii) includes the costs incurred in connection with the
development of policies, procedures, rules, and regulations
and other planning activities of the Corporation consistent
with carrying out this title.
(o) Assessments.--
(1) Risk-based assessments.--
(A) Eligible financial companies defined.--For purposes of
this subsection, the term ``eligible financial company'' means
any bank holding company with total consolidated assets equal
to or greater than $50,000,000,000 and any nonbank financial
company supervised by the Board of Governors.
(B) Assessments.--The Corporation shall charge one or more
risk-based assessments in accordance with the provisions of
subparagraph (D), if such assessments are necessary to pay in
full the obligations issued by the Corporation to the Secretary
under this title within 60 months of the date of issuance of
such obligations.
(C) Extensions authorized.--The Corporation may, with the
approval of the Secretary, extend the time period under
subparagraph (B), if the Corporation determines that an
extension is necessary to avoid a serious adverse effect on the
financial system of the United States.
(D) Application of assessments.--To meet the requirements
of subparagraph (B), the Corporation shall--
(i) impose assessments, as soon as practicable, on any
claimant that received additional payments or amounts from
the Corporation pursuant to subsection (b)(4), (d)(4), or
(h)(5)(E), except for payments or amounts necessary to
initiate and continue operations essential to
implementation of the receivership or any bridge financial
company, to recover on a cumulative basis, the entire
difference between--
(I) the aggregate value the claimant received from
the Corporation on a claim pursuant to this title
(including pursuant to subsection (b)(4), (d)(4), and
(h)(5)(E)), as of the date on which such value was
received; and
(II) the value the claimant was entitled to receive
from the Corporation on such claim solely from the
proceeds of the liquidation of the covered financial
company under this title; and
(ii) if the amounts to be recovered on a cumulative
basis under clause (i) are insufficient to meet the
requirements of subparagraph (B), after taking into account
the considerations set forth in paragraph (4), impose
assessments on--
(I) eligible financial companies; and
(II) financial companies with total consolidated
assets equal to or greater than $50,000,000,000 that
are not eligible financial companies.
(E) Provision of financing.--Payments or amounts necessary
to initiate and continue operations essential to implementation
of the receivership or any bridge financial company described
in subparagraph (D)(i) shall not include the provision of
financing, as defined by rule of the Corporation, to third
parties.
(2) Graduated assessment rate.--The Corporation shall impose
assessments on a graduated basis, with financial companies having
greater assets and risk being assessed at a higher rate.
(3) Notification and payment.--The Corporation shall notify
each financial company of that company's assessment under this
subsection. Any financial company subject to assessment under this
subsection shall pay such assessment in accordance with the
regulations prescribed pursuant to paragraph (6).
(4) Risk-based assessment considerations.--In imposing
assessments under paragraph (1)(D)(ii), the Corporation shall use a
risk matrix. The Council shall make a recommendation to the
Corporation on the risk matrix to be used in imposing such
assessments, and the Corporation shall take into account any such
recommendation in the establishment of the risk matrix to be used
to impose such assessments. In recommending or establishing such
risk matrix, the Council and the Corporation, respectively, shall
take into account--
(A) economic conditions generally affecting financial
companies so as to allow assessments to increase during more
favorable economic conditions and to decrease during less
favorable economic conditions;
(B) any assessments imposed on a financial company or an
affiliate of a financial company that--
(i) is an insured depository institution, assessed
pursuant to section 7 or 13(c)(4)(G) of the Federal Deposit
Insurance Act;
(ii) is a member of the Securities Investor Protection
Corporation, assessed pursuant to section 4 of the
Securities Investor Protection Act of 1970 (15 U.S.C.
78ddd);
(iii) is an insured credit union, assessed pursuant to
section 202(c)(1)(A)(i) of the Federal Credit Union Act (12
U.S.C. 1782(c)(1)(A)(i)); or
(iv) is an insurance company, assessed pursuant to
applicable State law to cover (or reimburse payments made
to cover) the costs of the rehabilitation, liquidation, or
other State insolvency proceeding with respect to 1 or more
insurance companies;
(C) the risks presented by the financial company to the
financial system and the extent to which the financial company
has benefitted, or likely would benefit, from the orderly
liquidation of a financial company under this title,
including--
(i) the amount, different categories, and
concentrations of assets of the financial company and its
affiliates, including both on-balance sheet and off-balance
sheet assets;
(ii) the activities of the financial company and its
affiliates;
(iii) the relevant market share of the financial
company and its affiliates;
(iv) the extent to which the financial company is
leveraged;
(v) the potential exposure to sudden calls on liquidity
precipitated by economic distress;
(vi) the amount, maturity, volatility, and stability of
the company's financial obligations to, and relationship
with, other financial companies;
(vii) the amount, maturity, volatility, and stability
of the liabilities of the company, including the degree of
reliance on short-term funding, taking into consideration
existing systems for measuring a company's risk-based
capital;
(viii) the stability and variety of the company's
sources of funding;
(ix) the company's importance as a source of credit for
households, businesses, and State and local governments and
as a source of liquidity for the financial system;
(x) the extent to which assets are simply managed and
not owned by the financial company and the extent to which
ownership of assets under management is diffuse; and
(xi) the amount, different categories, and
concentrations of liabilities, both insured and uninsured,
contingent and noncontingent, including both on-balance
sheet and off-balance sheet liabilities, of the financial
company and its affiliates;
(D) any risks presented by the financial company during the
10-year period immediately prior to the appointment of the
Corporation as receiver for the covered financial company that
contributed to the failure of the covered financial company;
and
(E) such other risk-related factors as the Corporation, or
the Council, as applicable, may determine to be appropriate.
(5) Collection of information.--The Corporation may impose on
covered financial companies such collection of information
requirements as the Corporation deems necessary to carry out this
subsection after the appointment of the Corporation as receiver
under this title.
(6) Rulemaking.--
(A) In general.--The Corporation shall prescribe
regulations to carry out this subsection. The Corporation shall
consult with the Secretary in the development and finalization
of such regulations.
(B) Equitable treatment.--The regulations prescribed under
subparagraph (A) shall take into account the differences in
risks posed to the financial stability of the United States by
financial companies, the differences in the liability
structures of financial companies, and the different bases for
other assessments that such financial companies may be required
to pay, to ensure that assessed financial companies are treated
equitably and that assessments under this subsection reflect
such differences.
(p) Unenforceability of Certain Agreements.--
(1) In general.--No provision described in paragraph (2) shall
be enforceable against or impose any liability on any person, as
such enforcement or liability shall be contrary to public policy.
(2) Prohibited provisions.--A provision described in this
paragraph is any term contained in any existing or future
standstill, confidentiality, or other agreement that, directly or
indirectly--
(A) affects, restricts, or limits the ability of any person
to offer to acquire or acquire;
(B) prohibits any person from offering to acquire or
acquiring; or
(C) prohibits any person from using any previously
disclosed information in connection with any such offer to
acquire or acquisition of,
all or part of any covered financial company, including any
liabilities, assets, or interest therein, in connection with any
transaction in which the Corporation exercises its authority under
this title.
(q) Other Exemptions.--
(1) In general.--When acting as a receiver under this title--
(A) the Corporation, including its franchise, its capital,
reserves and surplus, and its income, shall be exempt from all
taxation imposed by any State, county, municipality, or local
taxing authority, except that any real property of the
Corporation shall be subject to State, territorial, county,
municipal, or local taxation to the same extent according to
its value as other real property is taxed, except that,
notwithstanding the failure of any person to challenge an
assessment under State law of the value of such property, such
value, and the tax thereon, shall be determined as of the
period for which such tax is imposed;
(B) no property of the Corporation shall be subject to
levy, attachment, garnishment, foreclosure, or sale without the
consent of the Corporation, nor shall any involuntary lien
attach to the property of the Corporation; and
(C) the Corporation shall not be liable for any amounts in
the nature of penalties or fines, including those arising from
the failure of any person to pay any real property, personal
property, probate, or recording tax or any recording or filing
fees when due; and
(D) the Corporation shall be exempt from all prosecution by
the United States or any State, county, municipality, or local
authority for any criminal offense arising under Federal,
State, county, municipal, or local law, which was allegedly
committed by the covered financial company, or persons acting
on behalf of the covered financial company, prior to the
appointment of the Corporation as receiver.
(2) Limitation.--Paragraph (1) shall not apply with respect to
any tax imposed (or other amount arising) under the Internal
Revenue Code of 1986.
(r) Certain Sales of Assets Prohibited.--
(1) Persons who engaged in improper conduct with, or caused
losses to, covered financial companies.--The Corporation shall
prescribe regulations which, at a minimum, shall prohibit the sale
of assets of a covered financial company by the Corporation to--
(A) any person who--
(i) has defaulted, or was a member of a partnership or
an officer or director of a corporation that has defaulted,
on 1 or more obligations, the aggregate amount of which
exceeds $1,000,000, to such covered financial company;
(ii) has been found to have engaged in fraudulent
activity in connection with any obligation referred to in
clause (i); and
(iii) proposes to purchase any such asset in whole or
in part through the use of the proceeds of a loan or
advance of credit from the Corporation or from any covered
financial company;
(B) any person who participated, as an officer or director
of such covered financial company or of any affiliate of such
company, in a material way in any transaction that resulted in
a substantial loss to such covered financial company; or
(C) any person who has demonstrated a pattern or practice
of defalcation regarding obligations to such covered financial
company.
(2) Convicted debtors.--Except as provided in paragraph (3), a
person may not purchase any asset of such institution from the
receiver, if that person--
(A) has been convicted of an offense under section 215,
656, 657, 1005, 1006, 1007, 1008, 1014, 1032, 1341, 1343, or
1344 of title 18, United States Code, or of conspiring to
commit such an offense, affecting any covered financial
company; and
(B) is in default on any loan or other extension of credit
from such covered financial company which, if not paid, will
cause substantial loss to the Fund or the Corporation.
(3) Settlement of claims.--Paragraphs (1) and (2) shall not
apply to the sale or transfer by the Corporation of any asset of
any covered financial company to any person, if the sale or
transfer of the asset resolves or settles, or is part of the
resolution or settlement, of 1 or more claims that have been, or
could have been, asserted by the Corporation against the person.
(4) Definition of default.--For purposes of this subsection,
the term ``default'' means a failure to comply with the terms of a
loan or other obligation to such an extent that the property
securing the obligation is foreclosed upon.
(s) Recoupment of Compensation From Senior Executives and
Directors.--
(1) In general.--The Corporation, as receiver of a covered
financial company, may recover from any current or former senior
executive or director substantially responsible for the failed
condition of the covered financial company any compensation
received during the 2-year period preceding the date on which the
Corporation was appointed as the receiver of the covered financial
company, except that, in the case of fraud, no time limit shall
apply.
(2) Cost considerations.--In seeking to recover any such
compensation, the Corporation shall weigh the financial and
deterrent benefits of such recovery against the cost of executing
the recovery.
(3) Rulemaking.--The Corporation shall promulgate regulations
to implement the requirements of this subsection, including
defining the term ``compensation'' to mean any financial
remuneration, including salary, bonuses, incentives, benefits,
severance, deferred compensation, or golden parachute benefits, and
any profits realized from the sale of the securities of the covered
financial company.
SEC. 211. MISCELLANEOUS PROVISIONS.
(a) Clarification of Prohibition Regarding Concealment of Assets
From Receiver or Liquidating Agent.--Section 1032(1) of title 18,
United States Code, is amended by inserting ``the Federal Deposit
Insurance Corporation acting as receiver for a covered financial
company, in accordance with title II of the Dodd-Frank Wall Street
Reform and Consumer Protection Act,'' before ``or the National
Credit''.
(b) Conforming Amendment.--Section 1032 of title 18, United States
Code, is amended in the section heading, by striking ``of financial
institution''.
(c) Federal Deposit Insurance Corporation Improvement Act of
1991.--Section 403(a) of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4403(a)) is amended by inserting
``section 210(c) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act, section 1367 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4617(d)),'' after
``section 11(e) of the Federal Deposit Insurance Act,''.
(d) FDIC Inspector General Reviews.--
(1) Scope.--The Inspector General of the Corporation shall
conduct, supervise, and coordinate audits and investigations of the
liquidation of any covered financial company by the Corporation as
receiver under this title, including collecting and summarizing--
(A) a description of actions taken by the Corporation as
receiver;
(B) a description of any material sales, transfers,
mergers, obligations, purchases, and other material
transactions entered into by the Corporation;
(C) an evaluation of the adequacy of the policies and
procedures of the Corporation under section 203(d) and orderly
liquidation plan under section 210(n)(14);
(D) an evaluation of the utilization by the Corporation of
the private sector in carrying out its functions, including the
adequacy of any conflict-of-interest reviews; and
(E) an evaluation of the overall performance of the
Corporation in liquidating the covered financial company,
including administrative costs, timeliness of liquidation
process, and impact on the financial system.
(2) Frequency.--Not later than 6 months after the date of
appointment of the Corporation as receiver under this title and
every 6 months thereafter, the Inspector General of the Corporation
shall conduct the audit and investigation described in paragraph
(1).
(3) Reports and testimony.--The Inspector General of the
Corporation shall include in the semiannual reports required by
section 5(a) of the Inspector General Act of 1978 (5 U.S.C. App.),
a summary of the findings and evaluations under paragraph (1), and
shall appear before the appropriate committees of Congress, if
requested, to present each such report.
(4) Funding.--
(A) Initial funding.--The expenses of the Inspector General
of the Corporation in carrying out this subsection shall be
considered administrative expenses of the receivership.
(B) Additional funding.--If the maximum amount available to
the Corporation as receiver under this title is insufficient to
enable the Inspector General of the Corporation to carry out
the duties under this subsection, the Corporation shall pay
such additional amounts from assessments imposed under section
210.
(5) Termination of responsibilities.--The duties and
responsibilities of the Inspector General of the Corporation under
this subsection shall terminate 1 year after the date of
termination of the receivership under this title.
(e) Treasury Inspector General Reviews.--
(1) Scope.--The Inspector General of the Department of the
Treasury shall conduct, supervise, and coordinate audits and
investigations of actions taken by the Secretary related to the
liquidation of any covered financial company under this title,
including collecting and summarizing--
(A) a description of actions taken by the Secretary under
this title;
(B) an analysis of the approval by the Secretary of the
policies and procedures of the Corporation under section 203
and acceptance of the orderly liquidation plan of the
Corporation under section 210; and
(C) an assessment of the terms and conditions underlying
the purchase by the Secretary of obligations of the Corporation
under section 210.
(2) Frequency.--Not later than 6 months after the date of
appointment of the Corporation as receiver under this title and
every 6 months thereafter, the Inspector General of the Department
of the Treasury shall conduct the audit and investigation described
in paragraph (1).
(3) Reports and testimony.--The Inspector General of the
Department of the Treasury shall include in the semiannual reports
required by section 5(a) of the Inspector General Act of 1978 (5
U.S.C. App.), a summary of the findings and assessments under
paragraph (1), and shall appear before the appropriate committees
of Congress, if requested, to present each such report.
(4) Termination of responsibilities.--The duties and
responsibilities of the Inspector General of the Department of the
Treasury under this subsection shall terminate 1 year after the
date on which the obligations purchased by the Secretary from the
Corporation under section 210 are fully redeemed.
(f) Primary Financial Regulatory Agency Inspector General
Reviews.--
(1) Scope.--Upon the appointment of the Corporation as receiver
for a covered financial company supervised by a Federal primary
financial regulatory agency or the Board of Governors under section
165, the Inspector General of the agency or the Board of Governors
shall make a written report reviewing the supervision by the agency
or the Board of Governors of the covered financial company, which
shall--
(A) evaluate the effectiveness of the agency or the Board
of Governors in carrying out its supervisory responsibilities
with respect to the covered financial company;
(B) identify any acts or omissions on the part of agency or
Board of Governors officials that contributed to the covered
financial company being in default or in danger of default;
(C) identify any actions that could have been taken by the
agency or the Board of Governors that would have prevented the
company from being in default or in danger of default; and
(D) recommend appropriate administrative or legislative
action.
(2) Reports and testimony.--Not later than 1 year after the
date of appointment of the Corporation as receiver under this
title, the Inspector General of the Federal primary financial
regulatory agency or the Board of Governors shall provide the
report required by paragraph (1) to such agency or the Board of
Governors, and along with such agency or the Board of Governors, as
applicable, shall appear before the appropriate committees of
Congress, if requested, to present the report required by paragraph
(1). Not later than 90 days after the date of receipt of the report
required by paragraph (1), such agency or the Board of Governors,
as applicable, shall provide a written report to Congress
describing any actions taken in response to the recommendations in
the report, and if no such actions were taken, describing the
reasons why no actions were taken.
SEC. 212. PROHIBITION OF CIRCUMVENTION AND PREVENTION OF CONFLICTS
OF INTEREST.
(a) No Other Funding.--Funds for the orderly liquidation of any
covered financial company under this title shall only be provided as
specified under this title.
(b) Limit on Governmental Actions.--No governmental entity may take
any action to circumvent the purposes of this title.
(c) Conflict of Interest.--In the event that the Corporation is
appointed receiver for more than 1 covered financial company or is
appointed receiver for a covered financial company and receiver for any
insured depository institution that is an affiliate of such covered
financial company, the Corporation shall take appropriate action, as
necessary to avoid any conflicts of interest that may arise in
connection with multiple receiverships.
SEC. 213. BAN ON CERTAIN ACTIVITIES BY SENIOR EXECUTIVES AND
DIRECTORS.
(a) Prohibition Authority.--The Board of Governors or, if the
covered financial company was not supervised by the Board of Governors,
the Corporation, may exercise the authority provided by this section.
(b) Authority To Issue Order.--The appropriate agency described in
subsection (a) may take any action authorized by subsection (c), if the
agency determines that--
(1) a senior executive or a director of the covered financial
company, prior to the appointment of the Corporation as receiver,
has, directly or indirectly--
(A) violated--
(i) any law or regulation;
(ii) any cease-and-desist order which has become final;
(iii) any condition imposed in writing by a Federal
agency in connection with any action on any application,
notice, or request by such company or senior executive; or
(iv) any written agreement between such company and
such agency;
(B) engaged or participated in any unsafe or unsound
practice in connection with any financial company; or
(C) committed or engaged in any act, omission, or practice
which constitutes a breach of the fiduciary duty of such senior
executive or director;
(2) by reason of the violation, practice, or breach described
in any subparagraph of paragraph (1), such senior executive or
director has received financial gain or other benefit by reason of
such violation, practice, or breach and such violation, practice,
or breach contributed to the failure of the company; and
(3) such violation, practice, or breach--
(A) involves personal dishonesty on the part of such senior
executive or director; or
(B) demonstrates willful or continuing disregard by such
senior executive or director for the safety or soundness of
such company.
(c) Authorized Actions.--
(1) In general.--The appropriate agency for a financial
company, as described in subsection (a), may serve upon a senior
executive or director described in subsection (b) a written notice
of the intention of the agency to prohibit any further
participation by such person, in any manner, in the conduct of the
affairs of any financial company for a period of time determined by
the appropriate agency to be commensurate with such violation,
practice, or breach, provided such period shall be not less than 2
years.
(2) Procedures.--The due process requirements and other
procedures under section 8(e) of the Federal Deposit Insurance Act
(12 U.S.C. 1818(e)) shall apply to actions under this section as if
the covered financial company were an insured depository
institution and the senior executive or director were an
institution-affiliated party, as those terms are defined in that
Act.
(d) Regulations.--The Corporation and the Board of Governors, in
consultation with the Council, shall jointly prescribe rules or
regulations to administer and carry out this section, including rules,
regulations, or guidelines to further define the term senior executive
for the purposes of this section.
SEC. 214. PROHIBITION ON TAXPAYER FUNDING.
(a) Liquidation Required.--All financial companies put into
receivership under this title shall be liquidated. No taxpayer funds
shall be used to prevent the liquidation of any financial company under
this title.
(b) Recovery of Funds.--All funds expended in the liquidation of a
financial company under this title shall be recovered from the
disposition of assets of such financial company, or shall be the
responsibility of the financial sector, through assessments.
(c) No Losses to Taxpayers.--Taxpayers shall bear no losses from
the exercise of any authority under this title.
SEC. 215. STUDY ON SECURED CREDITOR HAIRCUTS.
(a) Study Required.--The Council shall conduct a study evaluating
the importance of maximizing United States taxpayer protections and
promoting market discipline with respect to the treatment of fully
secured creditors in the utilization of the orderly liquidation
authority authorized by this Act. In carrying out such study, the
Council shall--
(1) not be prejudicial to current or past laws or regulations
with respect to secured creditor treatment in a resolution process;
(2) study the similarities and differences between the
resolution mechanisms authorized by the Bankruptcy Code, the
Federal Deposit Insurance Corporation Improvement Act of 1991, and
the orderly liquidation authority authorized by this Act;
(3) determine how various secured creditors are treated in such
resolution mechanisms and examine how a haircut (of various
degrees) on secured creditors could improve market discipline and
protect taxpayers;
(4) compare the benefits and dynamics of prudent lending
practices by depository institutions in secured loans for consumers
and small businesses to the lending practices of secured creditors
to large, interconnected financial firms;
(5) consider whether credit differs according to different
types of collateral and different terms and timing of the extension
of credit; amd
(6) include an examination of stakeholders who were unsecured
or under-collateralized and seek collateral when a firm is failing,
and the impact that such behavior has on financial stability and an
orderly resolution that protects taxpayers if the firm fails.
(b) Report.--Not later than the end of the 1-year period beginning
on the date of enactment of this Act, the Council shall issue a report
to the Congress containing all findings and conclusions made by the
Council in carrying out the study required under subsection (a).
SEC. 216. STUDY ON BANKRUPTCY PROCESS FOR FINANCIAL AND NONBANK
FINANCIAL INSTITUTIONS.
(a) Study.--
(1) In general.--Upon enactment of this Act, the Board of
Governors, in consultation with the Administrative Office of the
United States Courts, shall conduct a study regarding the
resolution of financial companies under the Bankruptcy Code, under
chapter 7 or 11 thereof .
(2) Issues to be studied.--Issues to be studied under this
section include--
(A) the effectiveness of chapter 7 and chapter 11 of the
Bankruptcy Code in facilitating the orderly resolution or
reorganization of systemic financial companies;
(B) whether a special financial resolution court or panel
of special masters or judges should be established to oversee
cases involving financial companies to provide for the
resolution of such companies under the Bankruptcy Code, in a
manner that minimizes adverse impacts on financial markets
without creating moral hazard;
(C) whether amendments to the Bankruptcy Code should be
adopted to enhance the ability of the Code to resolve financial
companies in a manner that minimizes adverse impacts on
financial markets without creating moral hazard;
(D) whether amendments should be made to the Bankruptcy
Code, the Federal Deposit Insurance Act, and other insolvency
laws to address the manner in which qualified financial
contracts of financial companies are treated; and
(E) the implications, challenges, and benefits to creating
a new chapter or subchapter of the Bankruptcy Code to deal with
financial companies.
(b) Reports to Congress.--Not later than 1 year after the date of
enactment of this Act, and in each successive year until the fifth year
after the date of enactment of this Act, the Administrative Office of
the United States courts shall submit to the Committees on Banking,
Housing, and Urban Affairs and the Judiciary of the Senate and the
Committees on Financial Services and the Judiciary of the House of
Representatives a report summarizing the results of the study conducted
under subsection (a).
SEC. 217. STUDY ON INTERNATIONAL COORDINATION RELATING TO
BANKRUPTCY PROCESS FOR NONBANK FINANCIAL INSTITUTIONS.
(a) Study.--
(1) In general.--The Board of Governors, in consultation with
the Administrative Office of the United States Courts, shall
conduct a study regarding international coordination relating to
the resolution of systemic financial companies under the United
States Bankruptcy Code and applicable foreign law.
(2) Issues to be studied.--With respect to the bankruptcy
process for financial companies, issues to be studied under this
section include--
(A) the extent to which international coordination
currently exists;
(B) current mechanisms and structures for facilitating
international cooperation;
(C) barriers to effective international coordination; and
(D) ways to increase and make more effective international
coordination of the resolution of financial companies, so as to
minimize the impact on the financial system without creating
moral hazard.
(b) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the Administrative office of the United States
Courts shall submit to the Committees on Banking, Housing, and Urban
Affairs and the Judiciary of the Senate and the Committees on Financial
Services and the Judiciary of the House of Representatives a report
summarizing the results of the study conducted under subsection (a).
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS
SEC. 300. SHORT TITLE.
This title may be cited as the ``Enhancing Financial Institution
Safety and Soundness Act of 2010''.
SEC. 301. PURPOSES.
The purposes of this title are--
(1) to provide for the safe and sound operation of the banking
system of the United States;
(2) to preserve and protect the dual system of Federal and
State-chartered depository institutions;
(3) to ensure the fair and appropriate supervision of each
depository institution, regardless of the size or type of charter
of the depository institution; and
(4) to streamline and rationalize the supervision of depository
institutions and the holding companies of depository institutions.
SEC. 302. DEFINITION.
In this title, the term ``transferred employee'' means, as the
context requires, an employee transferred to the Office of the
Comptroller of the Currency or the Corporation under section 322.
Subtitle A--Transfer of Powers and Duties
SEC. 311. TRANSFER DATE.
(a) Transfer Date.--Except as provided in subsection (b), the term
``transfer date'' means the date that is 1 year after the date of
enactment of this Act.
(b) Extension Permitted.--
(1) Notice required.--The Secretary, in consultation with the
Comptroller of the Currency, the Director of the Office of Thrift
Supervision, the Chairman of the Board of Governors, and the
Chairperson of the Corporation, may extend the period under
subsection (a) and designate a transfer date that is not later than
18 months after the date of enactment of this Act, if the Secretary
transmits to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House
of Representatives--
(A) a written determination that commencement of the
orderly process to implement this title is not feasible by the
date that is 1 year after the date of enactment of this Act;
(B) an explanation of why an extension is necessary to
commence the process of orderly implementation of this title;
(C) the transfer date designated under this subsection; and
(D) a description of the steps that will be taken to
initiate the process of an orderly and timely implementation of
this title within the extended time period.
(2) Publication of notice.--Not later than 270 days after the
date of enactment of this Act, the Secretary shall publish in the
Federal Register notice of any transfer date designated under
paragraph (1).
SEC. 312. POWERS AND DUTIES TRANSFERRED.
(a) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
(b) Functions of the Office of Thrift Supervision.--
(1) Savings and loan holding company functions transferred.--
(A) Transfer of functions.--There are transferred to the
Board of Governors all functions of the Office of Thrift
Supervision and the Director of the Office of Thrift
Supervision (including the authority to issue orders) relating
to--
(i) the supervision of--
(I) any savings and loan holding company; and
(II) any subsidiary (other than a depository
institution) of a savings and loan holding company; and
(ii) all rulemaking authority of the Office of Thrift
Supervision and the Director of the Office of Thrift
Supervision relating to savings and loan holding companies.
(B) Powers, authorities, rights, and duties.--The Board of
Governors shall succeed to all powers, authorities, rights, and
duties that were vested in the Office of Thrift Supervision and
the Director of the Office of Thrift Supervision on the day
before the transfer date relating to the functions and
authority transferred under subparagraph (A).
(2) All other functions transferred.--
(A) Board of governors.--All rulemaking authority of the
Office of Thrift Supervision and the Director of the Office of
Thrift Supervision under section 11 of the Home Owners' Loan
Act (12 U.S.C. 1468) relating to transactions with affiliates
and extensions of credit to executive officers, directors, and
principal shareholders and under section 5(q) of such Act
relating to tying arrangements is transferred to the Board of
Governors.
(B) Comptroller of the currency.--Except as provided in
paragraph (1) and subparagraph (A)--
(i) there are transferred to the Office of the
Comptroller of the Currency and the Comptroller of the
Currency--
(I) all functions of the Office of Thrift
Supervision and the Director of the Office of Thrift
Supervision, respectively, relating to Federal savings
associations; and
(II) all rulemaking authority of the Office of
Thrift Supervision and the Director of the Office of
Thrift Supervision, respectively, relating to savings
associations; and
(ii) the Office of the Comptroller of the Currency and
the Comptroller of the Currency shall succeed to all
powers, authorities, rights, and duties that were vested in
the Office of Thrift Supervision and the Director of the
Office of Thrift Supervision, respectively, on the day
before the transfer date relating to the functions and
authority transferred under clause (i).
(C) Corporation.--Except as provided in paragraph (1) and
subparagraphs (A) and (B)--
(i) all functions of the Office of Thrift Supervision
and the Director of the Office of Thrift Supervision
relating to State savings associations are transferred to
the Corporation; and
(ii) the Corporation shall succeed to all powers,
authorities, rights, and duties that were vested in the
Office of Thrift Supervision and the Director of the Office
of Thrift Supervision on the day before the transfer date
relating to the functions transferred under clause (i).
(c) Conforming Amendments.--Section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813) is amended--
(1) in subsection (q), by striking paragraphs (1) through (4)
and inserting the following:
``(1) the Office of the Comptroller of the Currency, in the
case of--
``(A) any national banking association;
``(B) any Federal branch or agency of a foreign bank; and
``(C) any Federal savings association;
``(2) the Federal Deposit Insurance Corporation, in the case
of--
``(A) any State nonmember insured bank;
``(B) any foreign bank having an insured branch; and
``(C) any State savings association;
``(3) the Board of Governors of the Federal Reserve System, in
the case of--
``(A) any State member bank;
``(B) any branch or agency of a foreign bank with respect
to any provision of the Federal Reserve Act which is made
applicable under the International Banking Act of 1978;
``(C) any foreign bank which does not operate an insured
branch;
``(D) any agency or commercial lending company other than a
Federal agency;
``(E) supervisory or regulatory proceedings arising from
the authority given to the Board of Governors under section
7(c)(1) of the International Banking Act of 1978, including
such proceedings under the Financial Institutions Supervisory
Act of 1966;
``(F) any bank holding company and any subsidiary (other
than a depository institution) of a bank holding company; and
``(G) any savings and loan holding company and any
subsidiary (other than a depository institution) of a savings
and loan holding company.''; and
(2) in paragraphs (1) and (3) of subsection (u), by striking
``(other than a bank holding company'' and inserting ``(other than
a bank holding company or savings and loan holding company''.
(d) Consumer Protection.--Nothing in this section may be construed
to limit or otherwise affect the transfer of powers under title X.
SEC. 313. ABOLISHMENT.
Effective 90 days after the transfer date, the Office of Thrift
Supervision and the position of Director of the Office of Thrift
Supervision are abolished.
SEC. 314. AMENDMENTS TO THE REVISED STATUTES.
(a) Amendment to Section 324.--Section 324 of the Revised Statutes
of the United States (12 U.S.C. 1) is amended to read as follows:
``SEC. 324. COMPTROLLER OF THE CURRENCY.
``(a) Office of the Comptroller of the Currency Established.--There
is established in the Department of the Treasury a bureau to be known
as the `Office of the Comptroller of the Currency' which is charged
with assuring the safety and soundness of, and compliance with laws and
regulations, fair access to financial services, and fair treatment of
customers by, the institutions and other persons subject to its
jurisdiction.
``(b) Comptroller of the Currency.--
``(1) In general.--The chief officer of the Office of the
Comptroller of the Currency shall be known as the Comptroller of
the Currency. The Comptroller of the Currency shall perform the
duties of the Comptroller of the Currency under the general
direction of the Secretary of the Treasury. The Secretary of the
Treasury may not delay or prevent the issuance of any rule or the
promulgation of any regulation by the Comptroller of the Currency,
and may not intervene in any matter or proceeding before the
Comptroller of the Currency (including agency enforcement actions),
unless otherwise specifically provided by law.
``(2) Additional authority.--The Comptroller of the Currency
shall have the same authority with respect to functions transferred
to the Comptroller of the Currency under the Enhancing Financial
Institution Safety and Soundness Act of 2010 as was vested in the
Director of the Office of Thrift Supervision on the transfer date,
as defined in section 311 of that Act.''.
(b) Supervision of Federal Savings Associations.--Chapter 9 of
title VII of the Revised Statutes of the United States (12 U.S.C. 1 et
seq.) is amended by inserting after section 327A (12 U.S.C. 4a) the
following:
``SEC. 327B. DEPUTY COMPTROLLER FOR THE SUPERVISION AND EXAMINATION OF
FEDERAL SAVINGS ASSOCIATIONS.
``The Comptroller of the Currency shall designate a Deputy
Comptroller, who shall be responsible for the supervision and
examination of Federal savings associations.''.
(c) Amendment to Section 329.--Section 329 of the Revised Statutes
of the United States (12 U.S.C. 11) is amended by inserting before the
period at the end the following: ``or any Federal savings
association''.
(d) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
SEC. 315. FEDERAL INFORMATION POLICY.
Section 3502(5) of title 44, United States Code, is amended by
inserting ``Office of the Comptroller of the Currency,'' after ``the
Securities and Exchange Commission,''.
SEC. 316. SAVINGS PROVISIONS.
(a) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not affected.--
Sections 312(b) and 313 shall not affect the validity of any right,
duty, or obligation of the United States, the Director of the
Office of Thrift Supervision, the Office of Thrift Supervision, or
any other person, that existed on the day before the transfer date.
(2) Continuation of suits.--This title shall not abate any
action or proceeding commenced by or against the Director of the
Office of Thrift Supervision or the Office of Thrift Supervision
before the transfer date, except that--
(A) for any action or proceeding arising out of a function
of the Office of Thrift Supervision or the Director of the
Office of Thrift Supervision transferred to the Board of
Governors by this title, the Board of Governors shall be
substituted for the Office of Thrift Supervision or the
Director of the Office of Thrift Supervision as a party to the
action or proceeding on and after the transfer date;
(B) for any action or proceeding arising out of a function
of the Office of Thrift Supervision or the Director of the
Office of Thrift Supervision transferred to the Office of the
Comptroller of the Currency or the Comptroller of the Currency
by this title, the Office of the Comptroller of the Currency or
the Comptroller of the Currency shall be substituted for the
Office of Thrift Supervision or the Director of the Office of
Thrift Supervision, as the case may be, as a party to the
action or proceeding on and after the transfer date; and
(C) for any action or proceeding arising out of a function
of the Office of Thrift Supervision or the Director of the
Office of Thrift Supervision transferred to the Corporation by
this title, the Corporation shall be substituted for the Office
of Thrift Supervision or the Director of the Office of Thrift
Supervision as a party to the action or proceeding on and after
the transfer date.
(b) Continuation of Existing OTS Orders, Resolutions,
Determinations, Agreements, Regulations, etc.--All orders, resolutions,
determinations, agreements, and regulations, interpretative rules,
other interpretations, guidelines, procedures, and other advisory
materials, that have been issued, made, prescribed, or allowed to
become effective by the Office of Thrift Supervision or the Director of
the Office of Thrift Supervision, or by a court of competent
jurisdiction, in the performance of functions that are transferred by
this title and that are in effect on the day before the transfer date,
shall continue in effect according to the terms of such orders,
resolutions, determinations, agreements, and regulations,
interpretative rules, other interpretations, guidelines, procedures,
and other advisory materials, and shall be enforceable by or against--
(1) the Board of Governors, in the case of a function of the
Office of Thrift Supervision or the Director of the Office of
Thrift Supervision transferred to the Board of Governors, until
modified, terminated, set aside, or superseded in accordance with
applicable law by the Board of Governors, by any court of competent
jurisdiction, or by operation of law;
(2) the Office of the Comptroller of the Currency or the
Comptroller of the Currency, in the case of a function of the
Office of Thrift Supervision or the Director of the Office of
Thrift Supervision transferred to the Office of the Comptroller of
the Currency or the Comptroller of the Currency, respectively,
until modified, terminated, set aside, or superseded in accordance
with applicable law by the Office of the Comptroller of the
Currency or the Comptroller of the Currency, by any court of
competent jurisdiction, or by operation of law; and
(3) the Corporation, in the case of a function of the Office of
Thrift Supervision or the Director of the Office of Thrift
Supervision transferred to the Corporation, until modified,
terminated, set aside, or superseded in accordance with applicable
law by the Corporation, by any court of competent jurisdiction, or
by operation of law.
(c) Identification of Regulations Continued.--
(1) By the board of governors.--Not later than the transfer
date, the Board of Governors shall--
(A) identify the regulations continued under subsection (b)
that will be enforced by the Board of Governors; and
(B) publish a list of the regulations identified under
subparagraph (A) in the Federal Register.
(2) By office of the comptroller of the currency.--Not later
than the transfer date, the Office of the Comptroller of the
Currency shall--
(A) after consultation with the Corporation, identify the
regulations continued under subsection (b) that will be
enforced by the Office of the Comptroller of the Currency; and
(B) publish a list of the regulations identified under
subparagraph (A) in the Federal Register.
(3) By the corporation.--Not later than the transfer date, the
Corporation shall--
(A) after consultation with the Office of the Comptroller
of the Currency, identify the regulations continued under
subsection (b) that will be enforced by the Corporation; and
(B) publish a list of the regulations identified under
subparagraph (A) in the Federal Register.
(d) Status of Regulations Proposed or Not Yet Effective.--
(1) Proposed regulations.--Any proposed regulation of the
Office of Thrift Supervision, which the Office of Thrift
Supervision in performing functions transferred by this title, has
proposed before the transfer date but has not published as a final
regulation before such date, shall be deemed to be a proposed
regulation of the Office of the Comptroller of the Currency or the
Board of Governors, as appropriate, according to the terms of the
proposed regulation.
(2) Regulations not yet effective.--Any interim or final
regulation of the Office of Thrift Supervision, which the Office of
Thrift Supervision, in performing functions transferred by this
title, has published before the transfer date but which has not
become effective before that date, shall become effective as a
regulation of the Office of the Comptroller of the Currency or the
Board of Governors, as appropriate, according to the terms of the
interim or final regulation, unless modified, terminated, set
aside, or superseded in accordance with applicable law by the
Office of the Comptroller of the Currency or the Board of
Governors, as appropriate, by any court of competent jurisdiction,
or by operation of law.
SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL BANKING AGENCIES.
On and after the transfer date, any reference in Federal law to the
Director of the Office of Thrift Supervision or the Office of Thrift
Supervision, in connection with any function of the Director of the
Office of Thrift Supervision or the Office of Thrift Supervision
transferred under section 312(b) or any other provision of this
subtitle, shall be deemed to be a reference to the Comptroller of the
Currency, the Office of the Comptroller of the Currency, the
Chairperson of the Corporation, the Corporation, the Chairman of the
Board of Governors, or the Board of Governors, as appropriate and
consistent with the amendments made in subtitle E.
SEC. 318. FUNDING.
(a) Compensation of Examiners.--Section 5240 of the Revised
Statutes of the United States (12 U.S.C. 481 et seq.) is amended--
(1) in the second undesignated paragraph (12 U.S.C. 481), in
the fourth sentence, by striking ``without regard to the provisions
of other laws applicable to officers or employees of the United
States'' and inserting the following: ``set and adjusted subject to
chapter 71 of title 5, United States Code, and without regard to
the provisions of other laws applicable to officers or employees of
the United States''; and
(2) in the third undesignated paragraph (12 U.S.C. 482), in the
first sentence, by striking ``shall fix'' and inserting ``shall,
subject to chapter 71 of title 5, United States Code, fix''.
(b) Funding of Office of the Comptroller of the Currency.--Chapter
4 of title LXII of the Revised Statutes is amended by inserting after
section 5240 (12 U.S.C. 481, 482) the following:
``Sec. 5240A. The Comptroller of the Currency may collect an
assessment, fee, or other charge from any entity described in section
3(q)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)(1)), as
the Comptroller determines is necessary or appropriate to carry out the
responsibilities of the Office of the Comptroller of the Currency. In
establishing the amount of an assessment, fee, or charge collected from
an entity under this section, the Comptroller of the Currency may take
into account the nature and scope of the activities of the entity, the
amount and type of assets that the entity holds, the financial and
managerial condition of the entity, and any other factor, as the
Comptroller of the Currency determines is appropriate. Funds derived
from any assessment, fee, or charge collected or payment made pursuant
to this section may be deposited by the Comptroller of the Currency in
accordance with the provisions of section 5234. Such funds shall not be
construed to be Government funds or appropriated monies, and shall not
be subject to apportionment for purposes of chapter 15 of title 31,
United States Code, or any other provision of law. The authority of the
Comptroller of the Currency under this section shall be in addition to
the authority under section 5240.
``The Comptroller of the Currency shall have sole authority to
determine the manner in which the obligations of the Office of the
Comptroller of the Currency shall be incurred and its disbursements and
expenses allowed and paid, in accordance with this section, except as
provided in chapter 71 of title 5, United States Code (with respect to
compensation).''.
(c) Funding of Board of Governors.--Section 11 of the Federal
Reserve Act (12 U.S.C. 248) is amended by adding at the end the
following:
``(s) Assessments, Fees, and Other Charges for Certain Companies.--
``(1) In general.--The Board shall collect a total amount of
assessments, fees, or other charges from the companies described in
paragraph (2) that is equal to the total expenses the Board
estimates are necessary or appropriate to carry out the supervisory
and regulatory responsibilities of the Board with respect to such
companies.
``(2) Companies.--The companies described in this paragraph
are--
``(A) all bank holding companies having total consolidated
assets of $50,000,000,000 or more;
``(B) all savings and loan holding companies having total
consolidated assets of $50,000,000,000 or more; and
``(C) all nonbank financial companies supervised by the
Board under section 113 of the Dodd-Frank Wall Street Reform
and Consumer Protection Act.''.
(d) Corporation Examination Fees.--Section 10(e) of the Federal
Deposit Insurance Act (12 U.S.C. 1820(e)) is amended by striking
paragraph (1) and inserting the following:
``(1) Regular and special examinations of depository
institutions.--The cost of conducting any regular examination or
special examination of any depository institution under subsection
(b)(2), (b)(3), or (d) or of any entity described in section
3(q)(2) may be assessed by the Corporation against the institution
or entity to meet the expenses of the Corporation in carrying out
such examinations.''.
(e) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
SEC. 319. CONTRACTING AND LEASING AUTHORITY.
Notwithstanding the Federal Property and Administrative Services
Act of 1949 (41 U.S.C. 251 et seq.) or any other provision of law
(except the full and open competition requirements of the Competition
in Contracting Act), the Office of the Comptroller of the Currency
may--
(1) enter into and perform contracts, execute instruments, and
acquire real property (or property interest) as the Comptroller
deems necessary to carry out the duties and responsibilities of the
Office of the Comptroller of the Currency; and
(2) hold, maintain, sell, lease, or otherwise dispose of the
property (or property interest) acquired under paragraph (1).
Subtitle B--Transitional Provisions
SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROPERTY OF THE
OFFICE OF THRIFT SUPERVISION.
(a) In General.--Before the transfer date, the Office of the
Comptroller of the Currency, the Corporation, and the Board of
Governors shall--
(1) consult and cooperate with the Office of Thrift Supervision
to facilitate the orderly transfer of functions to the Office of
the Comptroller of the Currency, the Corporation, and the Board of
Governors in accordance with this title;
(2) determine jointly, from time to time--
(A) the amount of funds necessary to pay any expenses
associated with the transfer of functions (including expenses
for personnel, property, and administrative services) during
the period beginning on the date of enactment of this Act and
ending on the transfer date;
(B) which personnel are appropriate to facilitate the
orderly transfer of functions by this title; and
(C) what property and administrative services are necessary
to support the Office of the Comptroller of the Currency, the
Corporation, and the Board of Governors during the period
beginning on the date of enactment of this Act and ending on
the transfer date; and
(3) take such actions as may be necessary to provide for the
orderly implementation of this title.
(b) Agency Consultation.--When requested jointly by the Office of
the Comptroller of the Currency, the Corporation, and the Board of
Governors to do so before the transfer date, the Office of Thrift
Supervision shall--
(1) pay to the Office of the Comptroller of the Currency, the
Corporation, or the Board of Governors, as applicable, from funds
obtained by the Office of Thrift Supervision through assessments,
fees, or other charges that the Office of Thrift Supervision is
authorized by law to impose, such amounts as the Office of the
Comptroller of the Currency, the Corporation, and the Board of
Governors jointly determine to be necessary under subsection (a);
(2) detail to the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors, as applicable, such
personnel as the Office of the Comptroller of the Currency, the
Corporation, and the Board of Governors jointly determine to be
appropriate under subsection (a); and
(3) make available to the Office of the Comptroller of the
Currency, the Corporation, or the Board of Governors, as
applicable, such property and provide to the Office of the
Comptroller of the Currency, the Corporation, or the Board of
Governors, as applicable, such administrative services as the
Office of the Comptroller of the Currency, the Corporation, and the
Board of Governors jointly determine to be necessary under
subsection (a).
(c) Notice Required.--The Office of the Comptroller of the
Currency, the Corporation, and the Board of Governors shall jointly
give the Office of Thrift Supervision reasonable prior notice of any
request that the Office of the Comptroller of the Currency, the
Corporation, and the Board of Governors jointly intend to make under
subsection (b).
SEC. 322. TRANSFER OF EMPLOYEES.
(a) In General.--
(1) Office of thrift supervision employees.--
(A) In general.--Except as provided in section 1064, all
employees of the Office of Thrift Supervision shall be
transferred to the Office of the Comptroller of the Currency or
the Corporation for employment in accordance with this section.
(B) Allocating employees for transfer to receiving
agencies.--The Director of the Office of Thrift Supervision,
the Comptroller of the Currency, and the Chairperson of the
Corporation shall--
(i) jointly determine the number of employees of the
Office of Thrift Supervision necessary to perform or
support the functions that are transferred to the Office of
the Comptroller of the Currency or the Corporation by this
title; and
(ii) consistent with the determination under clause
(i), jointly identify employees of the Office of Thrift
Supervision for transfer to the Office of the Comptroller
of the Currency or the Corporation.
(2) Employees transferred; service periods credited.--For
purposes of this section, periods of service with a Federal home
loan bank, a joint office of Federal home loan banks, or a Federal
reserve bank shall be credited as periods of service with a Federal
agency.
(3) Appointment authority for excepted service transferred.--
(A) In general.--Except as provided in subparagraph (B),
any appointment authority of the Office of Thrift Supervision
under Federal law that relates to the functions transferred
under section 312, including the regulations of the Office of
Personnel Management, for filling the positions of employees in
the excepted service shall be transferred to the Comptroller of
the Currency or the Chairperson of the Corporation, as
appropriate.
(B) Declining transfers allowed.--The Comptroller of the
Currency or the Chairperson of the Corporation may decline to
accept a transfer of authority under subparagraph (A) (and the
employees appointed under that authority) to the extent that
such authority relates to positions excepted from the
competitive service because of their confidential, policy-
making, policy-determining, or policy-advocating character.
(4) Additional appointment authority.--Notwithstanding any
other provision of law, the Office of the Comptroller of the
Currency and the Corporation may appoint transferred employees to
positions in the Office of the Comptroller of the Currency or the
Corporation, respectively.
(b) Timing of Transfers and Position Assignments.--Each employee to
be transferred under subsection (a)(1) shall--
(1) be transferred not later than 90 days after the transfer
date; and
(2) receive notice of the position assignment of the employee
not later than 120 days after the effective date of the transfer of
the employee.
(c) Transfer of Functions.--
(1) In general.--Notwithstanding any other provision of law,
the transfer of employees under this subtitle shall be deemed a
transfer of functions for the purpose of section 3503 of title 5,
United States Code.
(2) Priority.--If any provision of this subtitle conflicts with
any protection provided to a transferred employee under section
3503 of title 5, United States Code, the provisions of this
subtitle shall control.
(d) Employee Status and Eligibility.--The transfer of functions and
employees under this subtitle, and the abolishment of the Office of
Thrift Supervision under section 313, shall not affect the status of
the transferred employees as employees of an agency of the United
States under any provision of law.
(e) Equal Status and Tenure Positions.--
(1) Status and tenure.--Each transferred employee from the
Office of Thrift Supervision shall be placed in a position at the
Office of the Comptroller of the Currency or the Corporation with
the same status and tenure as the transferred employee held on the
day before the date on which the employee was transferred.
(2) Functions.--To the extent practicable, each transferred
employee shall be placed in a position at the Office of the
Comptroller of the Currency or the Corporation, as applicable,
responsible for the same functions and duties as the transferred
employee had on the day before the date on which the employee was
transferred, in accordance with the expertise and preferences of
the transferred employee.
(f) No Additional Certification Requirements.--An examiner who is a
transferred employee shall not be subject to any additional
certification requirements before being placed in a comparable position
at the Office of the Comptroller of the Currency or the Corporation, if
the examiner carries out examinations of the same type of institutions
as an employee of the Office of the Comptroller of the Currency or the
Corporation as the employee was responsible for carrying out before the
date on which the employee was transferred.
(g) Personnel Actions Limited.--
(1) Protection.--
(A) In general.--Except as provided in paragraph (2), each
affected employee shall not, during the 30-month period
beginning on the transfer date, be involuntarily separated, or
involuntarily reassigned outside his or her locality pay area.
(B) Affected employees.--For purposes of this paragraph,
the term ``affected employee'' means--
(i) an employee transferred from the Office of Thrift
Supervision holding a permanent position on the day before
the transfer date; and
(ii) an employee of the Office of the Comptroller of
the Currency or the Corporation holding a permanent
position on the day before the transfer date.
(2) Exceptions.--Paragraph (1) does not limit the right of the
Office of the Comptroller of the Currency or the Corporation to--
(A) separate an employee for cause or for unacceptable
performance;
(B) terminate an appointment to a position excepted from
the competitive service because of its confidential policy-
making, policy-determining, or policy-advocating character; or
(C) reassign an employee outside such employee's locality
pay area when the Office of the Comptroller of the Currency or
the Corporation determines that the reassignment is necessary
for the efficient operation of the agency.
(h) Pay.--
(1) 30-month protection.--Except as provided in paragraph (2),
during the 30-month period beginning on the date on which the
employee was transferred under this subtitle, a transferred
employee shall be paid at a rate that is not less than the basic
rate of pay, including any geographic differential, that the
transferred employee received during the pay period immediately
preceding the date on which the employee was transferred.
Notwithstanding the preceding sentence, if the employee was
receiving a higher rate of basic pay on a temporary basis (because
of a temporary assignment, temporary promotion, or other temporary
action) immediately before the transfer, the Agency may reduce the
rate of basic pay on the date the rate would have been reduced but
for the transfer, and the protected rate for the remainder of the
30-month period will be the reduced rate that would have applied
but for the transfer.
(2) Exceptions.--The Comptroller of the Currency or the
Corporation may reduce the rate of basic pay of a transferred
employee--
(A) for cause, including for unacceptable performance; or
(B) with the consent of the transferred employee.
(3) Protection only while employed.--This subsection shall
apply to a transferred employee only during the period that the
transferred employee remains employed by Office of the Comptroller
of the Currency or the Corporation.
(4) Pay increases permitted.--Nothing in this subsection shall
limit the authority of the Comptroller of the Currency or the
Chairperson of the Corporation to increase the pay of a transferred
employee.
(i) Benefits.--
(1) Retirement benefits for transferred employees.--
(A) In general.--
(i) Continuation of existing retirement plan.--Each
transferred employee shall remain enrolled in the
retirement plan of the transferred employee, for as long as
the transferred employee is employed by the Office of the
Comptroller of the Currency or the Corporation.
(ii) Employer's contribution.--The Comptroller of the
Currency or the Chairperson of the Corporation, as
appropriate, shall pay any employer contributions to the
existing retirement plan of each transferred employee, as
required under each such existing retirement plan.
(B) Definition.--In this paragraph, the term ``existing
retirement plan'' means, with respect to a transferred
employee, the retirement plan (including the Financial
Institutions Retirement Fund), and any associated thrift
savings plan, of the agency from which the employee was
transferred in which the employee was enrolled on the day
before the date on which the employee was transferred.
(2) Benefits other than retirement benefits.--
(A) During first year.--
(i) Existing plans continue.--During the 1-year period
following the transfer date, each transferred employee may
retain membership in any employee benefit program (other
than a retirement benefit program) of the agency from which
the employee was transferred under this title, including
any dental, vision, long term care, or life insurance
program to which the employee belonged on the day before
the transfer date.
(ii) Employer's contribution.--The Office of the
Comptroller of the Currency or the Corporation, as
appropriate, shall pay any employer cost required to extend
coverage in the benefit program to the transferred employee
as required under that program or negotiated agreements.
(B) Dental, vision, or life insurance after first year.--
If, after the 1-year period beginning on the transfer date, the
Office of the Comptroller of the Currency or the Corporation
determines that the Office of the Comptroller of the Currency
or the Corporation, as the case may be, will not continue to
participate in any dental, vision, or life insurance program of
an agency from which an employee was transferred, a transferred
employee who is a member of the program may, before the
decision takes effect and without regard to any regularly
scheduled open season, elect to enroll in--
(i) the enhanced dental benefits program established
under chapter 89A of title 5, United States Code;
(ii) the enhanced vision benefits established under
chapter 89B of title 5, United States Code; and
(iii) the Federal Employees' Group Life Insurance
Program established under chapter 87 of title 5, United
States Code, without regard to any requirement of
insurability.
(C) Long term care insurance after 1st year.--If, after the
1-year period beginning on the transfer date, the Office of the
Comptroller of the Currency or the Corporation determines that
the Office of the Comptroller of the Currency or the
Corporation, as appropriate, will not continue to participate
in any long term care insurance program of an agency from which
an employee transferred, a transferred employee who is a member
of such a program may, before the decision takes effect, elect
to apply for coverage under the Federal Long Term Care
Insurance Program established under chapter 90 of title 5,
United States Code, under the underwriting requirements
applicable to a new active workforce member, as described in
part 875 of title 5, Code of Federal Regulations (or any
successor thereto).
(D) Contribution of transferred employee.--
(i) In general.--Subject to clause (ii), a transferred
employee who is enrolled in a plan under the Federal
Employees Health Benefits Program shall pay any employee
contribution required under the plan.
(ii) Cost differential.--The Office of the Comptroller
of the Currency or the Corporation, as applicable, shall
pay any difference in cost between the employee
contribution required under the plan provided to
transferred employees by the agency from which the employee
transferred on the date of enactment of this Act and the
plan provided by the Office of the Comptroller of the
Currency or the Corporation, as the case may be, under this
section.
(iii) Funds transfer.--The Office of the Comptroller of
the Currency or the Corporation, as the case may be, shall
transfer to the Employees Health Benefits Fund established
under section 8909 of title 5, United States Code, an
amount determined by the Director of the Office of
Personnel Management, after consultation with the
Comptroller of the Currency or the Chairperson of the
Corporation, as the case may be, and the Office of
Management and Budget, to be necessary to reimburse the
Fund for the cost to the Fund of providing any benefits
under this subparagraph that are not otherwise paid for by
a transferred employee under clause (i).
(E) Special provisions to ensure continuation of life
insurance benefits.--
(i) In general.--An annuitant, as defined in section
8901 of title 5, United States Code, who is enrolled in a
life insurance plan administered by an agency from which
employees are transferred under this title on the day
before the transfer date shall be eligible for coverage by
a life insurance plan under sections 8706(b), 8714a, 8714b,
or 8714c of title 5, United States Code, or by a life
insurance plan established by the Office of the Comptroller
of the Currency or the Corporation, as applicable, without
regard to any regularly scheduled open season or any
requirement of insurability.
(ii) Contribution of transferred employee.--
(I) In general.--Subject to subclause (II), a
transferred employee enrolled in a life insurance plan
under this subparagraph shall pay any employee
contribution required by the plan.
(II) Cost differential.--The Office of the
Comptroller of the Currency or the Corporation, as the
case may be, shall pay any difference in cost between
the benefits provided by the agency from which the
employee transferred on the date of enactment of this
Act and the benefits provided under this section.
(III) Funds transfer.--The Office of the
Comptroller of the Currency or the Corporation, as the
case may be, shall transfer to the Federal Employees'
Group Life Insurance Fund established under section
8714 of title 5, United States Code, an amount
determined by the Director of the Office of Personnel
Management, after consultation with the Comptroller of
the Currency or the Chairperson of the Corporation, as
the case may be, and the Office of Management and
Budget, to be necessary to reimburse the Federal
Employees' Group Life Insurance Fund for the cost to
the Federal Employees' Group Life Insurance Fund of
providing benefits under this subparagraph not
otherwise paid for by a transferred employee under
subclause (I).
(IV) Credit for time enrolled in other plans.--For
any transferred employee, enrollment in a life
insurance plan administered by the agency from which
the employee transferred, immediately before enrollment
in a life insurance plan under chapter 87 of title 5,
United States Code, shall be considered as enrollment
in a life insurance plan under that chapter for
purposes of section 8706(b)(1)(A) of title 5, United
States Code.
(j) Incorporation Into Agency Pay System.--Not later than 30 months
after the transfer date, the Comptroller of the Currency and the
Chairperson of the Corporation shall place each transferred employee
into the established pay system and structure of the appropriate
employing agency.
(k) Equitable Treatment.--In administering the provisions of this
section, the Comptroller of the Currency and the Chairperson of the
Corporation--
(1) may not take any action that would unfairly disadvantage a
transferred employee relative to any other employee of the Office
of the Comptroller of the Currency or the Corporation on the basis
of prior employment by the Office of Thrift Supervision;
(2) may take such action as is appropriate in an individual
case to ensure that a transferred employee receives equitable
treatment, with respect to the status, tenure, pay, benefits (other
than benefits under programs administered by the Office of
Personnel Management), and accrued leave or vacation time for prior
periods of service with any Federal agency of the transferred
employee;
(3) shall, jointly with the Director of the Office of Thrift
Supervision, develop and adopt procedures and safeguards designed
to ensure that the requirements of this subsection are met; and
(4) shall conduct a study detailing the position assignments of
all employees transferred pursuant to subsection (a), describing
the procedures and safeguards adopted pursuant to paragraph (3),
and demonstrating that the requirements of this subsection have
been met; and shall, not later than 365 days after the transfer
date, submit a copy of such study to Congress.
(l) Reorganization.--
(1) In general.--If the Comptroller of the Currency or the
Chairperson of the Corporation determines, during the 2-year period
beginning 1 year after the transfer date, that a reorganization of
the staff of the Office of the Comptroller of the Currency or the
Corporation, respectively, is required, the reorganization shall be
deemed a ``major reorganization'' for purposes of affording
affected employees retirement under section 8336(d)(2) or
8414(b)(1)(B) of title 5, United States Code.
(2) Service credit.--For purposes of this subsection, periods
of service with a Federal home loan bank or a joint office of
Federal home loan banks shall be credited as periods of service
with a Federal agency.
SEC. 323. PROPERTY TRANSFERRED.
(a) Property Defined.--For purposes of this section, the term
``property'' includes all real property (including leaseholds) and all
personal property, including computers, furniture, fixtures, equipment,
books, accounts, records, reports, files, memoranda, paper, reports of
examination, work papers, and correspondence related to such reports,
and any other information or materials.
(b) Property of the Office of Thrift Supervision.--
(1) In general.--No later than 90 days after the transfer date,
all property of the Office of Thrift Supervision (other than
property described under paragraph (b)(2)) that the Comptroller of
the Currency and the Chairperson of the Corporation jointly
determine is used, on the day before the transfer date, to perform
or support the functions of the Office of Thrift Supervision
transferred to the Office of the Comptroller of the Currency or the
Corporation under this title, shall be transferred to the Office of
the Comptroller of the Currency or the Corporation in a manner
consistent with the transfer of employees under this subtitle.
(2) Personal property.--All books, accounts, records, reports,
files, memoranda, papers, documents, reports of examination, work
papers, and correspondence of the Office of Thrift Supervision that
the Comptroller of the Currency, the Chairperson of the
Corporation, and the Chairman of the Board of Governors jointly
determine is used, on the day before the transfer date, to perform
or support the functions of the Office of Thrift Supervision
transferred to the Board of Governors under this title shall be
transferred to the Board of Governors in a manner consistent with
the purposes of this title.
(c) Contracts Related to Property Transferred.--Each contract,
agreement, lease, license, permit, and similar arrangement relating to
property transferred to the Office of the Comptroller of the Currency
or the Corporation by this section shall be transferred to the Office
of the Comptroller of the Currency or the Corporation, as appropriate,
together with the property to which it relates.
(d) Preservation of Property.--Property identified for transfer
under this section shall not be altered, destroyed, or deleted before
transfer under this section.
SEC. 324. FUNDS TRANSFERRED.
The funds that, on the day before the transfer date, the Director
of the Office of Thrift Supervision (in consultation with the
Comptroller of the Currency, the Chairperson of the Corporation, and
the Chairman of the Board of Governors) determines are not necessary to
dispose of the affairs of the Office of Thrift Supervision under
section 325 and are available to the Office of Thrift Supervision to
pay the expenses of the Office of Thrift Supervision--
(1) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(2)(B), shall be
transferred to the Office of the Comptroller of the Currency on the
transfer date;
(2) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(2)(C), shall be
transferred to the Corporation on the transfer date; and
(3) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(1)(A), shall be
transferred to the Board of Governors on the transfer date.
SEC. 325. DISPOSITION OF AFFAIRS.
(a) Authority of Director.--During the 90-day period beginning on
the transfer date, the Director of the Office of Thrift Supervision--
(1) shall, solely for the purpose of winding up the affairs of
the Office of Thrift Supervision relating to any function
transferred to the Office of the Comptroller of the Currency, the
Corporation, or the Board of Governors under this title--
(A) manage the employees of the Office of Thrift
Supervision who have not yet been transferred and provide for
the payment of the compensation and benefits of the employees
that accrue before the date on which the employees are
transferred under this title; and
(B) manage any property of the Office of Thrift
Supervision, until the date on which the property is
transferred under section 323; and
(2) may take any other action necessary to wind up the affairs
of the Office of Thrift Supervision.
(b) Status of Director.--
(1) In general.--Notwithstanding the transfer of functions
under this subtitle, during the 90-day period beginning on the
transfer date, the Director of the Office of Thrift Supervision
shall retain and may exercise any authority vested in the Director
of the Office of Thrift Supervision on the day before the transfer
date, only to the extent necessary--
(A) to wind up the Office of Thrift Supervision; and
(B) to carry out the transfer under this subtitle during
such 90-day period.
(2) Other provisions.--For purposes of paragraph (1), the
Director of the Office of Thrift Supervision shall, during the 90-
day period beginning on the transfer date, continue to be--
(A) treated as an officer of the United States; and
(B) entitled to receive compensation at the same annual
rate of basic pay that the Director of the Office of Thrift
Supervision received on the day before the transfer date.
SEC. 326. CONTINUATION OF SERVICES.
Any agency, department, or other instrumentality of the United
States, and any successor to any such agency, department, or
instrumentality, that was, before the transfer date, providing support
services to the Office of Thrift Supervision in connection with
functions transferred to the Office of the Comptroller of the Currency,
the Corporation or the Board of Governors under this title, shall--
(1) continue to provide such services, subject to reimbursement
by the Office of the Comptroller of the Currency, the Corporation,
or the Board of Governors, until the transfer of functions under
this title is complete; and
(2) consult with the Comptroller of the Currency, the
Chairperson of the Corporation, or the Chairman of the Board of
Governors, as appropriate, to coordinate and facilitate a prompt
and orderly transition.
SEC. 327. IMPLEMENTATION PLAN AND REPORTS.
(a) Plan Submission.--Within 180 days of the enactment of the Dodd-
Frank Wall Street Reform and Consumer Protection Act, the Board of
Governors, the Corporation, the Office of the Comptroller of the
Currency, and the Office of Thrift Supervision, shall jointly submit a
plan to the Committee on Banking, Housing, and Urban Affairs of the
Senate, the Committee on Financial Services of the House of
Representatives, and the Inspectors General of the Department of the
Treasury, the Corporation, and the Board of Governors detailing the
steps the Board of Governors, the Corporation, the Office of the
Comptroller of the Currency, and the Office of Thrift Supervision will
take to implement the provisions of sections 301 through 326, and the
provisions of the amendments made by such sections.
(b) Inspectors General Review of the Plan.--Within 60 days of
receiving the plan required under subsection (a), the Inspectors
General of the Department of the Treasury, the Corporation, and the
Board of Governors shall jointly provide a written report to the Board
of Governors, the Corporation, the Office of the Comptroller of the
Currency, and the Office of Thrift Supervision and shall submit a copy
to the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of Representatives
detailing whether the plan conforms with the provisions of sections 301
through 326, and the provisions of the amendments made by such
sections, including--
(1) whether the plan sufficiently takes into consideration the
orderly transfer of personnel;
(2) whether the plan describes procedures and safeguards to
ensure that the Office of Thrift Supervision employees are not
unfairly disadvantaged relative to employees of the Office of the
Comptroller of the Currency and the Corporation;
(3) whether the plan sufficiently takes into consideration the
orderly transfer of authority and responsibilities;
(4) whether the plan sufficiently takes into consideration the
effective transfer of funds;
(5) whether the plan sufficiently takes in consideration the
orderly transfer of property; and
(6) any additional recommendations for an orderly and effective
process.
(c) Implementation Reports.--Not later than 6 months after the date
on which the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives receives the report required under subsection (b), and
every 6 months thereafter until all aspects of the plan have been
implemented, the Inspectors General of the Department of the Treasury,
the Corporation, and the Board of Governors shall jointly provide a
written report on the status of the implementation of the plan to the
Board of Governors, the Corporation, the Office of the Comptroller of
the Currency, and the Office of Thrift Supervision and shall submit a
copy to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives.
Subtitle C--Federal Deposit Insurance Corporation
SEC. 331. DEPOSIT INSURANCE REFORMS.
(a) Size Distinctions.--Section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) is amended--
(1) by striking subparagraph (D); and
(2) by redesignating subparagraph (C) as subparagraph (D).
(b) Assessment Base.--The Corporation shall amend the regulations
issued by the Corporation under section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) to define the term ``assessment
base'' with respect to an insured depository institution for purposes
of that section 7(b)(2), as an amount equal to--
(1) the average consolidated total assets of the insured
depository institution during the assessment period; minus
(2) the sum of--
(A) the average tangible equity of the insured depository
institution during the assessment period; and
(B) in the case of an insured depository institution that
is a custodial bank (as defined by the Corporation, based on
factors including the percentage of total revenues generated by
custodial businesses and the level of assets under custody) or
a banker's bank (as that term is used in section 5136 of the
Revised Statutes (12 U.S.C. 24)), an amount that the
Corporation determines is necessary to establish assessments
consistent with the definition under section 7(b)(1) of the
Federal Deposit Insurance Act (12 U.S.C. 1817(b)(1)) for a
custodial bank or a banker's bank.
SEC. 332. ELIMINATION OF PROCYCLICAL ASSESSMENTS.
Section 7(e) of the Federal Deposit Insurance Act is amended--
(1) in paragraph (2)--
(A) by amending subparagraph (B) to read as follows:
``(B) Limitation.--The Board of Directors may, in its sole
discretion, suspend or limit the declaration of payment of
dividends under subparagraph (A).'';
(B) by amending subparagraph (C) to read as follows:
``(C) Notice and opportunity for comment.--The Corporation
shall prescribe, by regulation, after notice and opportunity
for comment, the method for the declaration, calculation,
distribution, and payment of dividends under this paragraph'';
and
(C) by striking subparagraphs (D) through (G); and
(2) in paragraph (4)(A) by striking ``paragraphs (2)(D) and''
and inserting ``paragraphs (2) and''.
SEC. 333. ENHANCED ACCESS TO INFORMATION FOR DEPOSIT INSURANCE
PURPOSES.
(a) Section 7(a)(2)(B) of the Federal Deposit Insurance Act is
amended by striking ``agreement'' and inserting ``consultation''.
(b) Section 7(b)(1)(E) of the Federal Deposit Insurance Act is
amended--
(1) in clause (i), by striking ``such as'' and inserting
``including''; and
(2) in clause (iii), by striking ``Corporation'' and inserting
``Corporation, except as provided in section 7(a)(2)(B)''.
SEC. 334. TRANSITION RESERVE RATIO REQUIREMENTS TO REFLECT NEW
ASSESSMENT BASE.
(a) Section 7(b)(3)(B) of the Federal Deposit Insurance Act is
amended to read as follows:
``(B) Minimum reserve ratio.--The reserve ratio designated
by the Board of Directors for any year may not be less than
1.35 percent of estimated insured deposits, or the comparable
percentage of the assessment base set forth in paragraph
(2)(C).''.
(b) Section 3(y)(3) of the Federal Deposit Insurance Act is amended
by inserting ``, or such comparable percentage of the assessment base
set forth in section 7(b)(2)(C)'' before the period.
(c) For a period of not less than 5 years after the date of the
enactment of this title, the Federal Deposit Insurance Corporation
shall make available to the public the reserve ratio and the designated
reserve ratio using both estimated insured deposits and the assessment
base under section 7(b)(2)(C) of the Federal Deposit Insurance Act.
(d) Reserve Ratio.--Notwithstanding the timing requirements of
section 7(b)(3)(E)(ii) of the Federal Deposit Insurance Act, the
Corporation shall take such steps as may be necessary for the reserve
ratio of the Deposit Insurance Fund to reach 1.35 percent of estimated
insured deposits by September 30, 2020.
(e) Offset.--In setting the assessments necessary to meet the
requirements of subsection (d), the Corporation shall offset the effect
of subsection (d) on insured depository institutions with total
consolidated assets of less than $10,000,000,000.
SEC. 335. PERMANENT INCREASE IN DEPOSIT AND SHARE INSURANCE.
(a) Permanent Increase in Deposit Insurance.--Section 11(a)(1)(E)
of the Federal Deposit Insurance Act (12 U.S.C. 1821(a)(1)(E)) is
amended--
(1) by striking ``$100,000'' and inserting ``$250,000''; and
(2) by adding at the end the following new sentences:
``Notwithstanding any other provision of law, the increase in the
standard maximum deposit insurance amount to $250,000 shall apply
to depositors in any institution for which the Corporation was
appointed as receiver or conservator on or after January 1, 2008,
and before October 3, 2008. The Corporation shall take such actions
as are necessary to carry out the requirements of this section with
respect to such depositors, without regard to any time limitations
under this Act. In implementing this and the preceding 2 sentences,
any payment on a deposit claim made by the Corporation as receiver
or conservator to a depositor above the standard maximum deposit
insurance amount in effect at the time of the appointment of the
Corporation as receiver or conservator shall be deemed to be part
of the net amount due to the depositor under subparagraph (B).''
(b) Permanent Increase in Share Insurance.--Section 207(k)(5) of
the Federal Credit Union Act (12 U.S.C. 1787(k)(5)) is amended by
striking ``$100,000'' and inserting ``$250,000''.
SEC. 336. MANAGEMENT OF THE FEDERAL DEPOSIT INSURANCE CORPORATION.
(a) In General.--Section 2 of the Federal Deposit Insurance Act (12
U.S.C. 1812) is amended--
(1) in subsection (a)(1)(B), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Director of the
Consumer Financial Protection Bureau'';
(2) by amending subsection (d)(2) to read as follows:
``(2) Acting officials may serve.--In the event of a vacancy in
the office of the Comptroller of the Currency or the office of
Director of the Consumer Financial Protection Bureau and pending
the appointment of a successor, or during the absence or disability
of the Comptroller of the Currency or the Director of the Consumer
Financial Protection Bureau, the acting Comptroller of the Currency
or the acting Director of the Consumer Financial Protection Bureau,
as the case may be, shall be a member of the Board of Directors in
the place of the Comptroller or Director.''; and
(3) in subsection (f)(2), by striking ``Office of Thrift
Supervision'' and inserting ``Consumer Financial Protection
Bureau''.
(b) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
Subtitle D--Other Matters
SEC. 341. BRANCHING.
Notwithstanding the Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.), the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.), or any other provision of Federal or State law, a savings
association that becomes a bank may--
(1) continue to operate any branch or agency that the savings
association operated immediately before the savings association
became a bank; and
(2) establish, acquire, and operate additional branches and
agencies at any location within any State in which the savings
association operated a branch immediately before the savings
association became a bank, if the law of the State in which the
branch is located, or is to be located, would permit establishment
of the branch if the bank were a State bank chartered by such
State.
SEC. 342. OFFICE OF MINORITY AND WOMEN INCLUSION.
(a) Office of Minority and Women Inclusion.--
(1) Establishment.--
(A) In general.--Except as provided in subparagraph (B),
not later than 6 months after the date of enactment of this
Act, each agency shall establish an Office of Minority and
Women Inclusion that shall be responsible for all matters of
the agency relating to diversity in management, employment, and
business activities.
(B) Bureau.--The Bureau shall establish an Office of
Minority and Women Inclusion not later than 6 months after the
designated transfer date established under section 1062.
(2) Transfer of responsibilities.--Each agency that, on the day
before the date of enactment of this Act, assigned the
responsibilities described in paragraph (1) (or comparable
responsibilities) to another office of the agency shall ensure that
such responsibilities are transferred to the Office.
(3) Duties with respect to civil rights laws.--The
responsibilities described in paragraph (1) do not include
enforcement of statutes, regulations, or executive orders
pertaining to civil rights, except each Director shall coordinate
with the agency administrator, or the designee of the agency
administrator, regarding the design and implementation of any
remedies resulting from violations of such statutes, regulations,
or executive orders.
(b) Director.--
(1) In general.--The Director of each Office shall be appointed
by, and shall report to, the agency administrator. The position of
Director shall be a career reserved position in the Senior
Executive Service, as that position is defined in section 3132 of
title 5, United States Code, or an equivalent designation.
(2) Duties.--Each Director shall develop standards for--
(A) equal employment opportunity and the racial, ethnic,
and gender diversity of the workforce and senior management of
the agency;
(B) increased participation of minority-owned and women-
owned businesses in the programs and contracts of the agency,
including standards for coordinating technical assistance to
such businesses; and
(C) assessing the diversity policies and practices of
entities regulated by the agency.
(3) Other duties.--Each Director shall advise the agency
administrator on the impact of the policies and regulations of the
agency on minority-owned and women-owned businesses.
(4) Rule of construction.--Nothing in paragraph (2)(C) may be
construed to mandate any requirement on or otherwise affect the
lending policies and practices of any regulated entity, or to
require any specific action based on the findings of the
assessment.
(c) Inclusion in All Levels of Business Activities.--
(1) In general.--The Director of each Office shall develop and
implement standards and procedures to ensure, to the maximum extent
possible, the fair inclusion and utilization of minorities, women,
and minority-owned and women-owned businesses in all business and
activities of the agency at all levels, including in procurement,
insurance, and all types of contracts.
(2) Contracts.--The procedures established by each agency for
review and evaluation of contract proposals and for hiring service
providers shall include, to the extent consistent with applicable
law, a component that gives consideration to the diversity of the
applicant. Such procedure shall include a written statement, in a
form and with such content as the Director shall prescribe, that a
contractor shall ensure, to the maximum extent possible, the fair
inclusion of women and minorities in the workforce of the
contractor and, as applicable, subcontractors.
(3) Termination.--
(A) Determination.--The standards and procedures developed
and implemented under this subsection shall include a procedure
for the Director to make a determination whether an agency
contractor, and, as applicable, a subcontractor has failed to
make a good faith effort to include minorities and women in
their workforce.
(B) Effect of determination.--
(i) Recommendation to agency administrator.--Upon a
determination described in subparagraph (A), the Director
shall make a recommendation to the agency administrator
that the contract be terminated.
(ii) Action by agency administrator.--Upon receipt of a
recommendation under clause (i), the agency administrator
may--
(I) terminate the contract;
(II) make a referral to the Office of Federal
Contract Compliance Programs of the Department of
Labor; or
(III) take other appropriate action.
(d) Applicability.--This section shall apply to all contracts of an
agency for services of any kind, including the services of financial
institutions, investment banking firms, mortgage banking firms, asset
management firms, brokers, dealers, financial services entities,
underwriters, accountants, investment consultants, and providers of
legal services. The contracts referred to in this subsection include
all contracts for all business and activities of an agency, at all
levels, including contracts for the issuance or guarantee of any debt,
equity, or security, the sale of assets, the management of the assets
of the agency, the making of equity investments by the agency, and the
implementation by the agency of programs to address economic recovery.
(e) Reports.--Each Office shall submit to Congress an annual report
regarding the actions taken by the agency and the Office pursuant to
this section, which shall include--
(1) a statement of the total amounts paid by the agency to
contractors since the previous report;
(2) the percentage of the amounts described in paragraph (1)
that were paid to contractors described in subsection (c)(1);
(3) the successes achieved and challenges faced by the agency
in operating minority and women outreach programs;
(4) the challenges the agency may face in hiring qualified
minority and women employees and contracting with qualified
minority-owned and women-owned businesses; and
(5) any other information, findings, conclusions, and
recommendations for legislative or agency action, as the Director
determines appropriate.
(f) Diversity in Agency Workforce.--Each agency shall take
affirmative steps to seek diversity in the workforce of the agency at
all levels of the agency in a manner consistent with applicable law.
Such steps shall include--
(1) recruiting at historically black colleges and universities,
Hispanic-serving institutions, women's colleges, and colleges that
typically serve majority minority populations;
(2) sponsoring and recruiting at job fairs in urban
communities;
(3) placing employment advertisements in newspapers and
magazines oriented toward minorities and women;
(4) partnering with organizations that are focused on
developing opportunities for minorities and women to place talented
young minorities and women in industry internships, summer
employment, and full-time positions;
(5) where feasible, partnering with inner-city high schools,
girls' high schools, and high schools with majority minority
populations to establish or enhance financial literacy programs and
provide mentoring; and
(6) any other mass media communications that the Office
determines necessary.
(g) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Agency.--The term ``agency'' means--
(A) the Departmental Offices of the Department of the
Treasury;
(B) the Corporation;
(C) the Federal Housing Finance Agency;
(D) each of the Federal reserve banks;
(E) the Board;
(F) the National Credit Union Administration;
(G) the Office of the Comptroller of the Currency;
(H) the Commission; and
(I) the Bureau.
(2) Agency administrator.--The term ``agency administrator''
means the head of an agency.
(3) Minority.--The term ``minority'' has the same meaning as in
section 1204(c) of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 1811 note).
(4) Minority-owned business.--The term ``minority-owned
business'' has the same meaning as in section 21A(r)(4)(A) of the
Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4)(A)), as in effect
on the day before the transfer date.
(5) Office.--The term ``Office'' means the Office of Minority
and Women Inclusion established by an agency under subsection (a).
(6) Women-owned business.--The term ``women-owned business''
has the meaning given the term ``women's business'' in section
21A(r)(4)(B) of the Federal Home Loan Bank Act (12 U.S.C.
1441a(r)(4)(B)), as in effect on the day before the transfer date.
SEC. 343. INSURANCE OF TRANSACTION ACCOUNTS.
(a) Banks and Savings Associations.--
(1) Amendments.--Section 11(a)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1821(a)(1)) is amended--
(A) in subparagraph (B)--
(i) by striking ``The net amount'' and inserting the
following:
``(i) In general.--Subject to clause (ii), the net
amount''; and
(ii) by adding at the end the following new clauses:
``(ii) Insurance for noninterest-bearing transaction
accounts.--Notwithstanding clause (i), the Corporation
shall fully insure the net amount that any depositor at an
insured depository institution maintains in a noninterest-
bearing transaction account. Such amount shall not be taken
into account when computing the net amount due to such
depositor under clause (i).
``(iii) Noninterest-bearing transaction account
defined.--For purposes of this subparagraph, the term
`noninterest-bearing transaction account' means a deposit
or account maintained at an insured depository
institution--
``(I) with respect to which interest is neither
accrued nor paid;
``(II) on which the depositor or account holder is
permitted to make withdrawals by negotiable or
transferable instrument, payment orders of withdrawal,
telephone or other electronic media transfers, or other
similar items for the purpose of making payments or
transfers to third parties or others; and
``(III) on which the insured depository institution
does not reserve the right to require advance notice of
an intended withdrawal.''; and
(B) in subparagraph (C), by striking ``subparagraph (B)''
and inserting ``subparagraph (B)(i)''.
(2) Effective date.--The amendments made by paragraph (1) shall
take effect on December 31, 2010.
(3) Prospective repeal.--Effective January 1, 2013, section
11(a)(1) of the Federal Deposit Insurance Act (12 U.S.C.
1821(a)(1)), as amended by paragraph (1), is amended--
(A) in subparagraph (B)--
(i) by striking ``deposit.--'' and all that follows
through ``clause (ii), the net amount'' and insert
``deposit.--The net amount''; and
(ii) by striking clauses (ii) and (iii); and
(B) in subparagraph (C), by striking ``subparagraph
(B)(i)'' and inserting ``subparagraph (B)''.
(b) Credit Unions.--
(1) Amendments.--Section 207(k)(1) of the Federal Credit Union
Act (12 U.S.C. 1787(k)(1)) is amended--
(A) in subparagraph (A)--
(i) by striking ``Subject to the provisions of
paragraph (2), the net amount'' and inserting the
following:
``(i) Net amount of insurance payable.--Subject to
clause (ii) and the provisions of paragraph (2), the net
amount''; and
(ii) by adding at the end the following new clauses:
``(ii) Insurance for noninterest-bearing transaction
accounts.--Notwithstanding clause (i), the Board shall
fully insure the net amount that any member or depositor at
an insured credit union maintains in a noninterest-bearing
transaction account. Such amount shall not be taken into
account when computing the net amount due to such member or
depositor under clause (i).
``(iii) Noninterest-bearing transaction account
defined.--For purposes of this subparagraph, the term
`noninterest-bearing transaction account' means an account
or deposit maintained at an insured credit union--
``(I) with respect to which interest is neither
accrued nor paid;
``(II) on which the account holder or depositor is
permitted to make withdrawals by negotiable or
transferable instrument, payment orders of withdrawal,
telephone or other electronic media transfers, or other
similar items for the purpose of making payments or
transfers to third parties or others; and
``(III) on which the insured credit union does not
reserve the right to require advance notice of an
intended withdrawal.''; and
(B) in subparagraph (B), by striking ``subparagraph (A)''
and inserting ``subparagraph (A)(i)''.
(2) Effective date.--The amendments made by paragraph (1) shall
take effect upon the date of the enactment of this Act
(3) Prospective repeal.--Effective January 1, 2013, section
207(k)(1) of the Federal Credit Union Act (12 U.S.C. 1787(k)(1)),
as amended by paragraph (1), is amended--
(A) in subparagraph (A)--
(i) by striking ``(i) net amount of insurance
payable.--'' and all that follows through ``paragraph (2),
the net amount'' and inserting ``Subject to the provisions
of paragraph (2), the net amount''; and
(ii) by striking clauses (ii) and (iii); and
(B) in subparagraph (B), by striking ``subparagraph
(A)(i)'' and inserting ``subparagraph (A)''.
Subtitle E--Technical and Conforming Amendments
SEC. 351. EFFECTIVE DATE.
Except as provided in section 364(a), the amendments made by this
subtitle shall take effect on the transfer date.
SEC. 352. BALANCED BUDGET AND EMERGENCY DEFICIT CONTROL ACT OF
1985.
Section 256(h) of the Balanced Budget and Emergency Deficit Control
Act of 1985 (2 U.S.C. 906(h)) is amended--
(1) in paragraph (4), by striking subparagraphs (C) and (G);
and
(2) by redesignating subparagraphs (D), (E), (F), and (H) as
subparagraphs (C), (D), (E), and (F), respectively.
SEC. 353. BANK ENTERPRISE ACT OF 1991.
Section 232(a) of the Bank Enterprise Act of 1991 (12 U.S.C.
1834(a)) is amended--
(1) in the subsection heading, by striking ``by Federal Reserve
Board'';
(2) in paragraph (1)--
(A) by striking ``The Board of Governors of the Federal
Reserve System,'' and inserting ``The Comptroller of the
Currency''; and
(B) by striking ``section 7(b)(2)(H)'' and inserting
``section 7(b)(2)(E)'';
(3) in paragraph (2)(A), by striking ``Board'' and inserting
``Comptroller''; and
(4) in paragraph (3)--
(A) by redesignating subparagraphs (A) through (C) as
subparagraphs (B) through (D), respectively; and
(B) by inserting before subparagraph (B) the following:
``(A) Comptroller.--The term `Comptroller' means the
Comptroller of the Currency.''.
SEC. 354. BANK HOLDING COMPANY ACT OF 1956.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended--
(1) in section 2(j)(3) (12 U.S.C. 1841(j)(3)), strike
``Director of the Office of Thrift Supervision'' and inserting
``appropriate Federal banking agency'';
(2) in section 4 (12 U.S.C. 1843)--
(A) in subsection (i)--
(i) in paragraph (4)--
(I) in subparagraph (A)--
(aa) in the subparagraph heading, by striking
``to director''; and
(bb) by striking ``Board'' and all that follows
through the end of the subparagraph and inserting
``Board shall solicit comments and recommendations
from--
``(i) the Comptroller of the Currency, with respect to
the acquisition of a Federal savings association; and
``(ii) the Federal Deposit Insurance Corporation, with
respect to the acquisition of a State savings
association.''.
(II) in subparagraph (B), by striking ``Director''
each place that term appears and inserting
``Comptroller of the Currency or the Federal Deposit
Insurance Corporation, as applicable,'';
(ii) in paragraph (5)--
(I) in subparagraph (B), by striking ``Director
with'' and inserting ``Comptroller of the Currency or
the Federal Deposit Insurance Corporation, as
applicable, with''; and
(II) by striking ``Director'' each place that term
appears and inserting ``Comptroller of the Currency or
the Federal Deposit Insurance Corporation'';
(iii) in paragraph (6), by striking ``Director'' and
inserting ``Comptroller of the Currency or the Federal
Deposit Insurance Corporation, as applicable,''; and
(iv) by striking paragraph (7); and
(3) in section 5(f) (12 U.S.C. 1844(f))--
(A) by striking ``subpena'' each place that term appears
and inserting ``subpoena'';
(B) by striking ``subpenas'' each place that term appears
and inserting ``subpoenas''; and
(C) by striking ``subpenaed'' and inserting ``subpoenaed''.
SEC. 355. BANK HOLDING COMPANY ACT AMENDMENTS OF 1970.
Section 106(b)(1) of the Bank Holding Company Act Amendments of
1970 (12 U.S.C. 1972(1)) is amended in the undesignated matter
following subparagraph (E) by inserting ``issue such regulations as are
necessary to carry out this section, and, in consultation with the
Comptroller of the Currency and the Federal Deposit Insurance Company,
may'' after ``The Board may''.
SEC. 356. BANK PROTECTION ACT OF 1968.
The Bank Protection Act of 1968 (12 U.S.C. 1881 et seq.) is
amended--
(1) in section 2 (12 U.S.C. 1881), by striking ``the term'' and
all that follows through the end of the section and inserting ``the
term `Federal supervisory agency' means the appropriate Federal
banking agency, as defined in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)).'';
(2) in section 3 (12 U.S.C. 1882), by striking ``and loan''
each place that term appears; and
(3) in section 5 (12 U.S.C. 1884), by striking ``and loan''.
SEC. 357. BANK SERVICE COMPANY ACT.
The Bank Service Company Act (12 U.S.C. 1861 et seq.) is amended--
(1) in section 1(b)(4) (12 U.S.C. 1861(b)(4))--
(A) by inserting after ``an insured bank,'' the following:
``a savings association,'';
(B) by striking ``Director of the Office of Thrift
Supervision'' and inserting ``appropriate Federal banking
agency''; and
(C) by striking ``, the Federal Savings and Loan Insurance
Corporation,'';
(2) in section 1(b)(5), by striking ``term `insured depository
institution' has the same meaning as in section 3(c)'' and
inserting ``terms `depository institution' and `savings
association' have the same meanings as in section 3''; and
(3) in section 7(c)(2) (12 U.S.C. 1867(c)(2)), by inserting
``each'' after ``notify''.
SEC. 358. COMMUNITY REINVESTMENT ACT OF 1977.
The Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) is
amended--
(1) in section 803 (12 U.S.C. 2902)--
(A) in paragraph (1)--
(i) in subparagraph (A), by inserting ``and Federal
savings associations (the deposits of which are insured by
the Federal Deposit Insurance Corporation)'' after
``banks'';
(ii) in subparagraph (B), by striking ``and bank
holding companies'' and inserting ``, bank holding
companies, and savings and loan holding companies''; and
(iii) in subparagraph (C), by striking ``; and'' and
inserting ``, and State savings associations (the deposits
of which are insured by the Federal Deposit Insurance
Corporation).''; and
(B) by striking paragraph (2) (relating to the Office of
Thrift Supervision), as added by section 744(q) of the
Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (Public Law 101-73; 103 Stat. 440); and
(2) in section 806 (12 U.S.C. 2905), by inserting ``, except
that the Comptroller of the Currency shall prescribe regulations
applicable to savings associations and the Board of Governors shall
prescribe regulations applicable to insured State member banks,
bank holding companies and savings and loan holding companies,''
after ``supervisory agency''.
SEC. 359. CRIME CONTROL ACT OF 1990.
The Crime Control Act of 1990 is amended--
(1) in section 2539(c)(2) (28 U.S.C. 509 note)--
(A) by striking subparagraphs (C) and (D); and
(B) by redesignating subparagraphs (E) through (H) as
subparagraphs (C) through (G), respectively; and
(2) in section 2554(b)(2) (Public Law 101-647; 104 Stat.
4890)--
(A) in subparagraph (A), by striking ``, the Director of
the Office of Thrift Supervision,'' and inserting ``the
Comptroller of the Currency''; and
(B) in subparagraph (B), by striking ``, the Director'' and
all that follows through ``Trust Corporation'' and inserting
``or the Federal Deposit Insurance Corporation''.
SEC. 360. DEPOSITORY INSTITUTION MANAGEMENT INTERLOCKS ACT.
The Depository Institution Management Interlocks Act (12 U.S.C.
3201 et seq.) is amended--
(1) in section 207 (12 U.S.C. 3206)--
(A) in paragraph (1), by inserting before the comma at the
end the following: ``and Federal savings associations (the
deposits of which are insured by the Federal Deposit Insurance
Corporation)'';
(B) in paragraph (2), by striking ``, and bank holding
companies'' and inserting ``, bank holding companies, and
savings and loan holding companies'';
(C) in paragraph (3), by striking ``Corporation,'' and
inserting ``Corporation and State savings associations (the
deposits of which are insured by the Federal Deposit Insurance
Corporation),'';
(D) by striking paragraph (4);
(E) by redesignating paragraphs (5) and (6) as paragraphs
(4) and (5), respectively; and
(F) in paragraph (5), as so redesignated, by striking
``through (5)'' and inserting ``through (4)'';
(2) in section 209 (12 U.S.C. 3207)--
(A) in paragraph (1), by inserting before the comma at the
end the following: ``and Federal savings associations (the
deposits of which are insured by the Federal Deposit Insurance
Corporation)'';
(B) in paragraph (2), by striking ``, and bank holding
companies'' and inserting ``, bank holding companies, and
savings and loan holding companies'';
(C) in paragraph (3), by striking ``Corporation,'' and
inserting ``Corporation and State savings associations (the
deposits of which are insured by the Federal Deposit Insurance
Corporation),'';
(D) by striking paragraph (4); and
(E) by redesignating paragraph (5) as paragraph (4); and
(3) in section 210(a) (12 U.S.C. 3208(a))--
(A) by striking ``his'' and inserting ``the''; and
(B) by inserting ``of the Attorney General'' after
``enforcement functions''.
SEC. 361. EMERGENCY HOMEOWNERS' RELIEF ACT.
Section 110 of the Emergency Homeowners' Relief Act (12 U.S.C.
2709) is amended in the second sentence, by striking ``Home Loan Bank
Board, the Federal Savings and Loan Insurance Corporation'' and
inserting ``Housing Finance Agency''.
SEC. 362. FEDERAL CREDIT UNION ACT.
The Federal Credit Union Act (12 U.S.C. 1751 et seq.) is amended--
(1) in section 107(8) (12 U.S.C. 1757(8)), by striking ``or the
Federal Savings and Loan Insurance Corporation'';
(2) in section 205 (12 U.S.C. 1785)--
(A) in subsection (b)(2)(G)(i), by striking ``the Office of
Thrift Supervision and''; and
(B) in subsection (i)(1), by striking ``or the Federal
Savings and Loan Insurance Corporation''; and
(3) in section 206(g)(7) (12 U.S.C. 1786(g)(7))--
(A) in subparagraph (A)--
(i) in clause (ii), by striking ``(b)(8)'' and
inserting ``(b)(9)'';
(ii) in clause (v)--
(I) by striking ``depository'' and inserting
``financial''; and
(II) by adding ``and'' at the end;
(iii) in clause (vi)--
(I) by striking ``Board'' and inserting ``Agency'';
and
(II) by striking ``; and'' and inserting a period;
and
(iv) by striking clause (vii); and
(B) in subparagraph (D)--
(i) in clause (iii), by adding ``and'' at the end;
(ii) in clause (iv)--
(I) by striking ``Board'' and inserting ``Agency'';
and
(II) by striking ``and'' at the end; and
(iii) by striking clause (v).
SEC. 363. FEDERAL DEPOSIT INSURANCE ACT.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is
amended--
(1) in section 3 (12 U.S.C. 1813)--
(A) in subsection (b)(1)(C), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Comptroller of
the Currency'';
(B) in subsection (l)(5), in the matter preceding
subparagraph (A), by striking ``Director of the Office of
Thrift Supervision,''; and
(C) in subsection (z), by striking ``the Director of the
Office of Thrift Supervision,'';
(2) in section 7 (12 U.S.C. 1817)--
(A) in subsection (a)--
(i) in paragraph (2)--
(I) in subparagraph (A)--
(aa) in the first sentence, by striking ``the
Director of the Office of Thrift Supervision,'';
(bb) in the second sentence--
(AA) by striking ``the Director of the
Office of Thrift Supervision,'' and inserting
``to''; and
(BB) by inserting ``to'' before ``any
Federal home''; and
(cc) by striking ``Finance Board'' each place
that term appears and inserting ``Finance Agency'';
and
(II) in subparagraph (B), by striking ``the
Comptroller of the Currency, the Board of Governors of
the Federal Reserve System, and the Director of the
Office of Thrift Supervision,'' and inserting ``the
Comptroller of the Currency and the Board of Governors
of the Federal Reserve System,'';
(ii) in paragraph (3), in the first sentence, by
striking ``Comptroller of the Currency, the Chairman of the
Board of Governors of the Federal Reserve System, and the
Director of the Office of Thrift Supervision.'' and
inserting ``Comptroller of the Currency, and the Chairman
of the Board of Governors of the Federal Reserve System.'';
(iii) in paragraph (6), by striking ``section
232(a)(3)(C)'' and inserting ``section 232(a)(3)(D)''; and
(iv) in paragraph (7), by striking ``, the Director of
the Office of Thrift Supervision,''; and
(B) in subsection (n)--
(i) in the heading, by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Comptroller
of the Currency'';
(ii) in the first sentence--
(I) by striking ``the Director of the Office of
Thrift Supervision'' and inserting ``the Comptroller of
the Currency''; and
(II) by inserting ``Federal'' before ``savings
associations'';
(iii) in the third sentence, by striking ``, the
Financing Corporation, and the Resolution Funding
Corporation''; and
(iv) by striking ``the Director'' each place that term
appears and inserting ``the Comptroller'';
(3) in section 8 (12 U.S.C. 1818)--
(A) in subsection (a)(8)(B)(ii), in the last sentence, by
striking ``Director of the Office of Thrift Supervision'' each
place that term appears and inserting ``Comptroller of the
Currency'';
(B) in subsection (b)(3)--
(i) by inserting ``any savings and loan holding company
and any subsidiary (other than a depository institution) of
a savings and loan holding company (as such terms are
defined in section 10 of Home Owners' Loan Act)), any
noninsured State member bank'' after ``Bank Holding Company
Act of 1956,''; and
(ii) by inserting ``or against a savings and loan
holding company or any subsidiary thereof (other than a
depository institution or a subsidiary of such depository
institution)'' before the period at the end;
(C) by striking paragraph (9) of subsection (b) and
inserting the following new paragraph:
``(9) [Repealed]''.
(D) in subsection (e)(7)--
(i) in subparagraph (A)--
(I) in clause (v), by inserting ``and'' after the
semicolon;
(II) in clause (vi)--
(aa) by striking ``Board'' and inserting
``Agency''; and
(bb) by striking ``; and'' and inserting a
period; and
(III) by striking clause (vii); and
(ii) in subparagraph (D)--
(I) in clause (iii), by inserting ``and'' after the
semicolon;
(II) in clause (iv)--
(aa) by striking ``Board'' and inserting
``Agency''; and
(bb) by striking ``; and'' and inserting a
period; and
(III) by striking clause (v);
(E) in subsection (j)--
(i) in paragraph (2), by striking ``, or as a savings
association under subsection (b)(9) of this section'';
(ii) in paragraph (3), by inserting ``or'' after the
semicolon;
(iii) in paragraph (4), by striking ``; or'' and
inserting a comma; and
(iv) by striking paragraph (5);
(F) in subsection (o), by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Comptroller of the
Currency''; and
(G) in subsection (w)(3)(A), by striking ``and the Office
of Thrift Supervision'';
(4) in section 10 (12 U.S.C. 1820)--
(A) in subsection (d)(5), by striking ``or the Resolution
Trust Corporation'' each place that term appears; and
(B) in subsection (k)(5)(B)--
(i) in clause (ii), by inserting ``and'' after the
semicolon;
(ii) in clause (iii), by striking ``; and'' and
inserting a period; and
(iii) by striking clause (iv);
(5) in section 11 (12 U.S.C. 1821)--
(A) in subsection (c)--
(i) in paragraph (2)(A)(ii), by striking ``(other than
section 21A of the Federal Home Loan Bank Act)'';
(ii) in paragraph (4), by striking ``Except as
otherwise provided in section 21A of the Federal Home Loan
Bank Act and notwithstanding'' and inserting
``Notwithstanding'';
(iii) in paragraph (6)--
(I) in the heading, by striking ``Director of the
office of thrift supervision'' and inserting
``Comptroller of the currency'';
(II) in subparagraph (A)--
(aa) by striking ``or the Resolution Trust
Corporation''; and
(bb) by striking ``Director of the Office of
Thrift Supervision'' and inserting ``Comptroller of
the Currency''; and
(III) by amending subparagraph (B) to read as
follows:
``(B) Receiver.--The Corporation may, at the discretion of
the Comptroller of the Currency, be appointed receiver and the
Corporation may accept any such appointment.'';
(iv) in paragraph (12)(A), by striking ``or the
Resolution Trust Corporation'';
(B) in subsection (d)--
(i) in paragraph (17)(A), by striking ``or the Director
of the Office of Thrift Supervision''; and
(ii) in paragraph (18)(B), by striking ``or the
Director of the Office of Thrift Supervision'';
(C) in subsection (m)--
(i) in paragraph (9), by striking ``or the Director of
the Office of Thrift Supervision, as appropriate'';
(ii) in paragraph (16), by striking ``or the Director
of the Office of Thrift Supervision, as appropriate'' each
place that term appears; and
(iii) in paragraph (18), by striking ``or the Director
of the Office of Thrift Supervision, as appropriate'' each
place that term appears;
(D) in subsection (n)--
(i) in paragraph (1)(A)--
(I) by striking ``, or the Director of the Office
of Thrift Supervision, with respect to'' and inserting
``or''; and
(II) by striking ``applicable,,'' and inserting
``applicable,'';
(ii) in paragraph (2)(A), by striking ``or the Director
of the Office of Thrift Supervision'';
(iii) in paragraph (4)(D), by striking ``and the
Director of the Office of Thrift Supervision, as
appropriate,'';
(iv) in paragraph (4)(G), by striking ``and the
Director of the Office of Thrift Supervision, as
appropriate,''; and
(v) in paragraph (12)(B)--
(I) by inserting ``as'' after ``shall appoint the
Corporation'';
(II) by striking ``or the Director of the Office of
Thrift Supervision, as appropriate,'' each place such
term appears;
(E) in subsection (p)--
(i) in paragraph (2)(B), by striking ``the Corporation,
the FSLIC Resolution Fund, or the Resolution Trust
Corporation,'' and inserting ``or the Corporation,''; and
(ii) in paragraph (3)(B), by striking ``, the FSLIC
Resolution Fund, the Resolution Trust Corporation,''; and
(F) in subsection (r), by striking ``and the Resolution
Trust Corporation'';
(6) in section 13(k)(1)(A)(iv) (12 U.S.C. 1823(k)(1)(A)(iv)),
by striking ``Director of the Office of Thrift Supervision'' and
inserting ``Comptroller of the Currency'';
(7) in section 18 (12 U.S.C. 1828)--
(A) in subsection (c)(2)--
(i) in subparagraph (A), by inserting ``or a Federal
savings association'' before the semicolon;
(ii) in subparagraph (B), by adding ``and'' at the end;
(iii) in subparagraph (C), by striking ``(except'' and
all that follows through ``; and'' and inserting ``or a
State savings association.''; and
(iv) by striking subparagraph (D);
(B) in subsection (g)(1), by striking ``the Director of the
Office of Thrift Supervision''and inserting ``the Comptroller
of the Currency'';
(C) in subsection (i)(2)(C), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Corporation'';
and
(D) in subsection (m)--
(i) in paragraph (1)--
(I) in subparagraph (A), by striking ``and the
Director of the Office of Thrift Supervision'' and
inserting ``or the Comptroller of the Currency, as
appropriate,''; and
(II) in subparagraph (B), by striking ``and orders
of the Director of the Office of Thrift Supervision''
and inserting ``of the Comptroller of the Currency and
orders of the Corporation and the Comptroller of the
Currency'';
(ii) in paragraph (2)--
(I) in subparagraph (A), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency, as appropriate,''; and
(II) in subparagraph (B)--
(aa) in the matter before clause (i), by
striking ``Director of the Office of Thrift
Supervision'' and inserting ``Corporation or the
Comptroller of the Currency, as appropriate,''; and
(bb) in the matter following clause (ii)--
(AA) in the first sentence, by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Office of the
Comptroller of the Currency, as appropriate,'';
and
(BB) by striking the second sentence and
inserting the following: ``The Corporation or
the Comptroller of the Currency, as
appropriate, may take any other corrective
measures with respect to the subsidiary,
including the authority to require the
subsidiary to terminate the activities or
operations posing such risks, as the
Corporation or the Comptroller of the Currency,
respectively, may deem appropriate.''; and
(iii) in paragraph (3)--
(I) in subparagraph (A), in the second sentence--
(aa) by inserting ``, in the case of a Federal
savings association,'' before ``consult with''; and
(bb) by striking ``Director of the Office of
Thrift Supervision'' and inserting ``Comptroller of
the Currency''; and
(II) in subparagraph (B)--
(aa) in the subparagraph heading, by striking
``Director'' and inserting ``Comptroller of the
currency'';
(bb) by striking ``Office of Thrift
Supervision'' and inserting ``Comptroller of the
Currency'';
(cc) by inserting a comma after ``soundness'';
and
(dd) by inserting ``as to Federal savings
associations'' after ``compliance'';
(8) in section 19(e) (12 U.S.C. 1829(e))--
(A) in paragraph (1), by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Board of Governors of
the Federal Reserve System''; and
(B) in paragraph (2), by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Board of Governors of
the Federal Reserve System'';
(9) in section 28 (12 U.S.C. 1831e)--
(A) in subsection (e)--
(i) in paragraph (2)--
(I) in subparagraph (A)(ii), by striking ``Director
of the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency or the Corporation, as
appropriate'';
(II) in subparagraph (C), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency or the Corporation, as
appropriate,''; and
(III) in subparagraph (F), by striking ``Director
of the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency or the Corporation, as
appropriate''; and
(ii) in paragraph (3)--
(I) in subparagraph (A), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency or the Corporation, as
appropriate''; and
(II) in subparagraph (B), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency or the Corporation, as
appropriate,''; and
(B) in subsection (h)(2), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Comptroller of
the Currency, of the Corporation,''; and
(10) in section 33(e) (12 U.S.C. 1831j(e)), by striking
``Federal Housing Finance Board, the Comptroller of the Currency,
and the Director of the Office of Thrift Supervision'' and
inserting ``Federal Housing Finance Agency and the Comptroller of
the Currency''.
SEC. 364. FEDERAL HOME LOAN BANK ACT.
(a) Repeal of Section 18(c).--Effective 90 days after the transfer
date, section 18(c) of the Federal Home Loan Bank Act (12 U.S.C.
1438(c)) is repealed.
(b) Repeal of Section 21A.--Section 21A of the Federal Home Loan
Bank Act (12 U.S.C. 1441a) is repealed.
SEC. 365. FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY AND
SOUNDNESS ACT OF 1992.
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4501 et seq.) is amended--
(1) in section 1315(b) (12 U.S.C. 4515(b)), by striking ``the
Federal Deposit Insurance Corporation, and the Office of Thrift
Supervision.'' and inserting ``and the Federal Deposit Insurance
Corporation.''; and
(2) in section 1317(c) (12 U.S.C. 4517(c)), by striking ``the
Federal Deposit Insurance Corporation, or the Director of the
Office of Thrift Supervision'' and inserting ``or the Federal
Deposit Insurance Corporation''.
SEC. 366. FEDERAL RESERVE ACT.
The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended--
(1) in section 11(a)(2) (12 U.S.C. 248(a)(2))--
(A) by inserting ``State savings associations that are
insured depository institutions (as defined in section 3 of the
Federal Deposit Insurance Act),'' after ``case of insured'';
(B) by striking ``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of the Currency'';
(C) by inserting ``Federal'' before ``savings association
which''; and
(D) by striking ``savings and loan association'' and
inserting ``savings association''; and
(2) in section 19(b) (12 U.S.C. 461(b))--
(A) in paragraph (1)(F), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Comptroller of
the Currency''; and
(B) in paragraph (4)(B), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Comptroller of
the Currency''.
SEC. 367. FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT
ACT OF 1989.
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 is amended--
(1) in section 203 (12 U.S.C. 1812 note), by striking
subsection (b);
(2) in section 302(1) (12 U.S.C. 1467a note), by striking
``Director of the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(3) in section 305(12 U.S.C. 1464 note), by striking subsection
(b);
(4) in section 308 (12 U.S.C. 1463 note)--
(A) in subsection (a), by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Chairman of the Board
of Governors of the Federal Reserve System, the Comptroller of
the Currency, the Chairman of the National Credit Union
Administration,''; and
(B) by adding at the end the following new subsection:
``(c) Reports.--The Secretary of the Treasury, the Chairman of the
Board of Governors of the Federal Reserve System, the Comptroller of
the Currency, the Chairman of the National Credit Union Administration,
and the Chairperson of Board of Directors of the Federal Deposit
Insurance Corporation shall each submit an annual report to the
Congress containing a description of actions taken to carry out this
section.'';
(5) in section 402 (12 U.S.C. 1437 note)--
(A) in subsection (a), by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Comptroller of the
Currency'';
(B) by striking subsection (b);
(C) in subsection (e)--
(i) in paragraph (1), by striking ``Office of Thrift
Supervision'' and inserting ``Comptroller of the
Currency''; and
(ii) in each of paragraphs (2), (3), and (4), by
striking ``Director of the Office of Thrift Supervision''
each place that term appears and inserting ``Comptroller of
the Currency''; and
(D) by striking ``Federal Housing Finance Board'' each
place that term appears and inserting ``Federal Housing Finance
Agency'';
(6) in section 1103(a) (12 U.S.C. 3332(a)), by striking ``and
the Resolution Trust Corporation'';
(7) in section 1205(b) (12 U.S.C. 1818 note)--
(A) in paragraph (1)--
(i) by striking subparagraph (B); and
(ii) by redesignating subparagraphs (C) through (F) as
subparagraphs (B) through (E), respectively; and
(B) in paragraph (2), by striking ``paragraph (1)(F)'' and
inserting ``paragraph (1)(E)'';
(8) in section 1206 (12 U.S.C. 1833b)--
(A) by striking ``Board, the Oversight Board of the
Resolution Trust Corporation'' and inserting ``Agency, and'';
and
(B) by striking ``, and the Office of Thrift Supervision'';
(9) in section 1216 (12 U.S.C. 1833e)--
(A) in subsection (a)--
(i) in paragraph (3), by adding ``and'' at the end;
(ii) in paragraph (4), by striking the semicolon at the
end and inserting a period;
(iii) by striking paragraphs (2), (5), and (6); and
(iv) by redesignating paragraphs (3) and (4), as
paragraphs (2) and (3), respectively;
(B) in subsection (c)--
(i) by striking ``the Director of the Office of Thrift
Supervision,'' and inserting ``and''; and
(ii) by striking ``the Thrift Depositor Protection
Oversight Board of the Resolution Trust Corporation, and
the Resolution Trust Corporation''; and
(C) in subsection (d)--
(i) by striking paragraphs (3), (5), and (6); and
(ii) by redesignating paragraphs (4), (7), and (8) as
paragraphs (3), (4), and (5), respectively.
SEC. 368. FLOOD DISASTER PROTECTION ACT OF 1973.
Section 3(a)(5) of the Flood Disaster Protection Act of 1973 (42
U.S.C. 4003(a)(5)) is amended by striking ``, the Office of Thrift
Supervision''.
SEC. 369. HOME OWNERS' LOAN ACT.
The Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended--
(1) in section 1 (12 U.S.C. 1461), by striking the table of
contents;
(2) in section 2 (12 U.S.C. 1462), as amended by this Act--
(A) by striking paragraphs (1) and (3);
(B) by redesignating paragraph (2) as paragraph (1);
(C) by redesignating paragraphs (4) through (9) as
paragraphs (2) through (7), respectively; and
(D) by adding at the end the following:
``(8) Board.--The term `Board', other than in the context of
the Board of Directors of the Corporation, means the Board of
Governors of the Federal Reserve System.
``(9) Comptroller.--The term `Comptroller' means the
Comptroller of the Currency.'';
(3) in section 3 (12 U.S.C. 1462a)--
(A) by striking the section heading and inserting the
following:
``SEC. 3. ADMINISTRATIVE PROVISIONS.'';
(B) by striking subsections (a), (b), (c), (d), (g), (h),
(i), and (j);
(C) by redesignating subsections (e) and (f) as subsections
(a) and (b), respectively;
(D) in subsection (a), as so redesignated--
(i) in the heading by striking ``of the Director''; and
(ii) in the matter preceding paragraph (1), by striking
``The Director'' and inserting ``In accordance with
subtitle A of title III of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, the appropriate Federal
banking agency''; and
(E) in subsection (b), as so redesignated, by striking
``Director'' and inserting ``appropriate Federal banking
agency'';
(4) in section 4 (12 U.S.C. 1463)--
(A) in subsection (a)--
(i) in the subsection heading, by striking ``Federal'';
(ii) by striking paragraphs (1) and (2) and inserting
the following:
``(1) Examination and safe and sound operation.--
``(A) Federal savings associations.--The Comptroller shall
provide for the examination and safe and sound operation of
Federal savings associations.
``(B) State savings associations.--The Corporation shall
provide for the examination and safe and sound operation of
State savings associations.
``(2) Regulations for savings associations.--The Comptroller
may prescribe regulations with respect to savings associations, as
the Comptroller determines to be appropriate to carry out the
purposes of this Act.''; and
(iii) in paragraph (3), by striking ``Director'' each
place that term appears and inserting ``Comptroller and the
Corporation'';
(B) in subsection (b)--
(i) in paragraph (2)--
(I) in subparagraph (A), by adding ``and'' at the
end;
(II) in subparagraph (B), by striking ``; and'' and
inserting a period; and
(III) by striking subparagraph (C); and
(ii) by striking ``Director'' each place that term
appears and inserting ``Comptroller'';
(C) in subsection (c)--
(i) by striking ``All regulations and policies of the
Director'' and inserting ``The regulations of the
Comptroller and the policies of the Comptroller and the
Corporation''; and
(ii) by striking ``of the Currency'';
(D) in subsection (e)(5), by striking ``Director'' and
inserting ``Comptroller'';
(E) in subsection (f), by striking ``Director'' each place
that term appears and inserting ``appropriate Federal banking
agency''; and
(F) in subsection (h), by striking ``Director'' each place
that term appears and inserting ``appropriate Federal banking
agency'';
(5) in section 5 (12 U.S.C. 1464)--
(A) in subsection (a), by striking ``Director'', each place
such term appears and inserting ``Comptroller of the
Currency'';
(B) in subsection (b), by striking ``Director'', each place
such term appears and inserting ``Comptroller of the
Currency'';
(C) in subsection (c)--
(i) in paragraph (5)--
(I) in subparagraph (A), by striking ``Director''
and inserting ``appropriate Federal banking agency'';
and
(II) in subparagraph (B)--
(aa) by striking ``The Director'' and inserting
``The appropriate Federal banking agency''; and
(bb) by striking ``the Director'' and inserting
``the appropriate Federal banking agency'';
(D) in subsection (d)--
(i) in paragraph (1)--
(I) in subparagraph (A)--
(aa) in the first sentence, by striking
``Director'' and inserting ``appropriate Federal
banking agency'';
(bb) in the second sentence--
(AA) by striking ``Director's own name and
through the Director's own attorneys'' and
inserting ``name of the appropriate Federal
banking agency and through the attorneys of the
appropriate Federal banking agency''; and
(BB) by striking ``Director'' each place
that term appears and inserting ``appropriate
Federal banking agency''; and
(cc) in the third sentence, by striking
``Director'' each place that term appears and
inserting ``Comptroller'';
(II) in subparagraph (B)--
(aa) in clauses (i) through (iv), by striking
``Director'' each place that term appears and
inserting ``appropriate Federal banking agency'';
(III) in clause (v)--
(aa) in the matter preceding subclause (I), by
striking ``Director'' and inserting ``appropriate
Federal banking agency'';
(bb) in subclause (II), by striking
``subpenas'' and inserting ``subpoenas''; and
(cc) in the matter following subclause (II), by
striking ``subpena'' and inserting ``subpoena'';
(IV) in clause (vi)--
(aa) in the first sentence, by striking
``Director'' and inserting ``appropriate Federal
banking agency''; and
(bb) in the second sentence, by striking
``Director'' and inserting ``Comptroller'';
(V) in clause (vii)--
(aa) in the first sentence, by striking
``subpena'' and inserting ``subpoena'';
(bb) in the second sentence, by striking
``subpenaed'' and inserting ``subpoenaed''; and
(cc) in the third sentence, by striking
``Director'' and inserting ``appropriate Federal
banking agency'';
(ii) in paragraph (2)--
(I) in subparagraph (A)--
(aa) by striking ``Director of the Office of
Thrift Supervision'' and inserting ``appropriate
Federal banking agency'';
(bb) by striking ``any insured savings
association'' and inserting ``an insured savings
association''; and
(cc) by striking ``Director determines, in the
Director's discretion'' and inserting ``appropriate
Federal banking agency determines, in the
discretion of the appropriate Federal banking
agency'';
(II) in subparagraph (B), by striking ``Director''
each place that term appears and inserting
``appropriate Federal banking agency'';
(III) in subparagraphs (C) and (D), by striking
``Director'' and inserting ``appropriate Federal
banking agency'';
(IV) in subparagraph (E)--
(aa) in clause (ii)--
(AA) in the clause heading, by striking
``or rtc''; and
(BB) by striking ``or the Resolution Trust
Corporation, as appropriate,'' each place that
term appears; and
(bb) by striking ``Director'' each place that
term appears and inserting ``appropriate Federal
banking agency''; and
(iii) in paragraph (3)--
(I) in subparagraph (A), by striking ``Director''
each place that term appears and inserting
``Comptroller''; and
(II) in subparagraph (B)--
(aa) in the subparagraph heading, by striking
``or rtc'';
(bb) by striking ``Corporation or the
Resolution Trust''; and
(cc) by striking ``Director'' and inserting
``Comptroller'';
(iv) in paragraph (4), by striking ``Director'' and
inserting ``appropriate Federal banking agency'';
(v) in paragraph (6)--
(I) in subparagraph (A), by striking ``Director''
and inserting ``Comptroller''; and
(II) in subparagraphs (B) and (C), by striking
``Director'' each place that term appears and inserting
``appropriate Federal banking agency'';
(vi) in paragraph (7)--
(I) in subparagraphs (A), (B), and (D), by striking
``Director'' each place that term appears and inserting
``appropriate Federal banking agency'';
(II) in subparagraph (C), by striking ``Director''
and inserting ``Federal Deposit Insurance Corporation
or the Comptroller, as appropriate,''; and
(III) by striking subparagraph (E) and inserting
the following:
``(E) Administration by the comptroller and the
corporation.--The Comptroller may issue such regulations, and
the appropriate Federal banking agency may issue such orders,
including those issued pursuant to section 8 of the Federal
Deposit Insurance Act, as may be necessary to administer and
carry out this paragraph and to prevent evasion of this
paragraph.'';
(E) in subsection (e)(2), strike ``Director'' and insert
``Comptroller'';
(F) in subsection (i)--
(i) by striking ``Director'', each place such term
appears, and inserting ``Comptroller'';
(ii) in paragraph (2), in the heading, by striking
``director'' and inserting ``Comptroller'';
(iii) in paragraph (5)(A), by striking ``of the
Currency''; and
(iv) except as provided in clauses (i) through (iii),
by striking ``Director'' each place such term appears and
inserting ``Comptroller'';
(G) in subsection (o)--
(i) in paragraph (1), by striking ``Director'' and
inserting ``Comptroller''; and
(ii) in paragraph (2)(B), by striking ``Director's
determination'' and inserting ``determination of the
Comptroller'';
(H) in subsections (m), (n), (o), and (p), by striking
``Director'', each place such term appears, and inserting
``Comptroller'';
(I) in subsection (q)--
(i) in paragraph (6), by striking ``of Governors of the
Federal Reserve System'';
(ii) by striking ``Director'' each place that term
appears and inserting ``Board''; and
(iii) by inserting ``in consultation with the
Comptroller and the Corporation,'' before ``considers'';
(J) in subsection (r)(3), by striking ``Director'' and
inserting ``Comptroller of the Currency'';
(K) in subsection (s)--
(i) in paragraph (1), strike ``Director'' and insert
``Comptroller of the Currency'';
(ii) in paragraph (2), strike ``Director'' and insert
``Comptroller of the Currency'';
(iii) in paragraph (3), by striking ``Director's
discretion, the Director'' and inserting ``discretion of
the appropriate Federal banking agency, the appropriate
Federal banking agency,'';
(iv) in paragraph (4), by striking ``Director'' each
place that term appears and inserting ``appropriate Federal
banking agency''; and
(v) in paragraph (5)--
(I) by striking ``Director'', each place such term
appears, and inserting ``appropriate Federal banking
agency''; and
(II) by striking ``Director's approval'' and
inserting ``approval of the appropriate Federal banking
agency'';
(L) in subsection (t)--
(i) in paragraph (1), by striking subparagraph (D);
(ii) by striking paragraph (3) and inserting the
following:
``(3) [Repealed].'';
(iii) in paragraph (5)--
(I) in subparagraph (B), by striking ``Corporation,
in its sole discretion'' and inserting ``appropriate
Federal banking agency, in the sole discretion of the
appropriate Federal banking agency''; and
(II) by striking subparagraph (D);
(iv) in paragraph (6)--
(I) by striking subparagraph (A) and inserting the
following:
``(A) [Reserved].'';
(II) in subparagraph (B), by striking ``Director''
each place that term appears and inserting
``appropriate Federal banking agency'';
(III) in subparagraph (C)--
(aa) in clause (i), by striking ``Director's
prior approval'' and inserting ``prior approval of
the appropriate Federal banking agency'';
(bb) in clause (ii), by striking ``Director's
discretion'' and inserting ``discretion of the
appropriate Federal banking agency''; and
(cc) by striking ``Director'' each place that
term appears and inserting ``appropriate Federal
banking agency'';
(IV) in subparagraph (E), by striking ``Director
shall'' and inserting ``appropriate Federal banking
agency may''; and
(V) in subparagraph (F), by striking ``Director''
and all that follows through the end of the
subparagraph and inserting ``appropriate Federal
banking agency under this Act or any other provision of
law.'';
(v) in paragraph (7), by striking ``Director'' each
place that term appears and inserting ``appropriate Federal
banking agency'';
(vi) by striking paragraph (8) and inserting the
following:
``(8) [Repealed].'';
(vii) in paragraph (9)--
(I) in subparagraph (A), by striking ``Director''
and inserting ``Comptroller'';
(II) in subparagraph (C), by striking ``of the
Currency''; and
(III) by striking subparagraph (B) and
redesignating subparagraphs (C) and (D) as
subparagraphs (B) and (C), respectively; and
(viii) except as provided in clauses (i) through (vii),
by striking ``Director'' each place that term appears and
inserting ``appropriate Federal banking agency'';
(M) in subsection (u), by striking ``Director'' each place
that term appears and inserting ``appropriate Federal banking
agency'';
(N) in subsection (v)--
(i) in paragraph (2), by striking ``Director's
determinations'' and inserting ``determinations of the
appropriate Federal banking agency''; and
(ii) by striking ``Director'' each place that term
appears and inserting ``appropriate Federal banking
agency'';
(O) in subsection (w)(1)--
(i) in subparagraph (A)(II), by striking ``Director's
intention'' and inserting ``intention of the Comptroller'';
and
(ii) in subparagraph (B), by striking ``Director's
intention'' and inserting ``intention of the Comptroller'';
and
(P) except as provided in subparagraphs (A) through (J), by
striking ``Director'' each place that term appears and
inserting ``Comptroller'';
(6) in section 8 (12 U.S.C. 1466a), by striking ``Director''
each place that term appears and inserting ``Comptroller'';
(7) in section 9 (12 U.S.C. 1467)--
(A) in subsection (a), by striking ``assessed by the
Director'' and all that follows through the end of the
subsection and inserting the following: ``assessed by--
``(1) the Comptroller, against each such Federal savings
association, as the Comptroller deems necessary or appropriate; and
``(2) the Corporation, against each such State savings
association, as the Corporation deems necessary or appropriate.'';
(B) in subsection (b), by striking ``Director'', each place
such term appears, and inserting ``Comptroller or Corporation,
as appropriate'';
(C) in subsection (e)--
(i) by striking ``Only the Director'' and inserting
``The Comptroller''; and
(ii) by striking ``Director's designee'' and inserting
``designee of the Comptroller'';
(D) by striking subsection (f) and inserting the following:
``(f) [Reserved].'';
(E) in subsection (g)--
(i) in paragraph (1), by striking ``Director'' and
inserting ``appropriate Federal banking agency''; and
(ii) in paragraph (2), by striking ``Director, or the
Corporation, as the case may be,'' and inserting
``appropriate Federal banking agency for the savings
association'';
(F) in subsection (i), by striking ``Director'' each place
that term appears and inserting ``appropriate Federal banking
agency'';
(G) in subsection (j), by striking ``Director's sole
discretion'' and inserting ``sole discretion of the appropriate
Federal banking agency'';
(H) in subsection (k), by striking ``Director may assess
against institutions for which the Director is the appropriate
Federal banking agency, as defined in section 3 of the Federal
Deposit Insurance Act,'' and inserting ``appropriate Federal
banking agency may assess against an institution''; and
(I) except as provided in subparagraphs (A) through (G), by
striking ``Director'' each place that term appears and
inserting ``appropriate Federal banking agency'';
(8) in section 10 (12 U.S.C. 1467a)--
(A) in subsection (a)(1), by striking ``Director'' each
place that term appears and inserting ``appropriate Federal
banking agency'';
(B) in subsection (b)--
(i) in paragraph (2), by striking ``and the regional
office of the Director of the district in which its
principal office is located,''; and
(ii) in paragraph (6), by striking ``Director's own
motion or application'' and inserting ``motion or
application of the Board'';
(C) in subsection (c)--
(i) in paragraph (2)(F), by striking ``of Governors of
the Federal Reserve System'';
(ii) in paragraph (4)(B), in the subparagraph heading,
by striking ``by director'';
(iii) in paragraph (6)(D), in the subparagraph heading,
by striking ``by director''; and
(iv) in paragraph (9)(E), by inserting ``(in
consultation with the appropriate Federal banking agency)''
after ``including a determination'';
(D) in subsection (g)(5)(B), by striking ``the Director's
discretion'' and inserting ``the discretion of the Board'';
(E) in subsection (l), by striking ``Director'' each place
that term appears and inserting ``appropriate Federal banking
agency'';
(F) in subsection (m), by striking ``Director'' and
inserting ``appropriate Federal banking agency'';
(G) in subsection (p)--
(i) in paragraph (1)--
(I) by striking ``Director determines'' the 1st
place such term appears and inserting ``Board or the
appropriate Federal banking agency for the savings
association determines'';
(II) by striking ``Director may'' and inserting
``Board may''; and
(III) by striking ``Director determines'' the 2nd
place such term appears and inserting ``Board, in
consultation with the appropriate Federal banking
agency for the savings association determines''; and
(ii) in paragraph (2), by striking ``Director'', each
place such term appears, and inserting ``Board'';
(H) in subsection (q), by striking ``Director'', each place
such term appears, and inserting ``Board'';
(I) in subsection (r), by striking ``Director'', each place
such term appears, and inserting ``Board or appropriate Federal
banking agency'';
(J) in subsection (s)--
(i) in paragraph (2)--
(I) in subparagraph (B)(ii), by striking
``Director's judgment'' and inserting ``judgment of the
appropriate Federal banking agency for the savings
association''; and
(II) by striking ``Director'' each place that term
appears and inserting ``appropriate Federal banking
agency for the savings association''; and
(ii) in paragraph (4), by striking ``Director'' and
inserting ``Comptroller''; and
(K) except as provided in subparagraphs (A) through (J), by
striking ``Director'' each place that term appears and
inserting ``Board'';
(9) in section 11 (12 U.S.C. 1468), by striking ``Director''
each place that term appears and inserting ``appropriate Federal
banking agency'';
(10) in section 12 (12 U.S.C. 1468a), by striking ``the
Director'' and inserting ``a Federal banking agency''; and
(11) in section 13 (12 U.S.C. 1468a) is amended by striking
``Director'' and inserting ``a Federal banking agency''.
SEC. 370. HOUSING ACT OF 1948.
Section 502(c) of the Housing Act of 1948 (12 U.S.C. 1701c(c)) is
amended--
(1) in the matter preceding paragraph (1), by striking ``and
the Director of the Office of Thrift Supervision'' and inserting
``, the Comptroller of the Currency, and the Federal Deposit
Insurance Corporation''; and
(2) in paragraph (3), by striking ``Board'' and inserting
``Agency''.
SEC. 371. HOUSING AND COMMUNITY DEVELOPMENT ACT OF 1992.
Section 543 of the Housing and Community Development Act of 1992
(Public Law 102-550; 106 Stat. 3798) is amended--
(1) in subsection (c)(1)--
(A) by striking subparagraphs (D) through (F); and
(B) by redesignating subparagraphs (G) and (H) as
subparagraphs (D) and (E), respectively; and
(2) in subsection (f)--
(A) in paragraph (2), by striking ``the Office of Thrift
Supervision,'' each place that term appears; and
(B) in paragraph (3)--
(i) in the matter preceding subparagraph (A), by
striking ``the Office of Thrift Supervision,''; and
(ii) in subparagraph (D), by striking ``Office of
Thrift Supervision,''.
SEC. 372. HOUSING AND URBAN-RURAL RECOVERY ACT OF 1983.
Section 469 of the Housing and Urban-Rural Recovery Act of 1983 (12
U.S.C. 1701p-1) is amended in the first sentence, by striking ``Federal
Home Loan Bank Board'' and inserting ``Federal Housing Finance
Agency''.
SEC. 373. NATIONAL HOUSING ACT.
Section 202(f) of the National Housing Act (12 U.S.C. 1708(f)) is
amended--
(1) by striking paragraph (5) and inserting the following:
``(5) if the mortgagee is a national bank, a subsidiary or
affiliate of such bank, a Federal savings association or a
subsidiary or affiliate of a savings association, the Comptroller
of the Currency;'';
(2) in paragraph (6), by adding ``and'' at the end;
(3) in paragraph (7)--
(A) by inserting ``or State savings association'' after
``State bank''; and
(B) by striking ``; and'' and inserting a period; and
(4) by striking paragraph (8).
SEC. 374. NEIGHBORHOOD REINVESTMENT CORPORATION ACT.
Section 606(c)(3) of the Neighborhood Reinvestment Corporation Act
(42 U.S.C. 8105(c)(3)) is amended by striking ``Federal Home Loan Bank
Board'' and inserting ``Federal Housing Finance Agency''.
SEC. 375. PUBLIC LAW 93-100.
Section 5(d) of Public Law 93-100 (12 U.S.C. 1470(a)) is amended--
(1) in paragraph (1), by striking ``Federal Savings and Loan
Insurance Corporation with respect to insured institutions, the
Board of Governors of the Federal Reserve System with respect to
State member insured banks, and the Federal Deposit Insurance
Corporation with respect to State nonmember insured banks'' and
inserting ``appropriate Federal banking agency, with respect to the
institutions subject to the jurisdiction of each such agency,'';
and
(2) in paragraph (2), by striking ``supervisory'' and inserting
``banking''.
SEC. 376. SECURITIES EXCHANGE ACT OF 1934.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended--
(1) in section 3(a)(34) (15 U.S.C. 78c(a)(34))--
(A) in subparagraph (A)--
(i) in clause (i), by striking ``or a subsidiary or a
department or division of any such bank'' and inserting ``a
subsidiary or a department or division of any such bank, a
Federal savings association (as defined in section 3(b)(2)
of the Federal Deposit Insurance Act (12 U.S.C.
1813(b)(2))), the deposits of which are insured by the
Federal Deposit Insurance Corporation, or a subsidiary or
department or division of any such Federal savings
association'';
(ii) in clause (ii), by striking ``or a subsidiary or a
department or division of such subsidiary'' and inserting
``a subsidiary or a department or division of such
subsidiary, or a savings and loan holding company'';
(iii) in clause (iii), by striking ``or a subsidiary or
department or division thereof;'' and inserting ``a
subsidiary or department or division of any such bank, a
State savings association (as defined in section 3(b)(3) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3))),
the deposits of which are insured by the Federal Deposit
Insurance Corporation, or a subsidiary or a department or
division of any such State savings association; and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause (iv);
(B) in subparagraph (B)--
(i) in clause (i), by striking ``or a subsidiary of any
such bank'' and inserting ``a subsidiary of any such bank,
a Federal savings association (as defined in section
3(b)(2) of the Federal Deposit Insurance Act (12 U.S.C.
1813(b)(2))), the deposits of which are insured by the
Federal Deposit Insurance Corporation, or a subsidiary of
any such Federal savings association'';
(ii) in clause (ii), by striking ``or a subsidiary of a
bank holding company which is a bank other than a bank
specified in clause (i), (iii), or (iv) of this
subparagraph'' and inserting ``a subsidiary of a bank
holding company that is a bank other than a bank specified
in clause (i) or (iii) of this subparagraph, or a savings
and loan holding company'';
(iii) in clause (iii), by striking ``or a subsidiary
thereof;'' and inserting ``a subsidiary of any such bank, a
State savings association (as defined in section 3(b)(3) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(b)(3))),
the deposits of which are insured by the Federal Deposit
Insurance Corporation, or a subsidiary of any such State
savings association; and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause (iv);
(C) in subparagraph (C)--
(i) in clause (i), by striking ``bank'' and inserting
``bank or a Federal savings association (as defined in
section 3(b)(2) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(2))), the deposits of which are insured by
the Federal Deposit Insurance Corporation'';
(ii) in clause (ii), by striking ``or a subsidiary of a
bank holding company which is a bank other than a bank
specified in clause (i), (iii), or (iv) of this
subparagraph'' and inserting ``a subsidiary of a bank
holding company that is a bank other than a bank specified
in clause (i) or (iii) of this subparagraph, or a savings
and loan holding company'';
(iii) in clause (iii), by striking ``System)'' and
inserting, ``System) or a State savings association (as
defined in section 3(b)(3) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(b)(3))), the deposits of which are
insured by the Federal Deposit Insurance Corporation;
and'';
(iv) by striking clause (iv); and
(v) by redesignating clause (v) as clause (iv);
(D) in subparagraph (D)--
(i) in clause (i), by inserting after ``bank'' the
following: ``or a Federal savings association (as defined
in section 3(b)(2) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(2))), the deposits of which are insured by
the Federal Deposit Insurance Corporation'';
(ii) in clause (ii), by adding ``and'' at the end;
(iii) by striking clause (iii);
(iv) by redesignating clause (iv) as clause (iii); and
(v) in clause (iii), as so redesignated, by inserting
after ``bank'' the following: ``or a State savings
association (as defined in section 3(b)(3) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the deposits
of which are insured by the Federal Deposit Insurance
Corporation'';
(E) in subparagraph (F)--
(i) in clause (i), by inserting after ``bank'' the
following: ``or a Federal savings association (as defined
in section 3(b)(2) of the Federal Deposit Insurance Act (12
U.S.C. 1813(b)(2))), the deposits of which are insured by
the Federal Deposit Insurance Corporation'';
(ii) by striking clause (ii);
(iii) by redesignating clauses (iii), (iv), and (v) as
clauses (ii), (iii), and (iv), respectively; and
(iv) in clause (iii), as so redesignated, by inserting
before the semicolon the following: ``or a State savings
association (as defined in section 3(b)(3) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(b)(3))), the deposits
of which are insured by the Federal Deposit Insurance
Corporation'';
(F) in subparagraph (G)--
(i) in clause (i), by inserting after ``national bank''
the following: ``, a Federal savings association (as
defined in section 3(b)(2) of the Federal Deposit Insurance
Act), the deposits of which are insured by the Federal
Deposit Insurance Corporation,'';
(ii) in clause (iii)--
(I) by inserting after ``bank)'' the following: ``,
a State savings association (as defined in section
3(b)(3) of the Federal Deposit Insurance Act), the
deposits of which are insured by the Federal Deposit
Insurance Corporation,''; and
(II) by adding ``and'' at the end;
(iii) by striking clause (iv); and
(iv) by redesignating clause (v) as clause (iv); and
(G) in the undesignated matter following subparagraph (H),
by striking ``, and the term `District of Columbia savings and
loan association' means any association subject to examination
and supervision by the Office of Thrift Supervision under
section 8 of the Home Owners' Loan Act of 1933'';
(2) in section 12(i) (15 U.S.C. 78l(i))--
(A) in paragraph (1), by inserting after ``national banks''
the following: ``and Federal savings associations, the accounts
of which are insured by the Federal Deposit Insurance
Corporation'';
(B) by striking ``(3)'' and all that follows through
``vested in the Office of Thrift Supervision'' and inserting
``and (3) with respect to all other insured banks and State
savings associations, the accounts of which are insured by the
Federal Deposit Insurance Corporation, are vested in the
Federal Deposit Insurance Corporation''; and
(C) in the second sentence, by striking ``the Federal
Deposit Insurance Corporation, and the Office of Thrift
Supervision'' and inserting ``and the Federal Deposit Insurance
Corporation'';
(3) in section 15C(g)(1) (15 U.S.C. 78o-5(g)(1)), by striking
``the Director of the Office of Thrift Supervision, the Federal
Savings and Loan Insurance Corporation,''; and
(4) in section 23(b)(1) (15 U.S.C. 78w(b)(1)), by striking ``,
other than the Office of Thrift Supervision,''.
SEC. 377. TITLE 18, UNITED STATES CODE.
Title 18, United States Code, is amended--
(1) in section 212(c)(2)--
(A) by striking subparagraph (C); and
(B) by redesignating subparagraphs (D) through (H) as
subparagraphs (C) through (G), respectively;
(2) in section 657, by striking ``Office of Thrift Supervision,
the Resolution Trust Corporation,'';
(3) in section 981(a)(1)(D)--
(A) by striking ``Resolution Trust Corporation,''; and
(B) by striking ``or the Office of Thrift Supervision'';
(4) in section 982(a)(3)--
(A) by striking ``Resolution Trust Corporation,''; and
(B) by striking ``or the Office of Thrift Supervision'';
(5) in section 1006--
(A) by striking ``Office of Thrift Supervision,''; and
(B) by striking ``the Resolution Trust Corporation,'';
(6) in section 1014--
(A) by striking ``the Office of Thrift Supervision''; and
(B) by striking ``the Resolution Trust Corporation,''; and
(7) in section 1032(1)--
(A) by striking ``the Resolution Trust Corporation,''; and
(B) by striking ``or the Director of the Office of Thrift
Supervision''.
SEC. 378. TITLE 31, UNITED STATES CODE.
Title 31, United States Code, is amended--
(1) in section 321--
(A) in subsection (c)--
(i) in paragraph (1), by adding ``and'' at the end;
(ii) in paragraph (2), by striking ``; and'' and
inserting a period; and
(iii) by striking paragraph (3); and
(B) by striking subsection (e); and
(2) in section 714(a), by striking ``the Office of the
Comptroller of the Currency, and the Office of Thrift
Supervision.'' and inserting ``and the Office of the Comptroller of
the Currency.''.
TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
SEC. 401. SHORT TITLE.
This title may be cited as the ``Private Fund Investment Advisers
Registration Act of 2010''.
SEC. 402. DEFINITIONS.
(a) Investment Advisers Act of 1940 Definitions.--Section 202(a) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended by
adding at the end the following:
``(29) The term `private fund' means an issuer that would be an
investment company, as defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a-3), but for section 3(c)(1) or
3(c)(7) of that Act.
``(30) The term `foreign private adviser' means any investment
adviser who--
``(A) has no place of business in the United States;
``(B) has, in total, fewer than 15 clients and investors in
the United States in private funds advised by the investment
adviser;
``(C) has aggregate assets under management attributable to
clients in the United States and investors in the United States
in private funds advised by the investment adviser of less than
$25,000,000, or such higher amount as the Commission may, by
rule, deem appropriate in accordance with the purposes of this
title; and
``(D) neither--
``(i) holds itself out generally to the public in the
United States as an investment adviser; nor
``(ii) acts as--
``(I) an investment adviser to any investment
company registered under the Investment Company Act of
1940; or
``(II) a company that has elected to be a business
development company pursuant to section 54 of the
Investment Company Act of 1940 (15 U.S.C. 80a-53), and
has not withdrawn its election.''.
(b) Other Definitions.--As used in this title, the terms
``investment adviser'' and ``private fund'' have the same meanings as
in section 202 of the Investment Advisers Act of 1940, as amended by
this title.
SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED
EXEMPTION FOR FOREIGN PRIVATE ADVISERS; LIMITED INTRASTATE
EXEMPTION.
Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-3(b)) is amended--
(1) in paragraph (1), by inserting ``, other than an investment
adviser who acts as an investment adviser to any private fund,''
before ``all of whose'';
(2) by striking paragraph (3) and inserting the following:
``(3) any investment adviser that is a foreign private
adviser;''; and
(3) in paragraph (5), by striking ``or'' at the end;
(4) in paragraph (6)--
(A) by striking ``any investment adviser'' and inserting
``(A) any investment adviser'';
(B) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively; and
(C) in clause (ii) (as so redesignated), by striking the
period at the end and inserting ``; or''; and
(D) by adding at the end the following:
``(B) any investment adviser that is registered with the Commodity
Futures Trading Commission as a commodity trading advisor and advises a
private fund, provided that, if after the date of enactment of the
Private Fund Investment Advisers Registration Act of 2010, the business
of the advisor should become predominately the provision of securities-
related advice, then such adviser shall register with the
Commission.''.
(5) by adding at the end the following:
``(7) any investment adviser, other than any entity that has
elected to be regulated or is regulated as a business development
company pursuant to section 54 of the Investment Company Act of
1940 (15 U.S.C. 80a-54), who solely advises--
``(A) small business investment companies that are
licensees under the Small Business Investment Act of 1958;
``(B) entities that have received from the Small Business
Administration notice to proceed to qualify for a license as a
small business investment company under the Small Business
Investment Act of 1958, which notice or license has not been
revoked; or
``(C) applicants that are affiliated with 1 or more
licensed small business investment companies described in
subparagraph (A) and that have applied for another license
under the Small Business Investment Act of 1958, which
application remains pending.''.
SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; EXAMINATIONS;
DISCLOSURES.
Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
4) is amended--
(1) by redesignating subsections (b) and (c) as subsections (c)
and (d), respectively; and
(2) by inserting after subsection (a) the following:
``(b) Records and Reports of Private Funds.--
``(1) In general.--The Commission may require any investment
adviser registered under this title--
``(A) to maintain such records of, and file with the
Commission such reports regarding, private funds advised by the
investment adviser, as necessary and appropriate in the public
interest and for the protection of investors, or for the
assessment of systemic risk by the Financial Stability
Oversight Council (in this subsection referred to as the
`Council'); and
``(B) to provide or make available to the Council those
reports or records or the information contained therein.
``(2) Treatment of records.--The records and reports of any
private fund to which an investment adviser registered under this
title provides investment advice shall be deemed to be the records
and reports of the investment adviser.
``(3) Required information.--The records and reports required
to be maintained by an investment adviser and subject to inspection
by the Commission under this subsection shall include, for each
private fund advised by the investment adviser, a description of--
``(A) the amount of assets under management and use of
leverage, including off-balance-sheet leverage;
``(B) counterparty credit risk exposure;
``(C) trading and investment positions;
``(D) valuation policies and practices of the fund;
``(E) types of assets held;
``(F) side arrangements or side letters, whereby certain
investors in a fund obtain more favorable rights or
entitlements than other investors;
``(G) trading practices; and
``(H) such other information as the Commission, in
consultation with the Council, determines is necessary and
appropriate in the public interest and for the protection of
investors or for the assessment of systemic risk, which may
include the establishment of different reporting requirements
for different classes of fund advisers, based on the type or
size of private fund being advised.
``(4) Maintenance of records.--An investment adviser registered
under this title shall maintain such records of private funds
advised by the investment adviser for such period or periods as the
Commission, by rule, may prescribe as necessary and appropriate in
the public interest and for the protection of investors, or for the
assessment of systemic risk.
``(5) Filing of records.--The Commission shall issue rules
requiring each investment adviser to a private fund to file reports
containing such information as the Commission deems necessary and
appropriate in the public interest and for the protection of
investors or for the assessment of systemic risk.
``(6) Examination of records.--
``(A) Periodic and special examinations.--The Commission--
``(i) shall conduct periodic inspections of the records
of private funds maintained by an investment adviser
registered under this title in accordance with a schedule
established by the Commission; and
``(ii) may conduct at any time and from time to time
such additional, special, and other examinations as the
Commission may prescribe as necessary and appropriate in
the public interest and for the protection of investors, or
for the assessment of systemic risk.
``(B) Availability of records.--An investment adviser
registered under this title shall make available to the
Commission any copies or extracts from such records as may be
prepared without undue effort, expense, or delay, as the
Commission or its representatives may reasonably request.
``(7) Information sharing.--
``(A) In general.--The Commission shall make available to
the Council copies of all reports, documents, records, and
information filed with or provided to the Commission by an
investment adviser under this subsection as the Council may
consider necessary for the purpose of assessing the systemic
risk posed by a private fund.
``(B) Confidentiality.--The Council shall maintain the
confidentiality of information received under this paragraph in
all such reports, documents, records, and information, in a
manner consistent with the level of confidentiality established
for the Commission pursuant to paragraph (8). The Council shall
be exempt from section 552 of title 5, United States Code, with
respect to any information in any report, document, record, or
information made available, to the Council under this
subsection.''.
``(8) Commission confidentiality of reports.--Notwithstanding
any other provision of law, the Commission may not be compelled to
disclose any report or information contained therein required to be
filed with the Commission under this subsection, except that
nothing in this subsection authorizes the Commission--
``(A) to withhold information from Congress, upon an
agreement of confidentiality; or
``(B) prevent the Commission from complying with--
``(i) a request for information from any other Federal
department or agency or any self-regulatory organization
requesting the report or information for purposes within
the scope of its jurisdiction; or
``(ii) an order of a court of the United States in an
action brought by the United States or the Commission.
``(9) Other recipients confidentiality.--Any department,
agency, or self-regulatory organization that receives reports or
information from the Commission under this subsection shall
maintain the confidentiality of such reports, documents, records,
and information in a manner consistent with the level of
confidentiality established for the Commission under paragraph (8).
``(10) Public information exception.--
``(A) In general.--The Commission, the Council, and any
other department, agency, or self-regulatory organization that
receives information, reports, documents, records, or
information from the Commission under this subsection, shall be
exempt from the provisions of section 552 of title 5, United
States Code, with respect to any such report, document, record,
or information. Any proprietary information of an investment
adviser ascertained by the Commission from any report required
to be filed with the Commission pursuant to this subsection
shall be subject to the same limitations on public disclosure
as any facts ascertained during an examination, as provided by
section 210(b) of this title.
``(B) Proprietary information.--For purposes of this
paragraph, proprietary information includes sensitive, non-
public information regarding--
``(i) the investment or trading strategies of the
investment adviser;
``(ii) analytical or research methodologies;
``(iii) trading data;
``(iv) computer hardware or software containing
intellectual property; and
``(v) any additional information that the Commission
determines to be proprietary.
``(11) Annual report to congress.--The Commission shall report
annually to Congress on how the Commission has used the data
collected pursuant to this subsection to monitor the markets for
the protection of investors and the integrity of the markets.''.
SEC. 405. DISCLOSURE PROVISION AMENDMENT.
Section 210(c) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-10(c)) is amended by inserting before the period at the end the
following: ``or for purposes of assessment of potential systemic
risk''.
SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY.
Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
11) is amended--
(1) in subsection (a), by inserting before the period at the
end of the first sentence the following: ``, including rules and
regulations defining technical, trade, and other terms used in this
title, except that the Commission may not define the term `client'
for purposes of paragraphs (1) and (2) of section 206 to include an
investor in a private fund managed by an investment adviser, if
such private fund has entered into an advisory contract with such
adviser''; and
(2) by adding at the end the following:
``(e) Disclosure Rules on Private Funds.--The Commission and the
Commodity Futures Trading Commission shall, after consultation with the
Council but not later than 12 months after the date of enactment of the
Private Fund Investment Advisers Registration Act of 2010, jointly
promulgate rules to establish the form and content of the reports
required to be filed with the Commission under subsection 204(b) and
with the Commodity Futures Trading Commission by investment advisers
that are registered both under this title and the Commodity Exchange
Act (7 U.S.C. 1a et seq.).''.
SEC. 407. EXEMPTION OF AND REPORTING BY VENTURE CAPITAL FUND
ADVISERS.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) is amended by adding at the end the following:
``(l) Exemption of Venture Capital Fund Advisers.--No investment
adviser that acts as an investment adviser solely to 1 or more venture
capital funds shall be subject to the registration requirements of this
title with respect to the provision of investment advice relating to a
venture capital fund. Not later than 1 year after the date of enactment
of this subsection, the Commission shall issue final rules to define
the term `venture capital fund' for purposes of this subsection. The
Commission shall require such advisers to maintain such records and
provide to the Commission such annual or other reports as the
Commission determines necessary or appropriate in the public interest
or for the protection of investors.''.
SEC. 408. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND
ADVISERS.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) is amended by adding at the end the following:
``(m) Exemption of and Reporting by Certain Private Fund
Advisers.--
``(1) In general.--The Commission shall provide an exemption
from the registration requirements under this section to any
investment adviser of private funds, if each of such investment
adviser acts solely as an adviser to private funds and has assets
under management in the United States of less than $150,000,000.
``(2) Reporting.--The Commission shall require investment
advisers exempted by reason of this subsection to maintain such
records and provide to the Commission such annual or other reports
as the Commission determines necessary or appropriate in the public
interest or for the protection of investors.
``(n) Registration and Examination of Mid-sized Private Fund
Advisers.--In prescribing regulations to carry out the requirements of
this section with respect to investment advisers acting as investment
advisers to mid-sized private funds, the Commission shall take into
account the size, governance, and investment strategy of such funds to
determine whether they pose systemic risk, and shall provide for
registration and examination procedures with respect to the investment
advisers of such funds which reflect the level of systemic risk posed
by such funds.''.
SEC. 409. FAMILY OFFICES.
(a) In General.--Section 202(a)(11) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a)(11)) is amended by striking ``or (G)'' and
inserting the following: ``; (G) any family office, as defined by rule,
regulation, or order of the Commission, in accordance with the purposes
of this title; or (H)''.
(b) Rulemaking.--The rules, regulations, or orders issued by the
Commission pursuant to section 202(a)(11)(G) of the Investment Advisers
Act of 1940, as added by this section, regarding the definition of the
term ``family office'' shall provide for an exemption that--
(1) is consistent with the previous exemptive policy of the
Commission, as reflected in exemptive orders for family offices in
effect on the date of enactment of this Act, and the grandfathering
provisions in paragraph (3);
(2) recognizes the range of organizational, management, and
employment structures and arrangements employed by family offices;
and
(3) does not exclude any person who was not registered or
required to be registered under the Investment Advisers Act of 1940
on January 1, 2010 from the definition of the term ``family
office'', solely because such person provides investment advice to,
and was engaged before January 1, 2010 in providing investment
advice to--
(A) natural persons who, at the time of their applicable
investment, are officers, directors, or employees of the family
office who--
(i) have invested with the family office before January
1, 2010; and
(ii) are accredited investors, as defined in Regulation
D of the Commission (or any successor thereto) under the
Securities Act of 1933, or, as the Commission may prescribe
by rule, the successors-in-interest thereto;
(B) any company owned exclusively and controlled by members
of the family of the family office, or as the Commission may
prescribe by rule;
(C) any investment adviser registered under the Investment
Adviser Act of 1940 that provides investment advice to the
family office and who identifies investment opportunities to
the family office, and invests in such transactions on
substantially the same terms as the family office invests, but
does not invest in other funds advised by the family office,
and whose assets as to which the family office directly or
indirectly provides investment advice represent, in the
aggregate, not more than 5 percent of the value of the total
assets as to which the family office provides investment
advice.
(c) Antifraud Authority.--A family office that would not be a
family office, but for subsection (b)(3), shall be deemed to be an
investment adviser for the purposes of paragraphs (1), (2) and (4) of
section 206 of the Investment Advisers Act of 1940.
SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET THRESHOLD FOR
FEDERAL REGISTRATION OF INVESTMENT ADVISERS.
Section 203A(a) of the of the Investment Advisers Act of 1940 (15
U.S.C. 80b-3a(a)) is amended--
(1) by redesignating paragraph (2) as paragraph (3); and
(2) by inserting after paragraph (1) the following:
``(2) Treatment of mid-sized investment advisers.--
``(A) In general.--No investment adviser described in
subparagraph (B) shall register under section 203, unless the
investment adviser is an adviser to an investment company
registered under the Investment Company Act of 1940, or a
company which has elected to be a business development company
pursuant to section 54 of the Investment Company Act of 1940,
and has not withdrawn the election, except that, if by effect
of this paragraph an investment adviser would be required to
register with 15 or more States, then the adviser may register
under section 203.
``(B) Covered persons.--An investment adviser described in
this subparagraph is an investment adviser that--
``(i) is required to be registered as an investment
adviser with the securities commissioner (or any agency or
office performing like functions) of the State in which it
maintains its principal office and place of business and,
if registered, would be subject to examination as an
investment adviser by any such commissioner, agency, or
office; and
``(ii) has assets under management between--
``(I) the amount specified under subparagraph (A)
of paragraph (1), as such amount may have been adjusted
by the Commission pursuant to that subparagraph; and
``(II) $100,000,000, or such higher amount as the
Commission may, by rule, deem appropriate in accordance
with the purposes of this title.''.
SEC. 411. CUSTODY OF CLIENT ASSETS.
The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is
amended by adding at the end the following new section:
``SEC. 223. CUSTODY OF CLIENT ACCOUNTS.
``An investment adviser registered under this title shall take such
steps to safeguard client assets over which such adviser has custody,
including, without limitation, verification of such assets by an
independent public accountant, as the Commission may, by rule,
prescribe.''.
SEC. 412. COMPTROLLER GENERAL STUDY ON CUSTODY RULE COSTS.
The Comptroller General of the United States shall--
(1) conduct a study of--
(A) the compliance costs associated with the current
Securities and Exchange Commission rules 204-2 (17 C.F.R. Parts
275.204-2) and rule 206(4)-2 (17 C.F.R. 275.206(4)-2) under the
Investment Advisers Act of 1940 regarding custody of funds or
securities of clients by investment advisers; and
(B) the additional costs if subsection (b)(6) of rule
206(4)-2 (17 C.F.R. 275.206(4)-2(b)(6)) relating to operational
independence were eliminated; and
(2) submit a report to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives on the results of such study, not
later than 3 years after the date of enactment of this Act.
SEC. 413. ADJUSTING THE ACCREDITED INVESTOR STANDARD.
(a) In General.--The Commission shall adjust any net worth standard
for an accredited investor, as set forth in the rules of the Commission
under the Securities Act of 1933, so that the individual net worth of
any natural person, or joint net worth with the spouse of that person,
at the time of purchase, is more than $1,000,000 (as such amount is
adjusted periodically by rule of the Commission), excluding the value
of the primary residence of such natural person, except that during the
4-year period that begins on the date of enactment of this Act, any net
worth standard shall be $1,000,000, excluding the value of the primary
residence of such natural person.
(b) Review and Adjustment.--
(1) Initial review and adjustment.--
(A) Initial review.--The Commission may undertake a review
of the definition of the term ``accredited investor'', as such
term applies to natural persons, to determine whether the
requirements of the definition, excluding the requirement
relating to the net worth standard described in subsection (a),
should be adjusted or modified for the protection of investors,
in the public interest, and in light of the economy.
(B) Adjustment or modification.--Upon completion of a
review under subparagraph (A), the Commission may, by notice
and comment rulemaking, make such adjustments to the definition
of the term ``accredited investor'', excluding adjusting or
modifying the requirement relating to the net worth standard
described in subsection (a), as such term applies to natural
persons, as the Commission may deem appropriate for the
protection of investors, in the public interest, and in light
of the economy.
(2) Subsequent reviews and adjustment.--
(A) Subsequent reviews.--Not earlier than 4 years after the
date of enactment of this Act, and not less frequently than
once every 4 years thereafter, the Commission shall undertake a
review of the definition, in its entirety, of the term
``accredited investor'', as defined in section 230.215 of title
17, Code of Federal Regulations, or any successor thereto, as
such term applies to natural persons, to determine whether the
requirements of the definition should be adjusted or modified
for the protection of investors, in the public interest, and in
light of the economy.
(B) Adjustment or modification.--Upon completion of a
review under subparagraph (A), the Commission may, by notice
and comment rulemaking, make such adjustments to the definition
of the term ``accredited investor'', as defined in section
230.215 of title 17, Code of Federal Regulations, or any
successor thereto, as such term applies to natural persons, as
the Commission may deem appropriate for the protection of
investors, in the public interest, and in light of the economy.
SEC. 414. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES EXCHANGE
ACT.
The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is
further amended by adding at the end the following new section:
``SEC. 224. RULE OF CONSTRUCTION RELATING TO THE COMMODITIES
EXCHANGE ACT.
``Nothing in this title shall relieve any person of any obligation
or duty, or affect the availability of any right or remedy available to
the Commodity Futures Trading Commission or any private party, arising
under the Commodity Exchange Act (7 U.S.C. 1 et seq.) governing
commodity pools, commodity pool operators, or commodity trading
advisors.''.
SEC. 415. GAO STUDY AND REPORT ON ACCREDITED INVESTORS.
The Comptroller General of the United States shall conduct a study
on the appropriate criteria for determining the financial thresholds or
other criteria needed to qualify for accredited investor status and
eligibility to invest in private funds, and shall submit a report to
the Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives on
the results of such study not later than 3 years after the date of
enactment of this Act.
SEC. 416. GAO STUDY ON SELF-REGULATORY ORGANIZATION FOR PRIVATE
FUNDS.
The Comptroller General of the United States shall--
(1) conduct a study of the feasibility of forming a self-
regulatory organization to oversee private funds; and
(2) submit a report to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives on the results of such study, not
later than 1 year after the date of enactment of this Act.
SEC. 417. COMMISSION STUDY AND REPORT ON SHORT SELLING.
(a) Studies.--The Division of Risk, Strategy, and Financial
Innovation of the Commission shall conduct--
(1) a study, taking into account current scholarship, on the
state of short selling on national securities exchanges and in the
over-the-counter markets, with particular attention to the impact
of recent rule changes and the incidence of--
(A) the failure to deliver shares sold short; or
(B) delivery of shares on the fourth day following the
short sale transaction; and
(2) a study of--
(A) the feasibility, benefits, and costs of requiring
reporting publicly, in real time short sale positions of
publicly listed securities, or, in the alternative, reporting
such short positions in real time only to the Commission and
the Financial Industry Regulatory Authority; and
(B) the feasibility, benefits, and costs of conducting a
voluntary pilot program in which public companies will agree to
have all trades of their shares marked ``short'', ``market
maker short'', ``buy'', ``buy-to-cover'', or ``long'', and
reported in real time through the Consolidated Tape.
(b) Reports.--The Commission shall submit a report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives--
(1) on the results of the study required under subsection
(a)(1), including recommendations for market improvements, not
later than 2 years after the date of enactment of this Act; and
(2) on the results of the study required under subsection
(a)(2), not later than 1 year after the date of enactment of this
Act.
SEC. 418. QUALIFIED CLIENT STANDARD.
Section 205(e) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-5(e)) is amended by adding at the end the following: ``With respect
to any factor used in any rule or regulation by the Commission in
making a determination under this subsection, if the Commission uses a
dollar amount test in connection with such factor, such as a net asset
threshold, the Commission shall, by order, not later than 1 year after
the date of enactment of the Private Fund Investment Advisers
Registration Act of 2010, and every 5 years thereafter, adjust for the
effects of inflation on such test. Any such adjustment that is not a
multiple of $100,000 shall be rounded to the nearest multiple of
$100,000.''.
SEC. 419. TRANSITION PERIOD.
Except as otherwise provided in this title, this title and the
amendments made by this title shall become effective 1 year after the
date of enactment of this Act, except that any investment adviser may,
at the discretion of the investment adviser, register with the
Commission under the Investment Advisers Act of 1940 during that 1-year
period, subject to the rules of the Commission.
TITLE V--INSURANCE
Subtitle A--Federal Insurance Office
SEC. 501. SHORT TITLE.
This subtitle may be cited as the ``Federal Insurance Office Act of
2010''.
SEC. 502. FEDERAL INSURANCE OFFICE.
(a) Establishment of Office.--Subchapter I of chapter 3 of subtitle
I of title 31, United States Code, is amended--
(1) by redesignating section 312 as section 315;
(2) by redesignating section 313 as section 312; and
(3) by inserting after section 312 (as so redesignated) the
following new sections:
``SEC. 313. FEDERAL INSURANCE OFFICE.
``(a) Establishment.--There is established within the Department of
the Treasury the Federal Insurance Office.
``(b) Leadership.--The Office shall be headed by a Director, who
shall be appointed by the Secretary of the Treasury. The position of
Director shall be a career reserved position in the Senior Executive
Service, as that position is defined under section 3132 of title 5,
United States Code.
``(c) Functions.--
``(1) Authority pursuant to direction of secretary.--The
Office, pursuant to the direction of the Secretary, shall have the
authority--
``(A) to monitor all aspects of the insurance industry,
including identifying issues or gaps in the regulation of
insurers that could contribute to a systemic crisis in the
insurance industry or the United States financial system;
``(B) to monitor the extent to which traditionally
underserved communities and consumers, minorities (as such term
is defined in section 1204(c) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1811
note)), and low- and moderate-income persons have access to
affordable insurance products regarding all lines of insurance,
except health insurance;
``(C) to recommend to the Financial Stability Oversight
Council that it designate an insurer, including the affiliates
of such insurer, as an entity subject to regulation as a
nonbank financial company supervised by the Board of Governors
pursuant to title I of the Dodd-Frank Wall Street Reform and
Consumer Protection Act;
``(D) to assist the Secretary in administering the
Terrorism Insurance Program established in the Department of
the Treasury under the Terrorism Risk Insurance Act of 2002 (15
U.S.C. 6701 note);
``(E) to coordinate Federal efforts and develop Federal
policy on prudential aspects of international insurance
matters, including representing the United States, as
appropriate, in the International Association of Insurance
Supervisors (or a successor entity) and assisting the Secretary
in negotiating covered agreements (as such term is defined in
subsection (r));
``(F) to determine, in accordance with subsection (f),
whether State insurance measures are preempted by covered
agreements;
``(G) to consult with the States (including State insurance
regulators) regarding insurance matters of national importance
and prudential insurance matters of international importance;
and
``(H) to perform such other related duties and authorities
as may be assigned to the Office by the Secretary.
``(2) Advisory functions.--The Office shall advise the
Secretary on major domestic and prudential international insurance
policy issues.
``(3) Advisory capacity on council.--The Director shall serve
in an advisory capacity on the Financial Stability Oversight
Council established under the Financial Stability Act of 2010.
``(d) Scope.--The authority of the Office shall extend to all lines
of insurance except--
``(1) health insurance, as determined by the Secretary in
coordination with the Secretary of Health and Human Services based
on section 2791 of the Public Health Service Act (42 U.S.C. 300gg-
91);
``(2) long-term care insurance, except long-term care insurance
that is included with life or annuity insurance components, as
determined by the Secretary in coordination with the Secretary of
Health and Human Services, and in the case of long-term care
insurance that is included with such components, the Secretary
shall coordinate with the Secretary of Health and Human Services in
performing the functions of the Office; and
``(3) crop insurance, as established by the Federal Crop
Insurance Act (7 U.S.C. 1501 et seq.).
``(e) Gathering of Information.--
``(1) In general.--In carrying out the functions required under
subsection (c), the Office may--
``(A) receive and collect data and information on and from
the insurance industry and insurers;
``(B) enter into information-sharing agreements;
``(C) analyze and disseminate data and information; and
``(D) issue reports regarding all lines of insurance except
health insurance.
``(2) Collection of information from insurers and affiliates.--
``(A) In general.--Except as provided in paragraph (3), the
Office may require an insurer, or any affiliate of an insurer,
to submit such data or information as the Office may reasonably
require in carrying out the functions described under
subsection (c).
``(B) Rule of construction.--Notwithstanding any other
provision of this section, for purposes of subparagraph (A),
the term `insurer' means any entity that writes insurance or
reinsures risks and issues contracts or policies in 1 or more
States.
``(3) Exception for small insurers.--Paragraph (2) shall not
apply with respect to any insurer or affiliate thereof that meets a
minimum size threshold that the Office may establish, whether by
order or rule.
``(4) Advance coordination.--Before collecting any data or
information under paragraph (2) from an insurer, or affiliate of an
insurer, the Office shall coordinate with each relevant Federal
agency and State insurance regulator (or other relevant Federal or
State regulatory agency, if any, in the case of an affiliate of an
insurer) and any publicly available sources to determine if the
information to be collected is available from, and may be obtained
in a timely manner by, such Federal agency or State insurance
regulator, individually or collectively, other regulatory agency,
or publicly available sources. If the Director determines that such
data or information is available, and may be obtained in a timely
manner, from such an agency, regulator, regulatory agency, or
source, the Director shall obtain the data or information from such
agency, regulator, regulatory agency, or source. If the Director
determines that such data or information is not so available, the
Director may collect such data or information from an insurer (or
affiliate) only if the Director complies with the requirements of
subchapter I of chapter 35 of title 44, United States Code
(relating to Federal information policy; commonly known as the
Paperwork Reduction Act), in collecting such data or information.
Notwithstanding any other provision of law, each such relevant
Federal agency and State insurance regulator or other Federal or
State regulatory agency is authorized to provide to the Office such
data or information.
``(5) Confidentiality.--
``(A) Retention of privilege.--The submission of any
nonpublicly available data and information to the Office under
this subsection shall not constitute a waiver of, or otherwise
affect, any privilege arising under Federal or State law
(including the rules of any Federal or State court) to which
the data or information is otherwise subject.
``(B) Continued application of prior confidentiality
agreements.--Any requirement under Federal or State law to the
extent otherwise applicable, or any requirement pursuant to a
written agreement in effect between the original source of any
nonpublicly available data or information and the source of
such data or information to the Office, regarding the privacy
or confidentiality of any data or information in the possession
of the source to the Office, shall continue to apply to such
data or information after the data or information has been
provided pursuant to this subsection to the Office.
``(C) Information-sharing agreement.--Any data or
information obtained by the Office may be made available to
State insurance regulators, individually or collectively,
through an information-sharing agreement that--
``(i) shall comply with applicable Federal law; and
``(ii) shall not constitute a waiver of, or otherwise
affect, any privilege under Federal or State law (including
the rules of any Federal or State court) to which the data
or information is otherwise subject.
``(D) Agency disclosure requirements.--Section 552 of title
5, United States Code, shall apply to any data or information
submitted to the Office by an insurer or an affiliate of an
insurer.
``(6) Subpoenas and enforcement.--The Director shall have the
power to require by subpoena the production of the data or
information requested under paragraph (2), but only upon a written
finding by the Director that such data or information is required
to carry out the functions described under subsection (c) and that
the Office has coordinated with such regulator or agency as
required under paragraph (4). Subpoenas shall bear the signature of
the Director and shall be served by any person or class of persons
designated by the Director for that purpose. In the case of
contumacy or failure to obey a subpoena, the subpoena shall be
enforceable by order of any appropriate district court of the
United States. Any failure to obey the order of the court may be
punished by the court as a contempt of court.
``(f) Preemption of State Insurance Measures.--
``(1) Standard.--A State insurance measure shall be preempted
pursuant to this section or section 314 if, and only to the extent
that the Director determines, in accordance with this subsection,
that the measure--
``(A) results in less favorable treatment of a non-United
States insurer domiciled in a foreign jurisdiction that is
subject to a covered agreement than a United States insurer
domiciled, licensed, or otherwise admitted in that State; and
``(B) is inconsistent with a covered agreement.
``(2) Determination.--
``(A) Notice of potential inconsistency.--Before making any
determination under paragraph (1), the Director shall--
``(i) notify and consult with the appropriate State
regarding any potential inconsistency or preemption;
``(ii) notify and consult with the United States Trade
Representative regarding any potential inconsistency or
preemption;
``(iii) cause to be published in the Federal Register
notice of the issue regarding the potential inconsistency
or preemption, including a description of each State
insurance measure at issue and any applicable covered
agreement;
``(iv) provide interested parties a reasonable
opportunity to submit written comments to the Office; and
``(v) consider any comments received.
``(B) Scope of review.--For purposes of this subsection,
any determination of the Director regarding State insurance
measures, and any preemption under paragraph (1) as a result of
such determination, shall be limited to the subject matter
contained within the covered agreement involved and shall
achieve a level of protection for insurance or reinsurance
consumers that is substantially equivalent to the level of
protection achieved under State insurance or reinsurance
regulation.
``(C) Notice of determination of inconsistency.--Upon
making any determination under paragraph (1), the Director
shall--
``(i) notify the appropriate State of the determination
and the extent of the inconsistency;
``(ii) establish a reasonable period of time, which
shall not be less than 30 days, before the determination
shall become effective; and
``(iii) notify the Committees on Financial Services and
Ways and Means of the House of Representatives and the
Committees on Banking, Housing, and Urban Affairs and
Finance of the Senate.
``(3) Notice of effectiveness.--Upon the conclusion of the
period referred to in paragraph (2)(C)(ii), if the basis for such
determination still exists, the determination shall become
effective and the Director shall--
``(A) cause to be published a notice in the Federal
Register that the preemption has become effective, as well as
the effective date; and
``(B) notify the appropriate State.
``(4) Limitation.--No State may enforce a State insurance
measure to the extent that such measure has been preempted under
this subsection.
``(g) Applicability of Administrative Procedures Act.--
Determinations of inconsistency made pursuant to subsection (f)(2)
shall be subject to the applicable provisions of subchapter II of
chapter 5 of title 5, United States Code (relating to administrative
procedure), and chapter 7 of such title (relating to judicial review),
except that in any action for judicial review of a determination of
inconsistency, the court shall determine the matter de novo.
``(h) Regulations, Policies, and Procedures.--The Secretary may
issue orders, regulations, policies, and procedures to implement this
section.
``(i) Consultation.--The Director shall consult with State
insurance regulators, individually or collectively, to the extent the
Director determines appropriate, in carrying out the functions of the
Office.
``(j) Savings Provisions.--Nothing in this section shall--
``(1) preempt--
``(A) any State insurance measure that governs any
insurer's rates, premiums, underwriting, or sales practices;
``(B) any State coverage requirements for insurance;
``(C) the application of the antitrust laws of any State to
the business of insurance; or
``(D) any State insurance measure governing the capital or
solvency of an insurer, except to the extent that such State
insurance measure results in less favorable treatment of a non-
United State insurer than a United States insurer;
``(2) be construed to alter, amend, or limit any provision of
the Consumer Financial Protection Agency Act of 2010; or
``(3) affect the preemption of any State insurance measure
otherwise inconsistent with and preempted by Federal law.
``(k) Retention of Existing State Regulatory Authority.--Nothing in
this section or section 314 shall be construed to establish or provide
the Office or the Department of the Treasury with general supervisory
or regulatory authority over the business of insurance.
``(l) Retention of Authority of Federal Financial Regulatory
Agencies.--Nothing in this section or section 314 shall be construed to
limit the authority of any Federal financial regulatory agency,
including the authority to develop and coordinate policy, negotiate,
and enter into agreements with foreign governments, authorities,
regulators, and multinational regulatory committees and to preempt
State measures to affect uniformity with international regulatory
agreements.
``(m) Retention of Authority of United States Trade
Representative.--Nothing in this section or section 314 shall be
construed to affect the authority of the Office of the United States
Trade Representative pursuant to section 141 of the Trade Act of 1974
(19 U.S.C. 2171) or any other provision of law, including authority
over the development and coordination of United States international
trade policy and the administration of the United States trade
agreements program.
``(n) Annual Reports to Congress.--
``(1) Section 313(f) reports.--Beginning September 30, 2011,
the Director shall submit a report on or before September 30 of
each calendar year to the President and to the Committees on
Financial Services and Ways and Means of the House of
Representatives and the Committees on Banking, Housing, and Urban
Affairs and Finance of the Senate on any actions taken by the
Office pursuant to subsection (f) (regarding preemption of
inconsistent State insurance measures).
``(2) Insurance industry.--Beginning September 30, 2011, the
Director shall submit a report on or before September 30 of each
calendar year to the President and to the Committee on Financial
Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate on the insurance
industry and any other information as deemed relevant by the
Director or requested by such Committees.
``(o) Reports on U.S. and Global Reinsurance Market.--The Director
shall submit to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate--
``(1) a report received not later than September 30, 2012,
describing the breadth and scope of the global reinsurance market
and the critical role such market plays in supporting insurance in
the United States; and
``(2) a report received not later than January 1, 2013, and
updated not later than January 1, 2015, describing the impact of
part II of the Nonadmitted and Reinsurance Reform Act of 2010 on
the ability of State regulators to access reinsurance information
for regulated companies in their jurisdictions.
``(p) Study and Report on Regulation of Insurance.--
``(1) In general.--Not later than 18 months after the date of
enactment of this section, the Director shall conduct a study and
submit a report to Congress on how to modernize and improve the
system of insurance regulation in the United States.
``(2) Considerations.--The study and report required under
paragraph (1) shall be based on and guided by the following
considerations:
``(A) Systemic risk regulation with respect to insurance.
``(B) Capital standards and the relationship between
capital allocation and liabilities, including standards
relating to liquidity and duration risk.
``(C) Consumer protection for insurance products and
practices, including gaps in State regulation.
``(D) The degree of national uniformity of State insurance
regulation.
``(E) The regulation of insurance companies and affiliates
on a consolidated basis.
``(F) International coordination of insurance regulation.
``(3) Additional factors.--The study and report required under
paragraph (1) shall also examine the following factors:
``(A) The costs and benefits of potential Federal
regulation of insurance across various lines of insurance
(except health insurance).
``(B) The feasibility of regulating only certain lines of
insurance at the Federal level, while leaving other lines of
insurance to be regulated at the State level.
``(C) The ability of any potential Federal regulation or
Federal regulators to eliminate or minimize regulatory
arbitrage.
``(D) The impact that developments in the regulation of
insurance in foreign jurisdictions might have on the potential
Federal regulation of insurance.
``(E) The ability of any potential Federal regulation or
Federal regulator to provide robust consumer protection for
policyholders.
``(F) The potential consequences of subjecting insurance
companies to a Federal resolution authority, including the
effects of any Federal resolution authority--
``(i) on the operation of State insurance guaranty fund
systems, including the loss of guaranty fund coverage if an
insurance company is subject to a Federal resolution
authority;
``(ii) on policyholder protection, including the loss
of the priority status of policyholder claims over other
unsecured general creditor claims;
``(iii) in the case of life insurance companies, on the
loss of the special status of separate account assets and
separate account liabilities; and
``(iv) on the international competitiveness of
insurance companies.
``(G) Such other factors as the Director determines
necessary or appropriate, consistent with the principles set
forth in paragraph (2).
``(4) Required recommendations.--The study and report required
under paragraph (1) shall also contain any legislative,
administrative, or regulatory recommendations, as the Director
determines appropriate, to carry out or effectuate the findings set
forth in such report.
``(5) Consultation.--With respect to the study and report
required under paragraph (1), the Director shall consult with the
State insurance regulators, consumer organizations, representatives
of the insurance industry and policyholders, and other
organizations and experts, as appropriate.
``(q) Use of Existing Resources.--To carry out this section, the
Office may employ personnel, facilities, and any other resource of the
Department of the Treasury available to the Secretary and the Secretary
shall dedicate specific personnel to the Office.
``(r) Definitions.--In this section and section 314, the following
definitions shall apply:
``(1) Affiliate.--The term `affiliate' means, with respect to
an insurer, any person who controls, is controlled by, or is under
common control with the insurer.
``(2) Covered agreement.--The term `covered agreement' means a
written bilateral or multilateral agreement regarding prudential
measures with respect to the business of insurance or reinsurance
that--
``(A) is entered into between the United States and one or
more foreign governments, authorities, or regulatory entities;
and
``(B) relates to the recognition of prudential measures
with respect to the business of insurance or reinsurance that
achieves a level of protection for insurance or reinsurance
consumers that is substantially equivalent to the level of
protection achieved under State insurance or reinsurance
regulation.
``(3) Insurer.--The term `insurer' means any person engaged in
the business of insurance, including reinsurance.
``(4) Federal financial regulatory agency.--The term `Federal
financial regulatory agency' means the Department of the Treasury,
the Board of Governors of the Federal Reserve System, the Office of
the Comptroller of the Currency, the Office of Thrift Supervision,
the Securities and Exchange Commission, the Commodity Futures
Trading Commission, the Federal Deposit Insurance Corporation, the
Federal Housing Finance Agency, or the National Credit Union
Administration.
``(5) Non-united states insurer.--The term `non-United States
insurer' means an insurer that is organized under the laws of a
jurisdiction other than a State, but does not include any United
States branch of such an insurer.
``(6) Office.--The term `Office' means the Federal Insurance
Office established by this section.
``(7) State insurance measure.--The term `State insurance
measure' means any State law, regulation, administrative ruling,
bulletin, guideline, or practice relating to or affecting
prudential measures applicable to insurance or reinsurance.
``(8) State insurance regulator.--The term `State insurance
regulator' means any State regulatory authority responsible for the
supervision of insurers.
``(9) Substantially equivalent to the level of protection
achieved.--The term `substantially equivalent to the level of
protection achieved' means the prudential measures of a foreign
government, authority, or regulatory entity achieve a similar
outcome in consumer protection as the outcome achieved under State
insurance or reinsurance regulation.
``(10) United states insurer.--The term `United States insurer'
means--
``(A) an insurer that is organized under the laws of a
State; or
``(B) a United States branch of a non-United States
insurer.
``(s) Authorization of Appropriations.--There are authorized to be
appropriated for the Office for each fiscal year such sums as may be
necessary.
``SEC. 314. COVERED AGREEMENTS.
``(a) Authority.--The Secretary and the United States Trade
Representative are authorized, jointly, to negotiate and enter into
covered agreements on behalf of the United States.
``(b) Requirements for Consultation With Congress.--
``(1) In general.--Before initiating negotiations to enter into
a covered agreement under subsection (a), during such negotiations,
and before entering into any such agreement, the Secretary and the
United States Trade Representative shall jointly consult with the
Committee on Financial Services and the Committee on Ways and Means
of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs and the Committee on Finance of the
Senate.
``(2) Scope.--The consultation described in paragraph (1) shall
include consultation with respect to--
``(A) the nature of the agreement;
``(B) how and to what extent the agreement will achieve the
applicable purposes, policies, priorities, and objectives of
section 313 and this section; and
``(C) the implementation of the agreement, including the
general effect of the agreement on existing State laws.
``(c) Submission and Layover Provisions.--A covered agreement under
subsection (a) may enter into force with respect to the United States
only if--
``(1) the Secretary and the United States Trade Representative
jointly submit to the congressional committees specified in
subsection (b)(1), on a day on which both Houses of Congress are in
session, a copy of the final legal text of the agreement; and
``(2) a period of 90 calendar days beginning on the date on
which the copy of the final legal text of the agreement is
submitted to the congressional committees under paragraph (1) has
expired.''.
(b) Duties of Secretary.--Section 321(a) of title 31, United States
Code, is amended--
(1) in paragraph (7), by striking ``; and'' and inserting a
semicolon;
(2) in paragraph (8)(C), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(9) advise the President on major domestic and international
prudential policy issues in connection with all lines of insurance
except health insurance.''.
(c) Clerical Amendment.--The table of sections for subchapter I of
chapter 3 of title 31, United States Code, is amended by striking the
item relating to section 312 and inserting the following new items:
``Sec. 312. Terrorism and financial intelligence.
``Sec. 313. Federal Insurance Office.
``Sec. 314. Covered agreements.
``Sec. 315. Continuing in office.''.
Subtitle B--State-Based Insurance Reform
SEC. 511. SHORT TITLE.
This subtitle may be cited as the ``Nonadmitted and Reinsurance
Reform Act of 2010''.
SEC. 512. EFFECTIVE DATE.
Except as otherwise specifically provided in this subtitle, this
subtitle shall take effect upon the expiration of the 12-month period
beginning on the date of the enactment of this subtitle.
PART I--NONADMITTED INSURANCE
SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF PREMIUM TAXES.
(a) Home State's Exclusive Authority.--No State other than the home
State of an insured may require any premium tax payment for nonadmitted
insurance.
(b) Allocation of Nonadmitted Premium Taxes.--
(1) In general.--The States may enter into a compact or
otherwise establish procedures to allocate among the States the
premium taxes paid to an insured's home State described in
subsection (a).
(2) Effective date.--Except as expressly otherwise provided in
such compact or other procedures, any such compact or other
procedures--
(A) if adopted on or before the expiration of the 330-day
period that begins on the date of the enactment of this
subtitle, shall apply to any premium taxes that, on or after
such date of enactment, are required to be paid to any State
that is subject to such compact or procedures; and
(B) if adopted after the expiration of such 330-day period,
shall apply to any premium taxes that, on or after January 1 of
the first calendar year that begins after the expiration of
such 330-day period, are required to be paid to any State that
is subject to such compact or procedures.
(3) Report.--Upon the expiration of the 330-day period referred
to in paragraph (2), the NAIC may submit a report to the Committee
on Financial Services and the Committee on the Judiciary of the
House of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate identifying and describing any compact
or other procedures for allocation among the States of premium
taxes that have been adopted during such period by any States.
(4) Nationwide system.--The Congress intends that each State
adopt nationwide uniform requirements, forms, and procedures, such
as an interstate compact, that provide for the reporting, payment,
collection, and allocation of premium taxes for nonadmitted
insurance consistent with this section.
(c) Allocation Based on Tax Allocation Report.--To facilitate the
payment of premium taxes among the States, an insured's home State may
require surplus lines brokers and insureds who have independently
procured insurance to annually file tax allocation reports with the
insured's home State detailing the portion of the nonadmitted insurance
policy premium or premiums attributable to properties, risks, or
exposures located in each State. The filing of a nonadmitted insurance
tax allocation report and the payment of tax may be made by a person
authorized by the insured to act as its agent.
SEC. 522. REGULATION OF NONADMITTED INSURANCE BY INSURED'S HOME
STATE.
(a) Home State Authority.--Except as otherwise provided in this
section, the placement of nonadmitted insurance shall be subject to the
statutory and regulatory requirements solely of the insured's home
State.
(b) Broker Licensing.--No State other than an insured's home State
may require a surplus lines broker to be licensed in order to sell,
solicit, or negotiate nonadmitted insurance with respect to such
insured.
(c) Enforcement Provision.--With respect to section 521 and
subsections (a) and (b) of this section, any law, regulation,
provision, or action of any State that applies or purports to apply to
nonadmitted insurance sold to, solicited by, or negotiated with an
insured whose home State is another State shall be preempted with
respect to such application.
(d) Workers' Compensation Exception.--This section may not be
construed to preempt any State law, rule, or regulation that restricts
the placement of workers' compensation insurance or excess insurance
for self-funded workers' compensation plans with a nonadmitted insurer.
SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATABASE.
After the expiration of the 2-year period beginning on the date of
the enactment of this subtitle, a State may not collect any fees
relating to licensing of an individual or entity as a surplus lines
broker in the State unless the State has in effect at such time laws or
regulations that provide for participation by the State in the national
insurance producer database of the NAIC, or any other equivalent
uniform national database, for the licensure of surplus lines brokers
and the renewal of such licenses.
SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGIBILITY.
A State may not--
(1) impose eligibility requirements on, or otherwise establish
eligibility criteria for, nonadmitted insurers domiciled in a
United States jurisdiction, except in conformance with such
requirements and criteria in sections 5A(2) and 5C(2)(a) of the
Non-Admitted Insurance Model Act, unless the State has adopted
nationwide uniform requirements, forms, and procedures developed in
accordance with section 521(b) of this subtitle that include
alternative nationwide uniform eligibility requirements; or
(2) prohibit a surplus lines broker from placing nonadmitted
insurance with, or procuring nonadmitted insurance from, a
nonadmitted insurer domiciled outside the United States that is
listed on the Quarterly Listing of Alien Insurers maintained by the
International Insurers Department of the NAIC.
SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL PURCHASERS.
A surplus lines broker seeking to procure or place nonadmitted
insurance in a State for an exempt commercial purchaser shall not be
required to satisfy any State requirement to make a due diligence
search to determine whether the full amount or type of insurance sought
by such exempt commercial purchaser can be obtained from admitted
insurers if--
(1) the broker procuring or placing the surplus lines insurance
has disclosed to the exempt commercial purchaser that such
insurance may or may not be available from the admitted market that
may provide greater protection with more regulatory oversight; and
(2) the exempt commercial purchaser has subsequently requested
in writing the broker to procure or place such insurance from a
nonadmitted insurer.
SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MARKET.
(a) In General.--The Comptroller General of the United States shall
conduct a study of the nonadmitted insurance market to determine the
effect of the enactment of this part on the size and market share of
the nonadmitted insurance market for providing coverage typically
provided by the admitted insurance market.
(b) Contents.--The study shall determine and analyze--
(1) the change in the size and market share of the nonadmitted
insurance market and in the number of insurance companies and
insurance holding companies providing such business in the 18-month
period that begins upon the effective date of this subtitle;
(2) the extent to which insurance coverage typically provided
by the admitted insurance market has shifted to the nonadmitted
insurance market;
(3) the consequences of any change in the size and market share
of the nonadmitted insurance market, including differences in the
price and availability of coverage available in both the admitted
and nonadmitted insurance markets;
(4) the extent to which insurance companies and insurance
holding companies that provide both admitted and nonadmitted
insurance have experienced shifts in the volume of business between
admitted and nonadmitted insurance; and
(5) the extent to which there has been a change in the number
of individuals who have nonadmitted insurance policies, the type of
coverage provided under such policies, and whether such coverage is
available in the admitted insurance market.
(c) Consultation With NAIC.--In conducting the study under this
section, the Comptroller General shall consult with the NAIC.
(d) Report.--The Comptroller General shall complete the study under
this section and submit a report to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives regarding the findings of the study not
later than 30 months after the effective date of this subtitle.
SEC. 527. DEFINITIONS.
For purposes of this part, the following definitions shall apply:
(1) Admitted insurer.--The term ``admitted insurer'' means,
with respect to a State, an insurer licensed to engage in the
business of insurance in such State.
(2) Affiliate.--The term ``affiliate'' means, with respect to
an insured, any entity that controls, is controlled by, or is under
common control with the insured.
(3) Affiliated group.--The term ``affiliated group'' means any
group of entities that are all affiliated.
(4) Control.--An entity has ``control'' over another entity
if--
(A) the entity directly or indirectly or acting through 1
or more other persons owns, controls, or has the power to vote
25 percent or more of any class of voting securities of the
other entity; or
(B) the entity controls in any manner the election of a
majority of the directors or trustees of the other entity.
(5) Exempt commercial purchaser.--The term ``exempt commercial
purchaser'' means any person purchasing commercial insurance that,
at the time of placement, meets the following requirements:
(A) The person employs or retains a qualified risk manager
to negotiate insurance coverage.
(B) The person has paid aggregate nationwide commercial
property and casualty insurance premiums in excess of $100,000
in the immediately preceding 12 months.
(C)(i) The person meets at least 1 of the following
criteria:
(I) The person possesses a net worth in excess of
$20,000,000, as such amount is adjusted pursuant to clause
(ii).
(II) The person generates annual revenues in excess of
$50,000,000, as such amount is adjusted pursuant to clause
(ii).
(III) The person employs more than 500 full-time or
full-time equivalent employees per individual insured or is
a member of an affiliated group employing more than 1,000
employees in the aggregate.
(IV) The person is a not-for-profit organization or
public entity generating annual budgeted expenditures of at
least $30,000,000, as such amount is adjusted pursuant to
clause (ii).
(V) The person is a municipality with a population in
excess of 50,000 persons.
(ii) Effective on the fifth January 1 occurring after the
date of the enactment of this subtitle and each fifth January 1
occurring thereafter, the amounts in subclauses (I), (II), and
(IV) of clause (i) shall be adjusted to reflect the percentage
change for such 5-year period in the Consumer Price Index for
All Urban Consumers published by the Bureau of Labor Statistics
of the Department of Labor.
(6) Home state.--
(A) In general.--Except as provided in subparagraph (B),
the term ``home State'' means, with respect to an insured--
(i) the State in which an insured maintains its
principal place of business or, in the case of an
individual, the individual's principal residence; or
(ii) if 100 percent of the insured risk is located out
of the State referred to in clause (i), the State to which
the greatest percentage of the insured's taxable premium
for that insurance contract is allocated.
(B) Affiliated groups.--If more than 1 insured from an
affiliated group are named insureds on a single nonadmitted
insurance contract, the term ``home State'' means the home
State, as determined pursuant to subparagraph (A), of the
member of the affiliated group that has the largest percentage
of premium attributed to it under such insurance contract.
(7) Independently procured insurance.--The term ``independently
procured insurance'' means insurance procured directly by an
insured from a nonadmitted insurer.
(8) NAIC.--The term ``NAIC'' means the National Association of
Insurance Commissioners or any successor entity.
(9) Nonadmitted insurance.--The term ``nonadmitted insurance''
means any property and casualty insurance permitted to be placed
directly or through a surplus lines broker with a nonadmitted
insurer eligible to accept such insurance.
(10) Non-admitted insurance model act.--The term ``Non-Admitted
Insurance Model Act'' means the provisions of the Non-Admitted
Insurance Model Act, as adopted by the NAIC on August 3, 1994, and
amended on September 30, 1996, December 6, 1997, October 2, 1999,
and June 8, 2002.
(11) Nonadmitted insurer.--The term ``nonadmitted insurer''--
(A) means, with respect to a State, an insurer not licensed
to engage in the business of insurance in such State; but
(B) does not include a risk retention group, as that term
is defined in section 2(a)(4) of the Liability Risk Retention
Act of 1986 (15 U.S.C. 3901(a)(4)).
(12) Premium tax.--The term ``premium tax'' means, with respect
to surplus lines or independently procured insurance coverage, any
tax, fee, assessment, or other charge imposed by a government
entity directly or indirectly based on any payment made as
consideration for an insurance contract for such insurance,
including premium deposits, assessments, registration fees, and any
other compensation given in consideration for a contract of
insurance.
(13) Qualified risk manager.--The term ``qualified risk
manager'' means, with respect to a policyholder of commercial
insurance, a person who meets all of the following requirements:
(A) The person is an employee of, or third-party consultant
retained by, the commercial policyholder.
(B) The person provides skilled services in loss
prevention, loss reduction, or risk and insurance coverage
analysis, and purchase of insurance.
(C) The person--
(i)(I) has a bachelor's degree or higher from an
accredited college or university in risk management,
business administration, finance, economics, or any other
field determined by a State insurance commissioner or other
State regulatory official or entity to demonstrate minimum
competence in risk management; and
(II)(aa) has 3 years of experience in risk financing,
claims administration, loss prevention, risk and insurance
analysis, or purchasing commercial lines of insurance; or
(bb) has--
(AA) a designation as a Chartered Property and
Casualty Underwriter (in this subparagraph referred to
as ``CPCU'') issued by the American Institute for CPCU/
Insurance Institute of America;
(BB) a designation as an Associate in Risk
Management (ARM) issued by the American Institute for
CPCU/Insurance Institute of America;
(CC) a designation as Certified Risk Manager (CRM)
issued by the National Alliance for Insurance Education
& Research;
(DD) a designation as a RIMS Fellow (RF) issued by
the Global Risk Management Institute; or
(EE) any other designation, certification, or
license determined by a State insurance commissioner or
other State insurance regulatory official or entity to
demonstrate minimum competency in risk management;
(ii)(I) has at least 7 years of experience in risk
financing, claims administration, loss prevention, risk and
insurance coverage analysis, or purchasing commercial lines
of insurance; and
(II) has any 1 of the designations specified in
subitems (AA) through (EE) of clause (i)(II)(bb);
(iii) has at least 10 years of experience in risk
financing, claims administration, loss prevention, risk and
insurance coverage analysis, or purchasing commercial lines
of insurance; or
(iv) has a graduate degree from an accredited college
or university in risk management, business administration,
finance, economics, or any other field determined by a
State insurance commissioner or other State regulatory
official or entity to demonstrate minimum competence in
risk management.
(14) Reinsurance.--The term ``reinsurance'' means the
assumption by an insurer of all or part of a risk undertaken
originally by another insurer.
(15) Surplus lines broker.--The term ``surplus lines broker''
means an individual, firm, or corporation which is licensed in a
State to sell, solicit, or negotiate insurance on properties,
risks, or exposures located or to be performed in a State with
nonadmitted insurers.
(16) State.--The term ``State'' includes any State of the
United States, the District of Columbia, the Commonwealth of Puerto
Rico, Guam, the Northern Mariana Islands, the Virgin Islands, and
American Samoa.
PART II--REINSURANCE
SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND REINSURANCE
AGREEMENTS.
(a) Credit for Reinsurance.--If the State of domicile of a ceding
insurer is an NAIC-accredited State, or has financial solvency
requirements substantially similar to the requirements necessary for
NAIC accreditation, and recognizes credit for reinsurance for the
insurer's ceded risk, then no other State may deny such credit for
reinsurance.
(b) Additional Preemption of Extraterritorial Application of State
Law.--In addition to the application of subsection (a), all laws,
regulations, provisions, or other actions of a State that is not the
domiciliary State of the ceding insurer, except those with respect to
taxes and assessments on insurance companies or insurance income, are
preempted to the extent that they--
(1) restrict or eliminate the rights of the ceding insurer or
the assuming insurer to resolve disputes pursuant to contractual
arbitration to the extent such contractual provision is not
inconsistent with the provisions of title 9, United States Code;
(2) require that a certain State's law shall govern the
reinsurance contract, disputes arising from the reinsurance
contract, or requirements of the reinsurance contract;
(3) attempt to enforce a reinsurance contract on terms
different than those set forth in the reinsurance contract, to the
extent that the terms are not inconsistent with this part; or
(4) otherwise apply the laws of the State to reinsurance
agreements of ceding insurers not domiciled in that State.
SEC. 532. REGULATION OF REINSURER SOLVENCY.
(a) Domiciliary State Regulation.--If the State of domicile of a
reinsurer is an NAIC-accredited State or has financial solvency
requirements substantially similar to the requirements necessary for
NAIC accreditation, such State shall be solely responsible for
regulating the financial solvency of the reinsurer.
(b) Nondomiciliary States.--
(1) Limitation on financial information requirements.--If the
State of domicile of a reinsurer is an NAIC-accredited State or has
financial solvency requirements substantially similar to the
requirements necessary for NAIC accreditation, no other State may
require the reinsurer to provide any additional financial
information other than the information the reinsurer is required to
file with its domiciliary State.
(2) Receipt of information.--No provision of this section shall
be construed as preventing or prohibiting a State that is not the
State of domicile of a reinsurer from receiving a copy of any
financial statement filed with its domiciliary State.
SEC. 533. DEFINITIONS.
For purposes of this part, the following definitions shall apply:
(1) Ceding insurer.--The term ``ceding insurer'' means an
insurer that purchases reinsurance.
(2) Domiciliary state.--The terms ``State of domicile'' and
``domiciliary State'' mean, with respect to an insurer or
reinsurer, the State in which the insurer or reinsurer is
incorporated or entered through, and licensed.
(3) NAIC.--The term ``NAIC'' means the National Association of
Insurance Commissioners or any successor entity.
(4) Reinsurance.--The term ``reinsurance'' means the assumption
by an insurer of all or part of a risk undertaken originally by
another insurer.
(5) Reinsurer.--
(A) In general.--The term ``reinsurer'' means an insurer to
the extent that the insurer--
(i) is principally engaged in the business of
reinsurance;
(ii) does not conduct significant amounts of direct
insurance as a percentage of its net premiums; and
(iii) is not engaged in an ongoing basis in the
business of soliciting direct insurance.
(B) Determination.--A determination of whether an insurer
is a reinsurer shall be made under the laws of the State of
domicile in accordance with this paragraph.
(6) State.--The term ``State'' includes any State of the United
States, the District of Columbia, the Commonwealth of Puerto Rico,
Guam, the Northern Mariana Islands, the Virgin Islands, and
American Samoa.
PART III--RULE OF CONSTRUCTION
SEC. 541. RULE OF CONSTRUCTION.
Nothing in this subtitle or the amendments made by this subtitle
shall be construed to modify, impair, or supersede the application of
the antitrust laws. Any implied or actual conflict between this
subtitle and any amendments to this subtitle and the antitrust laws
shall be resolved in favor of the operation of the antitrust laws.
SEC. 542. SEVERABILITY.
If any section or subsection of this subtitle, or any application
of such provision to any person or circumstance, is held to be
unconstitutional, the remainder of this subtitle, and the application
of the provision to any other person or circumstance, shall not be
affected.
TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
SEC. 601. SHORT TITLE.
This title may be cited as the ``Bank and Savings Association
Holding Company and Depository Institution Regulatory Improvements Act
of 2010''.
SEC. 602. DEFINITION.
For purposes of this title, a company is a ``commercial firm'' if
the annual gross revenues derived by the company and all of its
affiliates from activities that are financial in nature (as defined in
section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k))) and, if applicable, from the ownership or control of one or
more insured depository institutions, represent less than 15 percent of
the consolidated annual gross revenues of the company.
SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF CREDIT CARD BANKS,
INDUSTRIAL LOAN COMPANIES, AND CERTAIN OTHER COMPANIES UNDER THE
BANK HOLDING COMPANY ACT OF 1956.
(a) Moratorium.--
(1) Definitions.--In this subsection--
(A) the term ``credit card bank'' means an institution
described in section 2(c)(2)(F) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1841(c)(2)(F));
(B) the term ``industrial bank'' means an institution
described in section 2(c)(2)(H) of the Bank Holding Company Act
of 1956 (12 U.S.C. 1841(c)(2)(H)); and
(C) the term ``trust bank'' means an institution described
in section 2(c)(2)(D) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(c)(2)(D)).
(2) Moratorium on provision of deposit insurance.--The
Corporation may not approve an application for deposit insurance
under section 5 of the Federal Deposit Insurance Act (12 U.S.C.
1815) that is received after November 23, 2009, for an industrial
bank, a credit card bank, or a trust bank that is directly or
indirectly owned or controlled by a commercial firm.
(3) Change in control.--
(A) In general.--Except as provided in subparagraph (B),
the appropriate Federal banking agency shall disapprove a
change in control, as provided in section 7(j) of the Federal
Deposit Insurance Act (12 U.S.C. 1817(j)), of an industrial
bank, a credit card bank, or a trust bank if the change in
control would result in direct or indirect control of the
industrial bank, credit card bank, or trust bank by a
commercial firm.
(B) Exceptions.--Subparagraph (A) shall not apply to a
change in control of an industrial bank, credit card bank, or
trust bank--
(i) that--
(I) is in danger of default, as determined by the
appropriate Federal banking agency;
(II) results from the merger or whole acquisition
of a commercial firm that directly or indirectly
controls the industrial bank, credit card bank, or
trust bank in a bona fide merger with or acquisition by
another commercial firm, as determined by the
appropriate Federal banking agency; or
(III) results from an acquisition of voting shares
of a publicly traded company that controls an
industrial bank, credit card bank, or trust bank, if,
after the acquisition, the acquiring shareholder (or
group of shareholders acting in concert) holds less
than 25 percent of any class of the voting shares of
the company; and
(ii) that has obtained all regulatory approvals
otherwise required for such change of control under any
applicable Federal or State law, including section 7(j) of
the Federal Deposit Insurance Act (12 U.S.C. 1817(j)).
(4) Sunset.--This subsection shall cease to have effect 3 years
after the date of enactment of this Act.
(b) Government Accountability Office Study of Exceptions Under the
Bank Holding Company Act of 1956.--
(1) Study required.--The Comptroller General of the United
States shall carry out a study to determine whether it is
necessary, in order to strengthen the safety and soundness of
institutions or the stability of the financial system, to eliminate
the exceptions under section 2 of the Bank Holding Company Act of
1956 (12 U.S.C. 1841) for institutions described in--
(A) section 2(a)(5)(E) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(a)(5)(E));
(B) section 2(a)(5)(F) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(a)(5)(F));
(C) section 2(c)(2)(D) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(c)(2)(D));
(D) section 2(c)(2)(F) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(c)(2)(F));
(E) section 2(c)(2)(H) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(c)(2)(H)); and
(F) section 2(c)(2)(B) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(c)(2)(B)).
(2) Content of study.--
(A) In general.--The study required under paragraph (1),
with respect to the institutions referenced in each of
subparagraphs (A) through (E) of paragraph (1), shall, to the
extent feasible be based on information provided to the
Comptroller General by the appropriate Federal or State
regulator, and shall--
(i) identify the types and number of institutions
excepted from section 2 of the Bank Holding Company Act of
1956 (12 U.S.C. 1841) under each of the subparagraphs
described in subparagraphs (A) through (E) of paragraph
(1);
(ii) generally describe the size and geographic
locations of the institutions described in clause (i);
(iii) determine the extent to which the institutions
described in clause (i) are held by holding companies that
are commercial firms;
(iv) determine whether the institutions described in
clause (i) have any affiliates that are commercial firms;
(v) identify the Federal banking agency responsible for
the supervision of the institutions described in clause (i)
on and after the transfer date;
(vi) determine the adequacy of the Federal bank
regulatory framework applicable to each category of
institution described in clause (i), including any
restrictions (including limitations on affiliate
transactions or cross-marketing) that apply to transactions
between an institution, the holding company of the
institution, and any other affiliate of the institution;
and
(vii) evaluate the potential consequences of subjecting
the institutions described in clause (i) to the
requirements of the Bank Holding Company Act of 1956,
including with respect to the availability and allocation
of credit, the stability of the financial system and the
economy, the safe and sound operation of each category of
institution, and the impact on the types of activities in
which such institutions, and the holding companies of such
institutions, may engage.
(B) Savings associations.--With respect to institutions
described in paragraph (1)(F), the study required under
paragraph (1) shall--
(i) determine the adequacy of the Federal bank
regulatory framework applicable to such institutions,
including any restrictions (including limitations on
affiliate transactions or cross-marketing) that apply to
transactions between an institution, the holding company of
the institution, and any other affiliate of the
institution; and
(ii) evaluate the potential consequences of subjecting
the institutions described in paragraph (1)(F) to the
requirements of the Bank Holding Company Act of 1956,
including with respect to the availability and allocation
of credit, the stability of the financial system and the
economy, the safe and sound operation of such institutions,
and the impact on the types of activities in which such
institutions, and the holding companies of such
institutions, may engage.
(3) Report.--Not later than 18 months after the date of
enactment of this Act, the Comptroller General shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives
a report on the study required under paragraph (1).
SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COMPANIES; REGULATION
OF FUNCTIONALLY REGULATED SUBSIDIARIES.
(a) Reports by Bank Holding Companies.--Sections 5(c)(1) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) is amended--
(1) by striking subclause (A)(ii) and inserting the following:
``(ii) compliance by the bank holding company or
subsidiary with--
``(I) this Act;
``(II) Federal laws that the Board has specific
jurisdiction to enforce against the company or
subsidiary; and
``(III) other than in the case of an insured
depository institution or functionally regulated
subsidiary, any other applicable provision of Federal
law.'';
(2) by striking subparagraph (B) and inserting the following:
``(B) Use of existing reports and other supervisory
information.--The Board shall, to the fullest extent possible,
use--
``(i) reports and other supervisory information that
the bank holding company or any subsidiary thereof has been
required to provide to other Federal or State regulatory
agencies;
``(ii) externally audited financial statements of the
bank holding company or subsidiary;
``(iii) information otherwise available from Federal or
State regulatory agencies; and
``(iv) information that is otherwise required to be
reported publicly.''; and
(3) by adding at the end the following:
``(C) Availability.--Upon the request of the Board, the
bank holding company or a subsidiary of the bank holding
company shall promptly provide to the Board any information
described in clauses (i) through (iii) of subparagraph (B).''.
(b) Examinations of Bank Holding Companies.--Section 5(c)(2) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(2)) is amended to
read as follows:
``(2) Examinations.--
``(A) In general.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, the Board may make
examinations of a bank holding company and each subsidiary of a
bank holding company in order to--
``(i) inform the Board of--
``(I) the nature of the operations and financial
condition of the bank holding company and the
subsidiary;
``(II) the financial, operational, and other risks
within the bank holding company system that may pose a
threat to--
``(aa) the safety and soundness of the bank
holding company or of any depository institution
subsidiary of the bank holding company; or
``(bb) the stability of the financial system of
the United States; and
``(III) the systems of the bank holding company for
monitoring and controlling the risks described in
subclause (II); and
``(ii) monitor the compliance of the bank holding
company and the subsidiary with--
``(I) this Act;
``(II) Federal laws that the Board has specific
jurisdiction to enforce against the company or
subsidiary; and
``(III) other than in the case of an insured
depository institution or functionally regulated
subsidiary, any other applicable provisions of Federal
law.
``(B) Use of reports to reduce examinations.--For purposes
of this paragraph, the Board shall, to the fullest extent
possible, rely on--
``(i) examination reports made by other Federal or
State regulatory agencies relating to a bank holding
company and any subsidiary of a bank holding company; and
``(ii) the reports and other information required under
paragraph (1).
``(C) Coordination with other regulators.--The Board
shall--
``(i) provide reasonable notice to, and consult with,
the appropriate Federal banking agency, the Securities and
Exchange Commission, the Commodity Futures Trading
Commission, or State regulatory agency, as appropriate, for
a subsidiary that is a depository institution or a
functionally regulated subsidiary of a bank holding company
before commencing an examination of the subsidiary under
this section; and
``(ii) to the fullest extent possible, avoid
duplication of examination activities, reporting
requirements, and requests for information.''.
(c) Authority To Regulate Functionally Regulated Subsidiaries of
Bank Holding Companies.--The Bank Holding Company Act of 1956 (12
U.S.C. 1841 et seq.) is amended--
(1) in section 5(c)(5)(B) (12 U.S.C. 1844(c)(5)(B)), by
striking clause (v) and inserting the following:
``(v) an entity that is subject to regulation by, or
registration with, the Commodity Futures Trading
Commission, with respect to activities conducted as a
futures commission merchant, commodity trading adviser,
commodity pool, commodity pool operator, swap execution
facility, swap data repository, swap dealer, major swap
participant, and activities that are incidental to such
commodities and swaps activities.''; and
(2) by striking section 10A (12 U.S.C. 1848a).
(d) Acquisitions of Banks.--Section 3(c) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(c)) is amended by adding at the end
the following:
``(7) Financial stability.--In every case, the Board shall take
into consideration the extent to which a proposed acquisition,
merger, or consolidation would result in greater or more
concentrated risks to the stability of the United States banking or
financial system.''.
(e) Acquisitions of Nonbanks.--
(1) Notice procedures.--Section 4(j)(2)(A) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(j)(2)(A)) is amended by
striking ``or unsound banking practices'' and inserting ``unsound
banking practices, or risk to the stability of the United States
banking or financial system''.
(2) Activities that are financial in nature.--Section
4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(6)(B)) is amended to read as follows:
``(B) Approval not required for certain financial
activities.--
``(i) In general.--Except as provided in subsection (j)
with regard to the acquisition of a savings association and
clause (ii), a financial holding company may commence any
activity, or acquire any company, pursuant to paragraph (4)
or any regulation prescribed or order issued under
paragraph (5), without prior approval of the Board.
``(ii) Exception.--A financial holding company may not
acquire a company, without the prior approval of the Board,
in a transaction in which the total consolidated assets to
be acquired by the financial holding company exceed
$10,000,000,000.
``(iii) Hart-Scott-Rodino filing requirement.--Solely
for purposes of section 7A(c)(8) of the Clayton Act (15
U.S.C. 18a(c)(8)), the transactions subject to the
requirements of this paragraph shall be treated as if the
approval of the Board is not required.''.
(f) Bank Merger Act Transactions.--Section 18(c)(5) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended, in the matter
immediately following subparagraph (B), by striking ``and the
convenience and needs of the community to be served'' and inserting
``the convenience and needs of the community to be served, and the risk
to the stability of the United States banking or financial system''.
(g) Reports by Savings and Loan Holding Companies.--Section
10(b)(2) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)(2) is
amended--
(1) by striking ``Each savings'' and inserting the following:
``(A) In general.--Each savings''; and
(2) by adding at the end the following:
``(B) Use of existing reports and other supervisory
information.--The Board shall, to the fullest extent possible,
use--
``(i) reports and other supervisory information that
the savings and loan holding company or any subsidiary
thereof has been required to provide to other Federal or
State regulatory agencies;
``(ii) externally audited financial statements of the
savings and loan holding company or subsidiary;
``(iii) information that is otherwise available from
Federal or State regulatory agencies; and
``(iv) information that is otherwise required to be
reported publicly.
``(C) Availability.--Upon the request of the Board, a
savings and loan holding company or a subsidiary of a savings
and loan holding company shall promptly provide to the Board
any information described in clauses (i) through (iii) of
subparagraph (B).''.
(h) Examination of Savings and Loan Holding Companies.--
(1) Definitions.--Section 2 of the Home Owners' Loan Act (12
U.S.C. 1462) is amended by adding at the end the following:
``(10) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the same meaning as in
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)).
``(11) Functionally regulated subsidiary.--The term
`functionally regulated subsidiary' has the same meaning as in
section 5(c)(5) of the Bank Holding Company Act of 1956 (12 U.S.C.
1844(c)(5)).''.
(2) Examination.--Section 10(b) of the Home Owners' Loan Act
(12 U.S.C. 1467a(b)) is amended by striking paragraph (4) and
inserting the following:
``(4) Examinations.--
``(A) In general.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, the Board may make
examinations of a savings and loan holding company and each
subsidiary of a savings and loan holding company system, in
order to--
``(i) inform the Board of--
``(I) the nature of the operations and financial
condition of the savings and loan holding company and
the subsidiary;
``(II) the financial, operational, and other risks
within the savings and loan holding company system that
may pose a threat to--
``(aa) the safety and soundness of the savings
and loan holding company or of any depository
institution subsidiary of the savings and loan
holding company; or
``(bb) the stability of the financial system of
the United States; and
``(III) the systems of the savings and loan holding
company for monitoring and controlling the risks
described in subclause (II); and
``(ii) monitor the compliance of the savings and loan
holding company and the subsidiary with--
``(I) this Act;
``(II) Federal laws that the Board has specific
jurisdiction to enforce against the company or
subsidiary; and
``(III) other than in the case of an insured
depository institution or functionally regulated
subsidiary, any other applicable provisions of Federal
law.
``(B) Use of reports to reduce examinations.--For purposes
of this subsection, the Board shall, to the fullest extent
possible, rely on--
``(i) the examination reports made by other Federal or
State regulatory agencies relating to a savings and loan
holding company and any subsidiary; and
``(ii) the reports and other information required under
paragraph (2).
``(C) Coordination with other regulators.--The Board
shall--
``(i) provide reasonable notice to, and consult with,
the appropriate Federal banking agency, the Securities and
Exchange Commission, the Commodity Futures Trading
Commission, or State regulatory agency, as appropriate, for
a subsidiary that is a depository institution or a
functionally regulated subsidiary of a savings and loan
holding company before commencing an examination of the
subsidiary under this section; and
``(ii) to the fullest extent possible, avoid
duplication of examination activities, reporting
requirements, and requests for information.''.
(i) Definition of the Term ``Savings and Loan Holding Company''.--
Section 10(a)(1)(D)(ii) of the Home Owners' Loan Act (12 U.S.C.
1467a(a)(1)(D)(ii)) is amended to read as follows:
``(ii) Exclusion.--The term `savings and loan holding
company' does not include--
``(I) a bank holding company that is registered
under, and subject to, the Bank Holding Company Act of
1956 (12 U.S.C. 1841 et seq.), or to any company
directly or indirectly controlled by such company
(other than a savings association);
``(II) a company that controls a savings
association that functions solely in a trust or
fiduciary capacity as described in section 2(c)(2)(D)
of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(c)(2)(D)); or
``(III) a company described in subsection (c)(9)(C)
solely by virtue of such company's control of an
intermediate holding company established pursuant to
section 10A.''.
(j) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE ACTIVITIES
OF DEPOSITORY INSTITUTION SUBSIDIARIES OF HOLDING COMPANIES.
(a) In General.--The Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.) is amended by inserting after section 25 the following new
section:
``SEC. 26. ASSURING CONSISTENT OVERSIGHT OF SUBSIDIARIES OF HOLDING
COMPANIES.
``(a) Definitions.--For purposes of this section:
``(1) Board.--The term `Board' means the Board of Governors of
the Federal Reserve System.
``(2) Functionally regulated subsidiary.--The term
`functionally regulated subsidiary' has the same meaning as in
section 5(c)(5) of the Bank Holding Company Act.
``(3) Lead insured depository institution.--The term `lead
insured depository institution' has the same meaning as in section
2(o)(8) of the Bank Holding Company Act.
``(b) Examination Requirements.--Subject to subtitle B of the
Consumer Financial Protection Act of 2010, the Board shall examine the
activities of a nondepository institution subsidiary (other than a
functionally regulated subsidiary or a subsidiary of a depository
institution) of a depository institution holding company that are
permissible for the insured depository institution subsidiaries of the
depository institution holding company in the same manner, subject to
the same standards, and with the same frequency as would be required if
such activities were conducted in the lead insured depository
institution of the depository institution holding company.
``(c) State Coordination.--
``(1) Consultation and coordination.--If a nondepository
institution subsidiary is supervised by a State bank supervisor or
other State regulatory authority, the Board, in conducting the
examinations required in subsection (b), shall consult and
coordinate with such State regulator.
``(2) Alternating examinations permitted.--The examinations
required under subsection (b) may be conducted in joint or
alternating manner with a State regulator, if the Board determines
that an examination of a nondepository institution subsidiary
conducted by the State carries out the purposes of this section.
``(d) Appropriate Federal Banking Agency Backup Examination
Authority.--
``(1) In general.--In the event that the Board does not conduct
examinations required under subsection (b) in the same manner,
subject to the same standards, and with the same frequency as would
be required if such activities were conducted by the lead insured
depository institution subsidiary of the depository institution
holding company, the appropriate Federal banking agency for the
lead insured depository institution may recommend in writing (which
shall include a written explanation of the concerns giving rise to
the recommendation) that the Board perform the examination required
under subsection (b).
``(2) Examination by an appropriate federal banking agency.--If
the Board does not, before the end of the 60-day period beginning
on the date on which the Board receives a recommendation under
paragraph (1), begin an examination as required under subsection
(b) or provide a written explanation or plan to the appropriate
Federal banking agency making such recommendation responding to the
concerns raised by the appropriate Federal banking agency for the
lead insured depository institution, the appropriate Federal
banking agency for the lead insured depository institution may,
subject to the Consumer Financial Protection Act of 2010, examine
the activities that are permissible for a depository institution
subsidiary conducted by such nondepository institution subsidiary
(other than a functionally regulated subsidiary or a subsidiary of
a depository institution) of the depository institution holding
company as if the nondepository institution subsidiary were an
insured depository institution for which the appropriate Federal
banking agency of the lead insured depository institution was the
appropriate Federal banking agency, to determine whether the
activities--
``(A) pose a material threat to the safety and soundness of
any insured depository institution subsidiary of the depository
institution holding company;
``(B) are conducted in accordance with applicable Federal
law; and
``(C) are subject to appropriate systems for monitoring and
controlling the financial, operating, and other material risks
of the activities that may pose a material threat to the safety
and soundness of the insured depository institution
subsidiaries of the holding company.
``(3) Agency coordination with the board.--An appropriate
Federal banking agency that conducts an examination pursuant to
paragraph (2) shall coordinate examination of the activities of
nondepository institution subsidiaries described in subsection (b)
with the Board in a manner that--
``(A) avoids duplication;
``(B) shares information relevant to the supervision of the
depository institution holding company;
``(C) achieves the objectives of subsection (b); and
``(D) ensures that the depository institution holding
company and the subsidiaries of the depository institution
holding company are not subject to conflicting supervisory
demands by such agency and the Board.
``(4) Fee permitted for examination costs.--An appropriate
Federal banking agency that conducts an examination or enforcement
action pursuant to this section may collect an assessment, fee, or
such other charge from the subsidiary as the appropriate Federal
banking agency determines necessary or appropriate to carry out the
responsibilities of the appropriate Federal banking agency in
connection with such examination.
``(e) Referrals for Enforcement by Appropriate Federal Banking
Agency.--
``(1) Recommendation of enforcement action.--The appropriate
Federal banking agency for the lead insured depository institution,
based upon its examination of a nondepository institution
subsidiary conducted pursuant to subsection (d), or other relevant
information, may submit to the Board, in writing, a recommendation
that the Board take enforcement action against such nondepository
institution subsidiary, together with an explanation of the
concerns giving rise to the recommendation, if the appropriate
Federal banking agency determines (by a vote of its members, if
applicable) that the activities of the nondepository institution
subsidiary pose a material threat to the safety and soundness of
any insured depository institution subsidiary of the depository
institution holding company.
``(2) Back-up authority of the appropriate federal banking
agency.--If, within the 60-day period beginning on the date on
which the Board receives a recommendation under paragraph (1), the
Board does not take enforcement action against the nondepository
institution subsidiary or provide a plan for supervisory or
enforcement action that is acceptable to the appropriate Federal
banking agency that made the recommendation pursuant to paragraph
(1), such agency may take the recommended enforcement action
against the nondepository institution subsidiary, in the same
manner as if the nondepository institution subsidiary were an
insured depository institution for which the agency was the
appropriate Federal banking agency.
``(f) Coordination Among Appropriate Federal Banking Agencies.--
Each Federal banking agency, prior to or when exercising authority
under subsection (d) or (e) shall--
``(1) provide reasonable notice to, and consult with, the
appropriate Federal banking agency or State bank supervisor (or
other State regulatory agency) of the nondepository institution
subsidiary of a depository institution holding company that is
described in subsection (d) before commencing any examination of
the subsidiary;
``(2) to the fullest extent possible--
``(A) rely on the examinations, inspections, and reports of
the appropriate Federal banking agency or the State bank
supervisor (or other State regulatory agency) of the
subsidiary;
``(B) avoid duplication of examination activities,
reporting requirements, and requests for information; and
``(C) ensure that the depository institution holding
company and the subsidiaries of the depository institution
holding company are not subject to conflicting supervisory
demands by the appropriate Federal banking agencies.
``(g) Rule of Construction.--No provision of this section shall be
construed as limiting any authority of the Board, the Corporation, or
the Comptroller of the Currency under any other provision of law.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the transfer date.
SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO REMAIN
WELL CAPITALIZED AND WELL MANAGED.
(a) Amendment.--Section 4(l)(1) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(l)(1)) is amended--
(1) in subparagraph (B), by striking ``and'' at the end;
(2) by redesignating subparagraph (C) as subparagraph (D);
(3) by inserting after subparagraph (B) the following:
``(C) the bank holding company is well capitalized and well
managed; and''; and
(4) in subparagraph (D)(ii), as so redesignated, by striking
``subparagraphs (A) and (B)'' and inserting ``subparagraphs (A),
(B), and (C)''.
(b) Home Owners' Loan Act Amendment.--Section 10(c)(2) of the Home
Owners' Loan Act (12 U.S.C. 1467a(c)(2)) is amended by adding at the
end the following new subparagraph:
``(H) Any activity that is permissible for a financial
holding company (as such term is defined under section 2(p) of
the Bank Holding Company Act of 1956 (12 U.S.C. 1841(p)) to
conduct under section 4(k) of the Bank Holding Company Act of
1956 if--
``(i) the savings and loan holding company meets all of
the criteria to qualify as a financial holding company, and
complies with all of the requirements applicable to a
financial holding company, under sections 4(l) and 4(m) of
the Bank Holding Company Act and section 804(c) of the
Community Reinvestment Act of 1977 (12 U.S.C. 2903(c)) as
if the savings and loan holding company was a bank holding
company; and
``(ii) the savings and loan holding company conducts
the activity in accordance with the same terms, conditions,
and requirements that apply to the conduct of such activity
by a bank holding company under the Bank Holding Company
Act of 1956 and the Board's regulations and interpretations
under such Act.''.
(c) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS.
(a) Acquisition of Banks.--Section 3(d)(1)(A) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended by striking
``adequately capitalized and adequately managed'' and inserting ``well
capitalized and well managed''.
(b) Interstate Bank Mergers.--Section 44(b)(4)(B) of the Federal
Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended by striking
``will continue to be adequately capitalized and adequately managed''
and inserting ``will be well capitalized and well managed''.
(c) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS WITH
AFFILIATES.
(a) Affiliate Transactions.--Section 23A of the Federal Reserve Act
(12 U.S.C. 371c) is amended--
(1) in subsection (b)--
(A) in paragraph (1), by striking subparagraph (D) and
inserting the following:
``(D) any investment fund with respect to which a member
bank or affiliate thereof is an investment adviser; and''; and
(B) in paragraph (7)--
(i) in subparagraph (A), by inserting before the
semicolon at the end the following: ``, including a
purchase of assets subject to an agreement to repurchase'';
(ii) in subparagraph (C), by striking ``, including
assets subject to an agreement to repurchase,'';
(iii) in subparagraph (D)--
(I) by inserting ``or other debt obligations''
after ``acceptance of securities''; and
(II) by striking ``or'' at the end; and
(iv) by adding at the end the following:
``(F) a transaction with an affiliate that involves the
borrowing or lending of securities, to the extent that the
transaction causes a member bank or a subsidiary to have credit
exposure to the affiliate; or
``(G) a derivative transaction, as defined in paragraph (3)
of section 5200(b) of the Revised Statutes of the United States
(12 U.S.C. 84(b)), with an affiliate, to the extent that the
transaction causes a member bank or a subsidiary to have credit
exposure to the affiliate;'';
(2) in subsection (c)--
(A) in paragraph (1)--
(i) in the matter preceding subparagraph (A), by
striking ``subsidiary'' and all that follows through ``time
of the transaction'' and inserting ``subsidiary, and any
credit exposure of a member bank or a subsidiary to an
affiliate resulting from a securities borrowing or lending
transaction, or a derivative transaction, shall be secured
at all times''; and
(ii) in each of subparagraphs (A) through (D), by
striking ``or letter of credit'' and inserting ``letter of
credit, or credit exposure'';
(B) by striking paragraph (2);
(C) by redesignating paragraphs (3) through (5) as
paragraphs (2) through (4), respectively;
(D) in paragraph (2), as so redesignated, by inserting
before the period at the end ``, or credit exposure to an
affiliate resulting from a securities borrowing or lending
transaction, or derivative transaction''; and
(E) in paragraph (3), as so redesignated--
(i) by inserting ``or other debt obligations'' after
``securities''; and
(ii) by striking ``or guarantee'' and all that follows
through ``behalf of,'' and inserting ``guarantee,
acceptance, or letter of credit issued on behalf of, or
credit exposure from a securities borrowing or lending
transaction, or derivative transaction to,'';
(3) in subsection (d)(4), in the matter preceding subparagraph
(A), by striking ``or issuing'' and all that follows through
``behalf of,'' and inserting ``issuing a guarantee, acceptance, or
letter of credit on behalf of, or having credit exposure resulting
from a securities borrowing or lending transaction, or derivative
transaction to,''; and
(4) in subsection (f)--
(A) in paragraph (2)--
(i) by striking ``or order'';
(ii) by striking ``if it finds'' and all that follows
through the end of the paragraph and inserting the
following: ``if--
``(i) the Board finds the exemption to be in the public
interest and consistent with the purposes of this section,
and notifies the Federal Deposit Insurance Corporation of
such finding; and
``(ii) before the end of the 60-day period beginning on
the date on which the Federal Deposit Insurance Corporation
receives notice of the finding under clause (i), the
Federal Deposit Insurance Corporation does not object, in
writing, to the finding, based on a determination that the
exemption presents an unacceptable risk to the Deposit
Insurance Fund.'';
(iii) by striking the Board and inserting the
following:
``(A) In general.--The Board''; and
(iv) by adding at the end the following:
``(B) Additional exemptions.--
``(i) National banks.--The Comptroller of the Currency
may, by order, exempt a transaction of a national bank from
the requirements of this section if--
``(I) the Board and the Office of the Comptroller
of the Currency jointly find the exemption to be in the
public interest and consistent with the purposes of
this section and notify the Federal Deposit Insurance
Corporation of such finding; and
``(II) before the end of the 60-day period
beginning on the date on which the Federal Deposit
Insurance Corporation receives notice of the finding
under subclause (I), the Federal Deposit Insurance
Corporation does not object, in writing, to the
finding, based on a determination that the exemption
presents an unacceptable risk to the Deposit Insurance
Fund.
``(ii) State banks.--The Federal Deposit Insurance
Corporation may, by order, exempt a transaction of a State
nonmember bank, and the Board may, by order, exempt a
transaction of a State member bank, from the requirements
of this section if--
``(I) the Board and the Federal Deposit Insurance
Corporation jointly find that the exemption is in the
public interest and consistent with the purposes of
this section; and
``(II) the Federal Deposit Insurance Corporation
finds that the exemption does not present an
unacceptable risk to the Deposit Insurance Fund.''; and
(B) by adding at the end the following:
``(4) Amounts of covered transactions.--The Board may issue
such regulations or interpretations as the Board determines are
necessary or appropriate with respect to the manner in which a
netting agreement may be taken into account in determining the
amount of a covered transaction between a member bank or a
subsidiary and an affiliate, including the extent to which netting
agreements between a member bank or a subsidiary and an affiliate
may be taken into account in determining whether a covered
transaction is fully secured for purposes of subsection (d)(4). An
interpretation under this paragraph with respect to a specific
member bank, subsidiary, or affiliate shall be issued jointly with
the appropriate Federal banking agency for such member bank,
subsidiary, or affiliate.''.
(b) Transactions With Affiliates.--Section 23B(e) of the Federal
Reserve Act (12 U.S.C. 371c-1(e)) is amended--
(1) by striking the undesignated matter following subparagraph
(B);
(2) by redesignating subparagraphs (A) and (B) as clauses (i)
and (ii), respectively, and adjusting the clause margins
accordingly;
(3) by redesignating paragraphs (1) and (2) as subparagraphs
(A) and (B), respectively, and adjusting the subparagraph margins
accordingly;
(4) by striking ``The Board'' and inserting the following:
``(1) In general.--The Board'';
(5) in paragraph (1)(B), as so redesignated--
(A) in the matter preceding clause (i), by inserting before
``regulations'' the following: ``subject to paragraph (2), if
the Board finds that an exemption or exclusion is in the public
interest and is consistent with the purposes of this section,
and notifies the Federal Deposit Insurance Corporation of such
finding,''; and
(B) in clause (ii), by striking the comma at the end and
inserting a period; and
(6) by adding at the end the following:
``(2) Exception.--The Board may grant an exemption or exclusion
under this subsection only if, during the 60-day period beginning
on the date of receipt of notice of the finding from the Board
under paragraph (1)(B), the Federal Deposit Insurance Corporation
does not object, in writing, to such exemption or exclusion, based
on a determination that the exemption presents an unacceptable risk
to the Deposit Insurance Fund.''.
(c) Home Owners' Loan Act.--Section 11 of the Home Owners' Loan Act
(12 U.S.C. 1468) is amended by adding at the end the following:
``(d) Exemptions.--
``(1) Federal savings associations.--The Comptroller of the
Currency may, by order, exempt a transaction of a Federal savings
association from the requirements of this section if--
``(A) the Board and the Office of the Comptroller of the
Currency jointly find the exemption to be in the public
interest and consistent with the purposes of this section and
notify the Federal Deposit Insurance Corporation of such
finding; and
``(B) before the end of the 60-day period beginning on the
date on which the Federal Deposit Insurance Corporation
receives notice of the finding under subparagraph (A), the
Federal Deposit Insurance Corporation does not object, in
writing, to the finding, based on a determination that the
exemption presents an unacceptable risk to the Deposit
Insurance Fund.
``(2) State savings association.--The Federal Deposit Insurance
Corporation may, by order, exempt a transaction of a State savings
association from the requirements of this section if the Board and
the Federal Deposit Insurance Corporation jointly find that--
``(A) the exemption is in the public interest and
consistent with the purposes of this section; and
``(B) the exemption does not present an unacceptable risk
to the Deposit Insurance Fund.''.
(d) Effective Date.--The amendments made by this section shall take
effect 1 year after the transfer date.
SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL
SUBSIDIARIES.
(a) Amendment.--Section 23A(e) of the Federal Reserve Act (12
U.S.C. 371c(e)) is amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraph (4) as paragraph (3).
(b) Prospective Application of Amendment.--The amendments made by
this section shall apply with respect to any covered transaction
between a bank and a subsidiary of the bank, as those terms are defined
in section 23A of the Federal Reserve Act (12 U.S.C. 371c), that is
entered into on or after the date of enactment of this Act.
(c) Effective Date.--The amendments made by this section shall take
effect 1 year after the transfer date.
SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON
DERIVATIVE TRANSACTIONS, REPURCHASE AGREEMENTS, REVERSE
REPURCHASE AGREEMENTS, AND SECURITIES LENDING AND BORROWING
TRANSACTIONS.
(a) National Banks.--Section 5200(b) of the Revised Statutes of the
United States (12 U.S.C. 84(b)) is amended--
(1) in paragraph (1), by striking ``shall include'' and all
that follows through the end of the paragraph and inserting the
following: ``shall include--
``(A) all direct or indirect advances of funds to a person
made on the basis of any obligation of that person to repay the
funds or repayable from specific property pledged by or on
behalf of the person;
``(B) to the extent specified by the Comptroller of the
Currency, any liability of a national banking association to
advance funds to or on behalf of a person pursuant to a
contractual commitment; and
``(C) any credit exposure to a person arising from a
derivative transaction, repurchase agreement, reverse
repurchase agreement, securities lending transaction, or
securities borrowing transaction between the national banking
association and the person;'';
(2) in paragraph (2), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(3) the term `derivative transaction' includes any
transaction that is a contract, agreement, swap, warrant, note, or
option that is based, in whole or in part, on the value of, any
interest in, or any quantitative measure or the occurrence of any
event relating to, one or more commodities, securities, currencies,
interest or other rates, indices, or other assets.''.
(b) Savings Associations.--Section 5(u)(3) of the Home Owners' Loan
Act (12 U.S.C. 1464(u)(3)) is amended by striking ``Director'' each
place that term appears and inserting ``Comptroller of the Currency''.
(c) Effective Date.--The amendments made by this section shall take
effect 1 year after the transfer date.
SEC. 611. CONSISTENT TREATMENT OF DERIVATIVE TRANSACTIONS IN
LENDING LIMITS.
(a) Amendment.--Section 18 of the Federal Deposit Insurance Act (12
U.S.C. 1828) is amended by adding at the end the following:
``(y) State Lending Limit Treatment of Derivatives Transactions.--
An insured State bank may engage in a derivative transaction, as
defined in section 5200(b)(3) of the Revised Statutes of the United
States (12 U.S.C. 84(b)(3)), only if the law with respect to lending
limits of the State in which the insured State bank is chartered takes
into consideration credit exposure to derivative transactions.''.
(b) Effective Date.--The amendment made by this section shall take
effect 18 months after the transfer date.
SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.
(a) Conversion of a National Banking Association.--The Act entitled
``An Act to provide for the conversion of national banking associations
into and their merger or consolidation with State banks, and for other
purposes.'' (12 U.S.C. 214 et seq.) is amended by adding at the end the
following:
``SEC. 10. PROHIBITION ON CONVERSION.
``A national banking association may not convert to a State bank or
State savings association during any period in which the national
banking association is subject to a cease and desist order (or other
formal enforcement order) issued by, or a memorandum of understanding
entered into with, the Comptroller of the Currency with respect to a
significant supervisory matter.''.
(b) Conversion of a State Bank or Savings Association.--Section
5154 of the Revised Statutes of the United States (12 U.S.C. 35) is
amended by adding at the end the following: ``The Comptroller of the
Currency may not approve the conversion of a State bank or State
savings association to a national banking association or Federal
savings association during any period in which the State bank or State
savings association is subject to a cease and desist order (or other
formal enforcement order) issued by, or a memorandum of understanding
entered into with, a State bank supervisor or the appropriate Federal
banking agency with respect to a significant supervisory matter or a
final enforcement action by a State Attorney General.''.
(c) Conversion of a Federal Savings Association.--Section 5(i) of
the Home Owners' Loan Act (12 U.S.C. 1464(i)) is amended by adding at
the end the following:
``(6) Limitation on certain conversions by federal savings
associations.--A Federal savings association may not convert to a
State bank or State savings association during any period in which
the Federal savings association is subject to a cease and desist
order (or other formal enforcement order) issued by, or a
memorandum of understanding entered into with, the Office of Thrift
Supervision or the Comptroller of the Currency with respect to a
significant supervisory matter.''.
(d) Exception.--The prohibition on the approval of conversions
under the amendments made by subsections (a), (b), and (c) shall not
apply, if--
(1) the Federal banking agency that would be the appropriate
Federal banking agency after the proposed conversion gives the
appropriate Federal banking agency or State bank supervisor that
issued the cease and desist order (or other formal enforcement
order) or memorandum of understanding, as appropriate, written
notice of the proposed conversion including a plan to address the
significant supervisory matter in a manner that is consistent with
the safe and sound operation of the institution;
(2) within 30 days of receipt of the written notice required
under paragraph (1), the appropriate Federal banking agency or
State bank supervisor that issued the cease and desist order (or
other formal enforcement order) or memorandum of understanding, as
appropriate, does not object to the conversion or the plan to
address the significant supervisory matter;
(3) after conversion of the insured depository institution, the
appropriate Federal banking agency after the conversion implements
such plan; and
(4) in the case of a final enforcement action by a State
Attorney General, approval of the conversion is conditioned on
compliance by the insured depository institution with the terms of
such final enforcement action.
(e) Notification of Pending Enforcement Actions.--
(1) Copy of conversion application.--At the time an insured
depository institution files a conversion application, the insured
depository institution shall transmit a copy of the conversion
application to--
(A) the appropriate Federal banking agency for the insured
depository institution; and
(B) the Federal banking agency that would be the
appropriate Federal banking agency of the insured depository
institution after the proposed conversion.
(2) Notification and access to information.--Upon receipt of a
copy of the application described in paragraph (1), the appropriate
Federal banking agency for the insured depository institution
proposing the conversion shall--
(A) notify the Federal banking agency that would be the
appropriate Federal banking agency for the institution after
the proposed conversion in writing of any ongoing supervisory
or investigative proceedings that the appropriate Federal
banking agency for the institution proposing to convert
believes is likely to result, in the near term and absent the
proposed conversion, in a cease and desist order (or other
formal enforcement order) or memorandum of understanding with
respect to a significant supervisory matter; and
(B) provide the Federal banking agency that would be the
appropriate Federal banking agency for the institution after
the proposed conversion access to all investigative and
supervisory information relating to the proceedings described
in subparagraph (A).
SEC. 613. DE NOVO BRANCHING INTO STATES.
(a) National Banks.--Section 5155(g)(1)(A) of the Revised Statutes
of the United States (12 U.S.C. 36(g)(1)(A)) is amended to read as
follows:
``(A) the law of the State in which the branch is located,
or is to be located, would permit establishment of the branch,
if the national bank were a State bank chartered by such State;
and''.
(b) State Insured Banks.--Section 18(d)(4)(A)(i) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is amended to read
as follows:
``(i) the law of the State in which the branch is
located, or is to be located, would permit establishment of
the branch, if the bank were a State bank chartered by such
State; and''.
SEC. 614. LENDING LIMITS TO INSIDERS.
(a) Extensions of Credit.--Section 22(h)(9)(D)(i) of the Federal
Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended--
(1) by striking the period at the end and inserting ``; or'';
(2) by striking ``a person'' and inserting ``the person'';
(3) by striking ``extends credit by making'' and inserting the
following: ``extends credit to a person by--
``(I) making''; and
(4) by adding at the end the following:
``(II) having credit exposure to the person arising
from a derivative transaction (as defined in section
5200(b) of the Revised Statutes of the United States
(12 U.S.C. 84(b))), repurchase agreement, reverse
repurchase agreement, securities lending transaction,
or securities borrowing transaction between the member
bank and the person.''.
(b) Effective Date.--The amendments made by this section shall take
effect 1 year after the transfer date.
SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.
(a) Amendment to the Federal Deposit Insurance Act.--Section 18 of
the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding
at the end the following:
``(z) General Prohibition on Sale of Assets.--
``(1) In general.--An insured depository institution may not
purchase an asset from, or sell an asset to, an executive officer,
director, or principal shareholder of the insured depository
institution, or any related interest of such person (as such terms
are defined in section 22(h) of Federal Reserve Act), unless--
``(A) the transaction is on market terms; and
``(B) if the transaction represents more than 10 percent of
the capital stock and surplus of the insured depository
institution, the transaction has been approved in advance by a
majority of the members of the board of directors of the
insured depository institution who do not have an interest in
the transaction.
``(2) Rulemaking.--The Board of Governors of the Federal
Reserve System may issue such rules as may be necessary to define
terms and to carry out the purposes this subsection. Before
proposing or adopting a rule under this paragraph, the Board of
Governors of the Federal Reserve System shall consult with the
Comptroller of the Currency and the Corporation as to the terms of
the rule.''.
(b) Amendments to the Federal Reserve Act.--Section 22(d) of the
Federal Reserve Act (12 U.S.C. 375) is amended to read as follows:
``(d) [Reserved]''.
(c) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS.
(a) Capital Levels of Bank Holding Companies.--Section 5(b) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(b)) is amended--
(1) by inserting after ``orders'' the following: ``, including
regulations and orders relating to the capital requirements for
bank holding companies,''; and
(2) by adding at the end the following: ``In establishing
capital regulations pursuant to this subsection, the Board shall
seek to make such requirements countercyclical, so that the amount
of capital required to be maintained by a company increases in
times of economic expansion and decreases in times of economic
contraction, consistent with the safety and soundness of the
company.''.
(b) Capital Levels of Savings and Loan Holding Companies.--Section
10(g)(1) of the Home Owners' Loan Act (12 U.S.C. 1467a(g)(1)) is
amended--
(1) by inserting after ``orders'' the following: ``, including
regulations and orders relating to capital requirements for savings
and loan holding companies,''; and
(2) by inserting at the end the following: ``In establishing
capital regulations pursuant to this subsection, the appropriate
Federal banking agency shall seek to make such requirements
countercyclical so that the amount of capital required to be
maintained by a company increases in times of economic expansion
and decreases in times of economic contraction, consistent with the
safety and soundness of the company.''.
(c) Capital Levels of Insured Depository Institutions.--Section
908(a)(1) of the International Lending Supervision Act of 1983 (12
U.S.C. 3907(a)(1)) is amended by adding at the end the following:
``Each appropriate Federal banking agency shall seek to make the
capital standards required under this section or other provisions of
Federal law for insured depository institutions countercyclical so that
the amount of capital required to be maintained by an insured
depository institution increases in times of economic expansion and
decreases in times of economic contraction, consistent with the safety
and soundness of the insured depository institution.''
(d) Source of Strength.--The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended by inserting after section 38 (12
U.S.C. 1831o) the following:
``SEC. 38A. SOURCE OF STRENGTH.
``(a) Holding Companies.--The appropriate Federal banking agency
for a bank holding company or savings and loan holding company shall
require the bank holding company or savings and loan holding company to
serve as a source of financial strength for any subsidiary of the bank
holding company or savings and loan holding company that is a
depository institution.
``(b) Other Companies.--If an insured depository institution is not
the subsidiary of a bank holding company or savings and loan holding
company, the appropriate Federal banking agency for the insured
depository institution shall require any company that directly or
indirectly controls the insured depository institution to serve as a
source of financial strength for such institution.
``(c) Reports.--The appropriate Federal banking agency for an
insured depository institution described in subsection (b) may, from
time to time, require the company, or a company that directly or
indirectly controls the insured depository institution, to submit a
report, under oath, for the purposes of--
``(1) assessing the ability of such company to comply with the
requirement under subsection (b); and
``(2) enforcing the compliance of such company with the
requirement under subsection (b).
``(d) Rules.--Not later than 1 year after the transfer date, as
defined in section 311 of the Enhancing Financial Institution Safety
and Soundness Act of 2010, the appropriate Federal banking agencies
shall jointly issue final rules to carry out this section.
``(e) Definition.--In this section, the term `source of financial
strength' means the ability of a company that directly or indirectly
owns or controls an insured depository institution to provide financial
assistance to such insured depository institution in the event of the
financial distress of the insured depository institution.''.
(e) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING COMPANY
FRAMEWORK.
(a) Amendment.--Section 17 of the Securities Exchange Act of 1934
(15 U.S.C. 78q) is amended--
(1) by striking subsection (i); and
(2) by redesignating subsections (j) and (k) as subsections (i)
and (j), respectively.
(b) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 618. SECURITIES HOLDING COMPANIES.
(a) Definitions.--In this section--
(1) the term ``associated person of a securities holding
company'' means a person directly or indirectly controlling,
controlled by, or under common control with, a securities holding
company;
(2) the term ``foreign bank'' has the same meaning as in
section 1(b)(7) of the International Banking Act of 1978 (12 U.S.C.
3101(7));
(3) the term ``insured bank'' has the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(4) the term ``securities holding company''--
(A) means--
(i) a person (other than a natural person) that owns or
controls 1 or more brokers or dealers registered with the
Commission; and
(ii) the associated persons of a person described in
clause (i); and
(B) does not include a person that is--
(i) a nonbank financial company supervised by the Board
under title I;
(ii) an insured bank (other than an institution
described in subparagraphs (D), (F), or (H) of section
2(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(c)(2)) or a savings association;
(iii) an affiliate of an insured bank (other than an
institution described in subparagraphs (D), (F), or (H) of
section 2(c)(2) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)(2)) or an affiliate of a savings
association;
(iv) a foreign bank, foreign company, or company that
is described in section 8(a) of the International Banking
Act of 1978 (12 U.S.C. 3106(a));
(v) a foreign bank that controls, directly or
indirectly, a corporation chartered under section 25A of
the Federal Reserve Act (12 U.S.C. 611 et seq.); or
(vi) subject to comprehensive consolidated supervision
by a foreign regulator;
(5) the term ``supervised securities holding company'' means a
securities holding company that is supervised by the Board of
Governors under this section; and
(6) the terms ``affiliate'', ``bank'', ``bank holding
company'', ``company'', ``control'', ``savings association'', and
``subsidiary'' have the same meanings as in section 2 of the Bank
Holding Company Act of 1956.
(b) Supervision of a Securities Holding Company Not Having a Bank
or Savings Association Affiliate.--
(1) In general.--A securities holding company that is required
by a foreign regulator or provision of foreign law to be subject to
comprehensive consolidated supervision may register with the Board
of Governors under paragraph (2) to become a supervised securities
holding company. Any securities holding company filing such a
registration shall be supervised in accordance with this section,
and shall comply with the rules and orders prescribed by the Board
of Governors applicable to supervised securities holding companies.
(2) Registration as a supervised securities holding company.--
(A) Registration.--A securities holding company that elects
to be subject to comprehensive consolidated supervision shall
register by filing with the Board of Governors such information
and documents as the Board of Governors, by regulation, may
prescribe as necessary or appropriate in furtherance of the
purposes of this section.
(B) Effective date.--A securities holding company that
registers under subparagraph (A) shall be deemed to be a
supervised securities holding company, effective on the date
that is 45 days after the date of receipt of the registration
information and documents under subparagraph (A) by the Board
of Governors, or within such shorter period as the Board of
Governors, by rule or order, may determine.
(c) Supervision of Securities Holding Companies.--
(1) Recordkeeping and reporting.--
(A) Recordkeeping and reporting required.--Each supervised
securities holding company and each affiliate of a supervised
securities holding company shall make and keep for periods
determined by the Board of Governors such records, furnish
copies of such records, and make such reports, as the Board of
Governors determines to be necessary or appropriate to carry
out this section, to prevent evasions thereof, and to monitor
compliance by the supervised securities holding company or
affiliate with applicable provisions of law.
(B) Form and contents.--
(i) In general.--Any record or report required to be
made, furnished, or kept under this paragraph shall--
(I) be prepared in such form and according to such
specifications (including certification by a registered
public accounting firm), as the Board of Governors may
require; and
(II) be provided promptly to the Board of Governors
at any time, upon request by the Board of Governors.
(ii) Contents.--Records and reports required to be
made, furnished, or kept under this paragraph may include--
(I) a balance sheet or income statement of the
supervised securities holding company or an affiliate
of a supervised securities holding company;
(II) an assessment of the consolidated capital and
liquidity of the supervised securities holding company;
(III) a report by an independent auditor attesting
to the compliance of the supervised securities holding
company with the internal risk management and internal
control objectives of the supervised securities holding
company; and
(IV) a report concerning the extent to which the
supervised securities holding company or affiliate has
complied with the provisions of this section and any
regulations prescribed and orders issued under this
section.
(2) Use of existing reports.--
(A) In general.--The Board of Governors shall, to the
fullest extent possible, accept reports in fulfillment of the
requirements of this paragraph that a supervised securities
holding company or an affiliate of a supervised securities
holding company has been required to provide to another
regulatory agency or a self-regulatory organization.
(B) Availability.--A supervised securities holding company
or an affiliate of a supervised securities holding company
shall promptly provide to the Board of Governors, at the
request of the Board of Governors, any report described in
subparagraph (A), as permitted by law.
(3) Examination authority.--
(A) Focus of examination authority.--The Board of Governors
may make examinations of any supervised securities holding
company and any affiliate of a supervised securities holding
company to carry out this subsection, to prevent evasions
thereof, and to monitor compliance by the supervised securities
holding company or affiliate with applicable provisions of law.
(B) Deference to other examinations.--For purposes of this
subparagraph, the Board of Governors shall, to the fullest
extent possible, use the reports of examination made by other
appropriate Federal or State regulatory authorities with
respect to any functionally regulated subsidiary or any
institution described in subparagraph (D), (F), or (H) of
section 2(c)(2) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)(2)).
(d) Capital and Risk Management.--
(1) In general.--The Board of Governors shall, by regulation or
order, prescribe capital adequacy and other risk management
standards for supervised securities holding companies that are
appropriate to protect the safety and soundness of the supervised
securities holding companies and address the risks posed to
financial stability by supervised securities holding companies.
(2) Differentiation.--In imposing standards under this
subsection, the Board of Governors may differentiate among
supervised securities holding companies on an individual basis, or
by category, taking into consideration the requirements under
paragraph (3).
(3) Content.--Any standards imposed on a supervised securities
holding company under this subsection shall take into account--
(A) the differences among types of business activities
carried out by the supervised securities holding company;
(B) the amount and nature of the financial assets of the
supervised securities holding company;
(C) the amount and nature of the liabilities of the
supervised securities holding company, including the degree of
reliance on short-term funding;
(D) the extent and nature of the off-balance sheet
exposures of the supervised securities holding company;
(E) the extent and nature of the transactions and
relationships of the supervised securities holding company with
other financial companies;
(F) the importance of the supervised securities holding
company as a source of credit for households, businesses, and
State and local governments, and as a source of liquidity for
the financial system; and
(G) the nature, scope, and mix of the activities of the
supervised securities holding company.
(4) Notice.--A capital requirement imposed under this
subsection may not take effect earlier than 180 days after the date
on which a supervised securities holding company is provided notice
of the capital requirement.
(e) Other Provisions of Law Applicable to Supervised Securities
Holding Companies.--
(1) Federal deposit insurance act.--Subsections (b), (c)
through (s), and (u) of section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818) shall apply to any supervised securities
holding company, and to any subsidiary (other than a bank or an
institution described in subparagraph (D), (F), or (H) of section
2(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(c)(2))) of a supervised securities holding company, in the
same manner as such subsections apply to a bank holding company for
which the Board of Governors is the appropriate Federal banking
agency. For purposes of applying such subsections to a supervised
securities holding company or a subsidiary (other than a bank or an
institution described in subparagraph (D), (F), or (H) of section
2(c)(2) of the Bank Holding Company Act of 1956 (12 U.S.C.
1841(c)(2))) of a supervised securities holding company, the Board
of Governors shall be deemed the appropriate Federal banking agency
for the supervised securities holding company or subsidiary.
(2) Bank holding company act of 1956.--Except as the Board of
Governors may otherwise provide by regulation or order, a
supervised securities holding company shall be subject to the
provisions of the Bank Holding Company Act of 1956 (12 U.S.C. 1841
et seq.) in the same manner and to the same extent a bank holding
company is subject to such provisions, except that a supervised
securities holding company may not, by reason of this paragraph, be
deemed to be a bank holding company for purposes of section 4 of
the Bank Holding Company Act of 1956 (12 U.S.C. 1843).
SEC. 619. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN
RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by adding at the end the following:
``SEC. 13. PROHIBITIONS ON PROPRIETARY TRADING AND CERTAIN
RELATIONSHIPS WITH HEDGE FUNDS AND PRIVATE EQUITY FUNDS.
``(a) In General.--
``(1) Prohibition.--Unless otherwise provided in this section,
a banking entity shall not--
``(A) engage in proprietary trading; or
``(B) acquire or retain any equity, partnership, or other
ownership interest in or sponsor a hedge fund or a private
equity fund.
``(2) Nonbank financial companies supervised by the board.--Any
nonbank financial company supervised by the Board that engages in
proprietary trading or takes or retains any equity, partnership, or
other ownership interest in or sponsors a hedge fund or a private
equity fund shall be subject, by rule, as provided in subsection
(b)(2), to additional capital requirements for and additional
quantitative limits with regards to such proprietary trading and
taking or retaining any equity, partnership, or other ownership
interest in or sponsorship of a hedge fund or a private equity
fund, except that permitted activities as described in subsection
(d) shall not be subject to the additional capital and additional
quantitative limits except as provided in subsection (d)(3), as if
the nonbank financial company supervised by the Board were a
banking entity.
``(b) Study and Rulemaking.--
``(1) Study.--Not later than 6 months after the date of
enactment of this section, the Financial Stability Oversight
Council shall study and make recommendations on implementing the
provisions of this section so as to--
``(A) promote and enhance the safety and soundness of
banking entities;
``(B) protect taxpayers and consumers and enhance financial
stability by minimizing the risk that insured depository
institutions and the affiliates of insured depository
institutions will engage in unsafe and unsound activities;
``(C) limit the inappropriate transfer of Federal subsidies
from institutions that benefit from deposit insurance and
liquidity facilities of the Federal Government to unregulated
entities;
``(D) reduce conflicts of interest between the self-
interest of banking entities and nonbank financial companies
supervised by the Board, and the interests of the customers of
such entities and companies;
``(E) limit activities that have caused undue risk or loss
in banking entities and nonbank financial companies supervised
by the Board, or that might reasonably be expected to create
undue risk or loss in such banking entities and nonbank
financial companies supervised by the Board;
``(F) appropriately accommodate the business of insurance
within an insurance company, subject to regulation in
accordance with the relevant insurance company investment laws,
while protecting the safety and soundness of any banking entity
with which such insurance company is affiliated and of the
United States financial system; and
``(G) appropriately time the divestiture of illiquid assets
that are affected by the implementation of the prohibitions
under subsection (a).
``(2) Rulemaking.--
``(A) In general.--Unless otherwise provided in this
section, not later than 9 months after the completion of the
study under paragraph (1), the appropriate Federal banking
agencies, the Securities and Exchange Commission, and the
Commodity Futures Trading Commission, shall consider the
findings of the study under paragraph (1) and adopt rules to
carry out this section, as provided in subparagraph (B).
``(B) Coordinated rulemaking.--
``(i) Regulatory authority.--The regulations issued
under this paragraph shall be issued by--
``(I) the appropriate Federal banking agencies,
jointly, with respect to insured depository
institutions;
``(II) the Board, with respect to any company that
controls an insured depository institution, or that is
treated as a bank holding company for purposes of
section 8 of the International Banking Act, any nonbank
financial company supervised by the Board, and any
subsidiary of any of the foregoing (other than a
subsidiary for which an agency described in subclause
(I), (III), or (IV) is the primary financial regulatory
agency);
``(III) the Commodity Futures Trading Commission,
with respect to any entity for which the Commodity
Futures Trading Commission is the primary financial
regulatory agency, as defined in section 2 of the Dodd-
Frank Wall Street Reform and Consumer Protection Act;
and
``(IV) the Securities and Exchange Commission, with
respect to any entity for which the Securities and
Exchange Commission is the primary financial regulatory
agency, as defined in section 2 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
``(ii) Coordination, consistency, and comparability.--
In developing and issuing regulations pursuant to this
section, the appropriate Federal banking agencies, the
Securities and Exchange Commission, and the Commodity
Futures Trading Commission shall consult and coordinate
with each other, as appropriate, for the purposes of
assuring, to the extent possible, that such regulations are
comparable and provide for consistent application and
implementation of the applicable provisions of this section
to avoid providing advantages or imposing disadvantages to
the companies affected by this subsection and to protect
the safety and soundness of banking entities and nonbank
financial companies supervised by the Board.
``(iii) Council role.--The Chairperson of the Financial
Stability Oversight Council shall be responsible for
coordination of the regulations issued under this section.
``(c) Effective Date.--
``(1) In general.--Except as provided in paragraphs (2) and
(3), this section shall take effect on the earlier of--
``(A) 12 months after the date of the issuance of final
rules under subsection (b); or
``(B) 2 years after the date of enactment of this section.
``(2) Conformance period for divestiture.--A banking entity or
nonbank financial company supervised by the Board shall bring its
activities and investments into compliance with the requirements of
this section not later than 2 years after the date on which the
requirements become effective pursuant to this section or 2 years
after the date on which the entity or company becomes a nonbank
financial company supervised by the Board. The Board may, by rule
or order, extend this two-year period for not more than one year at
a time, if, in the judgment of the Board, such an extension is
consistent with the purposes of this section and would not be
detrimental to the public interest. The extensions made by the
Board under the preceding sentence may not exceed an aggregate of 3
years.
``(3) Extended transition for illiquid funds.--
``(A) Application.--The Board may, upon the application of
a banking entity, extend the period during which the banking
entity, to the extent necessary to fulfill a contractual
obligation that was in effect on May 1, 2010, may take or
retain its equity, partnership, or other ownership interest in,
or otherwise provide additional capital to, an illiquid fund.
``(B) Time limit on approval.--The Board may grant 1
extension under subparagraph (A), which may not exceed 5 years.
``(4) Divestiture required.--Except as otherwise provided in
subsection (d)(1)(G), a banking entity may not engage in any
activity prohibited under subsection (a)(1)(B) after the earlier
of--
``(A) the date on which the contractual obligation to
invest in the illiquid fund terminates; and
``(B) the date on which any extensions granted by the Board
under paragraph (3) expire.
``(5) Additional capital during transition period.--
Notwithstanding paragraph (2), on the date on which the rules are
issued under subsection (b)(2), the appropriate Federal banking
agencies, the Securities and Exchange Commission, and the Commodity
Futures Trading Commission shall issue rules, as provided in
subsection (b)(2), to impose additional capital requirements, and
any other restrictions, as appropriate, on any equity, partnership,
or ownership interest in or sponsorship of a hedge fund or private
equity fund by a banking entity.
``(6) Special rulemaking.--Not later than 6 months after the
date of enactment of this section, the Board shall issues rules to
implement paragraphs (2) and (3).
``(d) Permitted Activities.--
``(1) In general.--Notwithstanding the restrictions under
subsection (a), to the extent permitted by any other provision of
Federal or State law, and subject to the limitations under
paragraph (2) and any restrictions or limitations that the
appropriate Federal banking agencies, the Securities and Exchange
Commission, and the Commodity Futures Trading Commission, may
determine, the following activities (in this section referred to as
`permitted activities') are permitted:
``(A) The purchase, sale, acquisition, or disposition of
obligations of the United States or any agency thereof,
obligations, participations, or other instruments of or issued
by the Government National Mortgage Association, the Federal
National Mortgage Association, the Federal Home Loan Mortgage
Corporation, a Federal Home Loan Bank, the Federal Agricultural
Mortgage Corporation, or a Farm Credit System institution
chartered under and subject to the provisions of the Farm
Credit Act of 1971 (12 U.S.C. 2001 et seq.), and obligations of
any State or of any political subdivision thereof.
``(B) The purchase, sale, acquisition, or disposition of
securities and other instruments described in subsection (h)(4)
in connection with underwriting or market-making-related
activities, to the extent that any such activities permitted by
this subparagraph are designed not to exceed the reasonably
expected near term demands of clients, customers, or
counterparties.
``(C) Risk-mitigating hedging activities in connection with
and related to individual or aggregated positions, contracts,
or other holdings of a banking entity that are designed to
reduce the specific risks to the banking entity in connection
with and related to such positions, contracts, or other
holdings.
``(D) The purchase, sale, acquisition, or disposition of
securities and other instruments described in subsection (h)(4)
on behalf of customers.
``(E) Investments in one or more small business investment
companies, as defined in section 102 of the Small Business
Investment Act of 1958 (15 U.S.C. 662), investments designed
primarily to promote the public welfare, of the type permitted
under paragraph (11) of section 5136 of the Revised Statutes of
the United States (12 U.S.C. 24), or investments that are
qualified rehabilitation expenditures with respect to a
qualified rehabilitated building or certified historic
structure, as such terms are defined in section 47 of the
Internal Revenue Code of 1986 or a similar State historic tax
credit program.
``(F) The purchase, sale, acquisition, or disposition of
securities and other instruments described in subsection (h)(4)
by a regulated insurance company directly engaged in the
business of insurance for the general account of the company
and by any affiliate of such regulated insurance company,
provided that such activities by any affiliate are solely for
the general account of the regulated insurance company, if--
``(i) the purchase, sale, acquisition, or disposition
is conducted in compliance with, and subject to, the
insurance company investment laws, regulations, and written
guidance of the State or jurisdiction in which each such
insurance company is domiciled; and
``(ii) the appropriate Federal banking agencies, after
consultation with the Financial Stability Oversight Council
and the relevant insurance commissioners of the States and
territories of the United States, have not jointly
determined, after notice and comment, that a particular
law, regulation, or written guidance described in clause
(i) is insufficient to protect the safety and soundness of
the banking entity, or of the financial stability of the
United States.
``(G) Organizing and offering a private equity or hedge
fund, including serving as a general partner, managing member,
or trustee of the fund and in any manner selecting or
controlling (or having employees, officers, directors, or
agents who constitute) a majority of the directors, trustees,
or management of the fund, including any necessary expenses for
the foregoing, only if--
``(i) the banking entity provides bona fide trust,
fiduciary, or investment advisory services;
``(ii) the fund is organized and offered only in
connection with the provision of bona fide trust,
fiduciary, or investment advisory services and only to
persons that are customers of such services of the banking
entity;
``(iii) the banking entity does not acquire or retain
an equity interest, partnership interest, or other
ownership interest in the funds except for a de minimis
investment subject to and in compliance with paragraph (4);
``(iv) the banking entity complies with the
restrictions under paragraphs (1) and (2) of subparagraph
(f);
``(v) the banking entity does not, directly or
indirectly, guarantee, assume, or otherwise insure the
obligations or performance of the hedge fund or private
equity fund or of any hedge fund or private equity fund in
which such hedge fund or private equity fund invests;
``(vi) the banking entity does not share with the hedge
fund or private equity fund, for corporate, marketing,
promotional, or other purposes, the same name or a
variation of the same name;
``(vii) no director or employee of the banking entity
takes or retains an equity interest, partnership interest,
or other ownership interest in the hedge fund or private
equity fund, except for any director or employee of the
banking entity who is directly engaged in providing
investment advisory or other services to the hedge fund or
private equity fund; and
``(viii) the banking entity discloses to prospective
and actual investors in the fund, in writing, that any
losses in such hedge fund or private equity fund are borne
solely by investors in the fund and not by the banking
entity, and otherwise complies with any additional rules of
the appropriate Federal banking agencies, the Securities
and Exchange Commission, or the Commodity Futures Trading
Commission, as provided in subsection (b)(2), designed to
ensure that losses in such hedge fund or private equity
fund are borne solely by investors in the fund and not by
the banking entity.
``(H) Proprietary trading conducted by a banking entity
pursuant to paragraph (9) or (13) of section 4(c), provided
that the trading occurs solely outside of the United States and
that the banking entity is not directly or indirectly
controlled by a banking entity that is organized under the laws
of the United States or of one or more States.
``(I) The acquisition or retention of any equity,
partnership, or other ownership interest in, or the sponsorship
of, a hedge fund or a private equity fund by a banking entity
pursuant to paragraph (9) or (13) of section 4(c) solely
outside of the United States, provided that no ownership
interest in such hedge fund or private equity fund is offered
for sale or sold to a resident of the United States and that
the banking entity is not directly or indirectly controlled by
a banking entity that is organized under the laws of the United
States or of one or more States.
``(J) Such other activity as the appropriate Federal
banking agencies, the Securities and Exchange Commission, and
the Commodity Futures Trading Commission determine, by rule, as
provided in subsection (b)(2), would promote and protect the
safety and soundness of the banking entity and the financial
stability of the United States.
``(2) Limitation on permitted activities.--
``(A) In general.--No transaction, class of transactions,
or activity may be deemed a permitted activity under paragraph
(1) if the transaction, class of transactions, or activity--
``(i) would involve or result in a material conflict of
interest (as such term shall be defined by rule as provided
in subsection (b)(2)) between the banking entity and its
clients, customers, or counterparties;
``(ii) would result, directly or indirectly, in a
material exposure by the banking entity to high-risk assets
or high-risk trading strategies (as such terms shall be
defined by rule as provided in subsection (b)(2));
``(iii) would pose a threat to the safety and soundness
of such banking entity; or
``(iv) would pose a threat to the financial stability
of the United States.
``(B) Rulemaking.--The appropriate Federal banking
agencies, the Securities and Exchange Commission, and the
Commodity Futures Trading Commission shall issue regulations to
implement subparagraph (A), as part of the regulations issued
under subsection (b)(2).
``(3) Capital and quantitative limitations.--The appropriate
Federal banking agencies, the Securities and Exchange Commission,
and the Commodity Futures Trading Commission shall, as provided in
subsection (b)(2), adopt rules imposing additional capital
requirements and quantitative limitations, including
diversification requirements, regarding the activities permitted
under this section if the appropriate Federal banking agencies, the
Securities and Exchange Commission, and the Commodity Futures
Trading Commission determine that additional capital and
quantitative limitations are appropriate to protect the safety and
soundness of banking entities engaged in such activities.
``(4) De minimis investment.--
``(A) In general.--A banking entity may make and retain an
investment in a hedge fund or private equity fund that the
banking entity organizes and offers, subject to the limitations
and restrictions in subparagraph (B) for the purposes of--
``(i) establishing the fund and providing the fund with
sufficient initial equity for investment to permit the fund
to attract unaffiliated investors; or
``(ii) making a de minimis investment.
``(B) Limitations and restrictions on investments.--
``(i) Requirement to seek other investors.--A banking
entity shall actively seek unaffiliated investors to reduce
or dilute the investment of the banking entity to the
amount permitted under clause (ii).
``(ii) Limitations on size of investments.--
Notwithstanding any other provision of law, investments by
a banking entity in a hedge fund or private equity fund
shall--
``(I) not later than 1 year after the date of
establishment of the fund, be reduced through
redemption, sale, or dilution to an amount that is not
more than 3 percent of the total ownership interests of
the fund;
``(II) be immaterial to the banking entity, as
defined, by rule, pursuant to subsection (b)(2), but in
no case may the aggregate of all of the interests of
the banking entity in all such funds exceed 3 percent
of the Tier 1 capital of the banking entity.
``(iii) Capital.--For purposes of determining
compliance with applicable capital standards under
paragraph (3), the aggregate amount of the outstanding
investments by a banking entity under this paragraph,
including retained earnings, shall be deducted from the
assets and tangible equity of the banking entity, and the
amount of the deduction shall increase commensurate with
the leverage of the hedge fund or private equity fund.
``(C) Extension.--Upon an application by a banking entity,
the Board may extend the period of time to meet the
requirements under subparagraph (B)(ii)(I) for 2 additional
years, if the Board finds that an extension would be consistent
with safety and soundness and in the public interest.
``(e) Anti-evasion.--
``(1) Rulemaking.--The appropriate Federal banking agencies,
the Securities and Exchange Commission, and the Commodity Futures
Trading Commission shall issue regulations, as part of the
rulemaking provided for in subsection (b)(2), regarding internal
controls and recordkeeping, in order to insure compliance with this
section.
``(2) Termination of activities or investment.--Notwithstanding
any other provision of law, whenever an appropriate Federal banking
agency, the Securities and Exchange Commission, or the Commodity
Futures Trading Commission, as appropriate, has reasonable cause to
believe that a banking entity or nonbank financial company
supervised by the Board under the respective agency's jurisdiction
has made an investment or engaged in an activity in a manner that
functions as an evasion of the requirements of this section
(including through an abuse of any permitted activity) or otherwise
violates the restrictions under this section, the appropriate
Federal banking agency, the Securities and Exchange Commission, or
the Commodity Futures Trading Commission, as appropriate, shall
order, after due notice and opportunity for hearing, the banking
entity or nonbank financial company supervised by the Board to
terminate the activity and, as relevant, dispose of the investment.
Nothing in this paragraph shall be construed to limit the inherent
authority of any Federal agency or State regulatory authority to
further restrict any investments or activities under otherwise
applicable provisions of law.
``(f) Limitations on Relationships With Hedge Funds and Private
Equity Funds.--
``(1) In general.--No banking entity that serves, directly or
indirectly, as the investment manager, investment adviser, or
sponsor to a hedge fund or private equity fund, or that organizes
and offers a hedge fund or private equity fund pursuant to
paragraph (d)(1)(G), and no affiliate of such entity, may enter
into a transaction with the fund, or with any other hedge fund or
private equity fund that is controlled by such fund, that would be
a covered transaction, as defined in section 23A of the Federal
Reserve Act (12 U.S.C. 371c), with the hedge fund or private equity
fund, as if such banking entity and the affiliate thereof were a
member bank and the hedge fund or private equity fund were an
affiliate thereof.
``(2) Treatment as member bank.--A banking entity that serves,
directly or indirectly, as the investment manager, investment
adviser, or sponsor to a hedge fund or private equity fund, or that
organizes and offers a hedge fund or private equity fund pursuant
to paragraph (d)(1)(G), shall be subject to section 23B of the
Federal Reserve Act (12 U.S.C. 371c-1), as if such banking entity
were a member bank and such hedge fund or private equity fund were
an affiliate thereof.
``(3) Permitted services.--
``(A) In general.--Notwithstanding paragraph (1), the Board
may permit a banking entity to enter into any prime brokerage
transaction with any hedge fund or private equity fund in which
a hedge fund or private equity fund managed, sponsored, or
advised by such banking entity has taken an equity,
partnership, or other ownership interest, if--
``(i) the banking entity is in compliance with each of
the limitations set forth in subsection (d)(1)(G) with
regard to a hedge fund or private equity fund organized and
offered by such banking entity;
``(ii) the chief executive officer (or equivalent
officer) of the banking entity certifies in writing
annually (with a duty to update the certification if the
information in the certification materially changes) that
the conditions specified in subsection (d)(1)(g)(v) are
satisfied; and
``(iii) the Board has determined that such transaction
is consistent with the safe and sound operation and
condition of the banking entity.
``(B) Treatment of prime brokerage transactions.--For
purposes of subparagraph (A), a prime brokerage transaction
described in subparagraph (A) shall be subject to section 23B
of the Federal Reserve Act (12 U.S.C. 371c-1) as if the
counterparty were an affiliate of the banking entity.
``(4) Application to nonbank financial companies supervised by
the board.--The appropriate Federal banking agencies, the
Securities and Exchange Commission, and the Commodity Futures
Trading Commission shall adopt rules, as provided in subsection
(b)(2), imposing additional capital charges or other restrictions
for nonbank financial companies supervised by the Board to address
the risks to and conflicts of interest of banking entities
described in paragraphs (1), (2), and (3) of this subsection.
``(g) Rules of Construction.--
``(1) Limitation on contrary authority.--Except as provided in
this section, notwithstanding any other provision of law, the
prohibitions and restrictions under this section shall apply to
activities of a banking entity or nonbank financial company
supervised by the Board, even if such activities are authorized for
a banking entity or nonbank financial company supervised by the
Board.
``(2) Sale or securitization of loans.--Nothing in this section
shall be construed to limit or restrict the ability of a banking
entity or nonbank financial company supervised by the Board to sell
or securitize loans in a manner otherwise permitted by law.
``(3) Authority of federal agencies and state regulatory
authorities.--Nothing in this section shall be construed to limit
the inherent authority of any Federal agency or State regulatory
authority under otherwise applicable provisions of law.
``(h) Definitions.--In this section, the following definitions
shall apply:
``(1) Banking entity.--The term `banking entity' means any
insured depository institution (as defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813)), any company that
controls an insured depository institution, or that is treated as a
bank holding company for purposes of section 8 of the International
Banking Act of 1978, and any affiliate or subsidiary of any such
entity. For purposes of this paragraph, the term `insured
depository institution' does not include an institution that
functions solely in a trust or fiduciary capacity, if--
``(A) all or substantially all of the deposits of such
institution are in trust funds and are received in a bona fide
fiduciary capacity;
``(B) no deposits of such institution which are insured by
the Federal Deposit Insurance Corporation are offered or
marketed by or through an affiliate of such institution;
``(C) such institution does not accept demand deposits or
deposits that the depositor may withdraw by check or similar
means for payment to third parties or others or make commercial
loans; and
``(D) such institution does not--
``(i) obtain payment or payment related services from
any Federal Reserve bank, including any service referred to
in section 11A of the Federal Reserve Act (12 U.S.C. 248a);
or
``(ii) exercise discount or borrowing privileges
pursuant to section 19(b)(7) of the Federal Reserve Act (12
U.S.C. 461(b)(7)).
``(2) Hedge fund; private equity fund.--The terms `hedge fund'
and `private equity fund' mean an issuer that would be an
investment company, as defined in the Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.), but for section 3(c)(1) or 3(c)(7)
of that Act, or such similar funds as the appropriate Federal
banking agencies, the Securities and Exchange Commission, and the
Commodity Futures Trading Commission may, by rule, as provided in
subsection (b)(2), determine.
``(3) Nonbank financial company supervised by the board.--The
term `nonbank financial company supervised by the Board' means a
nonbank financial company supervised by the Board of Governors, as
defined in section 102 of the Financial Stability Act of 2010.
``(4) Proprietary trading.--The term `proprietary trading',
when used with respect to a banking entity or nonbank financial
company supervised by the Board, means engaging as a principal for
the trading account of the banking entity or nonbank financial
company supervised by the Board in any transaction to purchase or
sell, or otherwise acquire or dispose of, any security, any
derivative, any contract of sale of a commodity for future
delivery, any option on any such security, derivative, or contract,
or any other security or financial instrument that the appropriate
Federal banking agencies, the Securities and Exchange Commission,
and the Commodity Futures Trading Commission may, by rule as
provided in subsection (b)(2), determine.
``(5) Sponsor.--The term to `sponsor' a fund means--
``(A) to serve as a general partner, managing member, or
trustee of a fund;
``(B) in any manner to select or to control (or to have
employees, officers, or directors, or agents who constitute) a
majority of the directors, trustees, or management of a fund;
or
``(C) to share with a fund, for corporate, marketing,
promotional, or other purposes, the same name or a variation of
the same name.
``(6) Trading account.--The term `trading account' means any
account used for acquiring or taking positions in the securities
and instruments described in paragraph (4) principally for the
purpose of selling in the near term (or otherwise with the intent
to resell in order to profit from short-term price movements), and
any such other accounts as the appropriate Federal banking
agencies, the Securities and Exchange Commission, and the Commodity
Futures Trading Commission may, by rule as provided in subsection
(b)(2), determine.
``(7) Illiquid fund.--
``(A) In general.--The term `illiquid fund' means a hedge
fund or private equity fund that--
``(i) as of May 1, 2010, was principally invested in,
or was invested and contractually committed to principally
invest in, illiquid assets, such as portfolio companies,
real estate investments, and venture capital investments;
and
``(ii) makes all investments pursuant to, and
consistent with, an investment strategy to principally
invest in illiquid assets. In issuing rules regarding this
subparagraph, the Board shall take into consideration the
terms of investment for the hedge fund or private equity
fund, including contractual obligations, the ability of the
fund to divest of assets held by the fund, and any other
factors that the Board determines are appropriate.
``(B) Hedge fund.--For the purposes of this paragraph, the
term `hedge fund' means any fund identified under subsection
(h)(2), and does not include a private equity fund, as such
term is used in section 203(m) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-3(m)).''.
SEC. 620. STUDY OF BANK INVESTMENT ACTIVITIES.
(a) Study.--
(1) In general.--Not later than 18 months after the date of
enactment of this Act, the appropriate Federal banking agencies
shall jointly review and prepare a report on the activities that a
banking entity, as such term is defined in the Bank Holding Company
Act of 1956 (12 U.S.C. 1841 et. seq.), may engage in under Federal
and State law, including activities authorized by statute and by
order, interpretation and guidance.
(2) Content.--In carrying out the study under paragraph (1),
the appropriate Federal banking agencies shall review and
consider--
(A) the type of activities or investments;
(B) any financial, operational, managerial, or reputation
risks associated with or presented as a result of the banking
entity engaged in the activity or making the investment; and
(C) risk mitigation activities undertaken by the banking
entity with regard to the risks.
(b) Report and Recommendations to the Council and to Congress.--The
appropriate Federal banking agencies shall submit to the Council, the
Committee on Financial Services of the House of Representatives, and
the Committee on Banking, Housing, and Urban Affairs of the Senate the
study conducted pursuant to subsection (a) no later than 2 months after
its completion. In addition to the information described in subsection
(a), the report shall include recommendations regarding--
(1) whether each activity or investment has or could have a
negative effect on the safety and soundness of the banking entity
or the United States financial system;
(2) the appropriateness of the conduct of each activity or type
of investment by banking entities; and
(3) additional restrictions as may be necessary to address
risks to safety and soundness arising from the activities or types
of investments described in subsection (a).
SEC. 621. CONFLICTS OF INTEREST.
(a) In General.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
is amended by inserting after section 27A the following:
``SEC. 27B. CONFLICTS OF INTEREST RELATING TO CERTAIN
SECURITIZATIONS.
``(a) In General.--An underwriter, placement agent, initial
purchaser, or sponsor, or any affiliate or subsidiary of any such
entity, of an asset-backed security (as such term is defined in section
3 of the Securities and Exchange Act of 1934 (15 U.S.C. 78c), which for
the purposes of this section shall include a synthetic asset-backed
security), shall not, at any time for a period ending on the date that
is one year after the date of the first closing of the sale of the
asset-backed security, engage in any transaction that would involve or
result in any material conflict of interest with respect to any
investor in a transaction arising out of such activity.
``(b) Rulemaking.--Not later than 270 days after the date of
enactment of this section, the Commission shall issue rules for the
purpose of implementing subsection (a).
``(c) Exception.--The prohibitions of subsection (a) shall not
apply to--
``(1) risk-mitigating hedging activities in connection with
positions or holdings arising out of the underwriting, placement,
initial purchase, or sponsorship of an asset-backed security,
provided that such activities are designed to reduce the specific
risks to the underwriter, placement agent, initial purchaser, or
sponsor associated with positions or holdings arising out of such
underwriting, placement, initial purchase, or sponsorship; or
``(2) purchases or sales of asset-backed securities made
pursuant to and consistent with--
``(A) commitments of the underwriter, placement agent,
initial purchaser, or sponsor, or any affiliate or subsidiary
of any such entity, to provide liquidity for the asset-backed
security, or
``(B) bona fide market-making in the asset backed security.
``(d) Rule of Construction.--This subsection shall not otherwise
limit the application of section 15G of the Securities Exchange Act of
1934.''.
(b) Effective Date.--Section 27B of the Securities Act of 1933, as
added by this section, shall take effect on the effective date of final
rules issued by the Commission under subsection (b) of such section
27B, except that subsections (b) and (d) of such section 27B shall take
effect on the date of enactment of this Act.
SEC. 622. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by adding at the end the following:
``SEC. 14. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.
``(a) Definitions.--In this section--
``(1) the term `Council' means the Financial Stability
Oversight Council;
``(2) the term `financial company' means--
``(A) an insured depository institution;
``(B) a bank holding company;
``(C) a savings and loan holding company;
``(D) a company that controls an insured depository
institution;
``(E) a nonbank financial company supervised by the Board
under title I of the Dodd-Frank Wall Street Reform and Consumer
Protection Act; and
``(F) a foreign bank or company that is treated as a bank
holding company for purposes of this Act; and
``(3) the term `liabilities' means--
``(A) with respect to a United States financial company--
``(i) the total risk-weighted assets of the financial
company, as determined under the risk-based capital rules
applicable to bank holding companies, as adjusted to
reflect exposures that are deducted from regulatory
capital; less
``(ii) the total regulatory capital of the financial
company under the risk-based capital rules applicable to
bank holding companies;
``(B) with respect to a foreign-based financial company--
``(i) the total risk-weighted assets of the United
States operations of the financial company, as determined
under the applicable risk-based capital rules, as adjusted
to reflect exposures that are deducted from regulatory
capital; less
``(ii) the total regulatory capital of the United
States operations of the financial company, as determined
under the applicable risk-based capital rules; and
``(C) with respect to an insurance company or other nonbank
financial company supervised by the Board, such assets of the
company as the Board shall specify by rule, in order to provide
for consistent and equitable treatment of such companies.
``(b) Concentration Limit.--Subject to the recommendations by the
Council under subsection (e), a financial company may not merge or
consolidate with, acquire all or substantially all of the assets of, or
otherwise acquire control of, another company, if the total
consolidated liabilities of the acquiring financial company upon
consummation of the transaction would exceed 10 percent of the
aggregate consolidated liabilities of all financial companies at the
end of the calendar year preceding the transaction.
``(c) Exception to Concentration Limit.--With the prior written
consent of the Board, the concentration limit under subsection (b)
shall not apply to an acquisition--
``(1) of a bank in default or in danger of default;
``(2) with respect to which assistance is provided by the
Federal Deposit Insurance Corporation under section 13(c) of the
Federal Deposit Insurance Act (12 U.S.C. 1823(c)); or
``(3) that would result only in a de minimis increase in the
liabilities of the financial company.
``(d) Rulemaking and Guidance.--The Board shall issue regulations
implementing this section in accordance with the recommendations of the
Council under subsection (e), including the definition of terms, as
necessary. The Board may issue interpretations or guidance regarding
the application of this section to an individual financial company or
to financial companies in general.
``(e) Council Study and Rulemaking.--
``(1) Study and recommendations.--Not later than 6 months after
the date of enactment of this section, the Council shall--
``(A) complete a study of the extent to which the
concentration limit under this section would affect financial
stability, moral hazard in the financial system, the efficiency
and competitiveness of United States financial firms and
financial markets, and the cost and availability of credit and
other financial services to households and businesses in the
United States; and
``(B) make recommendations regarding any modifications to
the concentration limit that the Council determines would more
effectively implement this section.
``(2) Rulemaking.--Not later than 9 months after the date of
completion of the study under paragraph (1), and notwithstanding
subsections (b) and (d), the Board shall issue final regulations
implementing this section, which shall reflect any recommendations
by the Council under paragraph (1)(B).''.
SEC. 623. INTERSTATE MERGER TRANSACTIONS.
(a) Interstate Merger Transactions.--Section 18(c) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)) is amended by adding at the
end the following:
``(13)(A) Except as provided in subparagraph (B), the responsible
agency may not approve an application for an interstate merger
transaction if the resulting insured depository institution (including
all insured depository institutions which are affiliates of the
resulting insured depository institution), upon consummation of the
transaction, would control more than 10 percent of the total amount of
deposits of insured depository institutions in the United States.
``(B) Subparagraph (A) shall not apply to an interstate merger
transaction that involves 1 or more insured depository institutions in
default or in danger of default, or with respect to which the
Corporation provides assistance under section 13.
``(C) In this paragraph--
``(i) the term `interstate merger transaction' means a merger
transaction involving 2 or more insured depository institutions
that have different home States and that are not affiliates; and
``(ii) the term `home State' means--
``(I) with respect to a national bank, the State in which
the main office of the bank is located;
``(II) with respect to a State bank or State savings
association, the State by which the State bank or State savings
association is chartered; and
``(III) with respect to a Federal savings association, the
State in which the home office (as defined by the regulations
of the Director of the Office of Thrift Supervision, or, on and
after the transfer date, the Comptroller of the Currency) of
the Federal savings association is located.''.
(b) Acquisitions by Bank Holding Companies.--
(1) In general.--Section 4 of the Bank Holding Company Act of
1956 (12 U.S.C. 1843) is amended--
(A) in subsection (i), by adding at the end the following:
``(8) Interstate acquisitions.--
``(A) In general.--The Board may not approve an application
by a bank holding company to acquire an insured depository
institution under subsection (c)(8) or any other provision of
this Act if--
``(i) the home State of such insured depository
institution is a State other than the home State of the
bank holding company; and
``(ii) the applicant (including all insured depository
institutions which are affiliates of the applicant)
controls, or upon consummation of the transaction would
control, more than 10 percent of the total amount of
deposits of insured depository institutions in the United
States.
``(B) Exception.--Subparagraph (A) shall not apply to an
acquisition that involves an insured depository institution in
default or in danger of default, or with respect to which the
Federal Deposit Insurance Corporation provides assistance under
section 13 of the Federal Deposit Insurance Act (12 U.S.C.
1823).''; and
(B) in subsection (k)(6)(B), by striking ``savings
association'' and inserting ``insured depository institution''.
(2) Definitions.--Section 2(o)(4) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(o)(4)) is amended--
(A) in subparagraph (B), by striking ``and'' at the end;
(B) in subparagraph (C)(ii), by striking the period at the
end and inserting a semicolon; and
(C) by adding at the end the following:
``(D) with respect to a State savings association, the
State by which the savings association is chartered; and
``(E) with respect to a Federal savings association, the
State in which the home office (as defined by the regulations
of the Director of the Office of Thrift Supervision, or, on and
after the transfer date, the Comptroller of the Currency) of
the Federal savings association is located.''.
(c) Acquisitions by Savings and Loan Holding Companies.--Section
10(e)(2) of the Home Owners' Loan Act (12 U.S.C. 1467a(e)(2)) is
amended--
(1) in paragraph (2)--
(A) in subparagraph (C), by striking ``or'' at the end;
(B) in subparagraph (D), by striking the period at the end
and inserting ``, or''; and
(C) by adding at the end the following:
``(E) in the case of an application by a savings and loan
holding company to acquire an insured depository institution,
if--
``(i) the home State of the insured depository
institution is a State other than the home State of the
savings and loan holding company;
``(ii) the applicant (including all insured depository
institutions which are affiliates of the applicant)
controls, or upon consummation of the transaction would
control, more than 10 percent of the total amount of
deposits of insured depository institutions in the United
States; and
``(iii) the acquisition does not involve an insured
depository institution in default or in danger of default,
or with respect to which the Federal Deposit Insurance
Corporation provides assistance under section 13 of the
Federal Deposit Insurance Act (12 U.S.C. 1823).''; and
(2) by adding at the end the following:
``(7) Definitions.--For purposes of paragraph (2)(E)--
``(A) the terms `default', `in danger of default', and
`insured depository institution' have the same meanings as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813); and
``(B) the term `home State' means--
``(i) with respect to a national bank, the State in
which the main office of the bank is located;
``(ii) with respect to a State bank or State savings
association, the State by which the savings association is
chartered;
``(iii) with respect to a Federal savings association,
the State in which the home office (as defined by the
regulations of the Director of the Office of Thrift
Supervision, or, on and after the transfer date, the
Comptroller of the Currency) of the Federal savings
association is located; and
``(iv) with respect to a savings and loan holding
company, the State in which the amount of total deposits of
all insured depository institution subsidiaries of such
company was the greatest on the date on which the company
became a savings and loan holding company.''.
SEC. 624. QUALIFIED THRIFT LENDERS.
Section 10(m)(3) of the Home Owners' Loan Act (12 U.S.C.
1467a(m)(3)) is amended--
(1) by striking subparagraph (A) and inserting the following:
``(A) In general.--A savings association that fails to
become or remain a qualified thrift lender shall immediately be
subject to the restrictions under subparagraph (B).''; and
(2) in subparagraph (B)(i), by striking subclause (III) and
inserting the following:
``(III) Dividends.--The savings association may not
pay dividends, except for dividends that--
``(aa) would be permissible for a national
bank;
``(bb) are necessary to meet obligations of a
company that controls such savings association; and
``(cc) are specifically approved by the
Comptroller of the Currency and the Board after a
written request submitted to the Comptroller of the
Currency and the Board by the savings association
not later than 30 days before the date of the
proposed payment.
``(IV) Regulatory authority.--A savings association
that fails to become or remain a qualified thrift
lender shall be deemed to have violated section 5 of
the Home Owners' Loan Act (12 U.S.C. 1464) and subject
to actions authorized by section 5(d) of the Home
Owners' Loan Act (12 U.S.C. 1464(d)).''.
SEC. 625. TREATMENT OF DIVIDENDS BY CERTAIN MUTUAL HOLDING
COMPANIES.
(a) In General.--Section 10(o) of the Home Owners' Loan Act (12
U.S.C. 1467a(o) is amended by adding at the end the following:
``(11) Dividends.--
``(A) Declaration of dividends.--
``(i) Advance notice required.--Each subsidiary of a
mutual holding company that is a savings association shall
give the appropriate Federal banking agency and the Board
notice not later than 30 days before the date of a proposed
declaration by the board of directors of the savings
association of any dividend on the guaranty, permanent, or
other nonwithdrawable stock of the savings association.
``(ii) Invalid dividends.--Any dividend described in
clause (i) that is declared without giving notice to the
appropriate Federal banking agency and the Board under
clause (i), or that is declared during the 30-day period
preceding the date of a proposed declaration for which
notice is given to the appropriate Federal banking agency
and the Board under clause (i), shall be invalid and shall
confer no rights or benefits upon the holder of any such
stock.
``(B) Waiver of dividends.--A mutual holding company may
waive the right to receive any dividend declared by a
subsidiary of the mutual holding company, if--
``(i) no insider of the mutual holding company,
associate of an insider, or tax-qualified or non-tax-
qualified employee stock benefit plan of the mutual holding
company holds any share of the stock in the class of stock
to which the waiver would apply; or
``(ii) the mutual holding company gives written notice
to the Board of the intent of the mutual holding company to
waive the right to receive dividends, not later than 30
days before the date of the proposed date of payment of the
dividend, and the Board does not object to the waiver.
``(C) Resolution included in waiver notice.--A notice of a
waiver under subparagraph (B) shall include a copy of the
resolution of the board of directors of the mutual holding
company, in such form and substance as the Board may determine,
together with any supporting materials relied upon by the board
of directors of the mutual holding company, concluding that the
proposed dividend waiver is consistent with the fiduciary
duties of the board of directors to the mutual members of the
mutual holding company.
``(D) Standards for waiver of dividend.--The Board may not
object to a waiver of dividends under subparagraph (B) if--
``(i) the waiver would not be detrimental to the safe
and sound operation of the savings association;
``(ii) the board of directors of the mutual holding
company expressly determines that a waiver of the dividend
by the mutual holding company is consistent with the
fiduciary duties of the board of directors to the mutual
members of the mutual holding company; and
``(iii) the mutual holding company has, prior to
December 1, 2009--
``(I) reorganized into a mutual holding company
under subsection (o);
``(II) issued minority stock either from its mid-
tier stock holding company or its subsidiary stock
savings association; and
``(III) waived dividends it had a right to receive
from the subsidiary stock savings association.
``(E) Valuation.--
``(i) In general.--The appropriate Federal banking
agency shall consider waived dividends in determining an
appropriate exchange ratio in the event of a full
conversion to stock form.
``(ii) Exception.--In the case of a savings association
that has reorganized into a mutual holding company, has
issued minority stock from a mid-tier stock holding company
or a subsidiary stock savings association of the mutual
holding company, and has waived dividends it had a right to
receive from a subsidiary savings association before
December 1, 2009, the appropriate Federal banking agency
shall not consider waived dividends in determining an
appropriate exchange ratio in the event of a full
conversion to stock form.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect on the transfer date.
SEC. 626. INTERMEDIATE HOLDING COMPANIES.
The Home Owners' Loan Act (12 U.S.C. 1461 et seq.) is amended by
inserting after section 10 (12 U.S.C. 1467a) the following new section:
``SEC. 10A. INTERMEDIATE HOLDING COMPANIES.
``(a) Definition.--For purposes of this section:
``(1) Financial activities.--The term `financial activities'
means activities described in clauses (i) and (ii) of section
10(c)(9)(A).
``(2) Grandfathered unitary savings and loan holding company.--
The term `grandfathered unitary savings and loan holding company'
means a company described in section 10(c)(9)(C).
``(3) Internal financial activities.--The term `internal
financial activities' includes--
``(A) internal financial activities conducted by a
grandfathered savings and loan holding company or any
affiliate; and
``(B) internal treasury, investment, and employee benefit
functions.
``(b) Requirement.--
``(1) In general.--
``(A) Activities other than financial activities.--If a
grandfathered unitary savings and loan holding company conducts
activities other than financial activities, the Board may
require such company to establish and conduct all or a portion
of such financial activities in or through an intermediate
holding company, which shall be a savings and loan holding
company, established pursuant to regulations of the Board, not
later than 90 days (or such longer period as the Board may deem
appropriate) after the transfer date.
``(B) Other activities.--Notwithstanding subparagraph (A),
the Board shall require a grandfathered unitary savings and
loan holding company to establish an intermediate holding
company if the Board makes a determination that the
establishment of such intermediate holding company is
necessary--
``(i) to appropriately supervise activities that are
determined to be financial activities; or
``(ii) to ensure that supervision by the Board does not
extend to the activities of such company that are not
financial activities.
``(2) Internal financial activities.--
``(A) Treatment of internal financial activities.--For
purposes of this subsection, the internal financial activities
of a grandfathered unitary savings and loan holding company
shall not be required to be placed in an intermediate holding
company.
``(B) Grandfathered activities.--A grandfathered unitary
savings and loan holding company may continue to engage in an
internal financial activity, subject to review by the Board to
determine whether engaging in such activity presents undue risk
to the grandfathered unitary savings and loan holding company
or to the financial stability of the United States, if--
``(i) the grandfathered unitary savings and loan
holding company engaged in the activity during the year
before the date of enactment of this section; and
``(ii) at least \2/3\ of the assets or \2/3\ of the
revenues generated from the activity are from or
attributable to the grandfathered unitary savings and loan
holding company.
``(3) Source of strength.--A grandfathered unitary savings and
loan holding company that directly or indirectly controls an
intermediate holding company established under this section shall
serve as a source of strength to its subsidiary intermediate
holding company.
``(4) Parent company reports.--The Board, may from time to
time, examine and require reports under oath from a grandfathered
unitary savings and loan holding company that controls an
intermediate holding company, and from the appropriate officers or
directors of such company, solely for purposes of ensuring
compliance with the provisions of this section, including assessing
the ability of the company to serve as a source of strength to its
subsidiary intermediate holding company as required under paragraph
(3) and enforcing compliance with such requirement.
``(5) Limited parent company enforcement.--
``(A) In general.--In addition to any other authority of
the Board, the Board may enforce compliance with the provisions
of this subsection that are applicable to any company described
in paragraph (1)(A) that controls an intermediate holding
company under section 8 of the Federal Deposit Insurance Act,
and a company described in paragraph (1)(A) shall be subject to
such section (solely for purposes of this subparagraph) in the
same manner and to the same extent as if the company described
in paragraph (1)(A) were a savings and loan holding company.
``(B) Application of other act.--Any violation of this
subsection by a grandfathered unitary savings and loan holding
company that controls an intermediate holding company may also
be treated as a violation of the Federal Deposit Insurance Act
for purposes of subparagraph (A).
``(C) No effect on other authority.--No provision of this
paragraph shall be construed as limiting any authority of the
Board or any other Federal agency under any other provision of
law.
``(c) Regulations.--The Board--
``(1) shall promulgate regulations to establish the criteria
for determining whether to require a grandfathered unitary savings
and loan holding company to establish an intermediate holding
company under subsection (b); and
``(2) may promulgate regulations to establish any restrictions
or limitations on transactions between an intermediate holding
company or a parent of such company and its affiliates, as
necessary to prevent unsafe and unsound practices in connection
with transactions between the intermediate holding company, or any
subsidiary thereof, and its parent company or affiliates that are
not subsidiaries of the intermediate holding company, except that
such regulations shall not restrict or limit any transaction in
connection with the bona fide acquisition or lease by an
unaffiliated person of assets, goods, or services.
``(d) Rules of Construction.--
``(1) Activities.--Nothing in this section shall be construed
to require a grandfathered unitary savings and loan holding company
to conform its activities to permissible activities.
``(2) Permissible corporate reorganization.--The formation of
an intermediate holding company as required in subsection (b) shall
be presumed to be a permissible corporate reorganization as
described in section 10(c)(9)(D).''.
SEC. 627. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED.
(a) Repeal of Prohibition on Payment of Interest on Demand
Deposits.--
(1) Federal reserve act.--Section 19(i) of the Federal Reserve
Act (12 U.S.C. 371a) is amended to read as follows:
``(i) [Repealed]''.
(2) Home owners' loan act.--The first sentence of section
5(b)(1)(B) of the Home Owners' Loan Act (12 U.S.C. 1464(b)(1)(B))
is amended by striking ``savings association may not--'' and all
that follows through ``(ii) permit any'' and inserting ``savings
association may not permit any''.
(3) Federal deposit insurance act.--Section 18(g) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended to
read as follows:
``(g) [Repealed]''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect 1 year after the date of the enactment of this Act.
SEC. 628. CREDIT CARD BANK SMALL BUSINESS LENDING.
Section 2(c)(2)(F)(v) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(c)(2)(F)(v)) is amended by inserting before the period the
following: ``, other than credit card loans that are made to businesses
that meet the criteria for a small business concern to be eligible for
business loans under regulations established by the Small Business
Administration under part 121 of title 13, Code of Federal
Regulations''.
TITLE VII--WALL STREET TRANSPARENCY AND ACCOUNTABILITY
SEC. 701. SHORT TITLE.
This title may be cited as the ``Wall Street Transparency and
Accountability Act of 2010''.
Subtitle A--Regulation of Over-the-Counter Swaps Markets
PART I--REGULATORY AUTHORITY
SEC. 711. DEFINITIONS.
In this subtitle, the terms ``prudential regulator'', ``swap'',
``swap dealer'', ``major swap participant'', ``swap data repository'',
``associated person of a swap dealer or major swap participant'',
``eligible contract participant'', ``swap execution facility'',
``security-based swap'', ``security-based swap dealer'', ``major
security-based swap participant'', and ``associated person of a
security-based swap dealer or major security-based swap participant''
have the meanings given the terms in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a), including any modification of the meanings
under section 721(b) of this Act.
SEC. 712. REVIEW OF REGULATORY AUTHORITY.
(a) Consultation.--
(1) Commodity futures trading commission.--Before commencing
any rulemaking or issuing an order regarding swaps, swap dealers,
major swap participants, swap data repositories, derivative
clearing organizations with regard to swaps, persons associated
with a swap dealer or major swap participant, eligible contract
participants, or swap execution facilities pursuant to this
subtitle, the Commodity Futures Trading Commission shall consult
and coordinate to the extent possible with the Securities and
Exchange Commission and the prudential regulators for the purposes
of assuring regulatory consistency and comparability, to the extent
possible.
(2) Securities and exchange commission.--Before commencing any
rulemaking or issuing an order regarding security-based swaps,
security-based swap dealers, major security-based swap
participants, security-based swap data repositories, clearing
agencies with regard to security-based swaps, persons associated
with a security-based swap dealer or major security-based swap
participant, eligible contract participants with regard to
security-based swaps, or security-based swap execution facilities
pursuant to subtitle B, the Securities and Exchange Commission
shall consult and coordinate to the extent possible with the
Commodity Futures Trading Commission and the prudential regulators
for the purposes of assuring regulatory consistency and
comparability, to the extent possible.
(3) Procedures and deadline.--Such regulations shall be
prescribed in accordance with applicable requirements of title 5,
United States Code, and shall be issued in final form not later
than 360 days after the date of enactment of this Act.
(4) Applicability.--The requirements of paragraphs (1) and (2)
shall not apply to an order issued--
(A) in connection with or arising from a violation or
potential violation of any provision of the Commodity Exchange
Act (7 U.S.C. 1 et seq.);
(B) in connection with or arising from a violation or
potential violation of any provision of the securities laws; or
(C) in any proceeding that is conducted on the record in
accordance with sections 556 and 557 of title 5, United States
Code.
(5) Effect.--Nothing in this subsection authorizes any
consultation or procedure for consultation that is not consistent
with the requirements of subchapter II of chapter 5, and chapter 7,
of title 5, United States Code (commonly known as the
``Administrative Procedure Act'').
(6) Rules; orders.--In developing and promulgating rules or
orders pursuant to this subsection, each Commission shall consider
the views of the prudential regulators.
(7) Treatment of similar products and entities.--
(A) In general.--In adopting rules and orders under this
subsection, the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall treat functionally or
economically similar products or entities described in
paragraphs (1) and (2) in a similar manner.
(B) Effect.--Nothing in this subtitle requires the
Commodity Futures Trading Commission or the Securities and
Exchange Commission to adopt joint rules or orders that treat
functionally or economically similar products or entities
described in paragraphs (1) and (2) in an identical manner.
(8) Mixed swaps.--The Commodity Futures Trading Commission and
the Securities and Exchange Commission, after consultation with the
Board of Governors, shall jointly prescribe such regulations
regarding mixed swaps, as described in section 1a(47)(D) of the
Commodity Exchange Act (7 U.S.C. 1a(47)(D)) and in section
3(a)(68)(D) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(68)(D)), as may be necessary to carry out the purposes of
this title.
(b) Limitation.--
(1) Commodity futures trading commission.--Nothing in this
title, unless specifically provided, confers jurisdiction on the
Commodity Futures Trading Commission to issue a rule, regulation,
or order providing for oversight or regulation of--
(A) security-based swaps; or
(B) with regard to its activities or functions concerning
security-based swaps--
(i) security-based swap dealers;
(ii) major security-based swap participants;
(iii) security-based swap data repositories;
(iv) associated persons of a security-based swap dealer
or major security-based swap participant;
(v) eligible contract participants with respect to
security-based swaps; or
(vi) swap execution facilities with respect to
security-based swaps.
(2) Securities and exchange commission.--Nothing in this title,
unless specifically provided, confers jurisdiction on the
Securities and Exchange Commission or State securities regulators
to issue a rule, regulation, or order providing for oversight or
regulation of--
(A) swaps; or
(B) with regard to its activities or functions concerning
swaps--
(i) swap dealers;
(ii) major swap participants;
(iii) swap data repositories;
(iv) persons associated with a swap dealer or major
swap participant;
(v) eligible contract participants with respect to
swaps; or
(vi) swap execution facilities with respect to swaps.
(3) Prohibition on certain futures associations and national
securities associations.--
(A) Futures associations.--Notwithstanding any other
provision of law (including regulations), unless otherwise
authorized by this title, no futures association registered
under section 17 of the Commodity Exchange Act (7 U.S.C. 21)
may issue a rule, regulation, or order for the oversight or
regulation of, or otherwise assert jurisdiction over, for any
purpose, any security-based swap, except that this subparagraph
shall not limit the authority of a registered futures
association to examine for compliance with, and enforce, its
rules on capital adequacy.
(B) National securities associations.--Notwithstanding any
other provision of law (including regulations), unless
otherwise authorized by this title, no national securities
association registered under section 15A of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-3) may issue a rule,
regulation, or order for the oversight or regulation of, or
otherwise assert jurisdiction over, for any purpose, any swap,
except that this subparagraph shall not limit the authority of
a national securities association to examine for compliance
with, and enforce, its rules on capital adequacy.
(c) Objection to Commission Regulation.--
(1) Filing of petition for review.--
(A) In general.--If either Commission referred to in this
section determines that a final rule, regulation, or order of
the other Commission conflicts with subsection (a)(7) or (b),
then the complaining Commission may obtain review of the final
rule, regulation, or order in the United States Court of
Appeals for the District of Columbia Circuit by filing in the
court, not later than 60 days after the date of publication of
the final rule, regulation, or order, a written petition
requesting that the rule, regulation, or order be set aside.
(B) Expedited proceeding.--A proceeding described in
subparagraph (A) shall be expedited by the United States Court
of Appeals for the District of Columbia Circuit.
(2) Transmittal of petition and record.--
(A) In general.--A copy of a petition described in
paragraph (1) shall be transmitted not later than 1 business
day after the date of filing by the complaining Commission to
the Secretary of the responding Commission.
(B) Duty of responding commission.--On receipt of the copy
of a petition described in paragraph (1), the responding
Commission shall file with the United States Court of Appeals
for the District of Columbia Circuit--
(i) a copy of the rule, regulation, or order under
review (including any documents referred to therein); and
(ii) any other materials prescribed by the United
States Court of Appeals for the District of Columbia
Circuit.
(3) Standard of review.--The United States Court of Appeals for
the District of Columbia Circuit shall--
(A) give deference to the views of neither Commission; and
(B) determine to affirm or set aside a rule, regulation, or
order of the responding Commission under this subsection, based
on the determination of the court as to whether the rule,
regulation, or order is in conflict with subsection (a)(7) or
(b), as applicable.
(4) Judicial stay.--The filing of a petition by the complaining
Commission pursuant to paragraph (1) shall operate as a stay of the
rule, regulation, or order until the date on which the
determination of the United States Court of Appeals for the
District of Columbia Circuit is final (including any appeal of the
determination).
(d) Joint Rulemaking.--
(1) In general.--Notwithstanding any other provision of this
title and subsections (b) and (c), the Commodity Futures Trading
Commission and the Securities and Exchange Commission, in
consultation with the Board of Governors, shall further define the
terms ``swap'', ``security-based swap'', ``swap dealer'',
``security-based swap dealer'', ``major swap participant'', ``major
security-based swap participant'', ``eligible contract
participant'', and ``security-based swap agreement'' in section
1a(47)(A)(v) of the Commodity Exchange Act (7 U.S.C. 1a(47)(A)(v))
and section 3(a)(78) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(78)).
(2) Authority of the commissions.--
(A) In general.--Notwithstanding any other provision of
this title, the Commodity Futures Trading Commission and the
Securities and Exchange Commission, in consultation with the
Board of Governors, shall jointly adopt such other rules
regarding such definitions as the Commodity Futures Trading
Commission and the Securities and Exchange Commission determine
are necessary and appropriate, in the public interest, and for
the protection of investors.
(B) Trade repository recordkeeping.--Notwithstanding any
other provision of this title, the Commodity Futures Trading
Commission and the Securities and Exchange Commission, in
consultation with the Board of Governors, shall engage in joint
rulemaking to jointly adopt a rule or rules governing the books
and records that are required to be kept and maintained
regarding security-based swap agreements by persons that are
registered as swap data repositories under the Commodity
Exchange Act, including uniform rules that specify the data
elements that shall be collected and maintained by each
repository.
(C) Books and records.--Notwithstanding any other provision
of this title, the Commodity Futures Trading Commission and the
Securities and Exchange Commission, in consultation with the
Board of Governors, shall engage in joint rulemaking to jointly
adopt a rule or rules governing books and records regarding
security-based swap agreements, including daily trading
records, for swap dealers, major swap participants, security-
based swap dealers, and security-based swap participants.
(D) Comparable rules.--Rules and regulations prescribed
jointly under this title by the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall be
comparable to the maximum extent possible, taking into
consideration differences in instruments and in the applicable
statutory requirements.
(E) Tracking uncleared transactions.--Any rules prescribed
under subparagraph (A) shall require the maintenance of records
of all activities relating to security-based swap agreement
transactions defined under subparagraph (A) that are not
cleared.
(F) Sharing of information.--The Commodity Futures Trading
Commission shall make available to the Securities and Exchange
Commission information relating to security-based swap
agreement transactions defined in subparagraph (A) that are not
cleared.
(3) Financial stability oversight council.--In the event that
the Commodity Futures Trading Commission and the Securities and
Exchange Commission fail to jointly prescribe rules pursuant to
paragraph (1) or (2) in a timely manner, at the request of either
Commission, the Financial Stability Oversight Council shall resolve
the dispute--
(A) within a reasonable time after receiving the request;
(B) after consideration of relevant information provided by
each Commission; and
(C) by agreeing with 1 of the Commissions regarding the
entirety of the matter or by determining a compromise position.
(4) Joint interpretation.--Any interpretation of, or guidance
by either Commission regarding, a provision of this title, shall be
effective only if issued jointly by the Commodity Futures Trading
Commission and the Securities and Exchange Commission, after
consultation with the Board of Governors, if this title requires
the Commodity Futures Trading Commission and the Securities and
Exchange Commission to issue joint regulations to implement the
provision.
(e) Global Rulemaking Timeframe.--Unless otherwise provided in this
title, or an amendment made by this title, the Commodity Futures
Trading Commission or the Securities and Exchange Commission, or both,
shall individually, and not jointly, promulgate rules and regulations
required of each Commission under this title or an amendment made by
this title not later than 360 days after the date of enactment of this
Act.
(f) Rules and Registration Before Final Effective Dates.--Beginning
on the date of enactment of this Act and notwithstanding the effective
date of any provision of this Act, the Commodity Futures Trading
Commission and the Securities and Exchange Commission may, in order to
prepare for the effective dates of the provisions of this Act--
(1) promulgate rules, regulations, or orders permitted or
required by this Act;
(2) conduct studies and prepare reports and recommendations
required by this Act;
(3) register persons under the provisions of this Act; and
(4) exempt persons, agreements, contracts, or transactions from
provisions of this Act, under the terms contained in this Act,
provided, however, that no action by the Commodity Futures Trading
Commission or the Securities and Exchange Commission described in
paragraphs (1) through (4) shall become effective prior to the
effective date applicable to such action under the provisions of this
Act.
SEC. 713. PORTFOLIO MARGINING CONFORMING CHANGES.
(a) Securities Exchange Act of 1934.--Section 15(c)(3) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)) is amended by
adding at the end the following:
``(C) Notwithstanding any provision of sections
2(a)(1)(C)(i) or 4d(a)(2) of the Commodity Exchange Act and the
rules and regulations thereunder, and pursuant to an exemption
granted by the Commission under section 36 of this title or
pursuant to a rule or regulation, cash and securities may be
held by a broker or dealer registered pursuant to subsection
(b)(1) and also registered as a futures commission merchant
pursuant to section 4f(a)(1) of the Commodity Exchange Act, in
a portfolio margining account carried as a futures account
subject to section 4d of the Commodity Exchange Act and the
rules and regulations thereunder, pursuant to a portfolio
margining program approved by the Commodity Futures Trading
Commission, and subject to subchapter IV of chapter 7 of title
11 of the United States Code and the rules and regulations
thereunder. The Commission shall consult with the Commodity
Futures Trading Commission to adopt rules to ensure that such
transactions and accounts are subject to comparable
requirements to the extent practicable for similar products.''.
(b) Commodity Exchange Act.--Section 4d of the Commodity Exchange
Act (7 U.S.C. 6d) is amended by adding at the end the following:
``(h) Notwithstanding subsection (a)(2) or the rules and
regulations thereunder, and pursuant to an exemption granted by the
Commission under section 4(c) of this Act or pursuant to a rule or
regulation, a futures commission merchant that is registered pursuant
to section 4f(a)(1) of this Act and also registered as a broker or
dealer pursuant to section 15(b)(1) of the Securities Exchange Act of
1934 may, pursuant to a portfolio margining program approved by the
Securities and Exchange Commission pursuant to section 19(b) of the
Securities Exchange Act of 1934, hold in a portfolio margining account
carried as a securities account subject to section 15(c)(3) of the
Securities Exchange Act of 1934 and the rules and regulations
thereunder, a contract for the purchase or sale of a commodity for
future delivery or an option on such a contract, and any money,
securities or other property received from a customer to margin,
guarantee or secure such a contract, or accruing to a customer as the
result of such a contract. The Commission shall consult with the
Securities and Exchange Commission to adopt rules to ensure that such
transactions and accounts are subject to comparable requirements to the
extent practical for similar products.''.
(c) Duty of Commodity Futures Trading Commission.--Section 20 of
the Commodity Exchange Act (7 U.S.C. 24) is amended by adding at the
end the following:
``(c) The Commission shall exercise its authority to ensure that
securities held in a portfolio margining account carried as a futures
account are customer property and the owners of those accounts are
customers for the purposes of subchapter IV of chapter 7 of title 11 of
the United States Code.''.
SEC. 714. ABUSIVE SWAPS.
The Commodity Futures Trading Commission or the Securities and
Exchange Commission, or both, individually may, by rule or order--
(1) collect information as may be necessary concerning the
markets for any types of--
(A) swap (as defined in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a)); or
(B) security-based swap (as defined in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a)); and
(2) issue a report with respect to any types of swaps or
security-based swaps that the Commodity Futures Trading Commission
or the Securities and Exchange Commission determines to be
detrimental to--
(A) the stability of a financial market; or
(B) participants in a financial market.
SEC. 715. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP ACTIVITIES.
Except as provided in section 4 of the Commodity Exchange Act (7
U.S.C. 6), if the Commodity Futures Trading Commission or the
Securities and Exchange Commission determines that the regulation of
swaps or security-based swaps markets in a foreign country undermines
the stability of the United States financial system, either Commission,
in consultation with the Secretary of the Treasury, may prohibit an
entity domiciled in the foreign country from participating in the
United States in any swap or security-based swap activities.
SEC. 716. PROHIBITION AGAINST FEDERAL GOVERNMENT BAILOUTS OF SWAPS
ENTITIES.
(a) Prohibition on Federal Assistance.--Notwithstanding any other
provision of law (including regulations), no Federal assistance may be
provided to any swaps entity with respect to any swap, security-based
swap, or other activity of the swaps entity.
(b) Definitions.--In this section:
(1) Federal assistance.--The term ``Federal assistance'' means
the use of any advances from any Federal Reserve credit facility or
discount window that is not part of a program or facility with
broad-based eligibility under section 13(3)(A) of the Federal
Reserve Act, Federal Deposit Insurance Corporation insurance or
guarantees for the purpose of--
(A) making any loan to, or purchasing any stock, equity
interest, or debt obligation of, any swaps entity;
(B) purchasing the assets of any swaps entity;
(C) guaranteeing any loan or debt issuance of any swaps
entity; or
(D) entering into any assistance arrangement (including tax
breaks), loss sharing, or profit sharing with any swaps entity.
(2) Swaps entity.--
(A) In general.--The term ``swaps entity'' means any swap
dealer, security-based swap dealer, major swap participant,
major security-based swap participant, that is registered
under--
(i) the Commodity Exchange Act (7 U.S.C. 1 et seq.); or
(ii) the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.).
(B) Exclusion.--The term ``swaps entity'' does not include
any major swap participant or major security-based swap
participant that is an insured depository institution.
(c) Affiliates of Insured Depository Institutions.--The prohibition
on Federal assistance contained in subsection (a) does not apply to and
shall not prevent an insured depository institution from having or
establishing an affiliate which is a swaps entity, as long as such
insured depository institution is part of a bank holding company, or
savings and loan holding company, that is supervised by the Federal
Reserve and such swaps entity affiliate complies with sections 23A and
23B of the Federal Reserve Act and such other requirements as the
Commodity Futures Trading Commission or the Securities Exchange
Commission, as appropriate, and the Board of Governors of the Federal
Reserve System, may determine to be necessary and appropriate.
(d) Only Bona Fide Hedging and Traditional Bank Activities
Permitted.--The prohibition in subsection (a) shall apply to any
insured depository institution unless the insured depository
institution limits its swap or security-based swap activities to:
(1) Hedging and other similar risk mitigating activities
directly related to the insured depository institution's
activities.
(2) Acting as a swaps entity for swaps or security-based swaps
involving rates or reference assets that are permissible for
investment by a national bank under the paragraph designated as
``Seventh.'' of section 5136 of the Revised Statutes of the United
States ( 12 U.S.C. 24), other than as described in paragraph (3).
(3) Limitation on credit default swaps.--Acting as a swaps
entity for credit default swaps, including swaps or security-based
swaps referencing the credit risk of asset-backed securities as
defined in section 3(a)(77) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(77)) (as amended by this Act) shall not be
considered a bank permissible activity for purposes of subsection
(d)(2) unless such swaps or security-based swaps are cleared by a
derivatives clearing organization (as such term is defined in
section la of the Commodity Exchange Act (7 U.S.C. la)) or a
clearing agency (as such term is defined in section 3 of the
Securities Exchange Act (15 U.S.C. 78c)) that is registered, or
exempt from registration, as a derivatives clearing organization
under the Commodity Exchange Act or as a clearing agency under the
Securities Exchange Act, respectively.
(e) Existing Swaps and Security-based Swaps.--The prohibition in
subsection (a) shall only apply to swaps or security-based swaps
entered into by an insured depository institution after the end of the
transition period described in subsection (f).
(f) Transition Period.--To the extent an insured depository
institution qualifies as a ``swaps entity'' and would be subject to the
Federal assistance prohibition in subsection (a), the appropriate
Federal banking agency, after consulting with and considering the views
of the Commodity Futures Trading Commission or the Securities Exchange
Commission, as appropriate, shall permit the insured depository
institution up to 24 months to divest the swaps entity or cease the
activities that require registration as a swaps entity. In establishing
the appropriate transition period to effect such divestiture or
cessation of activities, which may include making the swaps entity an
affiliate of the insured depository institution, the appropriate
Federal banking agency shall take into account and make written
findings regarding the potential impact of such divestiture or
cessation of activities on the insured depository institution's (1)
mortgage lending, (2) small business lending, (3) job creation, and (4)
capital formation versus the potential negative impact on insured
depositors and the Deposit Insurance Fund of the Federal Deposit
Insurance Corporation. The appropriate Federal banking agency may
consider such other factors as may be appropriate. The appropriate
Federal banking agency may place such conditions on the insured
depository institution's divestiture or ceasing of activities of the
swaps entity as it deems necessary and appropriate. The transition
period under this subsection may be extended by the appropriate Federal
banking agency, after consultation with the Commodity Futures Trading
Commission and the Securities and Exchange Commission, for a period of
up to 1 additional year.
(g) Excluded Entities.--For purposes of this section, the term
``swaps entity'' shall not include any insured depository institution
under the Federal Deposit Insurance Act or a covered financial company
under title II which is in a conservatorship, receivership, or a bridge
bank operated by the Federal Deposit Insurance Corporation.
(h) Effective Date.--The prohibition in subsection (a) shall be
effective 2 years following the date on which this Act is effective.
(i) Liquidation Required.--
(1) In general.--
(A) FDIC insured institutions.--All swaps entities that are
FDIC insured institutions that are put into receivership or
declared insolvent as a result of swap or security-based swap
activity of the swaps entities shall be subject to the
termination or transfer of that swap or security-based swap
activity in accordance with applicable law prescribing the
treatment of those contracts. No taxpayer funds shall be used
to prevent the receivership of any swap entity resulting from
swap or security-based swap activity of the swaps entity.
(B) Institutions that pose a systemic risk and are subject
to heightened prudential supervision as regulated under section
113.--All swaps entities that are institutions that pose a
systemic risk and are subject to heightened prudential
supervision as regulated under section 113, that are put into
receivership or declared insolvent as a result of swap or
security-based swap activity of the swaps entities shall be
subject to the termination or transfer of that swap or
security-based swap activity in accordance with applicable law
prescribing the treatment of those contracts. No taxpayer funds
shall be used to prevent the receivership of any swap entity
resulting from swap or security-based swap activity of the
swaps entity.
(C) Non-FDIC insured, non-systemically significant
institutions not subject to heightened prudential supervision
as regulated under section 113.--No taxpayer resources shall be
used for the orderly liquidation of any swaps entities that are
non-FDIC insured, non-systemically significant institutions not
subject to heightened prudential supervision as regulated under
section 113.
(2) Recovery of funds.--All funds expended on the termination
or transfer of the swap or security-based swap activity of the
swaps entity shall be recovered in accordance with applicable law
from the disposition of assets of such swap entity or through
assessments, including on the financial sector as provided under
applicable law.
(3) No losses to taxpayers.--Taxpayers shall bear no losses
from the exercise of any authority under this title.
(j) Prohibition on Unregulated Combination of Swaps Entities and
Banking.--At no time following adoption of the rules in subsection (k)
may a bank or bank holding company be permitted to be or become a swap
entity unless it conducts its swap or security-based swap activity in
compliance with such minimum standards set by its prudential regulator
as are reasonably calculated to permit the swaps entity to conduct its
swap or security-based swap activities in a safe and sound manner and
mitigate systemic risk.
(k) Rules.--In prescribing rules, the prudential regulator for a
swaps entity shall consider the following factors:
(1) The expertise and managerial strength of the swaps entity,
including systems for effective oversight.
(2) The financial strength of the swaps entity.
(3) Systems for identifying, measuring and controlling risks
arising from the swaps entity's operations.
(4) Systems for identifying, measuring and controlling the
swaps entity's participation in existing markets.
(5) Systems for controlling the swaps entity's participation or
entry into in new markets and products.
(l) Authority of the Financial Stability Oversight Council.--The
Financial Stability Oversight Council may determine that, when other
provisions established by this Act are insufficient to effectively
mitigate systemic risk and protect taxpayers, that swaps entities may
no longer access Federal assistance with respect to any swap, security-
based swap, or other activity of the swaps entity. Any such
determination by the Financial Stability Oversight Council of a
prohibition of federal assistance shall be made on an institution-by-
institution basis, and shall require the vote of not fewer than two-
thirds of the members of the Financial Stability Oversight Council,
which must include the vote by the Chairman of the Council, the
Chairman of the Board of Governors of the Federal Reserve System, and
the Chairperson of the Federal Deposit Insurance Corporation. Notice
and hearing requirements for such determinations shall be consistent
with the standards provided in title I.
(m) Ban on Proprietary Trading in Derivatives.--An insured
depository institution shall comply with the prohibition on proprietary
trading in derivatives as required by section 619 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act.
SEC. 717. NEW PRODUCT APPROVAL CFTC--SEC PROCESS.
(a) Amendments to the Commodity Exchange Act.--Section 2(a)(1)(C)
of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(C)) is amended--
(1) in clause (i) by striking ``This'' and inserting ``(I)
Except as provided in subclause (II), this''; and
(2) by adding at the end of clause (i) the following:
``(II) This Act shall apply to and the Commission
shall have jurisdiction with respect to accounts,
agreements, and transactions involving, and may permit
the listing for trading pursuant to section 5c(c) of, a
put, call, or other option on 1 or more securities (as
defined in section 2(a)(1) of the Securities Act of
1933 or section 3(a)(10) of the Securities Exchange Act
of 1934 on the date of enactment of the Futures Trading
Act of 1982), including any group or index of such
securities, or any interest therein or based on the
value thereof, that is exempted by the Securities and
Exchange Commission pursuant to section 36(a)(1) of the
Securities Exchange Act of 1934 with the condition that
the Commission exercise concurrent jurisdiction over
such put, call, or other option; provided, however,
that nothing in this paragraph shall be construed to
affect the jurisdiction and authority of the Securities
and Exchange Commission over such put, call, or other
option.''.
(b) Amendments to the Securities Exchange Act of 1934.--The
Securities Exchange Act of 1934 is amended by adding the following
section after section 3A (15 U.S.C. 78c-1):
``SEC. 3B. SECURITIES-RELATED DERIVATIVES.
``(a) Any agreement, contract, or transaction (or class thereof)
that is exempted by the Commodity Futures Trading Commission pursuant
to section 4(c)(1) of the Commodity Exchange Act (7 U.S.C. 6(c)(1))
with the condition that the Commission exercise concurrent jurisdiction
over such agreement, contract, or transaction (or class thereof) shall
be deemed a security for purposes of the securities laws.
``(b) With respect to any agreement, contract, or transaction (or
class thereof) that is exempted by the Commodity Futures Trading
Commission pursuant to section 4(c)(1) of the Commodity Exchange Act (7
U.S.C. 6(c)(1)) with the condition that the Commission exercise
concurrent jurisdiction over such agreement, contract, or transaction
(or class thereof), references in the securities laws to the `purchase'
or `sale' of a security shall be deemed to include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or extinguishing of
rights or obligations under such agreement, contract, or transaction,
as the context may require.''.
(c) Amendment to Securities Exchange Act of 1934.--Section 19(b) of
the Securities Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by
adding at the end the following:
``(10) Notwithstanding paragraph (2), the time period within
which the Commission is required by order to approve a proposed
rule change or institute proceedings to determine whether the
proposed rule change should be disapproved is stayed pending a
determination by the Commission upon the request of the Commodity
Futures Trading Commission or its Chairman that the Commission
issue a determination as to whether a product that is the subject
of such proposed rule change is a security pursuant to section 718
of the Wall Street Transparency and Accountability Act of 2010.''.
(d) Amendment to Commodity Exchange Act.--Section 5c(c)(1) of the
Commodity Exchange Act (7 U.S.C. 7a-2(c)(1)) is amended--
(1) by striking ``Subject to paragraph (2)'' and inserting the
following:
``(A) Election.--Subject to paragraph (2)''; and
(2) by adding at the end the following:
``(B) Certification.--The certification of a product
pursuant to this paragraph shall be stayed pending a
determination by the Commission upon the request of the
Securities and Exchange Commission or its Chairman that the
Commission issue a determination as to whether the product that
is the subject of such certification is a contract of sale of a
commodity for future delivery, an option on such a contract, or
an option on a commodity pursuant to section 718 of the Wall
Street Transparency and Accountability Act of 2010.''.
SEC. 718. DETERMINING STATUS OF NOVEL DERIVATIVE PRODUCTS.
(a) Process for Determining the Status of a Novel Derivative
Product.--
(1) Notice.--
(A) In general.--Any person filing a proposal to list or
trade a novel derivative product that may have elements of both
securities and contracts of sale of a commodity for future
delivery (or options on such contracts or options on
commodities) may concurrently provide notice and furnish a copy
of such filing with the Securities and Exchange Commission and
the Commodity Futures Trading Commission. Any such notice shall
state that notice has been made with both Commissions.
(B) Notification.--If no concurrent notice is made pursuant
to subparagraph (A), within 5 business days after determining
that a proposal that seeks to list or trade a novel derivative
product may have elements of both securities and contracts of
sale of a commodity for future delivery (or options on such
contracts or options on commodities), the Securities and
Exchange Commission or the Commodity Futures Trading
Commission, as applicable, shall notify the other Commission
and provide a copy of such filing to the other Commission.
(2) Request for determination.--
(A) In general.--No later than 21 days after receipt of a
notice under paragraph (1), or upon its own initiative if no
such notice is received, the Commodity Futures Trading
Commission may request that the Securities and Exchange
Commission issue a determination as to whether a product is a
security, as defined in section 3(a)(10) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(10)).
(B) Request.--No later than 21 days after receipt of a
notice under paragraph (1), or upon its own initiative if no
such notice is received, the Securities and Exchange Commission
may request that the Commodity Futures Trading Commission issue
a determination as to whether a product is a contract of sale
of a commodity for future delivery, an option on such a
contract, or an option on a commodity subject to the Commodity
Futures Trading Commission's exclusive jurisdiction under
section 2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C.
2(a)(1)(A)).
(C) Requirement relating to request.--A request under
subparagraph (A) or (B) shall be made by submitting such
request, in writing, to the Securities and Exchange Commission
or the Commodity Futures Trading Commission, as applicable.
(D) Effect.--Nothing in this paragraph shall be construed
to prevent--
(i) the Commodity Futures Trading Commission from
requesting that the Securities and Exchange Commission
grant an exemption pursuant to section 36(a)(1) of the
Securities Exchange Act of 1934 (15 U.S.C. 78mm(a)(1)) with
respect to a product that is the subject of a filing under
paragraph (1); or
(ii) the Securities and Exchange Commission from
requesting that the Commodity Futures Trading Commission
grant an exemption pursuant to section 4(c)(1) of the
Commodity Exchange Act (7 U.S.C. 6(c)(1)) with respect to a
product that is the subject of a filing under paragraph
(1),
Provided, however, that nothing in this subparagraph shall be
construed to require the Commodity Futures Trading Commission
or the Securities and Exchange Commission to issue an exemption
requested pursuant to this subparagraph; provided further, That
an order granting or denying an exemption described in this
subparagraph and issued under paragraph (3)(B) shall not be
subject to judicial review pursuant to subsection (b).
(E) Withdrawal of request.--A request under subparagraph
(A) or (B) may be withdrawn by the Commission making the
request at any time prior to a determination being made
pursuant to paragraph (3) for any reason by providing written
notice to the head of the other Commission.
(3) Determination.--Notwithstanding any other provision of law,
no later than 120 days after the date of receipt of a request--
(A) under subparagraph (A) or (B) of paragraph (2), unless
such request has been withdrawn pursuant to paragraph (2)(E),
the Securities and Exchange Commission or the Commodity Futures
Trading Commission, as applicable, shall, by order, issue the
determination requested in subparagraph (A) or (B) of paragraph
(2), as applicable, and the reasons therefor; or
(B) under paragraph (2)(D), unless such request has been
withdrawn, the Securities and Exchange Commission or the
Commodity Futures Trading Commission, as applicable, shall
grant an exemption or provide reasons for not granting such
exemption, provided that any decision by the Securities and
Exchange Commission not to grant such exemption shall not be
reviewable under section 25 of the Securities Exchange Act of
1934 (15 U.S.C. 78y).
(b) Judicial Resolution.--
(1) In general.--The Commodity Futures Trading Commission or
the Securities and Exchange Commission may petition the United
States Court of Appeals for the District of Columbia Circuit for
review of a final order of the other Commission issued pursuant to
subsection (a)(3)(A), with respect to a novel derivative product
that may have elements of both securities and contracts of sale of
a commodity for future delivery (or options on such contracts or
options on commodities) that it believes affects its statutory
jurisdiction within 60 days after the date of entry of such order,
a written petition requesting a review of the order. Any such
proceeding shall be expedited by the Court of Appeals.
(2) Transmittal of petition and record.--A copy of a petition
described in paragraph (1) shall be transmitted not later than 1
business day after filing by the complaining Commission to the
responding Commission. On receipt of the petition, the responding
Commission shall file with the court a copy of the order under
review and any documents referred to therein, and any other
materials prescribed by the court.
(3) Standard of review.--The court, in considering a petition
filed pursuant to paragraph (1), shall give no deference to, or
presumption in favor of, the views of either Commission.
(4) Judicial stay.--The filing of a petition by the complaining
Commission pursuant to paragraph (1) shall operate as a stay of the
order, until the date on which the determination of the court is
final (including any appeal of the determination).
SEC. 719. STUDIES.
(a) Study on Effects of Position Limits on Trading on Exchanges in
the United States.--
(1) Study.--The Commodity Futures Trading Commission, in
consultation with each entity that is a designated contract market
under the Commodity Exchange Act, shall conduct a study of the
effects (if any) of the position limits imposed pursuant to the
other provisions of this title on excessive speculation and on the
movement of transactions from exchanges in the United States to
trading venues outside the United States.
(2) Report to the congress.--Within 12 months after the
imposition of position limits pursuant to the other provisions of
this title, the Commodity Futures Trading Commission, in
consultation with each entity that is a designated contract market
under the Commodity Exchange Act, shall submit to the Congress a
report on the matters described in paragraph (1).
(3) Required hearing.--Within 30 legislative days after the
submission to the Congress of the report described in paragraph
(2), the Committee on Agriculture of the House of Representatives
shall hold a hearing examining the findings of the report.
(4) Biennial reporting.--In addition to the study required in
paragraph (1), the Chairman of the Commodity Futures Trading
Commission shall prepare and submit to the Congress biennial
reports on the growth or decline of the derivatives markets in the
United States and abroad, which shall include assessments of the
causes of any such growth or decline, the effectiveness of
regulatory regimes in managing systemic risk, a comparison of the
costs of compliance at the time of the report for market
participants subject to regulation by the United States with the
costs of compliance in December 2008 for the market participants,
and the quality of the available data. In preparing the report, the
Chairman shall solicit the views of, consult with, and address the
concerns raised by, market participants, regulators, legislators,
and other interested parties.
(b) Study on Feasibility of Requiring Use of Standardized
Algorithmic Descriptions for Financial Derivatives.--
(1) In general.--The Securities and Exchange Commission and the
Commodity Futures Trading Commission shall conduct a joint study of
the feasibility of requiring the derivatives industry to adopt
standardized computer-readable algorithmic descriptions which may
be used to describe complex and standardized financial derivatives.
(2) Goals.--The algorithmic descriptions defined in the study
shall be designed to facilitate computerized analysis of individual
derivative contracts and to calculate net exposures to complex
derivatives. The algorithmic descriptions shall be optimized for
simultaneous use by--
(A) commercial users and traders of derivatives;
(B) derivative clearing houses, exchanges and electronic
trading platforms;
(C) trade repositories and regulator investigations of
market activities; and
(D) systemic risk regulators.
The study will also examine the extent to which the algorithmic
description, together with standardized and extensible legal
definitions, may serve as the binding legal definition of
derivative contracts. The study will examine the logistics of
possible implementations of standardized algorithmic descriptions
for derivatives contracts. The study shall be limited to electronic
formats for exchange of derivative contract descriptions and will
not contemplate disclosure of proprietary valuation models.
(3) International coordination.--In conducting the study, the
Securities and Exchange Commission and the Commodity Futures
Trading Commission shall coordinate the study with international
financial institutions and regulators as appropriate and practical.
(4) Report.--Within 8 months after the date of the enactment of
this Act, the Securities and Exchange Commission and the Commodity
Futures Trading Commission shall jointly submit to the Committees
on Agriculture and on Financial Services of the House of
Representatives and the Committees on Agriculture, Nutrition, and
Forestry and on Banking, Housing, and Urban Affairs of the Senate a
written report which contains the results of the study required by
paragraphs (1) through (3).
(c) International Swap Regulation.--
(1) In general.--The Commodity Futures Trading Commission and
the Securities and Exchange Commission shall jointly conduct a
study--
(A) relating to--
(i) swap regulation in the United States, Asia, and
Europe; and
(ii) clearing house and clearing agency regulation in
the United States, Asia, and Europe; and
(B) that identifies areas of regulation that are similar in
the United States, Asia and Europe and other areas of
regulation that could be harmonized
(2) Report.--Not later than 18 months after the date of
enactment of this Act, the Commodity Futures Trading Commission and
the Securities and Exchange Commission shall submit to the
Committee on Agriculture, Nutrition, and Forestry and the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Agriculture and the Committee on Financial Services of
the House of Representatives a report that includes a description
of the results of the study under subsection (a), including--
(A) identification of the major exchanges and their
regulator in each geographic area for the trading of swaps and
security-based swaps including a listing of the major contracts
and their trading volumes and notional values as well as
identification of the major swap dealers participating in such
markets;
(B) identification of the major clearing houses and
clearing agencies and their regulator in each geographic area
for the clearing of swaps and security-based swaps, including a
listing of the major contracts and the clearing volumes and
notional values as well as identification of the major clearing
members of such clearing houses and clearing agencies in such
markets;
(C) a description of the comparative methods of clearing
swaps in the United States, Asia, and Europe; and
(D) a description of the various systems used for
establishing margin on individual swaps, security-based swaps,
and swap portfolios.
(d) Stable Value Contracts.--
(1) Determination.--
(A) Status.--Not later than 15 months after the date of the
enactment of this Act, the Securities and Exchange Commission
and the Commodity Futures Trading Commission shall, jointly,
conduct a study to determine whether stable value contracts
fall within the definition of a swap. In making the
determination required under this subparagraph, the Commissions
jointly shall consult with the Department of Labor, the
Department of the Treasury, and the State entities that
regulate the issuers of stable value contracts.
(B) Regulations.--If the Commissions determine that stable
value contracts fall within the definition of a swap, the
Commissions jointly shall determine if an exemption for stable
value contracts from the definition of swap is appropriate and
in the public interest. The Commissions shall issue regulations
implementing the determinations required under this paragraph.
Until the effective date of such regulations, and
notwithstanding any other provision of this title, the
requirements of this title shall not apply to stable value
contracts.
(C) Legal certainty.--Stable value contracts in effect
prior to the effective date of the regulations described in
subparagraph (B) shall not be considered swaps.
(2) Definition.--For purposes of this subsection, the term
``stable value contract'' means any contract, agreement, or
transaction that provides a crediting interest rate and guaranty or
financial assurance of liquidity at contract or book value prior to
maturity offered by a bank, insurance company, or other State or
federally regulated financial institution for the benefit of any
individual or commingled fund available as an investment in an
employee benefit plan (as defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, including plans described
in section 3(32) of such Act) subject to participant direction, an
eligible deferred compensation plan (as defined in section 457(b)
of the Internal Revenue Code of 1986) that is maintained by an
eligible employer described in section 457(e)(1)(A) of such Code,
an arrangement described in section 403(b) of such Code, or a
qualified tuition program (as defined in section 529 of such Code).
SEC. 720. MEMORANDUM.
(a)(1) The Commodity Futures Trading Commission and the Federal
Energy Regulatory Commission shall, not later than 180 days after the
date of the enactment of this Act, negotiate a memorandum of
understanding to establish procedures for--
(A) applying their respective authorities in a manner so as to
ensure effective and efficient regulation in the public interest;
(B) resolving conflicts concerning overlapping jurisdiction
between the 2 agencies; and
(C) avoiding, to the extent possible, conflicting or
duplicative regulation.
(2) Such memorandum and any subsequent amendments to the memorandum
shall be promptly submitted to the appropriate committees of Congress.
(b) The Commodity Futures Trading Commission and the Federal Energy
Regulatory Commission shall, not later than 180 days after the date of
the enactment of this section, negotiate a memorandum of understanding
to share information that may be requested where either Commission is
conducting an investigation into potential manipulation, fraud, or
market power abuse in markets subject to such Commission's regulation
or oversight. Shared information shall remain subject to the same
restrictions on disclosure applicable to the Commission initially
holding the information.
PART II--REGULATION OF SWAP MARKETS
SEC. 721. DEFINITIONS.
(a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C.
1a) is amended--
(1) by redesignating paragraphs (2), (3) and (4), (5) through
(17), (18) through (23), (24) through (28), (29), (30), (31)
through (33), and (34) as paragraphs (6), (8) and (9), (11) through
(23), (26) through (31), (34) through (38), (40), (41), (44)
through (46), and (51), respectively;
(2) by inserting after paragraph (1) the following:
``(2) Appropriate federal banking agency.--The term
`appropriate Federal banking agency'--
``(A) has the meaning given the term in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813);
``(B) means the Board in the case of a noninsured State
bank; and
``(C) is the Farm Credit Administration for farm credit
system institutions.
``(3) Associated person of a security-based swap dealer or
major security-based swap participant.--The term `associated person
of a security-based swap dealer or major security-based swap
participant' has the meaning given the term in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
``(4) Associated person of a swap dealer or major swap
participant.--
``(A) In general.--The term `associated person of a swap
dealer or major swap participant' means a person who is
associated with a swap dealer or major swap participant as a
partner, officer, employee, or agent (or any person occupying a
similar status or performing similar functions), in any
capacity that involves--
``(i) the solicitation or acceptance of swaps; or
``(ii) the supervision of any person or persons so
engaged.
``(B) Exclusion.--Other than for purposes of section
4s(b)(6), the term `associated person of a swap dealer or major
swap participant' does not include any person associated with a
swap dealer or major swap participant the functions of which
are solely clerical or ministerial.
``(5) Board.--The term `Board' means the Board of Governors of
the Federal Reserve System.'';
(3) by inserting after paragraph (6) (as redesignated by
paragraph (1)) the following:
``(7) Cleared swap.--The term `cleared swap' means any swap
that is, directly or indirectly, submitted to and cleared by a
derivatives clearing organization registered with the
Commission.'';
(4) in paragraph (9) (as redesignated by paragraph (1)), by
striking ``except onions'' and all that follows through the period
at the end and inserting the following: ``except onions (as
provided by the first section of Public Law 85-839 (7 U.S.C. 13-1))
and motion picture box office receipts (or any index, measure,
value, or data related to such receipts), and all services, rights,
and interests (except motion picture box office receipts, or any
index, measure, value or data related to such receipts) in which
contracts for future delivery are presently or in the future dealt
in.'';
(5) by inserting after paragraph (9) (as redesignated by
paragraph (1)) the following:
``(10) Commodity pool.--
``(A) In general.--The term `commodity pool' means any
investment trust, syndicate, or similar form of enterprise
operated for the purpose of trading in commodity interests,
including any--
``(i) commodity for future delivery, security futures
product, or swap;
``(ii) agreement, contract, or transaction described in
section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(iii) commodity option authorized under section 4c;
or
``(iv) leverage transaction authorized under section
19.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`commodity pool' any investment trust, syndicate, or similar
form of enterprise if the Commission determines that the rule
or regulation will effectuate the purposes of this Act.'';
(6) by striking paragraph (11) (as redesignated by paragraph
(1)) and inserting the following:
``(11) Commodity pool operator.--
``(A) In general.--The term `commodity pool operator' means
any person--
``(i) engaged in a business that is of the nature of a
commodity pool, investment trust, syndicate, or similar
form of enterprise, and who, in connection therewith,
solicits, accepts, or receives from others, funds,
securities, or property, either directly or through capital
contributions, the sale of stock or other forms of
securities, or otherwise, for the purpose of trading in
commodity interests, including any--
``(I) commodity for future delivery, security
futures product, or swap;
``(II) agreement, contract, or transaction
described in section 2(c)(2)(C)(i) or section
2(c)(2)(D)(i);
``(III) commodity option authorized under section
4c; or
``(IV) leverage transaction authorized under
section 19; or
``(ii) who is registered with the Commission as a
commodity pool operator.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`commodity pool operator' any person engaged in a business that
is of the nature of a commodity pool, investment trust,
syndicate, or similar form of enterprise if the Commission
determines that the rule or regulation will effectuate the
purposes of this Act.'';
(7) in paragraph (12) (as redesignated by paragraph (1)), in
subparagraph (A)--
(A) in clause (i)--
(i) in subclause (I), by striking ``made or to be made
on or subject to the rules of a contract market or
derivatives transaction execution facility'' and inserting
``, security futures product, or swap'';
(ii) by redesignating subclauses (II) and (III) as
subclauses (III) and (IV);
(iii) by inserting after subclause (I) the following:
``(II) any agreement, contract, or transaction
described in section 2(c)(2)(C)(i) or section
2(c)(2)(D)(i)''; and
(iv) in subclause (IV) (as so redesignated), by
striking ``or'';
(B) in clause (ii), by striking the period at the end and
inserting a semicolon; and
(C) by adding at the end the following:
``(iii) is registered with the Commission as a
commodity trading advisor; or
``(iv) the Commission, by rule or regulation, may
include if the Commission determines that the rule or
regulation will effectuate the purposes of this Act.'';
(8) in paragraph (17) (as redesignated by paragraph (1)), in
subparagraph (A), in the matter preceding clause (i), by striking
``paragraph (12)(A)'' and inserting ``paragraph (18)(A)'';
(9) in paragraph (18) (as redesignated by paragraph (1))--
(A) in subparagraph (A)--
(i) in the matter following clause (vii)(III)--
(I) by striking ``section 1a (11)(A)'' and
inserting ``paragraph (17)(A)''; and
(II) by striking ``$25,000,000'' and inserting
``$50,000,000''; and
(ii) in clause (xi), in the matter preceding subclause
(I), by striking ``total assets in an amount'' and
inserting ``amounts invested on a discretionary basis, the
aggregate of which is'';
(10) by striking paragraph (22) (as redesignated by paragraph
(1)) and inserting the following:
``(22) Floor broker.--
``(A) In general.--The term `floor broker' means any
person--
``(i) who, in or surrounding any pit, ring, post, or
other place provided by a contract market for the meeting
of persons similarly engaged, shall purchase or sell for
any other person--
``(I) any commodity for future delivery, security
futures product, or swap; or
``(II) any commodity option authorized under
section 4c; or
``(ii) who is registered with the Commission as a floor
broker.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`floor broker' any person in or surrounding any pit, ring,
post, or other place provided by a contract market for the
meeting of persons similarly engaged who trades for any other
person if the Commission determines that the rule or regulation
will effectuate the purposes of this Act.'';
(11) by striking paragraph (23) (as redesignated by paragraph
(1)) and inserting the following:
``(23) Floor trader.--
``(A) In general.--The term `floor trader' means any
person--
``(i) who, in or surrounding any pit, ring, post, or
other place provided by a contract market for the meeting
of persons similarly engaged, purchases, or sells solely
for such person's own account--
``(I) any commodity for future delivery, security
futures product, or swap; or
``(II) any commodity option authorized under
section 4c; or
``(ii) who is registered with the Commission as a floor
trader.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`floor trader' any person in or surrounding any pit, ring,
post, or other place provided by a contract market for the
meeting of persons similarly engaged who trades solely for such
person's own account if the Commission determines that the rule
or regulation will effectuate the purposes of this Act.'';
(12) by inserting after paragraph (23) (as redesignated by
paragraph (1)) the following:
``(24) Foreign exchange forward.--The term `foreign exchange
forward' means a transaction that solely involves the exchange of 2
different currencies on a specific future date at a fixed rate
agreed upon on the inception of the contract covering the exchange.
``(25) Foreign exchange swap.--The term `foreign exchange swap'
means a transaction that solely involves--
``(A) an exchange of 2 different currencies on a specific
date at a fixed rate that is agreed upon on the inception of
the contract covering the exchange; and
``(B) a reverse exchange of the 2 currencies described in
subparagraph (A) at a later date and at a fixed rate that is
agreed upon on the inception of the contract covering the
exchange.'';
(13) by striking paragraph (28) (as redesignated by paragraph
(1)) and inserting the following:
``(28) Futures commission merchant.--
``(A) In general.--The term `futures commission merchant'
means an individual, association, partnership, corporation, or
trust--
``(i) that--
``(I) is--
``(aa) engaged in soliciting or in accepting
orders for--
``(AA) the purchase or sale of a commodity
for future delivery;
``(BB) a security futures product;
``(CC) a swap;
``(DD) any agreement, contract, or
transaction described in section 2(c)(2)(C)(i)
or section 2(c)(2)(D)(i);
``(EE) any commodity option authorized
under section 4c; or
``(FF) any leverage transaction authorized
under section 19; or
``(bb) acting as a counterparty in any
agreement, contract, or transaction described in
section 2(c)(2)(C)(i) or section 2(c)(2)(D)(i); and
``(II) in or in connection with the activities
described in items (aa) or (bb) of subclause (I),
accepts any money, securities, or property (or extends
credit in lieu thereof) to margin, guarantee, or secure
any trades or contracts that result or may result
therefrom; or
``(ii) that is registered with the Commission as a
futures commission merchant.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`futures commission merchant' any person who engages in
soliciting or accepting orders for, or acting as a counterparty
in, any agreement, contract, or transaction subject to this
Act, and who accepts any money, securities, or property (or
extends credit in lieu thereof) to margin, guarantee, or secure
any trades or contracts that result or may result therefrom, if
the Commission determines that the rule or regulation will
effectuate the purposes of this Act.'';
(14) in paragraph (30) (as redesignated by paragraph (1)), in
subparagraph (B), by striking ``state'' and inserting ``State'';
(15) by striking paragraph (31) (as redesignated by paragraph
(1)) and inserting the following:
``(31) Introducing broker.--
``(A) In general.--The term `introducing broker' means any
person (except an individual who elects to be and is registered
as an associated person of a futures commission merchant)--
``(i) who--
``(I) is engaged in soliciting or in accepting
orders for--
``(aa) the purchase or sale of any commodity
for future delivery, security futures product, or
swap;
``(bb) any agreement, contract, or transaction
described in section 2(c)(2)(C)(i) or section
2(c)(2)(D)(i);
``(cc) any commodity option authorized under
section 4c; or
``(dd) any leverage transaction authorized
under section 19; and
``(II) does not accept any money, securities, or
property (or extend credit in lieu thereof) to margin,
guarantee, or secure any trades or contracts that
result or may result therefrom; or
``(ii) who is registered with the Commission as an
introducing broker.
``(B) Further definition.--The Commission, by rule or
regulation, may include within, or exclude from, the term
`introducing broker' any person who engages in soliciting or
accepting orders for any agreement, contract, or transaction
subject to this Act, and who does not accept any money,
securities, or property (or extend credit in lieu thereof) to
margin, guarantee, or secure any trades or contracts that
result or may result therefrom, if the Commission determines
that the rule or regulation will effectuate the purposes of
this Act.'';
(16) by inserting after paragraph (31) (as redesignated by
paragraph (1)) the following:
``(32) Major security-based swap participant.--The term `major
security-based swap participant' has the meaning given the term in
section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).
``(33) Major swap participant.--
``(A) In general.--The term `major swap participant' means
any person who is not a swap dealer, and--
``(i) maintains a substantial position in swaps for any
of the major swap categories as determined by the
Commission, excluding--
``(I) positions held for hedging or mitigating
commercial risk; and
``(II) positions maintained by any employee benefit
plan (or any contract held by such a plan) as defined
in paragraphs (3) and (32) of section 3 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002)
for the primary purpose of hedging or mitigating any
risk directly associated with the operation of the
plan;
``(ii) whose outstanding swaps create substantial
counterparty exposure that could have serious adverse
effects on the financial stability of the United States
banking system or financial markets; or
``(iii)(I) is a financial entity that is highly
leveraged relative to the amount of capital it holds and
that is not subject to capital requirements established by
an appropriate Federal banking agency; and
``(II) maintains a substantial position in outstanding
swaps in any major swap category as determined by the
Commission.
``(B) Definition of substantial position.--For purposes of
subparagraph (A), the Commission shall define by rule or
regulation the term `substantial position' at the threshold
that the Commission determines to be prudent for the effective
monitoring, management, and oversight of entities that are
systemically important or can significantly impact the
financial system of the United States. In setting the
definition under this subparagraph, the Commission shall
consider the person's relative position in uncleared as opposed
to cleared swaps and may take into consideration the value and
quality of collateral held against counterparty exposures.
``(C) Scope of designation.--For purposes of subparagraph
(A), a person may be designated as a major swap participant for
1 or more categories of swaps without being classified as a
major swap participant for all classes of swaps.
``(D) Exclusions.--The definition under this paragraph
shall not include an entity whose primary business is providing
financing, and uses derivatives for the purpose of hedging
underlying commercial risks related to interest rate and
foreign currency exposures, 90 percent or more of which arise
from financing that facilitates the purchase or lease of
products, 90 percent or more of which are manufactured by the
parent company or another subsidiary of the parent company.'';
(17) by inserting after paragraph (38) (as redesignated by
paragraph (1)) the following:
``(39) Prudential regulator.--The term `prudential regulator'
means--
``(A) the Board in the case of a swap dealer, major swap
participant, security-based swap dealer, or major security-
based swap participant that is--
``(i) a State-chartered bank that is a member of the
Federal Reserve System;
``(ii) a State-chartered branch or agency of a foreign
bank;
``(iii) any foreign bank which does not operate an
insured branch;
``(iv) any organization operating under section 25A of
the Federal Reserve Act or having an agreement with the
Board under section 225 of the Federal Reserve Act;
``(v) any bank holding company (as defined in section 2
of the Bank Holding Company Act of 1965 (12 U.S.C. 1841)),
any foreign bank (as defined in section 1(b)(7) of the
International Banking Act of 1978 (12 U.S.C. 3101(b)(7))
that is treated as a bank holding company under section
8(a) of the International Banking Act of 1978 (12 U.S.C.
3106(a)), and any subsidiary of such a company or foreign
bank (other than a subsidiary that is described in
subparagraph (A) or (B) or that is required to be
registered with the Commission as a swap dealer or major
swap participant under this Act or with the Securities and
Exchange Commission as a security-based swap dealer or
major security-based swap participant);
``(vi) after the transfer date (as defined in section
311 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act), any savings and loan holding company (as
defined in section 10 of the Home Owners' Loan Act (12
U.S.C. 1467a)) and any subsidiary of such company (other
than a subsidiary that is described in subparagraph (A) or
(B) or that is required to be registered as a swap dealer
or major swap participant with the Commission under this
Act or with the Securities and Exchange Commission as a
security-based swap dealer or major security-based swap
participant); or
``(vii) any organization operating under section 25A of
the Federal Reserve Act (12U.S.C. 611 et seq.) or having an
agreement with the Board under section 25 of the Federal
Reserve Act (12 U.S.C. 601 et seq.);
``(B) the Office of the Comptroller of the Currency in the
case of a swap dealer, major swap participant, security-based
swap dealer, or major security-based swap participant that is--
``(i) a national bank;
``(ii) a federally chartered branch or agency of a
foreign bank; or
``(iii) any Federal savings association;
``(C) the Federal Deposit Insurance Corporation in the case
of a swap dealer, major swap participant, security-based swap
dealer, or major security-based swap participant that is--
``(i) a State-chartered bank that is not a member of
the Federal Reserve System; or
``(ii) any State savings association;
``(D) the Farm Credit Administration, in the case of a swap
dealer, major swap participant, security-based swap dealer, or
major security-based swap participant that is an institution
chartered under the Farm Credit Act of 1971 (12 U.S.C. 2001 et
seq.); and
``(E) the Federal Housing Finance Agency in the case of a
swap dealer, major swap participant, security-based swap
dealer, or major security-based swap participant that is a
regulated entity (as such term is defined in section 1303 of
the Federal Housing Enterprises Financial Safety and Soundness
Act of 1992).'';
(18) in paragraph (40) (as redesignated by paragraph (1))--
(A) by striking subparagraph (B);
(B) by redesignating subparagraphs (C), (D), and (E) as
subparagraphs (B), (C), and (F), respectively;
(C) in subparagraph (C) (as so redesignated), by striking
``and''; and
(D) by inserting after subparagraph (C) (as so
redesignated) the following:
``(D) a swap execution facility registered under section
5h;
``(E) a swap data repository registered under section 21;
and'';
(19) by inserting after paragraph (41) (as redesignated by
paragraph (1)) the following:
``(42) Security-based swap.--The term `security-based swap' has
the meaning given the term in section 3(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)).
``(43) Security-based swap dealer.--The term `security-based
swap dealer' has the meaning given the term in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).'';
(20) in paragraph (46) (as redesignated by paragraph (1)), by
striking ``subject to section 2(h)(7)'' and inserting ``subject to
section 2(h)(5)'';
(21) by inserting after paragraph (46) (as redesignated by
paragraph (1)) the following:
``(47) Swap.--
``(A) In general.--Except as provided in subparagraph (B),
the term `swap' means any agreement, contract, or transaction--
``(i) that is a put, call, cap, floor, collar, or
similar option of any kind that is for the purchase or
sale, or based on the value, of 1 or more interest or other
rates, currencies, commodities, securities, instruments of
indebtedness, indices, quantitative measures, or other
financial or economic interests or property of any kind;
``(ii) that provides for any purchase, sale, payment,
or delivery (other than a dividend on an equity security)
that is dependent on the occurrence, nonoccurrence, or the
extent of the occurrence of an event or contingency
associated with a potential financial, economic, or
commercial consequence;
``(iii) that provides on an executory basis for the
exchange, on a fixed or contingent basis, of 1 or more
payments based on the value or level of 1 or more interest
or other rates, currencies, commodities, securities,
instruments of indebtedness, indices, quantitative
measures, or other financial or economic interests or
property of any kind, or any interest therein or based on
the value thereof, and that transfers, as between the
parties to the transaction, in whole or in part, the
financial risk associated with a future change in any such
value or level without also conveying a current or future
direct or indirect ownership interest in an asset
(including any enterprise or investment pool) or liability
that incorporates the financial risk so transferred,
including any agreement, contract, or transaction commonly
known as--
``(I) an interest rate swap;
``(II) a rate floor;
``(III) a rate cap;
``(IV) a rate collar;
``(V) a cross-currency rate swap;
``(VI) a basis swap;
``(VII) a currency swap;
``(VIII) a foreign exchange swap;
``(IX) a total return swap;
``(X) an equity index swap;
``(XI) an equity swap;
``(XII) a debt index swap;
``(XIII) a debt swap;
``(XIV) a credit spread;
``(XV) a credit default swap;
``(XVI) a credit swap;
``(XVII) a weather swap;
``(XVIII) an energy swap;
``(XIX) a metal swap;
``(XX) an agricultural swap;
``(XXI) an emissions swap; and
``(XXII) a commodity swap;
``(iv) that is an agreement, contract, or transaction
that is, or in the future becomes, commonly known to the
trade as a swap;
``(v) including any security-based swap agreement which
meets the definition of `swap agreement' as defined in
section 206A of the Gramm-Leach-Bliley Act (15 U.S.C. 78c
note) of which a material term is based on the price,
yield, value, or volatility of any security or any group or
index of securities, or any interest therein; or
``(vi) that is any combination or permutation of, or
option on, any agreement, contract, or transaction
described in any of clauses (i) through (v).
``(B) Exclusions.--The term `swap' does not include--
``(i) any contract of sale of a commodity for future
delivery (or option on such a contract), leverage contract
authorized under section 19, security futures product, or
agreement, contract, or transaction described in section
2(c)(2)(C)(i) or section 2(c)(2)(D)(i);
``(ii) any sale of a nonfinancial commodity or security
for deferred shipment or delivery, so long as the
transaction is intended to be physically settled;
``(iii) any put, call, straddle, option, or privilege
on any security, certificate of deposit, or group or index
of securities, including any interest therein or based on
the value thereof, that is subject to--
``(I) the Securities Act of 1933 (15 U.S.C. 77a et
seq.); and
``(II) the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.);
``(iv) any put, call, straddle, option, or privilege
relating to a foreign currency entered into on a national
securities exchange registered pursuant to section 6(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78f(a));
``(v) any agreement, contract, or transaction providing
for the purchase or sale of 1 or more securities on a fixed
basis that is subject to--
``(I) the Securities Act of 1933 (15 U.S.C. 77a et
seq.); and
``(II) the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.);
``(vi) any agreement, contract, or transaction
providing for the purchase or sale of 1 or more securities
on a contingent basis that is subject to the Securities Act
of 1933 (15 U.S.C. 77a et seq.) and the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.), unless the agreement,
contract, or transaction predicates the purchase or sale on
the occurrence of a bona fide contingency that might
reasonably be expected to affect or be affected by the
creditworthiness of a party other than a party to the
agreement, contract, or transaction;
``(vii) any note, bond, or evidence of indebtedness
that is a security, as defined in section 2(a)(1) of the
Securities Act of 1933 (15 U.S.C. 77b(a)(1));
``(viii) any agreement, contract, or transaction that
is--
``(I) based on a security; and
``(II) entered into directly or through an
underwriter (as defined in section 2(a)(11) of the
Securities Act of 1933 (15 U.S.C. 77b(a)(11)) by the
issuer of such security for the purposes of raising
capital, unless the agreement, contract, or transaction
is entered into to manage a risk associated with
capital raising;
``(ix) any agreement, contract, or transaction a
counterparty of which is a Federal Reserve bank, the
Federal Government, or a Federal agency that is expressly
backed by the full faith and credit of the United States;
and
``(x) any security-based swap, other than a security-
based swap as described in subparagraph (D).
``(C) Rule of construction regarding master agreements.--
``(i) In general.--Except as provided in clause (ii),
the term `swap' includes a master agreement that provides
for an agreement, contract, or transaction that is a swap
under subparagraph (A), together with each supplement to
any master agreement, without regard to whether the master
agreement contains an agreement, contract, or transaction
that is not a swap pursuant to subparagraph (A).
``(ii) Exception.--For purposes of clause (i), the
master agreement shall be considered to be a swap only with
respect to each agreement, contract, or transaction covered
by the master agreement that is a swap pursuant to
subparagraph (A).
``(D) Mixed swap.--The term `security-based swap' includes
any agreement, contract, or transaction that is as described in
section 3(a)(68)(A) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)(68)(A)) and also is based on the value of 1 or
more interest or other rates, currencies, commodities,
instruments of indebtedness, indices, quantitative measures,
other financial or economic interest or property of any kind
(other than a single security or a narrow-based security
index), or the occurrence, non-occurrence, or the extent of the
occurrence of an event or contingency associated with a
potential financial, economic, or commercial consequence (other
than an event described in subparagraph (A)(iii)).
``(E) Treatment of foreign exchange swaps and forwards.--
``(i) In general.--Foreign exchange swaps and foreign
exchange forwards shall be considered swaps under this
paragraph unless the Secretary makes a written
determination under section 1b that either foreign exchange
swaps or foreign exchange forwards or both--
``(I) should be not be regulated as swaps under
this Act; and
``(II) are not structured to evade the Dodd-Frank
Wall Street Reform and Consumer Protection Act in
violation of any rule promulgated by the Commission
pursuant to section 721(c) of that Act.
``(ii) Congressional notice; effectiveness.--The
Secretary shall submit any written determination under
clause (i) to the appropriate committees of Congress,
including the Committee on Agriculture, Nutrition, and
Forestry of the Senate and the Committee on Agriculture of
the House of Representatives. Any such written
determination by the Secretary shall not be effective until
it is submitted to the appropriate committees of Congress.
``(iii) Reporting.--Notwithstanding a written
determination by the Secretary under clause (i), all
foreign exchange swaps and foreign exchange forwards shall
be reported to either a swap data repository, or, if there
is no swap data repository that would accept such swaps or
forwards, to the Commission pursuant to section 4r within
such time period as the Commission may by rule or
regulation prescribe.
``(iv) Business standards.--Notwithstanding a written
determination by the Secretary pursuant to clause (i), any
party to a foreign exchange swap or forward that is a swap
dealer or major swap participant shall conform to the
business conduct standards contained in section 4s(h).
``(v) Secretary.--For purposes of this subparagraph,
the term `Secretary' means the Secretary of the Treasury.
``(F) Exception for certain foreign exchange swaps and
forwards.--
``(i) Registered entities.--Any foreign exchange swap
and any foreign exchange forward that is listed and traded
on or subject to the rules of a designated contract market
or a swap execution facility, or that is cleared by a
derivatives clearing organization, shall not be exempt from
any provision of this Act or amendments made by the Wall
Street Transparency and Accountability Act of 2010
prohibiting fraud or manipulation.
``(ii) Retail transactions.--Nothing in subparagraph
(E) shall affect, or be construed to affect, the
applicability of this Act or the jurisdiction of the
Commission with respect to agreements, contracts, or
transactions in foreign currency pursuant to section
2(c)(2).
``(48) Swap data repository.--The term `swap data repository'
means any person that collects and maintains information or records
with respect to transactions or positions in, or the terms and
conditions of, swaps entered into by third parties for the purpose
of providing a centralized recordkeeping facility for swaps.
``(49) Swap dealer.--
``(A) In general.--The term `swap dealer' means any person
who--
``(i) holds itself out as a dealer in swaps;
``(ii) makes a market in swaps;
``(iii) regularly enters into swaps with counterparties
as an ordinary course of business for its own account; or
``(iv) engages in any activity causing the person to be
commonly known in the trade as a dealer or market maker in
swaps,
provided however, in no event shall an insured depository
institution be considered to be a swap dealer to the extent it
offers to enter into a swap with a customer in connection with
originating a loan with that customer.
``(B) Inclusion.--A person may be designated as a swap
dealer for a single type or single class or category of swap or
activities and considered not to be a swap dealer for other
types, classes, or categories of swaps or activities.
``(C) Exception.--The term `swap dealer' does not include a
person that enters into swaps for such person's own account,
either individually or in a fiduciary capacity, but not as a
part of a regular business.
``(D) De minimis exception.--The Commission shall exempt
from designation as a swap dealer an entity that engages in a
de minimis quantity of swap dealing in connection with
transactions with or on behalf of its customers. The Commission
shall promulgate regulations to establish factors with respect
to the making of this determination to exempt.
``(50) Swap execution facility.--The term `swap execution
facility' means a trading system or platform in which multiple
participants have the ability to execute or trade swaps by
accepting bids and offers made by multiple participants in the
facility or system, through any means of interstate commerce,
including any trading facility, that--
``(A) facilitates the execution of swaps between persons;
and
``(B) is not a designated contract market.''.
(22) in paragraph (51) (as redesignated by paragraph (1)), in
subparagraph (A)(i), by striking ``partipants'' and inserting
``participants''.
(b) Authority To Define Terms.--The Commodity Futures Trading
Commission may adopt a rule to define--
(1) the term ``commercial risk''; and
(2) any other term included in an amendment to the Commodity
Exchange Act (7 U.S.C. 1 et seq.) made by this subtitle.
(c) Modification of Definitions.--To include transactions and
entities that have been structured to evade this subtitle (or an
amendment made by this subtitle), the Commodity Futures Trading
Commission shall adopt a rule to further define the terms ``swap'',
``swap dealer'', ``major swap participant'', and ``eligible contract
participant''.
(d) Exemptions.--Section 4(c)(1) of the Commodity Exchange Act (7
U.S.C. 6(c)(1)) is amended by striking ``except that'' and all that
follows through the period at the end and inserting the following:
``except that--
``(A) unless the Commission is expressly authorized by any
provision described in this subparagraph to grant exemptions, with
respect to amendments made by subtitle A of the Wall Street
Transparency and Accountability Act of 2010--
``(i) with respect to--
``(I) paragraphs (2), (3), (4), (5), and (7), paragraph
(18)(A)(vii)(III), paragraphs (23), (24), (31), (32), (38),
(39), (41), (42), (46), (47), (48), and (49) of section 1a,
and sections 2(a)(13), 2(c)(1)(D), 4a(a), 4a(b), 4d(c),
4d(d), 4r, 4s, 5b(a), 5b(b), 5(d), 5(g), 5(h), 5b(c),
5b(i), 8e, and 21; and
``(II) section 206(e) of the Gramm-Leach-Bliley Act
(Public Law 106-102; 15 U.S.C. 78c note); and
``(ii) in sections 721(c) and 742 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act; and
``(B) the Commission and the Securities and Exchange Commission
may by rule, regulation, or order jointly exclude any agreement,
contract, or transaction from section 2(a)(1)(D)) if the
Commissions determine that the exemption would be consistent with
the public interest.''.
(e) Conforming Amendments.--
(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(B)(i)(II)) is amended--
(A) in item (cc)--
(i) in subitem (AA), by striking ``section 1a(20)'' and
inserting ``section 1a''; and
(ii) in subitem (BB), by striking ``section 1a(20)''
and inserting ``section 1a''; and
(B) in item (dd), by striking ``section 1a(12)(A)(ii)'' and
inserting ``section 1a(18)(A)(ii)''.
(2) Section 4m(3) of the Commodity Exchange Act (7 U.S.C.
6m(3)) is amended by striking ``section 1a(6)'' and inserting
``section 1a''.
(3) Section 4q(a)(1) of the Commodity Exchange Act (7 U.S.C.
6o-1(a)(1)) is amended by striking ``section 1a(4)'' and inserting
``section 1a(9)''.
(4) Section 5(e)(1) of the Commodity Exchange Act (7 U.S.C.
7(e)(1)) is amended by striking ``section 1a(4)'' and inserting
``section 1a(9)''.
(5) Section 5a(b)(2)(F) of the Commodity Exchange Act (7 U.S.C.
7a(b)(2)(F)) is amended by striking ``section 1a(4)'' and inserting
``section 1a(9)''.
(6) Section 5b(a) of the Commodity Exchange Act (7 U.S.C. 7a-
1(a)) is amended, in the matter preceding paragraph (1), by
striking ``section 1a(9)'' and inserting ``section 1a''.
(7) Section 5c(c)(2)(B) of the Commodity Exchange Act (7 U.S.C.
7a-2(c)(2)(B)) is amended by striking ``section 1a(4)'' and
inserting ``section 1a(9)''.
(8) Section 6(g)(5)(B)(i) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(5)(B)(i)) is amended--
(A) in subclause (I), by striking ``section 1a(12)(B)(ii)''
and inserting ``section 1a(18)(B)(ii)''; and
(B) in subclause (II), by striking ``section 1a(12)'' and
inserting ``section 1a(18)''.
(9) Section 402 of the Legal Certainty for Bank Products Act of
2000 (7 U.S.C. 27 et seq.) is amended--
(A) in subsection (a)(7), by striking ``section 1a(20)''
and inserting ``section 1a'';
(B) in subsection (b)(2), by striking ``section 1a(12)''
and inserting ``section 1a''; and
(C) in subsection (c), by striking ``section 1a(4)'' and
inserting ``section 1a''.
(10) The first section of Public Law 85-839 (7 U.S.C. 13-1) is
amended in subsection (a), in the first sentence, by inserting
``motion picture box office receipts (or any index, measure, value,
or data related to such receipts) or'' after ``sale of''.
(f) Effective Date.--Notwithstanding any other provision of this
Act, the amendments made by subsection (a)(4) shall take effect on June
1, 2010.
SEC. 722. JURISDICTION.
(a) Exclusive Jurisdiction.--Section 2(a)(1) of the Commodity
Exchange Act (7 U.S.C. 2(a)(1)) is amended--
(1) in subparagraph (A), in the first sentence--
(A) by inserting ``the Wall Street Transparency and
Accountability Act of 2010 (including an amendment made by that
Act) and'' after ``otherwise provided in'';
(B) by striking ``(C) and (D)'' and inserting ``(C), (D),
and (I)'';
(C) by striking ``(c) through (i) of this section'' and
inserting ``(c) and (f)'';
(D) by striking ``contracts of sale'' and inserting ``swaps
or contracts of sale''; and
(E) by striking ``or derivatives transaction execution
facility registered pursuant to section 5 or 5a'' and inserting
``pursuant to section 5 or a swap execution facility pursuant
to section 5h''; and
(2) by adding at the end the following:
``(G)(i) Nothing in this paragraph shall limit the
jurisdiction conferred on the Securities and Exchange
Commission by the Wall Street Transparency and Accountability
Act of 2010 with regard to security-based swap agreements as
defined pursuant to section 3(a)(78) of the Securities Exchange
Act of 1934, and security-based swaps.
``(ii) In addition to the authority of the Securities and
Exchange Commission described in clause (i), nothing in this
subparagraph shall limit or affect any statutory authority of
the Commission with respect to an agreement, contract, or
transaction described in clause (i).
``(H) Notwithstanding any other provision of law, the Wall
Street Transparency and Accountability Act of 2010 shall not
apply to, and the Commodity Futures Trading Commission shall
have no jurisdiction under such Act (or any amendments to the
Commodity Exchange Act made by such Act) with respect to, any
security other than a security-based swap.''.
(b) Regulation of Swaps Under Federal and State Law.--Section 12 of
the Commodity Exchange Act (7 U.S.C. 16) is amended by adding at the
end the following:
``(h) Regulation of Swaps as Insurance Under State Law.--A swap--
``(1) shall not be considered to be insurance; and
``(2) may not be regulated as an insurance contract under the
law of any State.''.
(c) Agreements, Contracts, and Transactions Traded on an Organized
Exchange.--Section 2(c)(2)(A) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)(A)) is amended--
(1) in clause (i), by striking ``or'' at the end;
(2) by redesignating clause (ii) as clause (iii); and
(3) by inserting after clause (i) the following:
``(ii) a swap; or''.
(d) Applicability.--Section 2 of the Commodity Exchange Act (7
U.S.C. 2) (as amended by section 723(a)(3)) is amended by adding at the
end the following:
``(i) Applicability.--The provisions of this Act relating to swaps
that were enacted by the Wall Street Transparency and Accountability
Act of 2010 (including any rule prescribed or regulation promulgated
under that Act), shall not apply to activities outside the United
States unless those activities--
``(1) have a direct and significant connection with activities
in, or effect on, commerce of the United States; or
``(2) contravene such rules or regulations as the Commission
may prescribe or promulgate as are necessary or appropriate to
prevent the evasion of any provision of this Act that was enacted
by the Wall Street Transparency and Accountability Act of 2010.''.
(e) Federal Energy Regulatory Commission.--Section 2(a)(1) of the
Commodity Exchange Act (7 U.S.C. 2(a)(1)) is amended by adding at the
end the following:
``(I)(i) Nothing in this Act shall limit or affect any
statutory authority of the Federal Energy Regulatory Commission
or a State regulatory authority (as defined in section 3(21) of
the Federal Power Act (16 U.S.C. 796(21)) with respect to an
agreement, contract, or transaction that is entered into
pursuant to a tariff or rate schedule approved by the Federal
Energy Regulatory Commission or a State regulatory authority
and is--
``(I) not executed, traded, or cleared on a registered
entity or trading facility; or
``(II) executed, traded, or cleared on a registered
entity or trading facility owned or operated by a regional
transmission organization or independent system operator.
``(ii) In addition to the authority of the Federal Energy
Regulatory Commission or a State regulatory authority described
in clause (i), nothing in this subparagraph shall limit or
affect--
``(I) any statutory authority of the Commission with
respect to an agreement, contract, or transaction described
in clause (i); or
``(II) the jurisdiction of the Commission under
subparagraph (A) with respect to an agreement, contract, or
transaction that is executed, traded, or cleared on a
registered entity or trading facility that is not owned or
operated by a regional transmission organization or
independent system operator (as defined by sections 3(27)
and (28) of the Federal Power Act (16 U.S.C. 796(27),
796(28)).''.
(f) Public Interest Waiver.--Section 4(c) of the Commodity Exchange
Act (7 U.S.C. 6(c)) (as amended by section 721(d)) is amended by adding
at the end the following:
``(6) If the Commission determines that the exemption would be
consistent with the public interest and the purposes of this Act,
the Commission shall, in accordance with paragraphs (1) and (2),
exempt from the requirements of this Act an agreement, contract, or
transaction that is entered into--
``(A) pursuant to a tariff or rate schedule approved or
permitted to take effect by the Federal Energy Regulatory
Commission;
``(B) pursuant to a tariff or rate schedule establishing
rates or charges for, or protocols governing, the sale of
electric energy approved or permitted to take effect by the
regulatory authority of the State or municipality having
jurisdiction to regulate rates and charges for the sale of
electric energy within the State or municipality; or
``(C) between entities described in section 201(f) of the
Federal Power Act (16 U.S.C. 824(f)).''.
(g) Authority of FERC.--Nothing in the Wall Street Transparency and
Accountability Act of 2010 or the amendments to the Commodity Exchange
Act made by such Act shall limit or affect any statutory enforcement
authority of the Federal Energy Regulatory Commission pursuant to
section 222 of the Federal Power Act and section 4A of the Natural Gas
Act that existed prior to the date of enactment of the Wall Street
Transparency and Accountability Act of 2010.
(h) Determination.--The Commodity Exchange Act is amended by
inserting after section 1a (7 U.S.C. 1a) the following:
``SEC. 1b. REQUIREMENTS OF SECRETARY OF THE TREASURY REGARDING
EXEMPTION OF FOREIGN EXCHANGE SWAPS AND FOREIGN EXCHANGE FORWARDS
FROM DEFINITION OF THE TERM `SWAP'.
``(a) Required Considerations.--In determining whether to exempt
foreign exchange swaps and foreign exchange forwards from the
definition of the term `swap', the Secretary of the Treasury (referred
to in this section as the `Secretary') shall consider--
``(1) whether the required trading and clearing of foreign
exchange swaps and foreign exchange forwards would create systemic
risk, lower transparency, or threaten the financial stability of
the United States;
``(2) whether foreign exchange swaps and foreign exchange
forwards are already subject to a regulatory scheme that is
materially comparable to that established by this Act for other
classes of swaps;
``(3) the extent to which bank regulators of participants in
the foreign exchange market provide adequate supervision, including
capital and margin requirements;
``(4) the extent of adequate payment and settlement systems;
and
``(5) the use of a potential exemption of foreign exchange
swaps and foreign exchange forwards to evade otherwise applicable
regulatory requirements.
``(b) Determination.--If the Secretary makes a determination to
exempt foreign exchange swaps and foreign exchange forwards from the
definition of the term `swap', the Secretary shall submit to the
appropriate committees of Congress a determination that contains--
``(1) an explanation regarding why foreign exchange swaps and
foreign exchange forwards are qualitatively different from other
classes of swaps in a way that would make the foreign exchange
swaps and foreign exchange forwards ill-suited for regulation as
swaps; and
``(2) an identification of the objective differences of foreign
exchange swaps and foreign exchange forwards with respect to
standard swaps that warrant an exempted status.
``(c) Effect of Determination.--A determination by the Secretary
under subsection (b) shall not exempt any foreign exchange swaps and
foreign exchange forwards traded on a designated contract market or
swap execution facility from any applicable antifraud and
antimanipulation provision under this title.''.
SEC. 723. CLEARING.
(a) Clearing Requirement.--
(1) In general.--Section 2 of the Commodity Exchange Act (7
U.S.C. 2) is amended--
(A) by striking subsections (d), (e), (g), and (h); and
(B) by redesignating subsection (i) as subsection (g).
(2) Swaps; limitation on participation.--Section 2 of the
Commodity Exchange Act (7 U.S.C. 2) (as amended by paragraph (1))
is amended by inserting after subsection (c) the following:
``(d) Swaps.--Nothing in this Act (other than subparagraphs (A),
(B), (C), (D), (G), and (H) of subsection (a)(1), subsections (f) and
(g), sections 1a, 2(a)(13), 2(c)(2)(A)(ii), 2(e), 2(h), 4(c), 4a, 4b,
and 4b-1, subsections (a), (b), and (g) of section 4c, sections 4d, 4e,
4f, 4g, 4h, 4i, 4j, 4k, 4l, 4m, 4n, 4o, 4p, 4r, 4s, 4t, 5, 5b, 5c, 5e,
and 5h, subsections (c) and (d) of section 6, sections 6c, 6d, 8, 8a,
and 9, subsections (e)(2), (f), and (h) of section 12, subsections (a)
and (b) of section 13, sections 17, 20, 21, and 22(a)(4), and any other
provision of this Act that is applicable to registered entities or
Commission registrants) governs or applies to a swap.
``(e) Limitation on Participation.--It shall be unlawful for any
person, other than an eligible contract participant, to enter into a
swap unless the swap is entered into on, or subject to the rules of, a
board of trade designated as a contract market under section 5.''.
(3) Mandatory clearing of swaps.--Section 2 of the Commodity
Exchange Act (7 U.S.C. 2) is amended by inserting after subsection
(g) (as redesignated by paragraph (1)(B)) the following:
``(h) Clearing Requirement.--
``(1) In general.--
``(A) Standard for clearing.--It shall be unlawful for any
person to engage in a swap unless that person submits such swap
for clearing to a derivatives clearing organization that is
registered under this Act or a derivatives clearing
organization that is exempt from registration under this Act if
the swap is required to be cleared.
``(B) Open access.--The rules of a derivatives clearing
organization described in subparagraph (A) shall--
``(i) prescribe that all swaps (but not contracts of
sale of a commodity for future delivery or options on such
contracts) submitted to the derivatives clearing
organization with the same terms and conditions are
economically equivalent within the derivatives clearing
organization and may be offset with each other within the
derivatives clearing organization; and
``(ii) provide for non-discriminatory clearing of a
swap (but not a contract of sale of a commodity for future
delivery or option on such contract) executed bilaterally
or on or through the rules of an unaffiliated designated
contract market or swap execution facility.
``(2) Commission review.--
``(A) Commission-initiated review.--
``(i) The Commission on an ongoing basis shall review
each swap, or any group, category, type, or class of swaps
to make a determination as to whether the swap or group,
category, type, or class of swaps should be required to be
cleared.
``(ii) The Commission shall provide at least a 30-day
public comment period regarding any determination made
under clause (i).
``(B) Swap submissions.--
``(i) A derivatives clearing organization shall submit
to the Commission each swap, or any group, category, type,
or class of swaps that it plans to accept for clearing, and
provide notice to its members (in a manner to be determined
by the Commission) of the submission.
``(ii) Any swap or group, category, type, or class of
swaps listed for clearing by a derivative clearing
organization as of the date of enactment of this subsection
shall be considered submitted to the Commission.
``(iii) The Commission shall--
``(I) make available to the public submissions
received under clauses (i) and (ii);
``(II) review each submission made under clauses
(i) and (ii), and determine whether the swap, or group,
category, type, or class of swaps described in the
submission is required to be cleared; and
``(III) provide at least a 30-day public comment
period regarding its determination as to whether the
clearing requirement under paragraph (1)(A) shall apply
to the submission.
``(C) Deadline.--The Commission shall make its
determination under subparagraph (B)(iii) not later than 90
days after receiving a submission made under subparagraphs
(B)(i) and (B)(ii), unless the submitting derivatives clearing
organization agrees to an extension for the time limitation
established under this subparagraph.
``(D) Determination.--
``(i) In reviewing a submission made under subparagraph
(B), the Commission shall review whether the submission is
consistent with section 5b(c)(2).
``(ii) In reviewing a swap, group of swaps, or class of
swaps pursuant to subparagraph (A) or a submission made
under subparagraph (B), the Commission shall take into
account the following factors:
``(I) The existence of significant outstanding
notional exposures, trading liquidity, and adequate
pricing data.
``(II) The availability of rule framework,
capacity, operational expertise and resources, and
credit support infrastructure to clear the contract on
terms that are consistent with the material terms and
trading conventions on which the contract is then
traded.
``(III) The effect on the mitigation of systemic
risk, taking into account the size of the market for
such contract and the resources of the derivatives
clearing organization available to clear the contract.
``(IV) The effect on competition, including
appropriate fees and charges applied to clearing.
``(V) The existence of reasonable legal certainty
in the event of the insolvency of the relevant
derivatives clearing organization or 1 or more of its
clearing members with regard to the treatment of
customer and swap counterparty positions, funds, and
property.
``(iii) In making a determination under subparagraph
(A) or (B)(iii) that the clearing requirement shall apply,
the Commission may require such terms and conditions to the
requirement as the Commission determines to be appropriate.
``(E) Rules.--Not later than 1 year after the date of the
enactment of this subsection, the Commission shall adopt rules
for a derivatives clearing organization's submission for
review, pursuant to this paragraph, of a swap, or a group,
category, type, or class of swaps, that it seeks to accept for
clearing. Nothing in this subparagraph limits the Commission
from making a determination under subparagraph (B)(iii) for
swaps described in subparagraph (B)(ii).
``(3) Stay of clearing requirement.--
``(A) In general.--After making a determination pursuant to
paragraph (2)(B), the Commission, on application of a
counterparty to a swap or on its own initiative, may stay the
clearing requirement of paragraph (1) until the Commission
completes a review of the terms of the swap (or the group,
category, type, or class of swaps) and the clearing
arrangement.
``(B) Deadline.--The Commission shall complete a review
undertaken pursuant to subparagraph (A) not later than 90 days
after issuance of the stay, unless the derivatives clearing
organization that clears the swap, or group, category, type, or
class of swaps agrees to an extension of the time limitation
established under this subparagraph.
``(C) Determination.--Upon completion of the review
undertaken pursuant to subparagraph (A), the Commission may--
``(i) determine, unconditionally or subject to such
terms and conditions as the Commission determines to be
appropriate, that the swap, or group, category, type, or
class of swaps must be cleared pursuant to this subsection
if it finds that such clearing is consistent with paragraph
(2)(D); or
``(ii) determine that the clearing requirement of
paragraph (1) shall not apply to the swap, or group,
category, type, or class of swaps.
``(D) Rules.--Not later than 1 year after the date of the
enactment of the Wall Street Transparency and Accountability
Act of 2010, the Commission shall adopt rules for reviewing,
pursuant to this paragraph, a derivatives clearing
organization's clearing of a swap, or a group, category, type,
or class of swaps, that it has accepted for clearing.
``(4) Prevention of evasion.--
``(A) In general.--The Commission shall prescribe rules
under this subsection (and issue interpretations of rules
prescribed under this subsection) as determined by the
Commission to be necessary to prevent evasions of the mandatory
clearing requirements under this Act.
``(B) Duty of commission to investigate and take certain
actions.--To the extent the Commission finds that a particular
swap, group, category, type, or class of swaps would otherwise
be subject to mandatory clearing but no derivatives clearing
organization has listed the swap, group, category, type, or
class of swaps for clearing, the Commission shall--
``(i) investigate the relevant facts and circumstances;
``(ii) within 30 days issue a public report containing
the results of the investigation; and
``(iii) take such actions as the Commission determines
to be necessary and in the public interest, which may
include requiring the retaining of adequate margin or
capital by parties to the swap, group, category, type, or
class of swaps.
``(C) Effect on authority.--Nothing in this paragraph--
``(i) authorizes the Commission to adopt rules
requiring a derivatives clearing organization to list for
clearing a swap, group, category, type, or class of swaps
if the clearing of the swap, group, category, type, or
class of swaps would threaten the financial integrity of
the derivatives clearing organization; and
``(ii) affects the authority of the Commission to
enforce the open access provisions of paragraph (1)(B) with
respect to a swap, group, category, type, or class of swaps
that is listed for clearing by a derivatives clearing
organization.
``(5) Reporting transition rules.--Rules adopted by the
Commission under this section shall provide for the reporting of
data, as follows:
``(A) Swaps entered into before the date of the enactment
of this subsection shall be reported to a registered swap data
repository or the Commission no later than 180 days after the
effective date of this subsection.
``(B) Swaps entered into on or after such date of enactment
shall be reported to a registered swap data repository or the
Commission no later than the later of--
``(i) 90 days after such effective date; or
``(ii) such other time after entering into the swap as
the Commission may prescribe by rule or regulation.
``(6) Clearing transition rules.--
``(A) Swaps entered into before the date of the enactment
of this subsection are exempt from the clearing requirements of
this subsection if reported pursuant to paragraph (5)(A).
``(B) Swaps entered into before application of the clearing
requirement pursuant to this subsection are exempt from the
clearing requirements of this subsection if reported pursuant
to paragraph (5)(B).
``(7) Exceptions.--
``(A) In general.--The requirements of paragraph (1)(A)
shall not apply to a swap if 1 of the counterparties to the
swap--
``(i) is not a financial entity;
``(ii) is using swaps to hedge or mitigate commercial
risk; and
``(iii) notifies the Commission, in a manner set forth
by the Commission, how it generally meets its financial
obligations associated with entering into non-cleared
swaps.
``(B) Option to clear.--The application of the clearing
exception in subparagraph (A) is solely at the discretion of
the counterparty to the swap that meets the conditions of
clauses (i) through (iii) of subparagraph (A).
``(C) Financial entity definition.--
``(i) In general.--For the purposes of this paragraph,
the term `financial entity' means--
``(I) a swap dealer;
``(II) a security-based swap dealer;
``(III) a major swap participant;
``(IV) a major security-based swap participant;
``(V) a commodity pool;
``(VI) a private fund as defined in section 202(a)
of the Investment Advisers Act of 1940 (15 U.S.C. 80-b-
2(a));
``(VII) an employee benefit plan as defined in
paragraphs (3) and (32) of section 3 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.
1002);
``(VIII) a person predominantly engaged in
activities that are in the business of banking, or in
activities that are financial in nature, as defined in
section 4(k) of the Bank Holding Company Act of 1956.
``(ii) Exclusion.--The Commission shall consider
whether to exempt small banks, savings associations, farm
credit system institutions, and credit unions, including--
``(I) depository institutions with total assets of
$10,000,000,000 or less;
``(II) farm credit system institutions with total
assets of $10,000,000,000 or less; or
``(III) credit unions with total assets of
$10,000,000,000 or less.
``(iii) Limitation.--Such definition shall not include
an entity whose primary business is providing financing,
and uses derivatives for the purpose of hedging underlying
commercial risks related to interest rate and foreign
currency exposures, 90 percent or more of which arise from
financing that facilitates the purchase or lease of
products, 90 percent or more of which are manufactured by
the parent company or another subsidiary of the parent
company.
``(D) Treatment of affiliates.--
``(i) In general.--An affiliate of a person that
qualifies for an exception under subparagraph (A)
(including affiliate entities predominantly engaged in
providing financing for the purchase of the merchandise or
manufactured goods of the person) may qualify for the
exception only if the affiliate, acting on behalf of the
person and as an agent, uses the swap to hedge or mitigate
the commercial risk of the person or other affiliate of the
person that is not a financial entity.
``(ii) Prohibition relating to certain affiliates.--The
exception in clause (i) shall not apply if the affiliate
is--
``(I) a swap dealer;
``(II) a security-based swap dealer;
``(III) a major swap participant;
``(IV) a major security-based swap participant;
``(V) an issuer that would be an investment
company, as defined in section 3 of the Investment
Company Act of 1940 (15 U.S.C. 80a-3), but for
paragraph (1) or (7) of subsection (c) of that Act (15
U.S.C. 80a-3(c));
``(VI) a commodity pool; or
``(VII) a bank holding company with over
$50,000,000,000 in consolidated assets.
``(iii) Transition rule for affiliates.--An affiliate,
subsidiary, or a wholly owned entity of a person that
qualifies for an exception under subparagraph (A) and is
predominantly engaged in providing financing for the
purchase or lease of merchandise or manufactured goods of
the person shall be exempt from the margin requirement
described in section 4s(e) and the clearing requirement
described in paragraph (1) with regard to swaps entered
into to mitigate the risk of the financing activities for
not less than a 2-year period beginning on the date of
enactment of this clause.
``(E) Election of counterparty.--
``(i) Swaps required to be cleared.--With respect to
any swap that is subject to the mandatory clearing
requirement under this subsection and entered into by a
swap dealer or a major swap participant with a counterparty
that is not a swap dealer, major swap participant,
security-based swap dealer, or major security-based swap
participant, the counterparty shall have the sole right to
select the derivatives clearing organization at which the
swap will be cleared.
``(ii) Swaps not required to be cleared.--With respect
to any swap that is not subject to the mandatory clearing
requirement under this subsection and entered into by a
swap dealer or a major swap participant with a counterparty
that is not a swap dealer, major swap participant,
security-based swap dealer, or major security-based swap
participant, the counterparty--
``(I) may elect to require clearing of the swap;
and
``(II) shall have the sole right to select the
derivatives clearing organization at which the swap
will be cleared.
``(F) Abuse of exception.--The Commission may prescribe
such rules or issue interpretations of the rules as the
Commission determines to be necessary to prevent abuse of the
exceptions described in this paragraph. The Commission may also
request information from those persons claiming the clearing
exception as necessary to prevent abuse of the exceptions
described in this paragraph.
``(8) Trade execution.--
``(A) In general.--With respect to transactions involving
swaps subject to the clearing requirement of paragraph (1),
counterparties shall--
``(i) execute the transaction on a board of trade
designated as a contract market under section 5; or
``(ii) execute the transaction on a swap execution
facility registered under 5h or a swap execution facility
that is exempt from registration under section 5h(f) of
this Act.
``(B) Exception.--The requirements of clauses (i) and (ii)
of subparagraph (A) shall not apply if no board of trade or
swap execution facility makes the swap available to trade or
for swap transactions subject to the clearing exception under
paragraph (7).''.
(b) Commodity Exchange Act.--Section 2 of the Commodity Exchange
Act (7 U.S.C. 2) is amended by adding at the end the following:
``(j) Committee Approval by Board.--Exemptions from the
requirements of subsection (h)(1) to clear a swap and subsection (h)(8)
to execute a swap through a board of trade or swap execution facility
shall be available to a counterparty that is an issuer of securities
that are registered under section 12 of the Securities Exchange Act of
1934 (15 U.S.C. 78l) or that is required to file reports pursuant to
section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
only if an appropriate committee of the issuer's board or governing
body has reviewed and approved its decision to enter into swaps that
are subject to such exemptions.''.
(c) Grandfather Provisions.--
(1) Legal certainty for certain transactions in exempt
commodities.--Not later than 60 days after the date of enactment of
this Act, a person may submit to the Commodity Futures Trading
Commission a petition to remain subject to section 2(h) of the
Commodity Exchange Act (7 U.S.C. 2(h)) (as in effect on the day
before the date of enactment of this Act).
(2) Consideration; authority of commodity futures trading
commission.--The Commodity Futures Trading Commission--
(A) shall consider any petition submitted under
subparagraph (A) in a prompt manner; and
(B) may allow a person to continue operating subject to
section 2(h) of the Commodity Exchange Act (7 U.S.C. 2(h)) (as
in effect on the day before the date of enactment of this Act)
for not longer than a 1-year period.
(3) Agricultural swaps.--
(A) In general.--Except as provided in subparagraph (B), no
person shall offer to enter into, enter into, or confirm the
execution of, any swap in an agricultural commodity (as defined
by the Commodity Futures Trading Commission).
(B) Exception.--Notwithstanding subparagraph (A), a person
may offer to enter into, enter into, or confirm the execution
of, any swap in an agricultural commodity pursuant to section
4(c) of the Commodity Exchange Act (7 U.S.C. 6(c)) or any rule,
regulation, or order issued thereunder (including any rule,
regulation, or order in effect as of the date of enactment of
this Act) by the Commodity Futures Trading Commission to allow
swaps under such terms and conditions as the Commission shall
prescribe.
(4) Required reporting.--If the exception described in section
2(h)(8)(B) of the Commodity Exchange Act applies, the
counterparties shall comply with any recordkeeping and transaction
reporting requirements that may be prescribed by the Commission
with respect to swaps subject to section 2(h)(8)(B) of the
Commodity Exchange Act.
SEC. 724. SWAPS; SEGREGATION AND BANKRUPTCY TREATMENT.
(a) Segregation Requirements for Cleared Swaps.--Section 4d of the
Commodity Exchange Act (7 U.S.C. 6d) (as amended by section 732) is
amended by adding at the end the following:
``(f) Swaps.--
``(1) Registration requirement.--It shall be unlawful for any
person to accept any money, securities, or property (or to extend
any credit in lieu of money, securities, or property) from, for, or
on behalf of a swaps customer to margin, guarantee, or secure a
swap cleared by or through a derivatives clearing organization
(including money, securities, or property accruing to the customer
as the result of such a swap), unless the person shall have
registered under this Act with the Commission as a futures
commission merchant, and the registration shall not have expired
nor been suspended nor revoked.
``(2) Cleared swaps.--
``(A) Segregation required.--A futures commission merchant
shall treat and deal with all money, securities, and property
of any swaps customer received to margin, guarantee, or secure
a swap cleared by or though a derivatives clearing organization
(including money, securities, or property accruing to the swaps
customer as the result of such a swap) as belonging to the
swaps customer.
``(B) Commingling prohibited.--Money, securities, and
property of a swaps customer described in subparagraph (A)
shall be separately accounted for and shall not be commingled
with the funds of the futures commission merchant or be used to
margin, secure, or guarantee any trades or contracts of any
swaps customer or person other than the person for whom the
same are held.
``(3) Exceptions.--
``(A) Use of funds.--
``(i) In general.--Notwithstanding paragraph (2),
money, securities, and property of swap customers of a
futures commission merchant described in paragraph (2) may,
for convenience, be commingled and deposited in the same
account or accounts with any bank or trust company or with
a derivatives clearing organization.
``(ii) Withdrawal.--Notwithstanding paragraph (2), such
share of the money, securities, and property described in
clause (i) as in the normal course of business shall be
necessary to margin, guarantee, secure, transfer, adjust,
or settle a cleared swap with a derivatives clearing
organization, or with any member of the derivatives
clearing organization, may be withdrawn and applied to such
purposes, including the payment of commissions, brokerage,
interest, taxes, storage, and other charges, lawfully
accruing in connection with the cleared swap.
``(B) Commission action.--Notwithstanding paragraph (2), in
accordance with such terms and conditions as the Commission may
prescribe by rule, regulation, or order, any money, securities,
or property of the swaps customers of a futures commission
merchant described in paragraph (2) may be commingled and
deposited in customer accounts with any other money,
securities, or property received by the futures commission
merchant and required by the Commission to be separately
accounted for and treated and dealt with as belonging to the
swaps customer of the futures commission merchant.
``(4) Permitted investments.--Money described in paragraph (2)
may be invested in obligations of the United States, in general
obligations of any State or of any political subdivision of a
State, and in obligations fully guaranteed as to principal and
interest by the United States, or in any other investment that the
Commission may by rule or regulation prescribe, and such
investments shall be made in accordance with such rules and
regulations and subject to such conditions as the Commission may
prescribe.
``(5) Commodity contract.--A swap cleared by or through a
derivatives clearing organization shall be considered to be a
commodity contract as such term is defined in section 761 of title
11, United States Code, with regard to all money, securities, and
property of any swaps customer received by a futures commission
merchant or a derivatives clearing organization to margin,
guarantee, or secure the swap (including money, securities, or
property accruing to the customer as the result of the swap).
``(6) Prohibition.--It shall be unlawful for any person,
including any derivatives clearing organization and any depository
institution, that has received any money, securities, or property
for deposit in a separate account or accounts as provided in
paragraph (2) to hold, dispose of, or use any such money,
securities, or property as belonging to the depositing futures
commission merchant or any person other than the swaps customer of
the futures commission merchant.''.
(b) Bankruptcy Treatment of Cleared Swaps.--Section 761 of title
11, United States Code, is amended--
(1) in paragraph (4), by striking subparagraph (F) and
inserting the following:
``(F)(i) any other contract, option, agreement, or
transaction that is similar to a contract, option, agreement,
or transaction referred to in this paragraph; and
``(ii) with respect to a futures commission merchant or a
clearing organization, any other contract, option, agreement,
or transaction, in each case, that is cleared by a clearing
organization;''; and
(2) in paragraph (9)(A)(i), by striking ``the commodity futures
account'' and inserting ``a commodity contract account''.
(c) Segregation Requirements for Uncleared Swaps.--Section 4s of
the Commodity Exchange Act (as added by section 731) is amended by
adding at the end the following:
``(l) Segregation Requirements.--
``(1) Segregation of assets held as collateral in uncleared
swap transactions.--
``(A) Notification.--A swap dealer or major swap
participant shall be required to notify the counterparty of the
swap dealer or major swap participant at the beginning of a
swap transaction that the counterparty has the right to require
segregation of the funds or other property supplied to margin,
guarantee, or secure the obligations of the counterparty.
``(B) Segregation and maintenance of funds.--At the request
of a counterparty to a swap that provides funds or other
property to a swap dealer or major swap participant to margin,
guarantee, or secure the obligations of the counterparty, the
swap dealer or major swap participant shall--
``(i) segregate the funds or other property for the
benefit of the counterparty; and
``(ii) in accordance with such rules and regulations as
the Commission may promulgate, maintain the funds or other
property in a segregated account separate from the assets
and other interests of the swap dealer or major swap
participant.
``(2) Applicability.--The requirements described in paragraph
(1) shall--
``(A) apply only to a swap between a counterparty and a
swap dealer or major swap participant that is not submitted for
clearing to a derivatives clearing organization; and
``(B)(i) not apply to variation margin payments; or
``(ii) not preclude any commercial arrangement regarding--
``(I) the investment of segregated funds or other
property that may only be invested in such investments as
the Commission may permit by rule or regulation; and
``(II) the related allocation of gains and losses
resulting from any investment of the segregated funds or
other property.
``(3) Use of independent third-party custodians.--The
segregated account described in paragraph (1) shall be--
``(A) carried by an independent third-party custodian; and
``(B) designated as a segregated account for and on behalf
of the counterparty.
``(4) Reporting requirement.--If the counterparty does not
choose to require segregation of the funds or other property
supplied to margin, guarantee, or secure the obligations of the
counterparty, the swap dealer or major swap participant shall
report to the counterparty of the swap dealer or major swap
participant on a quarterly basis that the back office procedures of
the swap dealer or major swap participant relating to margin and
collateral requirements are in compliance with the agreement of the
counterparties.''.
SEC. 725. DERIVATIVES CLEARING ORGANIZATIONS.
(a) Registration Requirement.--Section 5b of the Commodity Exchange
Act (7 U.S.C. 7a-1) is amended by striking subsections (a) and (b) and
inserting the following:
``(a) Registration Requirement.--
``(1) In general.--Except as provided in paragraph (2), it
shall be unlawful for a derivatives clearing organization, directly
or indirectly, to make use of the mails or any means or
instrumentality of interstate commerce to perform the functions of
a derivatives clearing organization with respect to--
``(A) a contract of sale of a commodity for future delivery
(or an option on the contract of sale) or option on a
commodity, in each case, unless the contract or option is--
``(i) excluded from this Act by subsection
(a)(1)(C)(i), (c), or (f) of section 2; or
``(ii) a security futures product cleared by a clearing
agency registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.); or
``(B) a swap.
``(2) Exception.--Paragraph (1) shall not apply to a
derivatives clearing organization that is registered with the
Commission.
``(b) Voluntary Registration.--A person that clears 1 or more
agreements, contracts, or transactions that are not required to be
cleared under this Act may register with the Commission as a
derivatives clearing organization.''.
(b) Registration for Depository Institutions and Clearing Agencies;
Exemptions; Compliance Officer; Annual Reports.--Section 5b of the
Commodity Exchange Act (7 U.S.C. 7a-1) is amended by adding at the end
the following:
``(g) Existing Depository Institutions and Clearing Agencies.--
``(1) In general.--A depository institution or clearing agency
registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) that is
required to be registered as a derivatives clearing organization
under this section is deemed to be registered under this section to
the extent that, before the date of enactment of this subsection--
``(A) the depository institution cleared swaps as a
multilateral clearing organization; or
``(B) the clearing agency cleared swaps.
``(2) Conversion of depository institutions.--A depository
institution to which this subsection applies may, by the vote of
the shareholders owning not less than 51 percent of the voting
interests of the depository institution, be converted into a State
corporation, partnership, limited liability company, or similar
legal form pursuant to a plan of conversion, if the conversion is
not in contravention of applicable State law.
``(3) Sharing of information.--The Securities and Exchange
Commission shall make available to the Commission, upon request,
all information determined to be relevant by the Securities and
Exchange Commission regarding a clearing agency deemed to be
registered with the Commission under paragraph (1).
``(h) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a derivatives clearing organization from registration
under this section for the clearing of swaps if the Commission
determines that the derivatives clearing organization is subject to
comparable, comprehensive supervision and regulation by the Securities
and Exchange Commission or the appropriate government authorities in
the home country of the organization. Such conditions may include, but
are not limited to, requiring that the derivatives clearing
organization be available for inspection by the Commission and make
available all information requested by the Commission.
``(i) Designation of Chief Compliance Officer.--
``(1) In general.--Each derivatives clearing organization shall
designate an individual to serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the derivatives clearing organization;
``(B) review the compliance of the derivatives clearing
organization with respect to the core principles described in
subsection (c)(2);
``(C) in consultation with the board of the derivatives
clearing organization, a body performing a function similar to
the board of the derivatives clearing organization, or the
senior officer of the derivatives clearing organization,
resolve any conflicts of interest that may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this Act (including
regulations) relating to agreements, contracts, or
transactions, including each rule prescribed by the Commission
under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the compliance officer
through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the derivatives clearing
organization of the compliance officer with respect to this
Act (including regulations); and
``(ii) each policy and procedure of the derivatives
clearing organization of the compliance officer (including
the code of ethics and conflict of interest policies of the
derivatives clearing organization).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of
the derivatives clearing organization that is required to
be furnished to the Commission pursuant to this section;
and
``(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.''.
(c) Core Principles for Derivatives Clearing Organizations.--
Section 5b(c) of the Commodity Exchange Act (7 U.S.C. 7a-1(c)) is
amended by striking paragraph (2) and inserting the following:
``(2) Core principles for derivatives clearing organizations.--
``(A) Compliance.--
``(i) In general.--To be registered and to maintain
registration as a derivatives clearing organization, a
derivatives clearing organization shall comply with each
core principle described in this paragraph and any
requirement that the Commission may impose by rule or
regulation pursuant to section 8a(5).
``(ii) Discretion of derivatives clearing
organization.--Subject to any rule or regulation prescribed
by the Commission, a derivatives clearing organization
shall have reasonable discretion in establishing the manner
by which the derivatives clearing organization complies
with each core principle described in this paragraph.
``(B) Financial resources.--
``(i) In general.--Each derivatives clearing
organization shall have adequate financial, operational,
and managerial resources, as determined by the Commission,
to discharge each responsibility of the derivatives
clearing organization.
``(ii) Minimum amount of financial resources.--Each
derivatives clearing organization shall possess financial
resources that, at a minimum, exceed the total amount that
would--
``(I) enable the organization to meet its financial
obligations to its members and participants
notwithstanding a default by the member or participant
creating the largest financial exposure for that
organization in extreme but plausible market
conditions; and
``(II) enable the derivatives clearing organization
to cover the operating costs of the derivatives
clearing organization for a period of 1 year (as
calculated on a rolling basis).
``(C) Participant and product eligibility.--
``(i) In general.--Each derivatives clearing
organization shall establish--
``(I) appropriate admission and continuing
eligibility standards (including sufficient financial
resources and operational capacity to meet obligations
arising from participation in the derivatives clearing
organization) for members of, and participants in, the
derivatives clearing organization; and
``(II) appropriate standards for determining the
eligibility of agreements, contracts, or transactions
submitted to the derivatives clearing organization for
clearing.
``(ii) Required procedures.--Each derivatives clearing
organization shall establish and implement procedures to
verify, on an ongoing basis, the compliance of each
participation and membership requirement of the derivatives
clearing organization.
``(iii) Requirements.--The participation and membership
requirements of each derivatives clearing organization
shall--
``(I) be objective;
``(II) be publicly disclosed; and
``(III) permit fair and open access.
``(D) Risk management.--
``(i) In general.--Each derivatives clearing
organization shall ensure that the derivatives clearing
organization possesses the ability to manage the risks
associated with discharging the responsibilities of the
derivatives clearing organization through the use of
appropriate tools and procedures.
``(ii) Measurement of credit exposure.--Each
derivatives clearing organization shall--
``(I) not less than once during each business day
of the derivatives clearing organization, measure the
credit exposures of the derivatives clearing
organization to each member and participant of the
derivatives clearing organization; and
``(II) monitor each exposure described in subclause
(I) periodically during the business day of the
derivatives clearing organization.
``(iii) Limitation of exposure to potential losses from
defaults.--Each derivatives clearing organization, through
margin requirements and other risk control mechanisms,
shall limit the exposure of the derivatives clearing
organization to potential losses from defaults by members
and participants of the derivatives clearing organization
to ensure that--
``(I) the operations of the derivatives clearing
organization would not be disrupted; and
``(II) nondefaulting members or participants would
not be exposed to losses that nondefaulting members or
participants cannot anticipate or control.
``(iv) Margin requirements.--The margin required from
each member and participant of a derivatives clearing
organization shall be sufficient to cover potential
exposures in normal market conditions.
``(v) Requirements regarding models and parameters.--
Each model and parameter used in setting margin
requirements under clause (iv) shall be--
``(I) risk-based; and
``(II) reviewed on a regular basis.
``(E) Settlement procedures.--Each derivatives clearing
organization shall--
``(i) complete money settlements on a timely basis (but
not less frequently than once each business day);
``(ii) employ money settlement arrangements to
eliminate or strictly limit the exposure of the derivatives
clearing organization to settlement bank risks (including
credit and liquidity risks from the use of banks to effect
money settlements);
``(iii) ensure that money settlements are final when
effected;
``(iv) maintain an accurate record of the flow of funds
associated with each money settlement;
``(v) possess the ability to comply with each term and
condition of any permitted netting or offset arrangement
with any other clearing organization;
``(vi) regarding physical settlements, establish rules
that clearly state each obligation of the derivatives
clearing organization with respect to physical deliveries;
and
``(vii) ensure that each risk arising from an
obligation described in clause (vi) is identified and
managed.
``(F) Treatment of funds.--
``(i) Required standards and procedures.--Each
derivatives clearing organization shall establish standards
and procedures that are designed to protect and ensure the
safety of member and participant funds and assets.
``(ii) Holding of funds and assets.--Each derivatives
clearing organization shall hold member and participant
funds and assets in a manner by which to minimize the risk
of loss or of delay in the access by the derivatives
clearing organization to the assets and funds.
``(iii) Permissible investments.--Funds and assets
invested by a derivatives clearing organization shall be
held in instruments with minimal credit, market, and
liquidity risks.
``(G) Default rules and procedures.--
``(i) In general.--Each derivatives clearing
organization shall have rules and procedures designed to
allow for the efficient, fair, and safe management of
events during which members or participants--
``(I) become insolvent; or
``(II) otherwise default on the obligations of the
members or participants to the derivatives clearing
organization.
``(ii) Default procedures.--Each derivatives clearing
organization shall--
``(I) clearly state the default procedures of the
derivatives clearing organization;
``(II) make publicly available the default rules of
the derivatives clearing organization; and
``(III) ensure that the derivatives clearing
organization may take timely action--
``(aa) to contain losses and liquidity
pressures; and
``(bb) to continue meeting each obligation of
the derivatives clearing organization.
``(H) Rule enforcement.--Each derivatives clearing
organization shall--
``(i) maintain adequate arrangements and resources
for--
``(I) the effective monitoring and enforcement of
compliance with the rules of the derivatives clearing
organization; and
``(II) the resolution of disputes;
``(ii) have the authority and ability to discipline,
limit, suspend, or terminate the activities of a member or
participant due to a violation by the member or participant
of any rule of the derivatives clearing organization; and
``(iii) report to the Commission regarding rule
enforcement activities and sanctions imposed against
members and participants as provided in clause (ii).
``(I) System safeguards.--Each derivatives clearing
organization shall--
``(i) establish and maintain a program of risk analysis
and oversight to identify and minimize sources of
operational risk through the development of appropriate
controls and procedures, and automated systems, that are
reliable, secure, and have adequate scalable capacity;
``(ii) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery that
allows for--
``(I) the timely recovery and resumption of
operations of the derivatives clearing organization;
and
``(II) the fulfillment of each obligation and
responsibility of the derivatives clearing
organization; and
``(iii) periodically conduct tests to verify that the
backup resources of the derivatives clearing organization
are sufficient to ensure daily processing, clearing, and
settlement.
``(J) Reporting.--Each derivatives clearing organization
shall provide to the Commission all information that the
Commission determines to be necessary to conduct oversight of
the derivatives clearing organization.
``(K) Recordkeeping.--Each derivatives clearing
organization shall maintain records of all activities related
to the business of the derivatives clearing organization as a
derivatives clearing organization--
``(i) in a form and manner that is acceptable to the
Commission; and
``(ii) for a period of not less than 5 years.
``(L) Public information.--
``(i) In general.--Each derivatives clearing
organization shall provide to market participants
sufficient information to enable the market participants to
identify and evaluate accurately the risks and costs
associated with using the services of the derivatives
clearing organization.
``(ii) Availability of information.--Each derivatives
clearing organization shall make information concerning the
rules and operating and default procedures governing the
clearing and settlement systems of the derivatives clearing
organization available to market participants.
``(iii) Public disclosure.--Each derivatives clearing
organization shall disclose publicly and to the Commission
information concerning--
``(I) the terms and conditions of each contract,
agreement, and transaction cleared and settled by the
derivatives clearing organization;
``(II) each clearing and other fee that the
derivatives clearing organization charges the members
and participants of the derivatives clearing
organization;
``(III) the margin-setting methodology, and the
size and composition, of the financial resource package
of the derivatives clearing organization;
``(IV) daily settlement prices, volume, and open
interest for each contract settled or cleared by the
derivatives clearing organization; and
``(V) any other matter relevant to participation in
the settlement and clearing activities of the
derivatives clearing organization.
``(M) Information-sharing.--Each derivatives clearing
organization shall--
``(i) enter into, and abide by the terms of, each
appropriate and applicable domestic and international
information-sharing agreement; and
``(ii) use relevant information obtained from each
agreement described in clause (i) in carrying out the risk
management program of the derivatives clearing
organization.
``(N) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a derivatives
clearing organization shall not--
``(i) adopt any rule or take any action that results in
any unreasonable restraint of trade; or
``(ii) impose any material anticompetitive burden.
``(O) Governance fitness standards.--
``(i) Governance arrangements.--Each derivatives
clearing organization shall establish governance
arrangements that are transparent--
``(I) to fulfill public interest requirements; and
``(II) to permit the consideration of the views of
owners and participants.
``(ii) Fitness standards.--Each derivatives clearing
organization shall establish and enforce appropriate
fitness standards for--
``(I) directors;
``(II) members of any disciplinary committee;
``(III) members of the derivatives clearing
organization;
``(IV) any other individual or entity with direct
access to the settlement or clearing activities of the
derivatives clearing organization; and
``(V) any party affiliated with any individual or
entity described in this clause.
``(P) Conflicts of interest.--Each derivatives clearing
organization shall--
``(i) establish and enforce rules to minimize conflicts
of interest in the decision-making process of the
derivatives clearing organization; and
``(ii) establish a process for resolving conflicts of
interest described in clause (i).
``(Q) Composition of governing boards.--Each derivatives
clearing organization shall ensure that the composition of the
governing board or committee of the derivatives clearing
organization includes market participants.
``(R) Legal risk.--Each derivatives clearing organization
shall have a well-founded, transparent, and enforceable legal
framework for each aspect of the activities of the derivatives
clearing organization.''.
(d) Conflicts of Interest.--The Commodity Futures Trading
Commission shall adopt rules mitigating conflicts of interest in
connection with the conduct of business by a swap dealer or a major
swap participant with a derivatives clearing organization, board of
trade, or a swap execution facility that clears or trades swaps in
which the swap dealer or major swap participant has a material debt or
material equity investment.
(e) Reporting Requirements.--Section 5b of the Commodity Exchange
Act (7 U.S.C. 7a-1) (as amended by subsection (b)) is amended by adding
at the end the following:
``(k) Reporting Requirements.--
``(1) Duty of derivatives clearing organizations.--Each
derivatives clearing organization that clears swaps shall provide
to the Commission all information that is determined by the
Commission to be necessary to perform each responsibility of the
Commission under this Act.
``(2) Data collection and maintenance requirements.--The
Commission shall adopt data collection and maintenance requirements
for swaps cleared by derivatives clearing organizations that are
comparable to the corresponding requirements for--
``(A) swaps data reported to swap data repositories; and
``(B) swaps traded on swap execution facilities.
``(3) Reports on security-based swap agreements to be shared
with the securities and exchange commission.--
``(A) In general.--A derivatives clearing organization that
clears security-based swap agreements (as defined in section
1a(47)(A)(v)) shall, upon request, open to inspection and
examination to the Securities and Exchange Commission all books
and records relating to such security-based swap agreements,
consistent with the confidentiality and disclosure requirements
of section 8.
``(B) Jurisdiction.--Nothing in this paragraph shall affect
the exclusive jurisdiction of the Commission to prescribe
recordkeeping and reporting requirements for a derivatives
clearing organization that is registered with the Commission.
``(4) Information sharing.--Subject to section 8, and upon
request, the Commission shall share information collected under
paragraph (2) with--
``(A) the Board;
``(B) the Securities and Exchange Commission;
``(C) each appropriate prudential regulator;
``(D) the Financial Stability Oversight Council;
``(E) the Department of Justice; and
``(F) any other person that the Commission determines to be
appropriate, including--
``(i) foreign financial supervisors (including foreign
futures authorities);
``(ii) foreign central banks; and
``(iii) foreign ministries.
``(5) Confidentiality and indemnification agreement.--Before
the Commission may share information with any entity described in
paragraph (4)--
``(A) the Commission shall receive a written agreement from
each entity stating that the entity shall abide by the
confidentiality requirements described in section 8 relating to
the information on swap transactions that is provided; and
``(B) each entity shall agree to indemnify the Commission
for any expenses arising from litigation relating to the
information provided under section 8.
``(6) Public information.--Each derivatives clearing
organization that clears swaps shall provide to the Commission
(including any designee of the Commission) information under
paragraph (2) in such form and at such frequency as is required by
the Commission to comply with the public reporting requirements
contained in section 2(a)(13).''.
(f) Public Disclosure.--Section 8(e) of the Commodity Exchange Act
(7 U.S.C. 12(e)) is amended in the last sentence--
(1) by inserting ``, central bank and ministries,'' after
``department'' each place it appears; and
(2) by striking ``. is a party.'' and inserting ``, is a
party.''.
(g) Legal Certainty for Identified Banking Products.--
(1) Repeals.--The Legal Certainty for Bank Products Act of 2000
(7 U.S.C. 27 et seq.) is amended--
(A) by striking sections 404 and 407 (7 U.S.C. 27b, 27e);
(B) in section 402 (7 U.S.C. 27), by striking subsection
(d); and
(C) in section 408 (7 U.S.C. 27f)--
(i) in subsection (c)--
(I) by striking ``in the case'' and all that
follows through ``a hybrid'' and inserting ``in the
case of a hybrid'';
(II) by striking ``; or'' and inserting a period;
and
(III) by striking paragraph (2);
(ii) by striking subsection (b); and
(iii) by redesignating subsection (c) as subsection
(b).
(2) Legal certainty for bank products act of 2000.--Section 403
of the Legal Certainty for Bank Products Act of 2000 (7 U.S.C. 27a)
is amended to read as follows:
``SEC. 403. EXCLUSION OF IDENTIFIED BANKING PRODUCT.
``(a) Exclusion.--Except as provided in subsection (b) or (c)--
``(1) the Commodity Exchange Act (7 U.S.C. 1 et seq.) shall not
apply to, and the Commodity Futures Trading Commission shall not
exercise regulatory authority under the Commodity Exchange Act (7
U.S.C. 1 et seq.) with respect to, an identified banking product;
and
``(2) the definitions of `security-based swap' in section
3(a)(68) of the Securities Exchange Act of 1934 and `security-based
swap agreement' in section 1a(47)(A)(v) of the Commodity Exchange
Act and section 3(a)(78) of the Securities Exchange Act of 1934 do
not include any identified bank product.
``(b) Exception.--An appropriate Federal banking agency may except
an identified banking product of a bank under its regulatory
jurisdiction from the exclusion in subsection (a) if the agency
determines, in consultation with the Commodity Futures Trading
Commission and the Securities and Exchange Commission, that the
product--
``(1) would meet the definition of a `swap' under section
1a(47) of the Commodity Exchange Act (7 U.S.C. 1a) or a `security-
based swap' under that section 3(a)(68) of the Securities Exchange
Act of 1934; and
``(2) has become known to the trade as a swap or security-based
swap, or otherwise has been structured as an identified banking
product for the purpose of evading the provisions of the Commodity
Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15
U.S.C. 77a et seq.), or the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).
``(c) Exception.--The exclusions in subsection (a) shall not apply
to an identified bank product that--
``(1) is a product of a bank that is not under the regulatory
jurisdiction of an appropriate Federal banking agency;
``(2) meets the definition of swap in section 1a(47) of the
Commodity Exchange Act or security-based swap in section 3(a)(68)
of the Securities Exchange Act of 1934; and
``(3) has become known to the trade as a swap or security-based
swap, or otherwise has been structured as an identified banking
product for the purpose of evading the provisions of the Commodity
Exchange Act (7 U.S.C. 1 et seq.), the Securities Act of 1933 (15
U.S.C. 77a et seq.), or the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.).''.
(h) Reducing Clearing Systemic Risk.--Section 5b(f)(1) of the
Commodity Exchange Act (7 U.S.C. 7a-1(F)(i)) is amended by adding at
the end the following: ``In order to minimize systemic risk, under no
circumstances shall a derivatives clearing organization be compelled to
accept the counterparty credit risk of another clearing
organization.''.
SEC. 726. RULEMAKING ON CONFLICT OF INTEREST.
(a) In General.--In order to mitigate conflicts of interest, not
later than 180 days after the date of enactment of the Wall Street
Transparency and Accountability Act of 2010, the Commodity Futures
Trading Commission shall adopt rules which may include numerical limits
on the control of, or the voting rights with respect to, any
derivatives clearing organization that clears swaps, or swap execution
facility or board of trade designated as a contract market that posts
swaps or makes swaps available for trading, by a bank holding company
(as defined in section 2 of the Bank Holding Company Act of 1956 (12
U.S.C. 1841)) with total consolidated assets of $50,000,000,000 or
more, a nonbank financial company (as defined in section 102)
supervised by the Board, an affiliate of such a bank holding company or
nonbank financial company, a swap dealer, major swap participant, or
associated person of a swap dealer or major swap participant.
(b) Purposes.--The Commission shall adopt rules if it determines,
after the review described in subsection (a), that such rules are
necessary or appropriate to improve the governance of, or to mitigate
systemic risk, promote competition, or mitigate conflicts of interest
in connection with a swap dealer or major swap participant's conduct of
business with, a derivatives clearing organization, contract market, or
swap execution facility that clears or posts swaps or makes swaps
available for trading and in which such swap dealer or major swap
participant has a material debt or equity investment.
(c) Considerations.--In adopting rules pursuant to this section,
the Commodity Futures Trading Commission shall consider any conflicts
of interest arising from the amount of equity owned by a single
investor, the ability to vote, cause the vote of, or withhold votes
entitled to be cast on any matters by the holders of the ownership
interest, and the governance arrangements of any derivatives clearing
organization that clears swaps, or swap execution facility or board of
trade designated as a contract market that posts swaps or makes swaps
available for trading.
SEC. 727. PUBLIC REPORTING OF SWAP TRANSACTION DATA.
Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) is
amended by adding at the end the following:
``(13) Public availability of swap transaction data.--
``(A) Definition of real-time public reporting.--In this
paragraph, the term `real-time public reporting' means to
report data relating to a swap transaction, including price and
volume, as soon as technologically practicable after the time
at which the swap transaction has been executed.
``(B) Purpose.--The purpose of this section is to authorize
the Commission to make swap transaction and pricing data
available to the public in such form and at such times as the
Commission determines appropriate to enhance price discovery.
``(C) General rule.--The Commission is authorized and
required to provide by rule for the public availability of swap
transaction and pricing data as follows:
``(i) With respect to those swaps that are subject to
the mandatory clearing requirement described in subsection
(h)(1) (including those swaps that are excepted from the
requirement pursuant to subsection (h)(7)), the Commission
shall require real-time public reporting for such
transactions.
``(ii) With respect to those swaps that are not subject
to the mandatory clearing requirement described in
subsection (h)(1), but are cleared at a registered
derivatives clearing organization, the Commission shall
require real-time public reporting for such transactions.
``(iii) With respect to swaps that are not cleared at a
registered derivatives clearing organization and which are
reported to a swap data repository or the Commission under
subsection (h)(6), the Commission shall require real-time
public reporting for such transactions, in a manner that
does not disclose the business transactions and market
positions of any person.
``(iv) With respect to swaps that are determined to be
required to be cleared under subsection (h)(2) but are not
cleared, the Commission shall require real-time public
reporting for such transactions.
``(D) Registered entities and public reporting.--The
Commission may require registered entities to publicly
disseminate the swap transaction and pricing data required to
be reported under this paragraph.
``(E) Rulemaking required.--With respect to the rule
providing for the public availability of transaction and
pricing data for swaps described in clauses (i) and (ii) of
subparagraph (C), the rule promulgated by the Commission shall
contain provisions--
``(i) to ensure such information does not identify the
participants;
``(ii) to specify the criteria for determining what
constitutes a large notional swap transaction (block trade)
for particular markets and contracts;
``(iii) to specify the appropriate time delay for
reporting large notional swap transactions (block trades)
to the public; and
``(iv) that take into account whether the public
disclosure will materially reduce market liquidity.
``(F) Timeliness of reporting.--Parties to a swap
(including agents of the parties to a swap) shall be
responsible for reporting swap transaction information to the
appropriate registered entity in a timely manner as may be
prescribed by the Commission.
``(G) Reporting of swaps to registered swap data
repositories.--Each swap (whether cleared or uncleared) shall
be reported to a registered swap data repository.
``(14) Semiannual and annual public reporting of aggregate swap
data.--
``(A) In general.--In accordance with subparagraph (B), the
Commission shall issue a written report on a semiannual and
annual basis to make available to the public information
relating to--
``(i) the trading and clearing in the major swap
categories; and
``(ii) the market participants and developments in new
products.
``(B) Use; consultation.--In preparing a report under
subparagraph (A), the Commission shall--
``(i) use information from swap data repositories and
derivatives clearing organizations; and
``(ii) consult with the Office of the Comptroller of
the Currency, the Bank for International Settlements, and
such other regulatory bodies as may be necessary.
``(C) Authority of the commission.--The Commission may, by
rule, regulation, or order, delegate the public reporting
responsibilities of the Commission under this paragraph in
accordance with such terms and conditions as the Commission
determines to be appropriate and in the public interest.''.
SEC. 728. SWAP DATA REPOSITORIES.
The Commodity Exchange Act is amended by inserting after section 20
(7 U.S.C. 24) the following:
``SEC. 21. SWAP DATA REPOSITORIES.
``(a) Registration Requirement.--
``(1) Requirement; authority of derivatives clearing
organization.--
``(A) In general.--It shall be unlawful for any person,
unless registered with the Commission, directly or indirectly
to make use of the mails or any means or instrumentality of
interstate commerce to perform the functions of a swap data
repository.
``(B) Registration of derivatives clearing organizations.--
A derivatives clearing organization may register as a swap data
repository.
``(2) Inspection and examination.--Each registered swap data
repository shall be subject to inspection and examination by any
representative of the Commission.
``(3) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a swap data repository, the swap data
repository shall comply with--
``(i) the requirements and core principles described in
this section; and
``(ii) any requirement that the Commission may impose
by rule or regulation pursuant to section 8a(5).
``(B) Reasonable discretion of swap data repository.--
Unless otherwise determined by the Commission by rule or
regulation, a swap data repository described in subparagraph
(A) shall have reasonable discretion in establishing the manner
in which the swap data repository complies with the core
principles described in this section.
``(b) Standard Setting.--
``(1) Data identification.--
``(A) In general.--In accordance with subparagraph (B), the
Commission shall prescribe standards that specify the data
elements for each swap that shall be collected and maintained
by each registered swap data repository.
``(B) Requirement.--In carrying out subparagraph (A), the
Commission shall prescribe consistent data element standards
applicable to registered entities and reporting counterparties.
``(2) Data collection and maintenance.--The Commission shall
prescribe data collection and data maintenance standards for swap
data repositories.
``(3) Comparability.--The standards prescribed by the
Commission under this subsection shall be comparable to the data
standards imposed by the Commission on derivatives clearing
organizations in connection with their clearing of swaps.
``(c) Duties.--A swap data repository shall--
``(1) accept data prescribed by the Commission for each swap
under subsection (b);
``(2) confirm with both counterparties to the swap the accuracy
of the data that was submitted;
``(3) maintain the data described in paragraph (1) in such
form, in such manner, and for such period as may be required by the
Commission;
``(4)(A) provide direct electronic access to the Commission (or
any designee of the Commission, including another registered
entity); and
``(B) provide the information described in paragraph (1) in
such form and at such frequency as the Commission may require to
comply with the public reporting requirements contained in section
2(a)(13);
``(5) at the direction of the Commission, establish automated
systems for monitoring, screening, and analyzing swap data,
including compliance and frequency of end user clearing exemption
claims by individual and affiliated entities;
``(6) maintain the privacy of any and all swap transaction
information that the swap data repository receives from a swap
dealer, counterparty, or any other registered entity; and
``(7) on a confidential basis pursuant to section 8, upon
request, and after notifying the Commission of the request, make
available all data obtained by the swap data repository, including
individual counterparty trade and position data, to--
``(A) each appropriate prudential regulator;
``(B) the Financial Stability Oversight Council;
``(C) the Securities and Exchange Commission;
``(D) the Department of Justice; and
``(E) any other person that the Commission determines to be
appropriate, including--
``(i) foreign financial supervisors (including foreign
futures authorities);
``(ii) foreign central banks; and
``(iii) foreign ministries; and
``(8) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allows for the
timely recovery and resumption of operations and the fulfillment of
the responsibilities and obligations of the organization.
``(d) Confidentiality and Indemnification Agreement.--Before the
swap data repository may share information with any entity described in
subsection (c)(7)--
``(1) the swap data repository shall receive a written
agreement from each entity stating that the entity shall abide by
the confidentiality requirements described in section 8 relating to
the information on swap transactions that is provided; and
``(2) each entity shall agree to indemnify the swap data
repository and the Commission for any expenses arising from
litigation relating to the information provided under section 8.
``(e) Designation of Chief Compliance Officer.--
``(1) In general.--Each swap data repository shall designate an
individual to serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the swap data repository;
``(B) review the compliance of the swap data repository
with respect to the requirements and core principles described
in this section;
``(C) in consultation with the board of the swap data
repository, a body performing a function similar to the board
of the swap data repository, or the senior officer of the swap
data repository, resolve any conflicts of interest that may
arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this Act (including
regulations) relating to agreements, contracts, or
transactions, including each rule prescribed by the Commission
under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance officer
through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the swap data repository of the
chief compliance officer with respect to this Act
(including regulations); and
``(ii) each policy and procedure of the swap data
repository of the chief compliance officer (including the
code of ethics and conflict of interest policies of the
swap data repository).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of
the swap data repository that is required to be furnished
to the Commission pursuant to this section; and
``(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.
``(f) Core Principles Applicable To Swap Data Repositories.--
``(1) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a swap data
repository shall not--
``(A) adopt any rule or take any action that results in any
unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on the
trading, clearing, or reporting of transactions.
``(2) Governance arrangements.--Each swap data repository shall
establish governance arrangements that are transparent--
``(A) to fulfill public interest requirements; and
``(B) to support the objectives of the Federal Government,
owners, and participants.
``(3) Conflicts of interest.--Each swap data repository shall--
``(A) establish and enforce rules to minimize conflicts of
interest in the decision-making process of the swap data
repository; and
``(B) establish a process for resolving conflicts of
interest described in subparagraph (A).
``(4) Additional duties developed by commission.--
``(A) In general.--The Commission may develop 1 or more
additional duties applicable to swap data repositories.
``(B) Consideration of evolving standards.--In developing
additional duties under subparagraph (A), the Commission may
take into consideration any evolving standard of the United
States or the international community.
``(C) Additional duties for commission designees.--The
Commission shall establish additional duties for any registrant
described in section 1a(48) in order to minimize conflicts of
interest, protect data, ensure compliance, and guarantee the
safety and security of the swap data repository.
``(g) Required Registration for Swap Data Repositories.--Any person
that is required to be registered as a swap data repository under this
section shall register with the Commission regardless of whether that
person is also licensed as a bank or registered with the Securities and
Exchange Commission as a swap data repository.
``(h) Rules.--The Commission shall adopt rules governing persons
that are registered under this section.''.
SEC. 729. REPORTING AND RECORDKEEPING.
The Commodity Exchange Act is amended by inserting after section 4q
(7 U.S.C. 6o-1) the following:
``SEC. 4r. REPORTING AND RECORDKEEPING FOR UNCLEARED SWAPS.
``(a) Required Reporting of Swaps Not Accepted by Any Derivatives
Clearing Organization.--
``(1) In general.--Each swap that is not accepted for clearing
by any derivatives clearing organization shall be reported to--
``(A) a swap data repository described in section 21; or
``(B) in the case in which there is no swap data repository
that would accept the swap, to the Commission pursuant to this
section within such time period as the Commission may by rule
or regulation prescribe.
``(2) Transition rule for preenactment swaps.--
``(A) Swaps entered into before the date of enactment of
the wall street transparency and accountability act of 2010.--
Each swap entered into before the date of enactment of the Wall
Street Transparency and Accountability Act of 2010, the terms
of which have not expired as of the date of enactment of that
Act, shall be reported to a registered swap data repository or
the Commission by a date that is not later than--
``(i) 30 days after issuance of the interim final rule;
or
``(ii) such other period as the Commission determines
to be appropriate.
``(B) Commission rulemaking.--The Commission shall
promulgate an interim final rule within 90 days of the date of
enactment of this section providing for the reporting of each
swap entered into before the date of enactment as referenced in
subparagraph (A).
``(C) Effective date.--The reporting provisions described
in this section shall be effective upon the enactment of this
section.
``(3) Reporting obligations.--
``(A) Swaps in which only 1 counterparty is a swap dealer
or major swap participant.--With respect to a swap in which
only 1 counterparty is a swap dealer or major swap participant,
the swap dealer or major swap participant shall report the swap
as required under paragraphs (1) and (2).
``(B) Swaps in which 1 counterparty is a swap dealer and
the other a major swap participant.--With respect to a swap in
which 1 counterparty is a swap dealer and the other a major
swap participant, the swap dealer shall report the swap as
required under paragraphs (1) and (2).
``(C) Other swaps.--With respect to any other swap not
described in subparagraph (A) or (B), the counterparties to the
swap shall select a counterparty to report the swap as required
under paragraphs (1) and (2).
``(b) Duties of Certain Individuals.--Any individual or entity that
enters into a swap shall meet each requirement described in subsection
(c) if the individual or entity did not--
``(1) clear the swap in accordance with section 2(h)(1); or
``(2) have the data regarding the swap accepted by a swap data
repository in accordance with rules (including timeframes) adopted
by the Commission under section 21.
``(c) Requirements.--An individual or entity described in
subsection (b) shall--
``(1) upon written request from the Commission, provide reports
regarding the swaps held by the individual or entity to the
Commission in such form and in such manner as the Commission may
request; and
``(2) maintain books and records pertaining to the swaps held
by the individual or entity in such form, in such manner, and for
such period as the Commission may require, which shall be open to
inspection by--
``(A) any representative of the Commission;
``(B) an appropriate prudential regulator;
``(C) the Securities and Exchange Commission;
``(D) the Financial Stability Oversight Council; and
``(E) the Department of Justice.
``(d) Identical Data.--In prescribing rules under this section, the
Commission shall require individuals and entities described in
subsection (b) to submit to the Commission a report that contains data
that is not less comprehensive than the data required to be collected
by swap data repositories under section 21.''.
SEC. 730. LARGE SWAP TRADER REPORTING.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
adding after section 4s (as added by section 731) the following:
``SEC. 4t. LARGE SWAP TRADER REPORTING.
``(a) Prohibition.--
``(1) In general.--Except as provided in paragraph (2), it
shall be unlawful for any person to enter into any swap that the
Commission determines to perform a significant price discovery
function with respect to registered entities if--
``(A) the person directly or indirectly enters into the
swap during any 1 day in an amount equal to or in excess of
such amount as shall be established periodically by the
Commission; and
``(B) the person directly or indirectly has or obtains a
position in the swap equal to or in excess of such amount as
shall be established periodically by the Commission.
``(2) Exception.--Paragraph (1) shall not apply if--
``(A) the person files or causes to be filed with the
properly designated officer of the Commission such reports
regarding any transactions or positions described in
subparagraphs (A) and (B) of paragraph (1) as the Commission
may require by rule or regulation; and
``(B) in accordance with the rules and regulations of the
Commission, the person keeps books and records of all such
swaps and any transactions and positions in any related
commodity traded on or subject to the rules of any designated
contract market or swap execution facility, and of cash or spot
transactions in, inventories of, and purchase and sale
commitments of, such a commodity.
``(b) Requirements.--
``(1) In general.--Books and records described in subsection
(a)(2)(B) shall--
``(A) show such complete details concerning all
transactions and positions as the Commission may prescribe by
rule or regulation;
``(B) be open at all times to inspection and examination by
any representative of the Commission; and
``(C) be open at all times to inspection and examination by
the Securities and Exchange Commission, to the extent such
books and records relate to transactions in swaps (as that term
is defined in section 1a(47)(A)(v)), and consistent with the
confidentiality and disclosure requirements of section 8.
``(2) Jurisdiction.--Nothing in paragraph (1) shall affect the
exclusive jurisdiction of the Commission to prescribe recordkeeping
and reporting requirements for large swap traders under this
section.
``(c) Applicability.--For purposes of this section, the swaps,
futures, and cash or spot transactions and positions of any person
shall include the swaps, futures, and cash or spot transactions and
positions of any persons directly or indirectly controlled by the
person.
``(d) Significant Price Discovery Function.--In making a
determination as to whether a swap performs or affects a significant
price discovery function with respect to registered entities, the
Commission shall consider the factors described in section 4a(a)(3).''.
SEC. 731. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR
SWAP PARTICIPANTS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4r (as added by section 729) the following:
``SEC. 4s. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP
PARTICIPANTS.
``(a) Registration.--
``(1) Swap dealers.--It shall be unlawful for any person to act
as a swap dealer unless the person is registered as a swap dealer
with the Commission.
``(2) Major swap participants.--It shall be unlawful for any
person to act as a major swap participant unless the person is
registered as a major swap participant with the Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a swap dealer or
major swap participant by filing a registration application with
the Commission.
``(2) Contents.--
``(A) In general.--The application shall be made in such
form and manner as prescribed by the Commission, and shall
contain such information, as the Commission considers necessary
concerning the business in which the applicant is or will be
engaged.
``(B) Continual reporting.--A person that is registered as
a swap dealer or major swap participant shall continue to
submit to the Commission reports that contain such information
pertaining to the business of the person as the Commission may
require.
``(3) Expiration.--Each registration under this section shall
expire at such time as the Commission may prescribe by rule or
regulation.
``(4) Rules.--Except as provided in subsections (d) and (e),
the Commission may prescribe rules applicable to swap dealers and
major swap participants, including rules that limit the activities
of swap dealers and major swap participants.
``(5) Transition.--Rules under this section shall provide for
the registration of swap dealers and major swap participants not
later than 1 year after the date of enactment of the Wall Street
Transparency and Accountability Act of 2010.
``(6) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or order, it
shall be unlawful for a swap dealer or a major swap participant to
permit any person associated with a swap dealer or a major swap
participant who is subject to a statutory disqualification to
effect or be involved in effecting swaps on behalf of the swap
dealer or major swap participant, if the swap dealer or major swap
participant knew, or in the exercise of reasonable care should have
known, of the statutory disqualification.
``(c) Dual Registration.--
``(1) Swap dealer.--Any person that is required to be
registered as a swap dealer under this section shall register with
the Commission regardless of whether the person also is a
depository institution or is registered with the Securities and
Exchange Commission as a security-based swap dealer.
``(2) Major swap participant.--Any person that is required to
be registered as a major swap participant under this section shall
register with the Commission regardless of whether the person also
is a depository institution or is registered with the Securities
and Exchange Commission as a major security-based swap participant.
``(d) Rulemakings.--
``(1) In general.--The Commission shall adopt rules for persons
that are registered as swap dealers or major swap participants
under this section.
``(2) Exception for prudential requirements.--
``(A) In general.--The Commission may not prescribe rules
imposing prudential requirements on swap dealers or major swap
participants for which there is a prudential regulator.
``(B) Applicability.--Subparagraph (A) does not limit the
authority of the Commission to prescribe rules as directed
under this section.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Swap dealers and major swap participants that are
banks.--Each registered swap dealer and major swap participant
for which there is a prudential regulator shall meet such
minimum capital requirements and minimum initial and variation
margin requirements as the prudential regulator shall by rule
or regulation prescribe under paragraph (2)(A).
``(B) Swap dealers and major swap participants that are not
banks.--Each registered swap dealer and major swap participant
for which there is not a prudential regulator shall meet such
minimum capital requirements and minimum initial and variation
margin requirements as the Commission shall by rule or
regulation prescribe under paragraph (2)(B).
``(2) Rules.--
``(A) Swap dealers and major swap participants that are
banks.--The prudential regulators, in consultation with the
Commission and the Securities and Exchange Commission, shall
jointly adopt rules for swap dealers and major swap
participants, with respect to their activities as a swap dealer
or major swap participant, for which there is a prudential
regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation margin requirements
on all swaps that are not cleared by a registered
derivatives clearing organization.
``(B) Swap dealers and major swap participants that are not
banks.--The Commission shall adopt rules for swap dealers and
major swap participants, with respect to their activities as a
swap dealer or major swap participant, for which there is not a
prudential regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation margin requirements
on all swaps that are not cleared by a registered
derivatives clearing organization.
``(C) Capital.--In setting capital requirements for a
person that is designated as a swap dealer or a major swap
participant for a single type or single class or category of
swap or activities, the prudential regulator and the Commission
shall take into account the risks associated with other types
of swaps or classes of swaps or categories of swaps engaged in
and the other activities conducted by that person that are not
otherwise subject to regulation applicable to that person by
virtue of the status of the person as a swap dealer or a major
swap participant.
``(3) Standards for capital and margin.--
``(A) In general.--To offset the greater risk to the swap
dealer or major swap participant and the financial system
arising from the use of swaps that are not cleared, the
requirements imposed under paragraph (2) shall--
``(i) help ensure the safety and soundness of the swap
dealer or major swap participant; and
``(ii) be appropriate for the risk associated with the
non-cleared swaps held as a swap dealer or major swap
participant.
``(B) Rule of construction.--
``(i) In general.--Nothing in this section shall limit,
or be construed to limit, the authority--
``(I) of the Commission to set financial
responsibility rules for a futures commission merchant
or introducing broker registered pursuant to section
4f(a) (except for section 4f(a)(3)) in accordance with
section 4f(b); or
``(II) of the Securities and Exchange Commission to
set financial responsibility rules for a broker or
dealer registered pursuant to section 15(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b))
(except for section 15(b)(11) of that Act (15 U.S.C.
78o(b)(11)) in accordance with section 15(c)(3) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(c)(3)).
``(ii) Futures commission merchants and other
dealers.--A futures commission merchant, introducing
broker, broker, or dealer shall maintain sufficient capital
to comply with the stricter of any applicable capital
requirements to which such futures commission merchant,
introducing broker, broker, or dealer is subject to under
this Act or the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.).
``(C) Margin requirements.--In prescribing margin
requirements under this subsection, the prudential regulator
with respect to swap dealers and major swap participants for
which it is the prudential regulator and the Commission with
respect to swap dealers and major swap participants for which
there is no prudential regulator shall permit the use of
noncash collateral, as the regulator or the Commission
determines to be consistent with--
``(i) preserving the financial integrity of markets
trading swaps; and
``(ii) preserving the stability of the United States
financial system.
``(D) Comparability of capital and margin requirements.--
``(i) In general.--The prudential regulators, the
Commission, and the Securities and Exchange Commission
shall periodically (but not less frequently than annually)
consult on minimum capital requirements and minimum initial
and variation margin requirements.
``(ii) Comparability.--The entities described in clause
(i) shall, to the maximum extent practicable, establish and
maintain comparable minimum capital requirements and
minimum initial and variation margin requirements,
including the use of non cash collateral, for--
``(I) swap dealers; and
``(II) major swap participants.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered swap dealer and major swap
participant--
``(A) shall make such reports as are required by the
Commission by rule or regulation regarding the transactions and
positions and financial condition of the registered swap dealer
or major swap participant;
``(B)(i) for which there is a prudential regulator, shall
keep books and records of all activities related to the
business as a swap dealer or major swap participant in such
form and manner and for such period as may be prescribed by the
Commission by rule or regulation; and
``(ii) for which there is no prudential regulator, shall
keep books and records in such form and manner and for such
period as may be prescribed by the Commission by rule or
regulation;
``(C) shall keep books and records described in
subparagraph (B) open to inspection and examination by any
representative of the Commission; and
``(D) shall keep any such books and records relating to
swaps defined in section 1a(47)(A)(v) open to inspection and
examination by the Securities and Exchange Commission.
``(2) Rules.--The Commission shall adopt rules governing
reporting and recordkeeping for swap dealers and major swap
participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered swap dealer and major swap
participant shall maintain daily trading records of the swaps of
the registered swap dealer and major swap participant and all
related records (including related cash or forward transactions)
and recorded communications, including electronic mail, instant
messages, and recordings of telephone calls, for such period as may
be required by the Commission by rule or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall require by
rule or regulation.
``(3) Counterparty records.--Each registered swap dealer and
major swap participant shall maintain daily trading records for
each counterparty in a manner and form that is identifiable with
each swap transaction.
``(4) Audit trail.--Each registered swap dealer and major swap
participant shall maintain a complete audit trail for conducting
comprehensive and accurate trade reconstructions.
``(5) Rules.--The Commission shall adopt rules governing daily
trading records for swap dealers and major swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered swap dealer and major swap
participant shall conform with such business conduct standards as
prescribed in paragraph (3) and as may be prescribed by the
Commission by rule or regulation that relate to--
``(A) fraud, manipulation, and other abusive practices
involving swaps (including swaps that are offered but not
entered into);
``(B) diligent supervision of the business of the
registered swap dealer and major swap participant;
``(C) adherence to all applicable position limits; and
``(D) such other matters as the Commission determines to be
appropriate.
``(2) Responsibilities with respect to special entities.--
``(A) Advising special entities.--A swap dealer or major
swap participant that acts as an advisor to a special entity
regarding a swap shall comply with the requirements of
subparagraph (4) with respect to such Special Entity.
``(B) Entering of swaps with respect to special entities.--
A swap dealer that enters into or offers to enter into swap
with a Special Entity shall comply with the requirements of
subparagraph (5) with respect to such Special Entity.
``(C) Special entity defined.--For purposes of this
subsection, the term `special entity' means--
``(i) a Federal agency;
``(ii) a State, State agency, city, county,
municipality, or other political subdivision of a State;
``(iii) any employee benefit plan, as defined in
section 3 of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1002);
``(iv) any governmental plan, as defined in section 3
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002); or
``(v) any endowment, including an endowment that is an
organization described in section 501(c)(3) of the Internal
Revenue Code of 1986.
``(3) Business conduct requirements.--Business conduct
requirements adopted by the Commission shall--
``(A) establish a duty for a swap dealer or major swap
participant to verify that any counterparty meets the
eligibility standards for an eligible contract participant;
``(B) require disclosure by the swap dealer or major swap
participant to any counterparty to the transaction (other than
a swap dealer, major swap participant, security-based swap
dealer, or major security-based swap participant) of--
``(i) information about the material risks and
characteristics of the swap;
``(ii) any material incentives or conflicts of interest
that the swap dealer or major swap participant may have in
connection with the swap; and
``(iii)(I) for cleared swaps, upon the request of the
counterparty, receipt of the daily mark of the transaction
from the appropriate derivatives clearing organization; and
``(II) for uncleared swaps, receipt of the daily mark
of the transaction from the swap dealer or the major swap
participant;
``(C) establish a duty for a swap dealer or major swap
participant to communicate in a fair and balanced manner based
on principles of fair dealing and good faith; and
``(D) establish such other standards and requirements as
the Commission may determine are appropriate in the public
interest, for the protection of investors, or otherwise in
furtherance of the purposes of this Act.
``(4) Special requirements for swap dealers acting as
advisors.--
``(A) In general.--It shall be unlawful for a swap dealer
or major swap participant--
``(i) to employ any device, scheme, or artifice to
defraud any Special Entity or prospective customer who is a
Special Entity;
``(ii) to engage in any transaction, practice, or
course of business that operates as a fraud or deceit on
any Special Entity or prospective customer who is a Special
Entity; or
``(iii) to engage in any act, practice, or course of
business that is fraudulent, deceptive or manipulative.
``(B) Duty.--Any swap dealer that acts as an advisor to a
Special Entity shall have a duty to act in the best interests
of the Special Entity.
``(C) Reasonable efforts.--Any swap dealer that acts as an
advisor to a Special Entity shall make reasonable efforts to
obtain such information as is necessary to make a reasonable
determination that any swap recommended by the swap dealer is
in the best interests of the Special Entity, including
information relating to--
``(i) the financial status of the Special Entity;
``(ii) the tax status of the Special Entity;
``(iii) the investment or financing objectives of the
Special Entity; and
``(iv) any other information that the Commission may
prescribe by rule or regulation.
``(5) Special requirements for swap dealers as counterparties
to special entities.--
``(A) Any swap dealer or major swap participant that offers
to enter or enters into a swap with a Special Entity shall--
``(i) comply with any duty established by the
Commission for a swap dealer or major swap participant,
with respect to a counterparty that is an eligible contract
participant within the meaning of subclause (I) or (II) of
clause (vii) of section 1a(18) of this Act, that requires
the swap dealer or major swap participant to have a
reasonable basis to believe that the counterparty that is a
Special Entity has an independent representative that--
``(I) has sufficient knowledge to evaluate the
transaction and risks;
``(II) is not subject to a statutory
disqualification;
``(III) is independent of the swap dealer or major
swap participant;
``(IV) undertakes a duty to act in the best
interests of the counterparty it represents;
``(V) makes appropriate disclosures;
``(VI) will provide written representations to the
Special Entity regarding fair pricing and the
appropriateness of the transaction; and
``(VII) in the case of employee benefit plans
subject to the Employee Retirement Income Security act
of 1974, is a fiduciary as defined in section 3 of that
Act (29 U.S.C. 1002); and
``(ii) before the initiation of the transaction,
disclose to the Special Entity in writing the capacity in
which the swap dealer is acting; and
``(B) the Commission may establish such other standards and
requirements as the Commission may determine are appropriate in
the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of this Act.
``(6) Rules.--The Commission shall prescribe rules under this
subsection governing business conduct standards for swap dealers
and major swap participants.
``(7) Applicability.--This section shall not apply with respect
to a transaction that is--
``(A) initiated by a Special Entity on an exchange or swap
execution facility; and
``(B) one in which the swap dealer or major swap
participant does not know the identity of the counterparty to
the transaction.
``(i) Documentation Standards.--
``(1) In general.--Each registered swap dealer and major swap
participant shall conform with such standards as may be prescribed
by the Commission by rule or regulation that relate to timely and
accurate confirmation, processing, netting, documentation, and
valuation of all swaps.
``(2) Rules.--The Commission shall adopt rules governing
documentation standards for swap dealers and major swap
participants.
``(j) Duties.--Each registered swap dealer and major swap
participant at all times shall comply with the following requirements:
``(1) Monitoring of trading.--The swap dealer or major swap
participant shall monitor its trading in swaps to prevent
violations of applicable position limits.
``(2) Risk management procedures.--The swap dealer or major
swap participant shall establish robust and professional risk
management systems adequate for managing the day-to-day business of
the swap dealer or major swap participant.
``(3) Disclosure of general information.--The swap dealer or
major swap participant shall disclose to the Commission and to the
prudential regulator for the swap dealer or major swap participant,
as applicable, information concerning--
``(A) terms and conditions of its swaps;
``(B) swap trading operations, mechanisms, and practices;
``(C) financial integrity protections relating to swaps;
and
``(D) other information relevant to its trading in swaps.
``(4) Ability to obtain information.--The swap dealer or major
swap participant shall--
``(A) establish and enforce internal systems and procedures
to obtain any necessary information to perform any of the
functions described in this section; and
``(B) provide the information to the Commission and to the
prudential regulator for the swap dealer or major swap
participant, as applicable, on request.
``(5) Conflicts of interest.--The swap dealer and major swap
participant shall implement conflict-of-interest systems and
procedures that--
``(A) establish structural and institutional safeguards to
ensure that the activities of any person within the firm
relating to research or analysis of the price or market for any
commodity or swap or acting in a role of providing clearing
activities or making determinations as to accepting clearing
customers are separated by appropriate informational partitions
within the firm from the review, pressure, or oversight of
persons whose involvement in pricing, trading, or clearing
activities might potentially bias their judgment or supervision
and contravene the core principles of open access and the
business conduct standards described in this Act; and
``(B) address such other issues as the Commission
determines to be appropriate.
``(6) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a swap dealer or
major swap participant shall not--
``(A) adopt any process or take any action that results in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(7) Rules.--The Commission shall prescribe rules under this
subsection governing duties of swap dealers and major swap
participants.
``(k) Designation of Chief Compliance Officer.--
``(1) In general.--Each swap dealer and major swap participant
shall designate an individual to serve as a chief compliance
officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the swap dealer or major swap participant;
``(B) review the compliance of the swap dealer or major
swap participant with respect to the swap dealer and major swap
participant requirements described in this section;
``(C) in consultation with the board of directors, a body
performing a function similar to the board, or the senior
officer of the organization, resolve any conflicts of interest
that may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this Act (including
regulations) relating to swaps, including each rule prescribed
by the Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance officer
through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the swap dealer or major swap
participant with respect to this Act (including
regulations); and
``(ii) each policy and procedure of the swap dealer or
major swap participant of the chief compliance officer
(including the code of ethics and conflict of interest
policies).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of
the swap dealer or major swap participant that is required
to be furnished to the Commission pursuant to this section;
and
``(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.''.
SEC. 732. CONFLICTS OF INTEREST.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended--
(1) by redesignating subsection (c) as subsection (e); and
(2) by inserting after subsection (b) the following:
``(c) Conflicts of Interest.--The Commission shall require that
futures commission merchants and introducing brokers implement
conflict-of-interest systems and procedures that--
``(1) establish structural and institutional safeguards to
ensure that the activities of any person within the firm relating
to research or analysis of the price or market for any commodity
are separated by appropriate informational partitions within the
firm from the review, pressure, or oversight of persons whose
involvement in trading or clearing activities might potentially
bias the judgment or supervision of the persons; and
``(2) address such other issues as the Commission determines to
be appropriate.
``(d) Designation of Chief Compliance Officer.--Each futures
commission merchant shall designate an individual to serve as its Chief
Compliance Officer and perform such duties and responsibilities as
shall be set forth in regulations to be adopted by the Commission or
rules to be adopted by a futures association registered under section
17.''.
SEC. 733. SWAP EXECUTION FACILITIES.
The Commodity Exchange Act is amended by inserting after section 5g
(7 U.S.C. 7b-2) the following:
``SEC. 5h. SWAP EXECUTION FACILITIES.
``(a) Registration.--
``(1) In general.--No person may operate a facility for the
trading or processing of swaps unless the facility is registered as
a swap execution facility or as a designated contract market under
this section.
``(2) Dual registration.--Any person that is registered as a
swap execution facility under this section shall register with the
Commission regardless of whether the person also is registered with
the Securities and Exchange Commission as a swap execution
facility.
``(b) Trading and Trade Processing.--
``(1) In general.--Except as specified in paragraph (2), a swap
execution facility that is registered under subsection (a) may--
``(A) make available for trading any swap; and
``(B) facilitate trade processing of any swap.
``(2) Agricultural swaps.--A swap execution facility may not
list for trading or confirm the execution of any swap in an
agricultural commodity (as defined by the Commission) except
pursuant to a rule or regulation of the Commission allowing the
swap under such terms and conditions as the Commission shall
prescribe.
``(c) Identification of Facility Used To Trade Swaps by Contract
Markets.--A board of trade that operates a contract market shall, to
the extent that the board of trade also operates a swap execution
facility and uses the same electronic trade execution system for
listing and executing trades of swaps on or through the contract market
and the swap execution facility, identify whether the electronic
trading of such swaps is taking place on or through the contract market
or the swap execution facility.
``(d) Rule-writing.--
``(1) The Securities and Exchange Commission and Commodity
Futures Trading Commission may promulgate rules defining the
universe of swaps that can be executed on a swap execution
facility. These rules shall take into account the price and
nonprice requirements of the counterparties to a swap and the goal
of this section as set forth in subsection (e).
``(2) For all swaps that are not required to be executed
through a swap execution facility as defined in paragraph (1), such
trades may be executed through any other available means of
interstate commerce.
``(3) The Securities and Exchange Commission and Commodity
Futures Trading Commission shall update these rules as necessary to
account for technological and other innovation.
``(e) Rule of Construction.--The goal of this section is to promote
the trading of swaps on swap execution facilities and to promote pre-
trade price transparency in the swaps market.
``(f) Core Principles for Swap Execution Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a swap execution facility, the swap execution
facility shall comply with--
``(i) the core principles described in this subsection;
and
``(ii) any requirement that the Commission may impose
by rule or regulation pursuant to section 8a(5).
``(B) Reasonable discretion of swap execution facility.--
Unless otherwise determined by the Commission by rule or
regulation, a swap execution facility described in subparagraph
(A) shall have reasonable discretion in establishing the manner
in which the swap execution facility complies with the core
principles described in this subsection.
``(2) Compliance with rules.--A swap execution facility shall--
``(A) establish and enforce compliance with any rule of the
swap execution facility, including--
``(i) the terms and conditions of the swaps traded or
processed on or through the swap execution facility; and
``(ii) any limitation on access to the swap execution
facility;
``(B) establish and enforce trading, trade processing, and
participation rules that will deter abuses and have the
capacity to detect, investigate, and enforce those rules,
including means--
``(i) to provide market participants with impartial
access to the market; and
``(ii) to capture information that may be used in
establishing whether rule violations have occurred;
``(C) establish rules governing the operation of the
facility, including rules specifying trading procedures to be
used in entering and executing orders traded or posted on the
facility, including block trades; and
``(D) provide by its rules that when a swap dealer or major
swap participant enters into or facilitates a swap that is
subject to the mandatory clearing requirement of section 2(h),
the swap dealer or major swap participant shall be responsible
for compliance with the mandatory trading requirement under
section 2(h)(8).
``(3) Swaps not readily susceptible to manipulation.--The swap
execution facility shall permit trading only in swaps that are not
readily susceptible to manipulation.
``(4) Monitoring of trading and trade processing.--The swap
execution facility shall--
``(A) establish and enforce rules or terms and conditions
defining, or specifications detailing--
``(i) trading procedures to be used in entering and
executing orders traded on or through the facilities of the
swap execution facility; and
``(ii) procedures for trade processing of swaps on or
through the facilities of the swap execution facility; and
``(B) monitor trading in swaps to prevent manipulation,
price distortion, and disruptions of the delivery or cash
settlement process through surveillance, compliance, and
disciplinary practices and procedures, including methods for
conducting real-time monitoring of trading and comprehensive
and accurate trade reconstructions.
``(5) Ability to obtain information.--The swap execution
facility shall--
``(A) establish and enforce rules that will allow the
facility to obtain any necessary information to perform any of
the functions described in this section;
``(B) provide the information to the Commission on request;
and
``(C) have the capacity to carry out such international
information-sharing agreements as the Commission may require.
``(6) Position limits or accountability.--
``(A) In general.--To reduce the potential threat of market
manipulation or congestion, especially during trading in the
delivery month, a swap execution facility that is a trading
facility shall adopt for each of the contracts of the facility,
as is necessary and appropriate, position limitations or
position accountability for speculators.
``(B) Position limits.--For any contract that is subject to
a position limitation established by the Commission pursuant to
section 4a(a), the swap execution facility shall--
``(i) set its position limitation at a level no higher
than the Commission limitation; and
``(ii) monitor positions established on or through the
swap execution facility for compliance with the limit set
by the Commission and the limit, if any, set by the swap
execution facility.
``(7) Financial integrity of transactions.--The swap execution
facility shall establish and enforce rules and procedures for
ensuring the financial integrity of swaps entered on or through the
facilities of the swap execution facility, including the clearance
and settlement of the swaps pursuant to section 2(h)(1).
``(8) Emergency authority.--The swap execution facility shall
adopt rules to provide for the exercise of emergency authority, in
consultation or cooperation with the Commission, as is necessary
and appropriate, including the authority to liquidate or transfer
open positions in any swap or to suspend or curtail trading in a
swap.
``(9) Timely publication of trading information.--
``(A) In general.--The swap execution facility shall make
public timely information on price, trading volume, and other
trading data on swaps to the extent prescribed by the
Commission.
``(B) Capacity of swap execution facility.--The swap
execution facility shall be required to have the capacity to
electronically capture and transmit trade information with
respect to transactions executed on the facility.
``(10) Recordkeeping and reporting.--
``(A) In general.--A swap execution facility shall--
``(i) maintain records of all activities relating to
the business of the facility, including a complete audit
trail, in a form and manner acceptable to the Commission
for a period of 5 years;
``(ii) report to the Commission, in a form and manner
acceptable to the Commission, such information as the
Commission determines to be necessary or appropriate for
the Commission to perform the duties of the Commission
under this Act; and
``(iii) shall keep any such records relating to swaps
defined in section 1a(47)(A)(v) open to inspection and
examination by the Securities and Exchange Commission.''
``(B) Requirements.--The Commission shall adopt data
collection and reporting requirements for swap execution
facilities that are comparable to corresponding requirements
for derivatives clearing organizations and swap data
repositories.
``(11) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the swap execution
facility shall not--
``(A) adopt any rules or taking any actions that result in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(12) Conflicts of interest.--The swap execution facility
shall--
``(A) establish and enforce rules to minimize conflicts of
interest in its decision-making process; and
``(B) establish a process for resolving the conflicts of
interest.
``(13) Financial resources.--
``(A) In general.--The swap execution facility shall have
adequate financial, operational, and managerial resources to
discharge each responsibility of the swap execution facility.
``(B) Determination of resource adequacy.--The financial
resources of a swap execution facility shall be considered to
be adequate if the value of the financial resources exceeds the
total amount that would enable the swap execution facility to
cover the operating costs of the swap execution facility for a
1-year period, as calculated on a rolling basis.
``(14) System safeguards.--The swap execution facility shall--
``(A) establish and maintain a program of risk analysis and
oversight to identify and minimize sources of operational risk,
through the development of appropriate controls and procedures,
and automated systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allow for--
``(i) the timely recovery and resumption of operations;
and
``(ii) the fulfillment of the responsibilities and
obligations of the swap execution facility; and
``(C) periodically conduct tests to verify that the backup
resources of the swap execution facility are sufficient to
ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance and
``(iv) maintenance of a comprehensive and accurate
audit trail.
``(15) Designation of chief compliance officer.--
``(A) In general.--Each swap execution facility shall
designate an individual to serve as a chief compliance officer.
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the senior
officer of the facility;
``(ii) review compliance with the core principles in
this subsection;
``(iii) in consultation with the board of the facility,
a body performing a function similar to that of a board, or
the senior officer of the facility, resolve any conflicts
of interest that may arise;
``(iv) be responsible for establishing and
administering the policies and procedures required to be
established pursuant to this section;
``(v) ensure compliance with this Act and the rules and
regulations issued under this Act, including rules
prescribed by the Commission pursuant to this section; and
``(vi) establish procedures for the remediation of
noncompliance issues found during compliance office
reviews, look backs, internal or external audit findings,
self-reported errors, or through validated complaints.
``(C) Requirements for procedures.--In establishing
procedures under subparagraph (B)(vi), the chief compliance
officer shall design the procedures to establish the handling,
management response, remediation, retesting, and closing of
noncompliance issues.
``(D) Annual reports.--
``(i) In general.--In accordance with rules prescribed
by the Commission, the chief compliance officer shall
annually prepare and sign a report that contains a
description of--
``(I) the compliance of the swap execution facility
with this Act; and
``(II) the policies and procedures, including the
code of ethics and conflict of interest policies, of
the swap execution facility.
``(ii) Requirements.--The chief compliance officer
shall--
``(I) submit each report described in clause (i)
with the appropriate financial report of the swap
execution facility that is required to be submitted to
the Commission pursuant to this section; and
``(II) include in the report a certification that,
under penalty of law, the report is accurate and
complete.
``(g) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap execution facility from registration under this
section if the Commission finds that the facility is subject to
comparable, comprehensive supervision and regulation on a consolidated
basis by the Securities and Exchange Commission, a prudential
regulator, or the appropriate governmental authorities in the home
country of the facility.
``(h) Rules.--The Commission shall prescribe rules governing the
regulation of alternative swap execution facilities under this
section.''.
SEC. 734. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND EXEMPT
BOARDS OF TRADE.
(a) In General.--Sections 5a and 5d of the Commodity Exchange Act
(7 U.S.C. 7a, 7a-3) are repealed.
(b) Conforming Amendments.--
(1) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is
amended--
(A) in subsection (a)(1)(A), in the first sentence, by
striking ``or 5a''; and
(B) in paragraph (2) of subsection (g) (as redesignated by
section 723(a)(1)(B)), by striking ``section 5a of this Act''
and all that follows through ``5d of this Act'' and inserting
``section 5b of this Act''.
(2) Section 6(g)(1)(A) of the Securities Exchange Act of 1934
(15 U.S.C. 78f(g)(1)(A)) is amended--
(A) by striking ``that--'' and all that follows through
``(i) has been designated'' and inserting ``that has been
designated'';
(B) by striking ``; or'' and inserting ``; and'' and
(C) by striking clause (ii).
(c) Ability to Petition Commission.--
(1) In general.--Prior to the final effective dates in this
title, a person may petition the Commodity Futures Trading
Commission to remain subject to the provisions of section 5d of the
Commodity Exchange Act, as such provisions existed prior to the
effective date of this subtitle.
(2) Consideration of petition.--The Commodity Futures Trading
Commission shall consider any petition submitted under paragraph
(1) in a prompt manner and may allow a person to continue operating
subject to the provisions of section 5d of the Commodity Exchange
Act for up to 1 year after the effective date of this subtitle.
SEC. 735. DESIGNATED CONTRACT MARKETS.
(a) Criteria for Designation.--Section 5 of the Commodity Exchange
Act (7 U.S.C. 7) is amended by striking subsection (b).
(b) Core Principles for Contract Markets.--Section 5 of the
Commodity Exchange Act (7 U.S.C. 7) is amended by striking subsection
(d) and inserting the following:
``(d) Core Principles for Contract Markets.--
``(1) Designation as contract market.--
``(A) In general.--To be designated, and maintain a
designation, as a contract market, a board of trade shall
comply with--
``(i) any core principle described in this subsection;
and
``(ii) any requirement that the Commission may impose
by rule or regulation pursuant to section 8a(5).
``(B) Reasonable discretion of contract market.--Unless
otherwise determined by the Commission by rule or regulation, a
board of trade described in subparagraph (A) shall have
reasonable discretion in establishing the manner in which the
board of trade complies with the core principles described in
this subsection.
``(2) Compliance with rules.--
``(A) In general.--The board of trade shall establish,
monitor, and enforce compliance with the rules of the contract
market, including--
``(i) access requirements;
``(ii) the terms and conditions of any contracts to be
traded on the contract market; and
``(iii) rules prohibiting abusive trade practices on
the contract market.
``(B) Capacity of contract market.--The board of trade
shall have the capacity to detect, investigate, and apply
appropriate sanctions to any person that violates any rule of
the contract market.
``(C) Requirement of rules.--The rules of the contract
market shall provide the board of trade with the ability and
authority to obtain any necessary information to perform any
function described in this subsection, including the capacity
to carry out such international information-sharing agreements
as the Commission may require.
``(3) Contracts not readily subject to manipulation.--The board
of trade shall list on the contract market only contracts that are
not readily susceptible to manipulation.
``(4) Prevention of market disruption.--The board of trade
shall have the capacity and responsibility to prevent manipulation,
price distortion, and disruptions of the delivery or cash-
settlement process through market surveillance, compliance, and
enforcement practices and procedures, including--
``(A) methods for conducting real-time monitoring of
trading; and
``(B) comprehensive and accurate trade reconstructions.
``(5) Position limitations or accountability.--
``(A) In general.--To reduce the potential threat of market
manipulation or congestion (especially during trading in the
delivery month), the board of trade shall adopt for each
contract of the board of trade, as is necessary and
appropriate, position limitations or position accountability
for speculators.
``(B) Maximum allowable position limitation.--For any
contract that is subject to a position limitation established
by the Commission pursuant to section 4a(a), the board of trade
shall set the position limitation of the board of trade at a
level not higher than the position limitation established by
the Commission.
``(6) Emergency authority.--The board of trade, in consultation
or cooperation with the Commission, shall adopt rules to provide
for the exercise of emergency authority, as is necessary and
appropriate, including the authority--
``(A) to liquidate or transfer open positions in any
contract;
``(B) to suspend or curtail trading in any contract; and
``(C) to require market participants in any contract to
meet special margin requirements.
``(7) Availability of general information.--The board of trade
shall make available to market authorities, market participants,
and the public accurate information concerning--
``(A) the terms and conditions of the contracts of the
contract market; and
``(B)(i) the rules, regulations, and mechanisms for
executing transactions on or through the facilities of the
contract market; and
``(ii) the rules and specifications describing the
operation of the contract market's--
``(I) electronic matching platform; or
``(II) trade execution facility.
``(8) Daily publication of trading information.--The board of
trade shall make public daily information on settlement prices,
volume, open interest, and opening and closing ranges for actively
traded contracts on the contract market.
``(9) Execution of transactions.--
``(A) In general.--The board of trade shall provide a
competitive, open, and efficient market and mechanism for
executing transactions that protects the price discovery
process of trading in the centralized market of the board of
trade.
``(B) Rules.--The rules of the board of trade may
authorize, for bona fide business purposes--
``(i) transfer trades or office trades;
``(ii) an exchange of--
``(I) futures in connection with a cash commodity
transaction;
``(II) futures for cash commodities; or
``(III) futures for swaps; or
``(iii) a futures commission merchant, acting as
principal or agent, to enter into or confirm the execution
of a contract for the purchase or sale of a commodity for
future delivery if the contract is reported, recorded, or
cleared in accordance with the rules of the contract market
or a derivatives clearing organization.
``(10) Trade information.--The board of trade shall maintain
rules and procedures to provide for the recording and safe storage
of all identifying trade information in a manner that enables the
contract market to use the information--
``(A) to assist in the prevention of customer and market
abuses; and
``(B) to provide evidence of any violations of the rules of
the contract market.
``(11) Financial integrity of transactions.--The board of trade
shall establish and enforce--
``(A) rules and procedures for ensuring the financial
integrity of transactions entered into on or through the
facilities of the contract market (including the clearance and
settlement of the transactions with a derivatives clearing
organization); and
``(B) rules to ensure--
``(i) the financial integrity of any--
``(I) futures commission merchant; and
``(II) introducing broker; and
``(ii) the protection of customer funds.
``(12) Protection of markets and market participants.--The
board of trade shall establish and enforce rules--
``(A) to protect markets and market participants from
abusive practices committed by any party, including abusive
practices committed by a party acting as an agent for a
participant; and
``(B) to promote fair and equitable trading on the contract
market.
``(13) Disciplinary procedures.--The board of trade shall
establish and enforce disciplinary procedures that authorize the
board of trade to discipline, suspend, or expel members or market
participants that violate the rules of the board of trade, or
similar methods for performing the same functions, including
delegation of the functions to third parties.
``(14) Dispute resolution.--The board of trade shall establish
and enforce rules regarding, and provide facilities for alternative
dispute resolution as appropriate for, market participants and any
market intermediaries.
``(15) Governance fitness standards.--The board of trade shall
establish and enforce appropriate fitness standards for directors,
members of any disciplinary committee, members of the contract
market, and any other person with direct access to the facility
(including any party affiliated with any person described in this
paragraph).
``(16) Conflicts of interest.--The board of trade shall
establish and enforce rules--
``(A) to minimize conflicts of interest in the decision-
making process of the contract market; and
``(B) to establish a process for resolving conflicts of
interest described in subparagraph (A).
``(17) Composition of governing boards of contract markets.--
The governance arrangements of the board of trade shall be designed
to permit consideration of the views of market participants.
``(18) Recordkeeping.--The board of trade shall maintain
records of all activities relating to the business of the contract
market--
``(A) in a form and manner that is acceptable to the
Commission; and
``(B) for a period of at least 5 years.
``(19) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the board of trade
shall not--
``(A) adopt any rule or taking any action that results in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
on the contract market.
``(20) System safeguards.--The board of trade shall--
``(A) establish and maintain a program of risk analysis and
oversight to identify and minimize sources of operational risk,
through the development of appropriate controls and procedures,
and the development of automated systems, that are reliable,
secure, and have adequate scalable capacity;
``(B) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allow for the
timely recovery and resumption of operations and the
fulfillment of the responsibilities and obligations of the
board of trade; and
``(C) periodically conduct tests to verify that backup
resources are sufficient to ensure continued order processing
and trade matching, price reporting, market surveillance, and
maintenance of a comprehensive and accurate audit trail.
``(21) Financial resources.--
``(A) In general.--The board of trade shall have adequate
financial, operational, and managerial resources to discharge
each responsibility of the board of trade.
``(B) Determination of adequacy.--The financial resources
of the board of trade shall be considered to be adequate if the
value of the financial resources exceeds the total amount that
would enable the contract market to cover the operating costs
of the contract market for a 1-year period, as calculated on a
rolling basis.
``(22) Diversity of board of directors.--The board of trade, if
a publicly traded company, shall endeavor to recruit individuals to
serve on the board of directors and the other decision-making
bodies (as determined by the Commission) of the board of trade from
among, and to have the composition of the bodies reflect, a broad
and culturally diverse pool of qualified candidates.
``(23) Securities and exchange commission.--The board of trade
shall keep any such records relating to swaps defined in section
1a(47)(A)(v) open to inspection and examination by the Securities
and Exchange Commission.''.
SEC. 736. MARGIN.
Section 8a(7) of the Commodity Exchange Act (7 U.S.C. 12a(7)) is
amended--
(1) in subparagraph (C), by striking ``, excepting the setting
of levels of margin'';
(2) by redesignating subparagraphs (D) through (F) as
subparagraphs (E) through (G), respectively; and
(3) by inserting after subparagraph (C) the following:
``(D) margin requirements, provided that the rules,
regulations, or orders shall--
``(i) be limited to protecting the financial integrity
of the derivatives clearing organization;
``(ii) be designed for risk management purposes to
protect the financial integrity of transactions; and
``(iii) not set specific margin amounts;''.
SEC. 737. POSITION LIMITS.
(a) Aggregate Position Limits.--Section 4a(a) of the Commodity
Exchange Act (7 U.S.C. 6a(a)) is amended--
(1) by inserting after ``(a)'' the following:
``(1) In general.--'';
(2) in the first sentence, by striking ``on electronic trading
facilities with respect to a significant price discovery contract''
and inserting ``swaps that perform or affect a significant price
discovery function with respect to registered entities'';
(3) in the second sentence--
(A) by inserting ``, including any group or class of
traders,'' after ``held by any person''; and
(B) by striking ``on an electronic trading facility with
respect to a significant price discovery contract,'' and
inserting ``swaps traded on or subject to the rules of a
designated contract market or a swap execution facility, or
swaps not traded on or subject to the rules of a designated
contract market or a swap execution facility that performs a
significant price discovery function with respect to a
registered entity,''; and
(4) by adding at the end the following:
``(2) Establishment of limitations.--
``(A) In general.--In accordance with the standards set
forth in paragraph (1) of this subsection and consistent with
the good faith exception cited in subsection (b)(2), with
respect to physical commodities other than excluded commodities
as defined by the Commission, the Commission shall by rule,
regulation, or order establish limits on the amount of
positions, as appropriate, other than bona fide hedge
positions, that may be held by any person with respect to
contracts of sale for future delivery or with respect to
options on the contracts or commodities traded on or subject to
the rules of a designated contract market.
``(B) Timing.--
``(i) Exempt commodities.--For exempt commodities, the
limits required under subparagraph (A) shall be established
within 180 days after the date of the enactment of this
paragraph.
``(ii) Agricultural commodities.--For agricultural
commodities, the limits required under subparagraph (A)
shall be established within 270 days after the date of the
enactment of this paragraph.
``(C) Goal.--In establishing the limits required under
subparagraph (A), the Commission shall strive to ensure that
trading on foreign boards of trade in the same commodity will
be subject to comparable limits and that any limits to be
imposed by the Commission will not cause price discovery in the
commodity to shift to trading on the foreign boards of trade.
``(3) Specific limitations.--In establishing the limits
required in paragraph (2), the Commission, as appropriate, shall
set limits--
``(A) on the number of positions that may be held by any
person for the spot month, each other month, and the aggregate
number of positions that may be held by any person for all
months; and
``(B) to the maximum extent practicable, in its
discretion--
``(i) to diminish, eliminate, or prevent excessive
speculation as described under this section;
``(ii) to deter and prevent market manipulation,
squeezes, and corners;
``(iii) to ensure sufficient market liquidity for bona
fide hedgers; and
``(iv) to ensure that the price discovery function of
the underlying market is not disrupted.
``(4) Significant price discovery function.--In making a
determination whether a swap performs or affects a significant
price discovery function with respect to regulated markets, the
Commission shall consider, as appropriate:
``(A) Price linkage.--The extent to which the swap uses or
otherwise relies on a daily or final settlement price, or other
major price parameter, of another contract traded on a
regulated market based upon the same underlying commodity, to
value a position, transfer or convert a position, financially
settle a position, or close out a position.
``(B) Arbitrage.--The extent to which the price for the
swap is sufficiently related to the price of another contract
traded on a regulated market based upon the same underlying
commodity so as to permit market participants to effectively
arbitrage between the markets by simultaneously maintaining
positions or executing trades in the swaps on a frequent and
recurring basis.
``(C) Material price reference.--The extent to which, on a
frequent and recurring basis, bids, offers, or transactions in
a contract traded on a regulated market are directly based on,
or are determined by referencing, the price generated by the
swap.
``(D) Material liquidity.--The extent to which the volume
of swaps being traded in the commodity is sufficient to have a
material effect on another contract traded on a regulated
market.
``(E) Other material factors.--Such other material factors
as the Commission specifies by rule or regulation as relevant
to determine whether a swap serves a significant price
discovery function with respect to a regulated market.
``(5) Economically equivalent contracts.--
``(A) Notwithstanding any other provision of this section,
the Commission shall establish limits on the amount of
positions, including aggregate position limits, as appropriate,
other than bona fide hedge positions, that may be held by any
person with respect to swaps that are economically equivalent
to contracts of sale for future delivery or to options on the
contracts or commodities traded on or subject to the rules of a
designated contract market subject to paragraph (2).
``(B) In establishing limits pursuant to subparagraph (A),
the Commission shall--
``(i) develop the limits concurrently with limits
established under paragraph (2), and the limits shall have
similar requirements as under paragraph (3)(B); and
``(ii) establish the limits simultaneously with limits
established under paragraph (2).
``(6) Aggregate position limits.--The Commission shall, by rule
or regulation, establish limits (including related hedge exemption
provisions) on the aggregate number or amount of positions in
contracts based upon the same underlying commodity (as defined by
the Commission) that may be held by any person, including any group
or class of traders, for each month across--
``(A) contracts listed by designated contract markets;
``(B) with respect to an agreement contract, or transaction
that settles against any price (including the daily or final
settlement price) of 1 or more contracts listed for trading on
a registered entity, contracts traded on a foreign board of
trade that provides members or other participants located in
the United States with direct access to its electronic trading
and order matching system; and
``(C) swap contracts that perform or affect a significant
price discovery function with respect to regulated entities.
``(7) Exemptions.--The Commission, by rule, regulation, or
order, may exempt, conditionally or unconditionally, any person or
class of persons, any swap or class of swaps, any contract of sale
of a commodity for future delivery or class of such contracts, any
option or class of options, or any transaction or class of
transactions from any requirement it may establish under this
section with respect to position limits.''.
(b) Conforming Amendments.--Section 4a(b) of the Commodity Exchange
Act (7 U.S.C. 6a(b)) is amended--
(1) in paragraph (1), by striking ``or derivatives transaction
execution facility or facilities or electronic trading facility''
and inserting ``or swap execution facility or facilities''; and
(2) in paragraph (2), by striking ``or derivatives transaction
execution facility or facilities or electronic trading facility''
and inserting ``or swap execution facility''.
(c) Bona Fide Hedging Transaction.--Section 4a(c) of the Commodity
Exchange Act is amended--
(1) by inserting ``(1)'' after ``(c)''; and
(2) by adding at the end the following:
``(2) For the purposes of implementation of subsection (a)(2)
for contracts of sale for future delivery or options on the
contracts or commodities, the Commission shall define what
constitutes a bona fide hedging transaction or position as a
transaction or position that--
``(A)(i) represents a substitute for transactions made or
to be made or positions taken or to be taken at a later time in
a physical marketing channel;
``(ii) is economically appropriate to the reduction of
risks in the conduct and management of a commercial enterprise;
and
``(iii) arises from the potential change in the value of--
``(I) assets that a person owns, produces,
manufactures, processes, or merchandises or anticipates
owning, producing, manufacturing, processing, or
merchandising;
``(II) liabilities that a person owns or anticipates
incurring; or
``(III) services that a person provides, purchases, or
anticipates providing or purchasing; or
``(B) reduces risks attendant to a position resulting from
a swap that--
``(i) was executed opposite a counterparty for which
the transaction would qualify as a bona fide hedging
transaction pursuant to subparagraph (A); or
``(ii) meets the requirements of subparagraph (A).''.
(d) Effective Date.--This section and the amendments made by this
section shall become effective on the date of the enactment of this
section.
SEC. 738. FOREIGN BOARDS OF TRADE.
(a) In General.--Section 4(b) of the Commodity Exchange Act (7
U.S.C. 6(b)) is amended--
(1) in the first sentence, by striking ``The Commission'' and
inserting the following:
``(2) Persons located in the united states.--
``(A) In general.--The Commission'';
(2) in the second sentence, by striking ``Such rules and
regulations'' and inserting the following:
``(B) Different requirements.--Rules and regulations
described in subparagraph (A)'';
(3) in the third sentence--
(A) by striking ``No rule or regulation'' and inserting the
following:
``(C) Prohibition.--Except as provided in paragraphs (1)
and (2), no rule or regulation'';
(B) by striking ``that (1) requires'' and inserting the
following: ``that--
``(i) requires''; and
(C) by striking ``market, or (2) governs'' and inserting
the following: ``market; or
``(ii) governs''; and
(4) by inserting before paragraph (2) (as designated by
paragraph (1)) the following:
``(1) Foreign boards of trade.--
``(A) Registration.--The Commission may adopt rules and
regulations requiring registration with the Commission for a
foreign board of trade that provides the members of the foreign
board of trade or other participants located in the United
States with direct access to the electronic trading and order
matching system of the foreign board of trade, including rules
and regulations prescribing procedures and requirements
applicable to the registration of such foreign boards of trade.
For purposes of this paragraph, `direct access' refers to an
explicit grant of authority by a foreign board of trade to an
identified member or other participant located in the United
States to enter trades directly into the trade matching system
of the foreign board of trade. In adopting such rules and
regulations, the commission shall consider--
``(i) whether any such foreign board of trade is
subject to comparable, comprehensive supervision and
regulation by the appropriate governmental authorities in
the foreign board of trade's home country; and
``(ii) any previous commission findings that the
foreign board of trade is subject to comparable
comprehensive supervision and regulation by the appropriate
government authorities in the foreign board of trade's home
country.
``(B) Linked contracts.--The Commission may not permit a
foreign board of trade to provide to the members of the foreign
board of trade or other participants located in the United
States direct access to the electronic trading and order-
matching system of the foreign board of trade with respect to
an agreement, contract, or transaction that settles against any
price (including the daily or final settlement price) of 1 or
more contracts listed for trading on a registered entity,
unless the Commission determines that--
``(i) the foreign board of trade makes public daily
trading information regarding the agreement, contract, or
transaction that is comparable to the daily trading
information published by the registered entity for the 1 or
more contracts against which the agreement, contract, or
transaction traded on the foreign board of trade settles;
and
``(ii) the foreign board of trade (or the foreign
futures authority that oversees the foreign board of
trade)--
``(I) adopts position limits (including related
hedge exemption provisions) for the agreement,
contract, or transaction that are comparable to the
position limits (including related hedge exemption
provisions) adopted by the registered entity for the 1
or more contracts against which the agreement,
contract, or transaction traded on the foreign board of
trade settles;
``(II) has the authority to require or direct
market participants to limit, reduce, or liquidate any
position the foreign board of trade (or the foreign
futures authority that oversees the foreign board of
trade) determines to be necessary to prevent or reduce
the threat of price manipulation, excessive speculation
as described in section 4a, price distortion, or
disruption of delivery or the cash settlement process;
``(III) agrees to promptly notify the Commission,
with regard to the agreement, contract, or transaction
that settles against any price (including the daily or
final settlement price) of 1 or more contracts listed
for trading on a registered entity, of any change
regarding--
``(aa) the information that the foreign board
of trade will make publicly available;
``(bb) the position limits that the foreign
board of trade or foreign futures authority will
adopt and enforce;
``(cc) the position reductions required to
prevent manipulation, excessive speculation as
described in section 4a, price distortion, or
disruption of delivery or the cash settlement
process; and
``(dd) any other area of interest expressed by
the Commission to the foreign board of trade or
foreign futures authority;
``(IV) provides information to the Commission
regarding large trader positions in the agreement,
contract, or transaction that is comparable to the
large trader position information collected by the
Commission for the 1 or more contracts against which
the agreement, contract, or transaction traded on the
foreign board of trade settles; and
``(V) provides the Commission such information as
is necessary to publish reports on aggregate trader
positions for the agreement, contract, or transaction
traded on the foreign board of trade that are
comparable to such reports on aggregate trader
positions for the 1 or more contracts against which the
agreement, contract, or transaction traded on the
foreign board of trade settles.
``(C) Existing foreign boards of trade.--Subparagraphs (A)
and (B) shall not be effective with respect to any foreign
board of trade to which, prior to the date of enactment of this
paragraph, the Commission granted direct access permission
until the date that is 180 days after that date of
enactment.''.
(b) Liability of Registered Persons Trading on a Foreign Board of
Trade.--Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is
amended--
(1) in subsection (a), in the matter preceding paragraph (1),
by inserting ``or by subsection (e)'' after ``Unless exempted by
the Commission pursuant to subsection (c)''; and
(2) by adding at the end the following:
``(e) Liability of Registered Persons Trading on a Foreign Board of
Trade.--
``(1) In general.--A person registered with the Commission, or
exempt from registration by the Commission, under this Act may not
be found to have violated subsection (a) with respect to a
transaction in, or in connection with, a contract of sale of a
commodity for future delivery if the person--
``(A) has reason to believe that the transaction and the
contract is made on or subject to the rules of a foreign board
of trade that is--
``(i) legally organized under the laws of a foreign
country;
``(ii) authorized to act as a board of trade by a
foreign futures authority; and
``(iii) subject to regulation by the foreign futures
authority; and
``(B) has not been determined by the Commission to be
operating in violation of subsection (a).
``(2) Rule of construction.--Nothing in this subsection shall
be construed as implying or creating any presumption that a board
of trade, exchange, or market is located outside the United States,
or its territories or possessions, for purposes of subsection
(a).''.
(c) Contract Enforcement for Foreign Futures Contracts.--Section
22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) (as amended by
section 739) is amended by adding at the end the following:
``(6) Contract Enforcement for Foreign Futures Contracts.--A
contract of sale of a commodity for future delivery traded or executed
on or through the facilities of a board of trade, exchange, or market
located outside the United States for purposes of section 4(a) shall
not be void, voidable, or unenforceable, and a party to such a contract
shall not be entitled to rescind or recover any payment made with
respect to the contract, based on the failure of the foreign board of
trade to comply with any provision of this Act.''.
SEC. 739. LEGAL CERTAINTY FOR SWAPS.
Section 22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) is
amended by striking paragraph (4) and inserting the following:
``(4) Contract Enforcement Between Eligible Counterparties.--
``(A) In general.--No hybrid instrument sold to any investor
shall be void, voidable, or unenforceable, and no party to a hybrid
instrument shall be entitled to rescind, or recover any payment
made with respect to, the hybrid instrument under this section or
any other provision of Federal or State law, based solely on the
failure of the hybrid instrument to comply with the terms or
conditions of section 2(f) or regulations of the Commission.
``(B) Swaps.--No agreement, contract, or transaction between
eligible contract participants or persons reasonably believed to be
eligible contract participants shall be void, voidable, or
unenforceable, and no party to such agreement, contract, or
transaction shall be entitled to rescind, or recover any payment
made with respect to, the agreement, contract, or transaction under
this section or any other provision of Federal or State law, based
solely on the failure of the agreement, contract, or transaction--
``(i) to meet the definition of a swap under section 1a; or
``(ii) to be cleared in accordance with section 2(h)(1).
``(5) Legal Certainty for Long-term Swaps Entered Into Before the
Date of Enactment of the Wall Street Transparency and Accountability
Act of 2010.--
``(A) Effect on swaps.--Unless specifically reserved in the
applicable swap, neither the enactment of the Wall Street
Transparency and Accountability Act of 2010, nor any requirement
under that Act or an amendment made by that Act, shall constitute a
termination event, force majeure, illegality, increased costs,
regulatory change, or similar event under a swap (including any
related credit support arrangement) that would permit a party to
terminate, renegotiate, modify, amend, or supplement 1 or more
transactions under the swap.
``(B) Position limits.--Any position limit established under
the Wall Street Transparency and Accountability Act of 2010 shall
not apply to a position acquired in good faith prior to the
effective date of any rule, regulation, or order under the Act that
establishes the position limit; provided, however, that such
positions shall be attributed to the trader if the trader's
position is increased after the effective date of such position
limit rule, regulation, or order.''.
SEC. 740. MULTILATERAL CLEARING ORGANIZATIONS.
Sections 408 and 409 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4421, 4422) are repealed.
SEC. 741. ENFORCEMENT.
(a) Enforcement Authority.--The Commodity Exchange Act is amended
by inserting after section 4b (7 U.S.C. 6b) the following:
``SEC. 4b-1. ENFORCEMENT AUTHORITY.
``(a) Commodity Futures Trading Commission.--Except as provided in
subsections (b), (c), and (d), the Commission shall have exclusive
authority to enforce the provisions of subtitle A of the Wall Street
Transparency and Accountability Act of 2010 with respect to any person.
``(b) Prudential Regulators.--The prudential regulators shall have
exclusive authority to enforce the provisions of section 4s(e) with
respect to swap dealers or major swap participants for which they are
the prudential regulator.
``(c) Referrals.--
``(1) Prudential regulators.--If the prudential regulator for a
swap dealer or major swap participant has cause to believe that the
swap dealer or major swap participant, or any affiliate or division
of the swap dealer or major swap participant, may have engaged in
conduct that constitutes a violation of the nonprudential
requirements of this Act (including section 4s or rules adopted by
the Commission under that section), the prudential regulator may
promptly notify the Commission in a written report that includes--
``(A) a request that the Commission initiate an enforcement
proceeding under this Act; and
``(B) an explanation of the facts and circumstances that
led to the preparation of the written report.
``(2) Commission.--If the Commission has cause to believe that
a swap dealer or major swap participant that has a prudential
regulator may have engaged in conduct that constitutes a violation
of any prudential requirement of section 4s or rules adopted by the
Commission under that section, the Commission may notify the
prudential regulator of the conduct in a written report that
includes--
``(A) a request that the prudential regulator initiate an
enforcement proceeding under this Act or any other Federal law
(including regulations); and
``(B) an explanation of the concerns of the Commission, and
a description of the facts and circumstances, that led to the
preparation of the written report.
``(d) Backstop Enforcement Authority.--
``(1) Initiation of enforcement proceeding by prudential
regulator.--If the Commission does not initiate an enforcement
proceeding before the end of the 90-day period beginning on the
date on which the Commission receives a written report under
subsection (c)(1), the prudential regulator may initiate an
enforcement proceeding.
``(2) Initiation of enforcement proceeding by commission.--If
the prudential regulator does not initiate an enforcement
proceeding before the end of the 90-day period beginning on the
date on which the prudential regulator receives a written report
under subsection (c)(2), the Commission may initiate an enforcement
proceeding.''.
(b) Conforming Amendments.--
(1) Section 4b of the Commodity Exchange Act (7 U.S.C. 6b) is
amended--
(A) in subsection (a)(2), by striking ``or other agreement,
contract, or transaction subject to paragraphs (1) and (2) of
section 5a(g),'' and inserting ``or swap,'';
(B) in subsection (b), by striking ``or other agreement,
contract or transaction subject to paragraphs (1) and (2) of
section 5a(g),'' and inserting ``or swap,''; and
(C) by adding at the end the following:
``(e) It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate commerce, or
of the mails, or of any facility of any registered entity, in or in
connection with any order to make, or the making of, any contract of
sale of any commodity for future delivery (or option on such a
contract), or any swap, on a group or index of securities (or any
interest therein or based on the value thereof)--
``(1) to employ any device, scheme, or artifice to defraud;
``(2) to make any untrue statement of a material fact or to
omit to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which they
were made, not misleading; or
``(3) to engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit upon any
person.''.
(2) Section 4c(a)(1) of the Commodity Exchange Act (7 U.S.C.
6c(a)(1)) is amended by inserting ``or swap'' before ``if the
transaction is used or may be used''.
(3) Section 6(c) of the Commodity Exchange Act (7 U.S.C. 9) is
amended in the first sentence by inserting ``or of any swap,''
before ``or has willfully made''.
(4) Section 6(d) of the Commodity Exchange Act (7 U.S.C. 13b)
is amended in the first sentence, in the matter preceding the
proviso, by inserting ``or of any swap,'' before ``or otherwise is
violating''.
(5) Section 6c(a) of the Commodity Exchange Act (7 U.S.C. 13a-
1(a)) is amended in the matter preceding the proviso by inserting
``or any swap'' after ``commodity for future delivery''.
(6) Section 9 of the Commodity Exchange Act (7 U.S.C. 13) is
amended--
(A) in subsection (a)--
(i) in paragraph (2), by inserting ``or of any swap,''
before ``or to corner''; and
(ii) in paragraph (4), by inserting ``swap data
repository,'' before ``or futures association'' and
(B) in subsection (e)(1)--
(i) by inserting ``swap data repository,'' before ``or
registered futures association''; and
(ii) by inserting ``, or swaps,'' before ``on the
basis''.
(7) Section 9(a) of the Commodity Exchange Act (7 U.S.C. 13(a))
is amended by adding at the end the following:
``(6) Any person to abuse the end user clearing exemption under
section 2(h)(4), as determined by the Commission.''.
(8) Section 2(c)(2)(B) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)(B)) is amended--
(A) by striking ``(dd),'' each place it appears;
(B) in clause (iii), by inserting ``, and accounts or
pooled investment vehicles described in clause (vi),'' before
``shall be subject to''; and
(C) by adding at the end the following:
``(vi) This Act applies to, and the Commission shall
have jurisdiction over, an account or pooled investment
vehicle that is offered for the purpose of trading, or that
trades, any agreement, contract, or transaction in foreign
currency described in clause (i).''.
(9) Section 2(c)(2)(C) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)(C)) is amended--
(A) by striking ``(dd),'' each place it appears;
(B) in clause (ii)(I), by inserting ``, and accounts or
pooled investment vehicles described in clause (vii),'' before
``shall be subject to''; and
(C) by adding at the end the following:
``(vii) This Act applies to, and the Commission shall
have jurisdiction over, an account or pooled investment
vehicle that is offered for the purpose of trading, or that
trades, any agreement, contract, or transaction in foreign
currency described in clause (i).''.
(10) Section 1a(19)(A)(iv)(II) of the Commodity Exchange Act (7
U.S.C. 1a(19)(A)(iv)(II)) (as redesignated by section 721(a)(1)) is
amended by inserting before the semicolon at the end the following:
``provided, however, that for purposes of section 2(c)(2)(B)(vi)
and section 2(c)(2)(C)(vii), the term `eligible contract
participant' shall not include a commodity pool in which any
participant is not otherwise an eligible contract participant''.
(11) Section 6(e) of the Commodity Exchange Act (7 U.S.C. 9a)
is amended by adding at the end the following:
``(4) Any designated clearing organization that knowingly or
recklessly evades or participates in or facilitates an evasion of
the requirements of section 2(h) shall be liable for a civil money
penalty in twice the amount otherwise available for a violation of
section 2(h).
``(5) Any swap dealer or major swap participant that knowingly
or recklessly evades or participates in or facilitates an evasion
of the requirements of section 2(h) shall be liable for a civil
money penalty in twice the amount otherwise available for a
violation of section 2(h).''.
(c) Savings Clause.--Notwithstanding any other provision of this
title, nothing in this subtitle shall be construed as divesting any
appropriate Federal banking agency of any authority it may have to
establish or enforce, with respect to a person for which such agency is
the appropriate Federal banking agency, prudential or other standards
pursuant to authority granted by Federal law other than this title.
SEC. 742. RETAIL COMMODITY TRANSACTIONS.
(a) In General.--Section 2(c) of the Commodity Exchange Act (7
U.S.C. 2(c)) is amended--
(1) in paragraph (1), by striking ``5a (to the extent provided
in section 5a(g)), 5b, 5d, or 12(e)(2)(B))'' and inserting ``, 5b,
or 12(e)(2)(B))''; and
(2) in paragraph (2), by adding at the end the following:
``(D) Retail commodity transactions.--
``(i) Applicability.--Except as provided in clause
(ii), this subparagraph shall apply to any agreement,
contract, or transaction in any commodity that is--
``(I) entered into with, or offered to (even if not
entered into with), a person that is not an eligible
contract participant or eligible commercial entity; and
``(II) entered into, or offered (even if not
entered into), on a leveraged or margined basis, or
financed by the offeror, the counterparty, or a person
acting in concert with the offeror or counterparty on a
similar basis.
``(ii) Exceptions.--This subparagraph shall not apply
to--
``(I) an agreement, contract, or transaction
described in paragraph (1) or subparagraphs (A), (B),
or (C), including any agreement, contract, or
transaction specifically excluded from subparagraph
(A), (B), or (C);
``(II) any security;
``(III) a contract of sale that--
``(aa) results in actual delivery within 28
days or such other longer period as the Commission
may determine by rule or regulation based upon the
typical commercial practice in cash or spot markets
for the commodity involved; or
``(bb) creates an enforceable obligation to
deliver between a seller and a buyer that have the
ability to deliver and accept delivery,
respectively, in connection with the line of
business of the seller and buyer; or
``(IV) an agreement, contract, or transaction that
is listed on a national securities exchange registered
under section 6(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(a)); or
``(V) an identified banking product, as defined in
section 402(b) of the Legal Certainty for Bank Products
Act of 2000 (7 U.S.C.27(b)).
``(iii) Enforcement.--Sections 4(a), 4(b), and 4b apply
to any agreement, contract, or transaction described in
clause (i), as if the agreement, contract, or transaction
was a contract of sale of a commodity for future delivery.
``(iv) Eligible commercial entity.--For purposes of
this subparagraph, an agricultural producer, packer, or
handler shall be considered to be an eligible commercial
entity for any agreement, contract, or transaction for a
commodity in connection with the line of business of the
agricultural producer, packer, or handler.''.
(b) Gramm-Leach-Bliley Act.--Section 206(a) of the Gramm-Leach-
Bliley Act (Public Law 106-102; 15 U.S.C. 78c note) is amended, in the
matter preceding paragraph (1), by striking ``For purposes of'' and
inserting ``Except as provided in subsection (e), for purposes of''.
(c) Conforming Amendments Relating to Retail Foreign Exchange
Transactions.--
(1) Section 2(c)(2)(B)(i)(II) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(B)(i)(II)) is amended--
(A) in item (aa), by inserting ``United States'' before
``financial institution'';
(B) by striking items (dd) and (ff);
(C) by redesignating items (ee) and (gg) as items (dd) and
(ff), respectively; and
(D) in item (dd) (as so redesignated), by striking the
semicolon and inserting ``; or''.
(2) Section 2(c)(2) of the Commodity Exchange Act (7 U.S.C.
2(c)(2)) (as amended by subsection (a)(2)) is amended by adding at
the end the following:
``(E) Prohibition.--
``(i) Definition of federal regulatory agency.--In this
subparagraph, the term `Federal regulatory agency' means--
``(I) the Commission;
``(II) the Securities and Exchange Commission;
``(III) an appropriate Federal banking agency;
``(IV) the National Credit Union Association; and
``(V) the Farm Credit Administration.
``(ii) Prohibition.--
``(I) In general.--Except as provided in subclause
(II), a person described in subparagraph (B)(i)(II) for
which there is a Federal regulatory agency shall not
offer to, or enter into with, a person that is not an
eligible contract participant, any agreement, contract,
or transaction in foreign currency described in
subparagraph (B)(i)(I) except pursuant to a rule or
regulation of a Federal regulatory agency allowing the
agreement, contract, or transaction under such terms
and conditions as the Federal regulatory agency shall
prescribe.
``(II) Effective date.--With regard to persons
described in subparagraph (B)(i)(II) for which a
Federal regulatory agency has issued a proposed rule
concerning agreements, contracts, or transactions in
foreign currency described in subparagraph (B)(i)(I)
prior to the date of enactment of this subclause,
subclause (I) shall take effect 90 days after the date
of enactment of this subclause.
``(iii) Requirements of rules and regulations.--
``(I) In general.--The rules and regulations
described in clause (ii) shall prescribe appropriate
requirements with respect to--
``(aa) disclosure;
``(bb) recordkeeping;
``(cc) capital and margin;
``(dd) reporting;
``(ee) business conduct;
``(ff) documentation; and
``(gg) such other standards or requirements as
the Federal regulatory agency shall determine to be
necessary.
``(II) Treatment.--The rules or regulations
described in clause (ii) shall treat all agreements,
contracts, and transactions in foreign currency
described in subparagraph (B)(i)(I), and all
agreements, contracts, and transactions in foreign
currency that are functionally or economically similar
to agreements, contracts, or transactions described in
subparagraph (B)(i)(I), similarly.''.
SEC. 743. OTHER AUTHORITY.
Unless otherwise provided by the amendments made by this subtitle,
the amendments made by this subtitle do not divest any appropriate
Federal banking agency, the Commodity Futures Trading Commission, the
Securities and Exchange Commission, or other Federal or State agency of
any authority derived from any other applicable law.
SEC. 744. RESTITUTION REMEDIES.
Section 6c(d) of the Commodity Exchange Act (7 U.S.C. 13a-1(d)) is
amended by adding at the end the following:
``(3) Equitable remedies.--In any action brought under this
section, the Commission may seek, and the court may impose, on a
proper showing, on any person found in the action to have committed
any violation, equitable remedies including--
``(A) restitution to persons who have sustained losses
proximately caused by such violation (in the amount of such
losses); and
``(B) disgorgement of gains received in connection with
such violation.''.
SEC. 745. ENHANCED COMPLIANCE BY REGISTERED ENTITIES.
(a) Effect of Interpretation.--Section 5c(a) of the Commodity
Exchange Act (7 U.S.C. 7a-2(a)) is amended by striking paragraph (2)
and inserting the following:
``(2) Effect of interpretation.--An interpretation issued under
paragraph (1) may provide the exclusive means for complying with
each section described in paragraph (1).''.
(b) New Contracts, New Rules, and Rule Amendments.--Section 5c of
the Commodity Exchange Act (7 U.S.C. 7a-2) is amended by striking
subsection (c) and inserting the following:
``(c) New Contracts, New Rules, and Rule Amendments.--
``(1) In general.--A registered entity may elect to list for
trading or accept for clearing any new contract, or other
instrument, or may elect to approve and implement any new rule or
rule amendment, by providing to the Commission (and the Secretary
of the Treasury, in the case of a contract of sale of a government
security for future delivery (or option on such a contract) or a
rule or rule amendment specifically related to such a contract) a
written certification that the new contract or instrument or
clearing of the new contract or instrument, new rule, or rule
amendment complies with this Act (including regulations under this
Act).
``(2) Rule review.--The new rule or rule amendment described in
paragraph (1) shall become effective, pursuant to the certification
of the registered entity and notice of such certification to its
members (in a manner to be determined by the Commission), on the
date that is 10 business days after the date on which the
Commission receives the certification (or such shorter period as
determined by the Commission by rule or regulation) unless the
Commission notifies the registered entity within such time that it
is staying the certification because there exist novel or complex
issues that require additional time to analyze, an inadequate
explanation by the submitting registered entity, or a potential
inconsistency with this Act (including regulations under this Act).
``(3) Stay of certification for rules.--
``(A) A notification by the Commission pursuant to
paragraph (2) shall stay the certification of the new rule or
rule amendment for up to an additional 90 days from the date of
the notification.
``(B) A rule or rule amendment subject to a stay pursuant
to subparagraph (A) shall become effective, pursuant to the
certification of the registered entity, at the expiration of
the period described in subparagraph (A) unless the
Commission--
``(i) withdraws the stay prior to that time; or
``(ii) notifies the registered entity during such
period that it objects to the proposed certification on the
grounds that it is inconsistent with this Act (including
regulations under this Act).
``(C) The Commission shall provide a not less than 30-day
public comment period, within the 90-day period in which the
stay is in effect as described in subparagraph (A), whenever
the Commission reviews a rule or rule amendment pursuant to a
notification by the Commission under this paragraph.
``(4) Prior approval.--
``(A) In general.--A registered entity may request that the
Commission grant prior approval to any new contract or other
instrument, new rule, or rule amendment.
``(B) Prior approval required.--Notwithstanding any other
provision of this section, a designated contract market shall
submit to the Commission for prior approval each rule amendment
that materially changes the terms and conditions, as determined
by the Commission, in any contract of sale for future delivery
of a commodity specifically enumerated in section 1a(10) (or
any option thereon) traded through its facilities if the rule
amendment applies to contracts and delivery months which have
already been listed for trading and have open interest.
``(C) Deadline.--If prior approval is requested under
subparagraph (A), the Commission shall take final action on the
request not later than 90 days after submission of the request,
unless the person submitting the request agrees to an extension
of the time limitation established under this subparagraph.
``(5) Approval.--
``(A) Rules.--The Commission shall approve a new rule, or
rule amendment, of a registered entity unless the Commission
finds that the new rule, or rule amendment, is inconsistent
with this subtitle (including regulations).
``(B) Contracts and instruments.--The Commission shall
approve a new contract or other instrument unless the
Commission finds that the new contract or other instrument
would violate this Act (including regulations).
``(C) Special rule for review and approval of event
contracts and swaps contracts.--
``(i) Event contracts.--In connection with the listing
of agreements, contracts, transactions, or swaps in
excluded commodities that are based upon the occurrence,
extent of an occurrence, or contingency (other than a
change in the price, rate, value, or levels of a commodity
described in section 1a(2)(i)), by a designated contract
market or swap execution facility, the Commission may
determine that such agreements, contracts, or transactions
are contrary to the public interest if the agreements,
contracts, or transactions involve--
``(I) activity that is unlawful under any Federal
or State law;
``(II) terrorism;
``(III) assassination;
``(IV) war;
``(V) gaming; or
``(VI) other similar activity determined by the
Commission, by rule or regulation, to be contrary to
the public interest.
``(ii) Prohibition.--No agreement, contract, or
transaction determined by the Commission to be contrary to
the public interest under clause (i) may be listed or made
available for clearing or trading on or through a
registered entity.
``(iii) Swaps contracts.--
``(I) In general.--In connection with the listing
of a swap for clearing by a derivatives clearing
organization, the Commission shall determine, upon
request or on its own motion, the initial eligibility,
or the continuing qualification, of a derivatives
clearing organization to clear such a swap under those
criteria, conditions, or rules that the Commission, in
its discretion, determines.
``(II) Requirements.--Any such criteria,
conditions, or rules shall consider--
``(aa) the financial integrity of the
derivatives clearing organization; and
``(bb) any other factors which the Commission
determines may be appropriate.
``(iv) Deadline.--The Commission shall take final
action under clauses (i) and (ii) in not later than 90 days
from the commencement of its review unless the party
seeking to offer the contract or swap agrees to an
extension of this time limitation.''.
(c) Violation of Core Principles.--Section 5c of the Commodity
Exchange Act (7 U.S.C. 7a-2) is amended by striking subsection (d).
SEC. 746. INSIDER TRADING.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
amended by adding at the end the following:
``(3) Contract of sale.--It shall be unlawful for any employee
or agent of any department or agency of the Federal Government who,
by virtue of the employment or position of the employee or agent,
acquires information that may affect or tend to affect the price of
any commodity in interstate commerce, or for future delivery, or
any swap, and which information has not been disseminated by the
department or agency of the Federal Government holding or creating
the information in a manner which makes it generally available to
the trading public, or disclosed in a criminal, civil, or
administrative hearing, or in a congressional, administrative, or
Government Accountability Office report, hearing, audit, or
investigation, to use the information in his personal capacity and
for personal gain to enter into, or offer to enter into--
``(A) a contract of sale of a commodity for future delivery
(or option on such a contract);
``(B) an option (other than an option executed or traded on
a national securities exchange registered pursuant to section
6(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78f(a));
or
``(C) a swap.
``(4) Nonpublic information.--
``(A) Imparting of nonpublic information.--It shall be
unlawful for any employee or agent of any department or agency
of the Federal Government who, by virtue of the employment or
position of the employee or agent, acquires information that
may affect or tend to affect the price of any commodity in
interstate commerce, or for future delivery, or any swap, and
which information has not been disseminated by the department
or agency of the Federal Government holding or creating the
information in a manner which makes it generally available to
the trading public, or disclosed in a criminal, civil, or
administrative hearing, or in a congressional, administrative,
or Government Accountability Office report, hearing, audit, or
investigation, to impart the information in his personal
capacity and for personal gain with intent to assist another
person, directly or indirectly, to use the information to enter
into, or offer to enter into--
``(i) a contract of sale of a commodity for future
delivery (or option on such a contract);
``(ii) an option (other than an option executed or
traded on a national securities exchange registered
pursuant to section 6(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(a)); or
``(iii) a swap.
``(B) Knowing use.--It shall be unlawful for any person who
receives information imparted by any employee or agent of any
department or agency of the Federal Government as described in
subparagraph (A) to knowingly use such information to enter
into, or offer to enter into--
``(i) a contract of sale of a commodity for future
delivery (or option on such a contract);
``(ii) an option (other than an option executed or
traded on a national securities exchange registered
pursuant to section 6(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(a)); or
``(iii) a swap.
``(C) Theft of nonpublic information.--It shall be unlawful
for any person to steal, convert, or misappropriate, by any
means whatsoever, information held or created by any department
or agency of the Federal Government that may affect or tend to
affect the price of any commodity in interstate commerce, or
for future delivery, or any swap, where such person knows, or
acts in reckless disregard of the fact, that such information
has not been disseminated by the department or agency of the
Federal Government holding or creating the information in a
manner which makes it generally available to the trading
public, or disclosed in a criminal, civil, or administrative
hearing, or in a congressional, administrative, or Government
Accountability Office report, hearing, audit, or investigation,
and to use such information, or to impart such information with
the intent to assist another person, directly or indirectly, to
use such information to enter into, or offer to enter into--
``(i) a contract of sale of a commodity for future
delivery (or option on such a contract);
``(ii) an option (other than an option executed or
traded on a national securities exchange registered
pursuant to section 6(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(a)); or
``(iii) a swap, provided, however, that nothing in this
subparagraph shall preclude a person that has provided
information concerning, or generated by, the person, its
operations or activities, to any employee or agent of any
department or agency of the Federal Government, voluntarily
or as required by law, from using such information to enter
into, or offer to enter into, a contract of sale, option,
or swap described in clauses (i), (ii), or (iii).''.
SEC. 747. ANTIDISRUPTIVE PRACTICES AUTHORITY.
Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) (as
amended by section 746) is amended by adding at the end the following:
``(5) Disruptive practices.--It shall be unlawful for any
person to engage in any trading, practice, or conduct on or subject
to the rules of a registered entity that--
``(A) violates bids or offers;
``(B) demonstrates intentional or reckless disregard for
the orderly execution of transactions during the closing
period; or
``(C) is, is of the character of, or is commonly known to
the trade as, `spoofing' (bidding or offering with the intent
to cancel the bid or offer before execution).
``(6) Rulemaking authority.--The Commission may make and
promulgate such rules and regulations as, in the judgment of the
Commission, are reasonably necessary to prohibit the trading
practices described in paragraph (5) and any other trading practice
that is disruptive of fair and equitable trading.
``(7) Use of swaps to defraud.--It shall be unlawful for any
person to enter into a swap knowing, or acting in reckless
disregard of the fact, that its counterparty will use the swap as
part of a device, scheme, or artifice to defraud any third
party.''.
SEC. 748. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
adding at the end the following:
``SEC. 23. COMMODITY WHISTLEBLOWER INCENTIVES AND PROTECTION.
``(a) Definitions.--In this section:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any judicial or
administrative action brought by the Commission under this Act that
results in monetary sanctions exceeding $1,000,000.
``(2) Fund.--The term `Fund' means the Commodity Futures
Trading Commission Customer Protection Fund established under
subsection (g).
``(3) Monetary sanctions.--The term `monetary sanctions', when
used with respect to any judicial or administrative action means--
``(A) any monies, including penalties, disgorgement,
restitution, and interest ordered to be paid; and
``(B) any monies deposited into a disgorgement fund or
other fund pursuant to section 308(b) of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7246(b)), as a result of such action or any
settlement of such action.
``(4) Original information.--The term `original information'
means information that--
``(A) is derived from the independent knowledge or analysis
of a whistleblower;
``(B) is not known to the Commission from any other source,
unless the whistleblower is the original source of the
information; and
``(C) is not exclusively derived from an allegation made in
a judicial or administrative hearing, in a governmental report,
hearing, audit, or investigation, or from the news media,
unless the whistleblower is a source of the information.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought by
the Commission under this Act, means any judicial or administrative
action brought by an entity described in subclauses (I) through
(VI) of subsection (h)(2)(C) that is based upon the original
information provided by a whistleblower pursuant to subsection (a)
that led to the successful enforcement of the Commission action.
``(6) Successful resolution.--The term `successful resolution',
when used with respect to any judicial or administrative action
brought by the Commission under this Act, includes any settlement
of such action.
``(7) Whistleblower.--The term `whistleblower' means any
individual, or 2 or more individuals acting jointly, who provides
information relating to a violation of this Act to the Commission,
in a manner established by rule or regulation by the Commission.
``(b) Awards.--
``(1) In general.--In any covered judicial or administrative
action, or related action, the Commission, under regulations
prescribed by the Commission and subject to subsection (c), shall
pay an award or awards to 1 or more whistleblowers who voluntarily
provided original information to the Commission that led to the
successful enforcement of the covered judicial or administrative
action, or related action, in an aggregate amount equal to--
``(A) not less than 10 percent, in total, of what has been
collected of the monetary sanctions imposed in the action or
related actions; and
``(B) not more than 30 percent, in total, of what has been
collected of the monetary sanctions imposed in the action or
related actions.
``(2) Payment of awards.--Any amount paid under paragraph (1)
shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount of an
award made under subsection (b) shall be in the discretion of
the Commission.
``(B) Criteria.--In determining the amount of an award made
under subsection (b), the Commission--
``(i) shall take into consideration--
``(I) the significance of the information provided
by the whistleblower to the success of the covered
judicial or administrative action;
``(II) the degree of assistance provided by the
whistleblower and any legal representative of the
whistleblower in a covered judicial or administrative
action;
``(III) the programmatic interest of the Commission
in deterring violations of the Act (including
regulations under the Act) by making awards to
whistleblowers who provide information that leads to
the successful enforcement of such laws; and
``(IV) such additional relevant factors as the
Commission may establish by rule or regulation; and
``(ii) shall not take into consideration the balance of
the Fund.
``(2) Denial of award.--No award under subsection (b) shall be
made--
``(A) to any whistleblower who is, or was at the time the
whistleblower acquired the original information submitted to
the Commission, a member, officer, or employee of--
``(i) a appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a registered entity;
``(iv) a registered futures association;
``(v) a self-regulatory organization as defined in
section 3(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78c(a)); or
``(vi) a law enforcement organization;
``(B) to any whistleblower who is convicted of a criminal
violation related to the judicial or administrative action for
which the whistleblower otherwise could receive an award under
this section;
``(C) to any whistleblower who submits information to the
Commission that is based on the facts underlying the covered
action submitted previously by another whistleblower;
``(D) to any whistleblower who fails to submit information
to the Commission in such form as the Commission may, by rule
or regulation, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who makes a
claim for an award under subsection (b) may be represented by
counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who anonymously makes
a claim for an award under subsection (b) shall be represented
by counsel if the whistleblower submits the information upon
which the claim is based.
``(B) Disclosure of identity.--Prior to the payment of an
award, a whistleblower shall disclose the identity of the
whistleblower and provide such other information as the
Commission may require, directly or through counsel for the
whistleblower.
``(e) No Contract Necessary.--No contract with the Commission is
necessary for any whistleblower to receive an award under subsection
(b), unless otherwise required by the Commission, by rule or
regulation.
``(f) Appeals.--
``(1) In general.--Any determination made under this section,
including whether, to whom, or in what amount to make awards, shall
be in the discretion of the Commission.
``(2) Appeals.--Any determination described in paragraph (1)
may be appealed to the appropriate court of appeals of the United
States not more than 30 days after the determination is issued by
the Commission.
``(3) Review.--The court shall review the determination made by
the Commission in accordance with section 7064 of title 5, United
States Code.
``(g) Commodity Futures Trading Commission Customer Protection
Fund.--
``(1) Establishment.--There is established in the Treasury of
the United States a revolving fund to be known as the `Commodity
Futures Trading Commission Customer Protection Fund'.
``(2) Use of fund.--The Fund shall be available to the
Commission, without further appropriation or fiscal year
limitation, for--
``(A) the payment of awards to whistleblowers as provided
in subsection (a); and
``(B) the funding of customer education initiatives
designed to help customers protect themselves against fraud or
other violations of this Act, or the rules and regulations
thereunder.
``(3) Deposits and credits.--There shall be deposited into or
credited to the Fund:
``(A) Monetary sanctions.--Any monetary sanctions collected
by the Commission in any covered judicial or administrative
action that is not otherwise distributed to victims of a
violation of this Act or the rules and regulations thereunder
underlying such action, unless the balance of the Fund at the
time the monetary judgment is collected exceeds $100,000,000.
``(B) Additional amounts.--If the amounts deposited into or
credited to the Fund under subparagraph (A) are not sufficient
to satisfy an award made under subsection (b), there shall be
deposited into or credited to the Fund an amount equal to the
unsatisfied portion of the award from any monetary sanction
collected by the Commission in any judicial or administrative
action brought by the Commission under this Act that is based
on information provided by a whistleblower.
``(C) Investment income.--All income from investments made
under paragraph (4).
``(4) Investments.--
``(A) Amounts in fund may be invested.--The Commission may
request the Secretary of the Treasury to invest the portion of
the Fund that is not, in the Commission's judgment, required to
meet the current needs of the Fund.
``(B) Eligible investments.--Investments shall be made by
the Secretary of the Treasury in obligations of the United
States or obligations that are guaranteed as to principal and
interest by the United States, with maturities suitable to the
needs of the Fund as determined by the Commission.
``(C) Interest and proceeds credited.--The interest on, and
the proceeds from the sale or redemption of, any obligations
held in the Fund shall be credited to, and form a part of, the
Fund.
``(5) Reports to congress.--Not later than October 30 of each
year, the Commission shall transmit to the Committee on
Agriculture, Nutrition, and Forestry of the Senate, and the
Committee on Agriculture of the House of Representatives a report
on--
``(A) the Commission's whistleblower award program under
this section, including a description of the number of awards
granted and the types of cases in which awards were granted
during the preceding fiscal year;
``(B) customer education initiatives described in paragraph
(2)(B) that were funded by the Fund during the preceding fiscal
year;
``(C) the balance of the Fund at the beginning of the
preceding fiscal year;
``(D) the amounts deposited into or credited to the Fund
during the preceding fiscal year;
``(E) the amount of earnings on investments of amounts in
the Fund during the preceding fiscal year;
``(F) the amount paid from the Fund during the preceding
fiscal year to whistleblowers pursuant to subsection (b);
``(G) the amount paid from the Fund during the preceding
fiscal year for customer education initiatives described in
paragraph (2)(B);
``(H) the balance of the Fund at the end of the preceding
fiscal year; and
``(I) a complete set of audited financial statements,
including a balance sheet, income statement, and cash flow
analysis.
``(h) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(A) In general.--No employer may discharge, demote,
suspend, threaten, harass, directly or indirectly, or in any
other manner discriminate against, a whistleblower in the terms
and conditions of employment because of any lawful act done by
the whistleblower--
``(i) in providing information to the Commission in
accordance with subsection (b); or
``(ii) in assisting in any investigation or judicial or
administrative action of the Commission based upon or
related to such information.
``(B) Enforcement.--
``(i) Cause of action.--An individual who alleges
discharge or other discrimination in violation of
subparagraph (A) may bring an action under this subsection
in the appropriate district court of the United States for
the relief provided in subparagraph (C), unless the
individual who is alleging discharge or other
discrimination in violation of subparagraph (A) is an
employee of the Federal Government, in which case the
individual shall only bring an action under section 1221 of
title 5, United States Code.
``(ii) Subpoenas.--A subpoena requiring the attendance
of a witness at a trial or hearing conducted under this
subsection may be served at any place in the United States.
``(iii) Statute of limitations.--An action under this
subsection may not be brought more than 2 years after the
date on which the violation reported in subparagraph (A) is
committed.
``(C) Relief.--Relief for an individual prevailing in an
action brought under subparagraph (B) shall include--
``(i) reinstatement with the same seniority status that
the individual would have had, but for the discrimination;
``(ii) the amount of back pay otherwise owed to the
individual, with interest; and
``(iii) compensation for any special damages sustained
as a result of the discharge or discrimination, including
litigation costs, expert witness fees, and reasonable
attorney's fees.
``(2) Confidentiality.--
``(A) In general.--Except as provided in subparagraphs (B)
and (C), the Commission, and any officer or employee of the
Commission, shall not disclose any information, including
information provided by a whistleblower to the Commission,
which could reasonably be expected to reveal the identity of a
whistleblower, except in accordance with the provisions of
section 552a of title 5, United States Code, unless and until
required to be disclosed to a defendant or respondent in
connection with a public proceeding instituted by the
Commission or any entity described in subparagraph (C). For
purposes of section 552 of title 5, United States Code, this
paragraph shall be considered a statute described in subsection
(b)(3)(B) of such section 552.
``(B) Effect.--Nothing in this paragraph is intended to
limit the ability of the Attorney General to present such
evidence to a grand jury or to share such evidence with
potential witnesses or defendants in the course of an ongoing
criminal investigation.
``(C) Availability to government agencies.--
``(i) In general.--Without the loss of its status as
confidential in the hands of the Commission, all
information referred to in subparagraph (A) may, in the
discretion of the Commission, when determined by the
Commission to be necessary or appropriate to accomplish the
purposes of this Act and protect customers and in
accordance with clause (ii), be made available to--
``(I) the Department of Justice;
``(II) an appropriate department or agency of the
Federal Government, acting within the scope of its
jurisdiction;
``(III) a registered entity, registered futures
association, or self-regulatory organization as defined
in section 3(a) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a));
``(IV) a State attorney general in connection with
any criminal investigation;
``(V) an appropriate department or agency of any
State, acting within the scope of its jurisdiction; and
``(VI) a foreign futures authority.
``(ii) Maintenance of information.--Each of the
entities, agencies, or persons described in clause (i)
shall maintain information described in that clause as
confidential, in accordance with the requirements in
subparagraph (A).
``(iii) Study on impact of foia exemption on commodity
futures trading commission.--
``(I) Study.--The Inspector General of the
Commission shall conduct a study--
``(aa) on whether the exemption under section
552(b)(3) of title 5, United States Code (known as
the Freedom of Information Act) established in
paragraph (2)(A) aids whistleblowers in disclosing
information to the Commission;
``(bb) on what impact the exemption has had on
the public's ability to access information about
the Commission's regulation of commodity futures
and option markets; and
``(cc) to make any recommendations on whether
the Commission should continue to use the
exemption.
``(II) Report.--Not later than 30 months after the
date of enactment of this clause, the Inspector General
shall--
``(aa) submit a report on the findings of the
study required under this clause to the Committee
on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of
the House of Representatives; and
``(bb) make the report available to the public
through publication of a report on the website of
the Commission.
``(3) Rights retained.--Nothing in this section shall be deemed
to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
``(i) Rulemaking Authority.--The Commission shall have the
authority to issue such rules and regulations as may be necessary or
appropriate to implement the provisions of this section consistent with
the purposes of this section.
``(j) Implementing Rules.--The Commission shall issue final rules
or regulations implementing the provisions of this section not later
than 270 days after the date of enactment of the Wall Street
Transparency and Accountability Act of 2010.
``(k) Original Information.--Information submitted to the
Commission by a whistleblower in accordance with rules or regulations
implementing this section shall not lose its status as original
information solely because the whistleblower submitted such information
prior to the effective date of such rules or regulations, provided such
information was submitted after the date of enactment of the Wall
Street Transparency and Accountability Act of 2010.
``(l) Awards.--A whistleblower may receive an award pursuant to
this section regardless of whether any violation of a provision of this
Act, or a rule or regulation thereunder, underlying the judicial or
administrative action upon which the award is based occurred prior to
the date of enactment of the Wall Street Transparency and
Accountability Act of 2010.
``(m) Provision of False Information.--A whistleblower who
knowingly and willfully makes any false, fictitious, or fraudulent
statement or representation, or who makes or uses any false writing or
document knowing the same to contain any false, fictitious, or
fraudulent statement or entry, shall not be entitled to an award under
this section and shall be subject to prosecution under section 1001 of
title 18, United States Code.
``(n) Nonenforceability of Certain Provisions Waiving Rights and
Remedies or Requiring Arbitration of Disputes.--
``(1) Waiver of rights and remedies.--The rights and remedies
provided for in this section may not be waived by any agreement,
policy form, or condition of employment including by a predispute
arbitration agreement.
``(2) Predispute arbitration agreements.--No predispute
arbitration agreement shall be valid or enforceable, if the
agreement requires arbitration of a dispute arising under this
section.''.
SEC. 749. CONFORMING AMENDMENTS.
(a) Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) (as
amended by section 724) is amended--
(1) in subsection (a)--
(A) in the matter preceding paragraph (1)--
(i) by striking ``engage as'' and inserting ``be a'';
and
(ii) by striking ``or introducing broker'' and all that
follows through ``or derivatives transaction execution
facility'';
(B) in paragraph (1), by striking ``or introducing
broker''; and
(C) in paragraph (2), by striking ``if a futures commission
merchant,''; and
(2) by adding at the end the following:
``(g) It shall be unlawful for any person to be an introducing
broker unless such person shall have registered under this Act with the
Commission as an introducing broker and such registration shall not
have expired nor been suspended nor revoked.''.
(b) Section 4m(3) of the Commodity Exchange Act (7 U.S.C. 6m(3)) is
amended--
(1) by striking ``(3) Subsection (1) of this section'' and
inserting the following:
``(3) Exception.--
``(A) In general.--Paragraph (1)''; and
(2) by striking ``to any investment trust'' and all that
follows through the period at the end and inserting the following:
``to any commodity pool that is engaged primarily in trading
commodity interests.
``(B) Engaged primarily.--For purposes of subparagraph (A), a
commodity trading advisor or a commodity pool shall be considered
to be `engaged primarily' in the business of being a commodity
trading advisor or commodity pool if it is or holds itself out to
the public as being engaged primarily, or proposes to engage
primarily, in the business of advising on commodity interests or
investing, reinvesting, owning, holding, or trading in commodity
interests, respectively.
``(C) Commodity interests.--For purposes of this paragraph,
commodity interests shall include contracts of sale of a commodity
for future delivery, options on such contracts, security futures,
swaps, leverage contracts, foreign exchange, spot and forward
contracts on physical commodities, and any monies held in an
account used for trading commodity interests.''.
(c) Section 5c of the Commodity Exchange Act (7 U.S.C. 7a-2) is
amended--
(1) in subsection (a)(1)--
(A) by striking ``, 5a(d),''; and
(B) by striking ``and section (2)(h)(7) with respect to
significant price discovery contracts,''; and
(2) in subsection (f)(1), by striking ``section 4d(c) of this
Act'' and inserting ``section 4d(e)''.
(d) Section 5e of the Commodity Exchange Act (7 U.S.C. 7b) is
amended by striking ``or revocation of the right of an electronic
trading facility to rely on the exemption set forth in section 2(h)(3)
with respect to a significant price discovery contract,''.
(e) Section 6(b) of the Commodity Exchange Act (7 U.S.C. 8(b)) is
amended in the first sentence by striking ``, or to revoke the right of
an electronic trading facility to rely on the exemption set forth in
section 2(h)(3) with respect to a significant price discovery
contract,''.
(f) Section 12(e)(2)(B) of the Commodity Exchange Act (7 U.S.C.
16(e)(2)(B)) is amended--
(1) by striking ``section 2(c), 2(d), 2(f), or 2(g) of this
Act'' and inserting ``section 2(c) or 2(f) of this Act''; and
(2) by striking ``2(h) or''.
(g) Section 17(r)(1) of the Commodity Exchange Act (7 U.S.C.
21(r)(1)) is amended by striking ``section 4d(c) of this Act'' and
inserting ``section 4d(e)''.
(h) Section 22 of the Commodity Exchange Act is amended--
(1) in subsection (a)(1)(B), by--
(A) inserting ``or any swap'' after ``commodity)''; and
(B) inserting ``or any swap'' after ``such contract'';
(2) in subsection (a)(1)(C), by adding at the end the
following:
``(iv) a swap; or''; and
(3) in subsection (b)(1)(A), by striking ``section 2(h)(7) or
sections 5 through 5c'' and inserting ``section 5, 5b, 5c, 5h, or
21''.
(i) Section 408(2)(C) of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is amended--
(1) by striking ``section 2(c), 2(d), 2(f), or (2)(g) of such
Act'' and inserting ``section 2(c), 2(f), or 2(i) of that Act'';
and
(2) by striking ``2(h) or''.
SEC. 750. STUDY ON OVERSIGHT OF CARBON MARKETS.
(a) Interagency Working Group.--There is established to carry out
this section an interagency working group (referred to in this section
as the ``interagency group'') composed of the following members or
designees:
(1) The Chairman of the Commodity Futures Trading Commission
(referred to in this section as the ``Commission''), who shall
serve as Chairman of the interagency group.
(2) The Secretary of Agriculture.
(3) The Secretary of the Treasury.
(4) The Chairman of the Securities and Exchange Commission.
(5) The Administrator of the Environmental Protection Agency.
(6) The Chairman of the Federal Energy Regulatory Commission.
(7) The Commissioner of the Federal Trade Commission.
(8) The Administrator of the Energy Information Administration.
(b) Administrative Support.--The Commission shall provide the
interagency group such administrative support services as are necessary
to enable the interagency group to carry out the functions of the
interagency group under this section.
(c) Consultation.--In carrying out this section, the interagency
group shall consult with representatives of exchanges, clearinghouses,
self-regulatory bodies, major carbon market participants, consumers,
and the general public, as the interagency group determines to be
appropriate.
(d) Study.--The interagency group shall conduct a study on the
oversight of existing and prospective carbon markets to ensure an
efficient, secure, and transparent carbon market, including oversight
of spot markets and derivative markets.
(e) Report.--Not later than 180 days after the date of enactment of
this Act, the interagency group shall submit to Congress a report on
the results of the study conducted under subsection (b), including
recommendations for the oversight of existing and prospective carbon
markets to ensure an efficient, secure, and transparent carbon market,
including oversight of spot markets and derivative markets.
SEC. 751. ENERGY AND ENVIRONMENTAL MARKETS ADVISORY COMMITTEE.
Section 2(a) of the Commodity Exchange Act (7 U.S.C. 2(a)) (as
amended by section 727) is amended by adding at the end the following:
``(15) Energy and environmental markets advisory committee.--
``(A) Establishment.--
``(i) In general.--An Energy and Environmental Markets
Advisory Committee is hereby established.
``(ii) Membership.--The Committee shall have 9 members.
``(iii) Activities.--The Committee's objectives and
scope of activities shall be--
``(I) to conduct public meetings;
``(II) to submit reports and recommendations to the
Commission (including dissenting or minority views, if
any); and
``(III) otherwise to serve as a vehicle for
discussion and communication on matters of concern to
exchanges, firms, end users, and regulators regarding
energy and environmental markets and their regulation
by the Commission.
``(B) Requirements.--
``(i) In general.--The Committee shall hold public
meetings at such intervals as are necessary to carry out
the functions of the Committee, but not less frequently
than 2 times per year.
``(ii) Members.--Members shall be appointed to 3-year
terms, but may be removed for cause by vote of the
Commission.
``(C) Appointment.--The Commission shall appoint members
with a wide diversity of opinion and who represent a broad
spectrum of interests, including hedgers and consumers.
``(D) Reimbursement.--Members shall be entitled to per diem
and travel expense reimbursement by the Commission.
``(E) FACA.--The Committee shall not be subject to the
Federal Advisory Committee Act (5 U.S.C. App.).''.
SEC. 752. INTERNATIONAL HARMONIZATION.
(a) In order to promote effective and consistent global regulation
of swaps and security-based swaps, the Commodity Futures Trading
Commission, the Securities and Exchange Commission, and the prudential
regulators (as that term is defined in section 1a(39) of the Commodity
Exchange Act), as appropriate, shall consult and coordinate with
foreign regulatory authorities on the establishment of consistent
international standards with respect to the regulation (including fees)
of swaps, security-based swaps, swap entities, and security-based swap
entities and may agree to such information-sharing arrangements as may
be deemed to be necessary or appropriate in the public interest or for
the protection of investors, swap counterparties, and security-based
swap counterparties.
(b) In order to promote effective and consistent global regulation
of contracts of sale of a commodity for future delivery and options on
such contracts, the Commodity Futures Trading Commission shall consult
and coordinate with foreign regulatory authorities on the establishment
of consistent international standards with respect to the regulation of
contracts of sale of a commodity for future delivery and options on
such contracts, and may agree to such information-sharing arrangements
as may be deemed necessary or appropriate in the public interest for
the protection of users of contracts of sale of a commodity for future
delivery.
SEC. 753. ANTI-MANIPULATION AUTHORITY.
(a) Prohibition Regarding Manipulation and False Information.--
Subsection (c) of section 6 of the Commodity Exchange Act (7 U.S.C. 9,
15) is amended to read as follows:
``(c) Prohibition Regarding Manipulation and False Information.--
``(1) Prohibition against manipulation.--It shall be unlawful
for any person, directly or indirectly, to use or employ, or
attempt to use or employ, in connection with any swap, or a
contract of sale of any commodity in interstate commerce, or for
future delivery on or subject to the rules of any registered
entity, any manipulative or deceptive device or contrivance, in
contravention of such rules and regulations as the Commission shall
promulgate by not later than 1 year after the date of enactment of
the Dodd-Frank Wall Street Reform and Consumer Protection Act,
provided no rule or regulation promulgated by the Commission shall
require any person to disclose to another person nonpublic
information that may be material to the market price, rate, or
level of the commodity transaction, except as necessary to make any
statement made to the other person in or in connection with the
transaction not misleading in any material respect.
``(A) Special provision for manipulation by false
reporting.--Unlawful manipulation for purposes of this
paragraph shall include, but not be limited to, delivering, or
causing to be delivered for transmission through the mails or
interstate commerce, by any means of communication whatsoever,
a false or misleading or inaccurate report concerning crop or
market information or conditions that affect or tend to affect
the price of any commodity in interstate commerce, knowing, or
acting in reckless disregard of the fact that such report is
false, misleading or inaccurate.
``(B) Effect on other law.--Nothing in this paragraph shall
affect, or be construed to affect, the applicability of section
9(a)(2).
``(C) Good faith mistakes.--Mistakenly transmitting, in
good faith, false or misleading or inaccurate information to a
price reporting service would not be sufficient to violate
subsection (c)(1)(A).
``(2) Prohibition regarding false information.--It shall be
unlawful for any person to make any false or misleading statement
of a material fact to the Commission, including in any registration
application or any report filed with the Commission under this Act,
or any other information relating to a swap, or a contract of sale
of a commodity, in interstate commerce, or for future delivery on
or subject to the rules of any registered entity, or to omit to
state in any such statement any material fact that is necessary to
make any statement of a material fact made not misleading in any
material respect, if the person knew, or reasonably should have
known, the statement to be false or misleading.
``(3) Other manipulation.--In addition to the prohibition in
paragraph (1), it shall be unlawful for any person, directly or
indirectly, to manipulate or attempt to manipulate the price of any
swap, or of any commodity in interstate commerce, or for future
delivery on or subject to the rules of any registered entity.
``(4) Enforcement.--
``(A) Authority of commission.--If the Commission has
reason to believe that any person (other than a registered
entity) is violating or has violated this subsection, or any
other provision of this Act (including any rule, regulation, or
order of the Commission promulgated in accordance with this
subsection or any other provision of this Act), the Commission
may serve upon the person a complaint.
``(B) Contents of complaint.--A complaint under
subparagraph (A) shall--
``(i) contain a description of the charges against the
person that is the subject of the complaint; and
``(ii) have attached or contain a notice of hearing
that specifies the date and location of the hearing
regarding the complaint.
``(C) Hearing.--A hearing described in subparagraph
(B)(ii)--
``(i) shall be held not later than 3 days after service
of the complaint described in subparagraph (A);
``(ii) shall require the person to show cause regarding
why--
``(I) an order should not be made--
``(aa) to prohibit the person from trading on,
or subject to the rules of, any registered entity;
and
``(bb) to direct all registered entities to
refuse all privileges to the person until further
notice of the Commission; and
``(II) the registration of the person, if
registered with the Commission in any capacity, should
not be suspended or revoked; and
``(iii) may be held before--
``(I) the Commission; or
``(II) an administrative law judge designated by
the Commission, under which the administrative law
judge shall ensure that all evidence is recorded in
written form and submitted to the Commission.
``(5) Subpoena.--For the purpose of securing effective
enforcement of the provisions of this Act, for the purpose of any
investigation or proceeding under this Act, and for the purpose of
any action taken under section 12(f), any member of the Commission
or any Administrative Law Judge or other officer designated by the
Commission (except as provided in paragraph (7)) may administer
oaths and affirmations, subpoena witnesses, compel their
attendance, take evidence, and require the production of any books,
papers, correspondence, memoranda, or other records that the
Commission deems relevant or material to the inquiry.
``(6) Witnesses.--The attendance of witnesses and the
production of any such records may be required from any place in
the United States, any State, or any foreign country or
jurisdiction at any designated place of hearing.
``(7) Service.--A subpoena issued under this section may be
served upon any person who is not to be found within the
territorial jurisdiction of any court of the United States in such
manner as the Federal Rules of Civil Procedure prescribe for
service of process in a foreign country, except that a subpoena to
be served on a person who is not to be found within the territorial
jurisdiction of any court of the United States may be issued only
on the prior approval of the Commission.
``(8) Refusal to obey.--In case of contumacy by, or refusal to
obey a subpoena issued to, any person, the Commission may invoke
the aid of any court of the United States within the jurisdiction
in which the investigation or proceeding is conducted, or where
such person resides or transacts business, in requiring the
attendance and testimony of witnesses and the production of books,
papers, correspondence, memoranda, and other records. Such court
may issue an order requiring such person to appear before the
Commission or member or Administrative Law Judge or other officer
designated by the Commission, there to produce records, if so
ordered, or to give testimony touching the matter under
investigation or in question.
``(9) Failure to obey.--Any failure to obey such order of the
court may be punished by the court as a contempt thereof. All
process in any such case may be served in the judicial district
wherein such person is an inhabitant or transacts business or
wherever such person may be found.
``(10) Evidence.--On the receipt of evidence under paragraph
(4)(C)(iii), the Commission may--
``(A) prohibit the person that is the subject of the
hearing from trading on, or subject to the rules of, any
registered entity and require all registered entities to refuse
the person all privileges on the registered entities for such
period as the Commission may require in the order;
``(B) if the person is registered with the Commission in
any capacity, suspend, for a period not to exceed 180 days, or
revoke, the registration of the person;
``(C) assess such person--
``(i) a civil penalty of not more than an amount equal
to the greater of--
``(I) $140,000; or
``(II) triple the monetary gain to such person for
each such violation; or
``(ii) in any case of manipulation or attempted
manipulation in violation of this subsection or section
9(a)(2), a civil penalty of not more than an amount equal
to the greater of--
``(I) $1,000,000; or
``(II) triple the monetary gain to the person for
each such violation; and
``(D) require restitution to customers of damages
proximately caused by violations of the person.
``(11) Orders.--
``(A) Notice.--The Commission shall provide to a person
described in paragraph (10) and the appropriate governing board
of the registered entity notice of the order described in
paragraph (10) by--
``(i) registered mail;
``(ii) certified mail; or
``(iii) personal delivery.
``(B) Review.--
``(i) In general.--A person described in paragraph (10)
may obtain a review of the order or such other equitable
relief as determined to be appropriate by a court described
in clause (ii).
``(ii) Petition.--To obtain a review or other relief
under clause (i), a person may, not later than 15 days
after notice is given to the person under clause (i), file
a written petition to set aside the order with the United
States Court of Appeals--
``(I) for the circuit in which the petitioner
carries out the business of the petitioner; or
``(II) in the case of an order denying
registration, the circuit in which the principal place
of business of the petitioner is located, as listed on
the application for registration of the petitioner.
``(C) Procedure.--
``(i) Duty of clerk of appropriate court.--The clerk of
the appropriate court under subparagraph (B)(ii) shall
transmit to the Commission a copy of a petition filed under
subparagraph (B)(ii).
``(ii) Duty of commission.--In accordance with section
2112 of title 28, United States Code, the Commission shall
file in the appropriate court described in subparagraph
(B)(ii) the record theretofore made.
``(iii) Jurisdiction of appropriate court.--Upon the
filing of a petition under subparagraph (B)(ii), the
appropriate court described in subparagraph (B)(ii) may
affirm, set aside, or modify the order of the
Commission.''.
(b) Cease and Desist Orders, Fines.--Section 6(d) of the Commodity
Exchange Act (7 U.S.C. 13b) is amended to read as follows:
``(d) If any person (other than a registered entity), is violating
or has violated subsection (c) or any other provisions of this Act or
of the rules, regulations, or orders of the Commission thereunder, the
Commission may, upon notice and hearing, and subject to appeal as in
other cases provided for in subsection (c), make and enter an order
directing that such person shall cease and desist therefrom and, if
such person thereafter and after the lapse of the period allowed for
appeal of such order or after the affirmance of such order, shall
knowingly fail or refuse to obey or comply with such order, such
person, upon conviction thereof, shall be fined not more than the
higher of $140,000 or triple the monetary gain to such person, or
imprisoned for not more than 1 year, or both, except that if such
knowing failure or refusal to obey or comply with such order involves
any offense within subsection (a) or (b) of section 9, such person,
upon conviction thereof, shall be subject to the penalties of said
subsection (a) or (b): Provided, That any such cease and desist order
under this subsection against any respondent in any case of
manipulation shall be issued only in conjunction with an order issued
against such respondent under subsection (c).''.
(c) Manipulations; Private Rights of Action.--Section 22(a)(1) of
the Commodity Exchange Act (7 U.S.C. 25(a)(1)) is amended by striking
subparagraph (D) and inserting the following:
``(D) who purchased or sold a contract referred to in
subparagraph (B) hereof or swap if the violation constitutes--
``(i) the use or employment of, or an attempt to use or
employ, in connection with a swap, or a contract of sale of a
commodity, in interstate commerce, or for future delivery on or
subject to the rules of any registered entity, any manipulative
device or contrivance in contravention of such rules and
regulations as the Commission shall promulgate by not later
than 1 year after the date of enactment of the Dodd-Frank Wall
Street Reform and Consumer Protection Act; or
``(ii) a manipulation of the price of any such contract or
swap or the price of the commodity underlying such contract or
swap.''.
(d) Effective Date.--
(1) The amendments made by this section shall take effect on
the date on which the final rule promulgated by the Commodity
Futures Trading Commission pursuant to this Act takes effect.
(2) Paragraph (1) shall not preclude the Commission from
undertaking prior to the effective date any rulemaking necessary to
implement the amendments contained in this section.
SEC. 754. EFFECTIVE DATE.
Unless otherwise provided in this title, the provisions of this
subtitle shall take effect on the later of 360 days after the date of
the enactment of this subtitle or, to the extent a provision of this
subtitle requires a rulemaking, not less than 60 days after publication
of the final rule or regulation implementing such provision of this
subtitle.
Subtitle B--Regulation of Security-Based Swap Markets
SEC. 761. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
(a) Definitions.--Section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)) is amended--
(1) in subparagraphs (A) and (B) of paragraph (5), by inserting
``(not including security-based swaps, other than security-based
swaps with or for persons that are not eligible contract
participants)'' after ``securities'' each place that term appears;
(2) in paragraph (10), by inserting ``security-based swap,''
after ``security future,'';
(3) in paragraph (13), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or extinguishing of
rights or obligations under, a security-based swap, as the context
may require.'';
(4) in paragraph (14), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or extinguishing of
rights or obligations under, a security-based swap, as the context
may require.'';
(5) in paragraph (39)--
(A) in subparagraph (B)(i)--
(i) in subclause (I), by striking ``or government
securities dealer'' and inserting ``government securities
dealer, security-based swap dealer, or major security-based
swap participant''; and
(ii) in subclause (II), by inserting ``security-based
swap dealer, major security-based swap participant,'' after
``government securities dealer,'';
(B) in subparagraph (C), by striking ``or government
securities dealer'' and inserting ``government securities
dealer, security-based swap dealer, or major security-based
swap participant''; and
(C) in subparagraph (D), by inserting ``security-based swap
dealer, major security-based swap participant,'' after
``government securities dealer,''; and
(6) by adding at the end the following:
``(65) Eligible contract participant.--The term `eligible
contract participant' has the same meaning as in section 1a of the
Commodity Exchange Act (7 U.S.C. 1a).
``(66) Major swap participant.--The term `major swap
participant' has the same meaning as in section 1a of the Commodity
Exchange Act (7 U.S.C. 1a).
``(67) Major security-based swap participant.--
``(A) In general.--The term `major security-based swap
participant' means any person--
``(i) who is not a security-based swap dealer; and
``(ii)(I) who maintains a substantial position in
security-based swaps for any of the major security-based
swap categories, as such categories are determined by the
Commission, excluding both positions held for hedging or
mitigating commercial risk and positions maintained by any
employee benefit plan (or any contract held by such a plan)
as defined in paragraphs (3) and (32) of section 3 of the
Employee Retirement Income Security Act of 1974 (29 U.S.C.
1002) for the primary purpose of hedging or mitigating any
risk directly associated with the operation of the plan;
``(II) whose outstanding security-based swaps create
substantial counterparty exposure that could have serious
adverse effects on the financial stability of the United
States banking system or financial markets; or
``(III) that is a financial entity that--
``(aa) is highly leveraged relative to the amount
of capital such entity holds and that is not subject to
capital requirements established by an appropriate
Federal banking agency; and
``(bb) maintains a substantial position in
outstanding security-based swaps in any major security-
based swap category, as such categories are determined
by the Commission.
``(B) Definition of substantial position.--For purposes of
subparagraph (A), the Commission shall define, by rule or
regulation, the term `substantial position' at the threshold
that the Commission determines to be prudent for the effective
monitoring, management, and oversight of entities that are
systemically important or can significantly impact the
financial system of the United States. In setting the
definition under this subparagraph, the Commission shall
consider the person's relative position in uncleared as opposed
to cleared security-based swaps and may take into consideration
the value and quality of collateral held against counterparty
exposures.
``(C) Scope of designation.--For purposes of subparagraph
(A), a person may be designated as a major security-based swap
participant for 1 or more categories of security-based swaps
without being classified as a major security-based swap
participant for all classes of security-based swaps.
``(68) Security-based swap.--
``(A) In general.--Except as provided in subparagraph (B),
the term `security-based swap' means any agreement, contract,
or transaction that--
``(i) is a swap, as that term is defined under section
1a of the Commodity Exchange Act (without regard to
paragraph (47)(B)(x) of such section); and
``(ii) is based on--
``(I) an index that is a narrow-based security
index, including any interest therein or on the value
thereof;
``(II) a single security or loan, including any
interest therein or on the value thereof; or
``(III) the occurrence, nonoccurrence, or extent of
the occurrence of an event relating to a single issuer
of a security or the issuers of securities in a narrow-
based security index, provided that such event directly
affects the financial statements, financial condition,
or financial obligations of the issuer.
``(B) Rule of construction regarding master agreements.--
The term `security-based swap' shall be construed to include a
master agreement that provides for an agreement, contract, or
transaction that is a security-based swap pursuant to
subparagraph (A), together with all supplements to any such
master agreement, without regard to whether the master
agreement contains an agreement, contract, or transaction that
is not a security-based swap pursuant to subparagraph (A),
except that the master agreement shall be considered to be a
security-based swap only with respect to each agreement,
contract, or transaction under the master agreement that is a
security-based swap pursuant to subparagraph (A).
``(C) Exclusions.--The term `security-based swap' does not
include any agreement, contract, or transaction that meets the
definition of a security-based swap only because such
agreement, contract, or transaction references, is based upon,
or settles through the transfer, delivery, or receipt of an
exempted security under paragraph (12), as in effect on the
date of enactment of the Futures Trading Act of 1982 (other
than any municipal security as defined in paragraph (29) as in
effect on the date of enactment of the Futures Trading Act of
1982), unless such agreement, contract, or transaction is of
the character of, or is commonly known in the trade as, a put,
call, or other option.
``(D) Mixed swap.--The term `security-based swap' includes
any agreement, contract, or transaction that is as described in
subparagraph (A) and also is based on the value of 1 or more
interest or other rates, currencies, commodities, instruments
of indebtedness, indices, quantitative measures, other
financial or economic interest or property of any kind (other
than a single security or a narrow-based security index), or
the occurrence, non-occurrence, or the extent of the occurrence
of an event or contingency associated with a potential
financial, economic, or commercial consequence (other than an
event described in subparagraph (A)(ii)(III)).
``(E) Rule of construction regarding use of the term
index.--The term `index' means an index or group of securities,
including any interest therein or based on the value thereof.
``(69) Swap.--The term `swap' has the same meaning as in
section 1a of the Commodity Exchange Act (7 U.S.C. 1a).
``(70) Person associated with a security-based swap dealer or
major security-based swap participant.--
``(A) In general.--The term `person associated with a
security-based swap dealer or major security-based swap
participant' or `associated person of a security-based swap
dealer or major security-based swap participant' means--
``(i) any partner, officer, director, or branch manager
of such security-based swap dealer or major security-based
swap participant (or any person occupying a similar status
or performing similar functions);
``(ii) any person directly or indirectly controlling,
controlled by, or under common control with such security-
based swap dealer or major security-based swap participant;
or
``(iii) any employee of such security-based swap dealer
or major security-based swap participant.
``(B) Exclusion.--Other than for purposes of section
15F(l)(2), the term `person associated with a security-based
swap dealer or major security-based swap participant' or
`associated person of a security-based swap dealer or major
security-based swap participant' does not include any person
associated with a security-based swap dealer or major security-
based swap participant whose functions are solely clerical or
ministerial.
``(71) Security-based swap dealer.--
``(A) In general.--The term `security-based swap dealer'
means any person who--
``(i) holds themself out as a dealer in security-based
swaps;
``(ii) makes a market in security-based swaps;
``(iii) regularly enters into security-based swaps with
counterparties as an ordinary course of business for its
own account; or
``(iv) engages in any activity causing it to be
commonly known in the trade as a dealer or market maker in
security-based swaps.
``(B) Designation by type or class.--A person may be
designated as a security-based swap dealer for a single type or
single class or category of security-based swap or activities
and considered not to be a security-based swap dealer for other
types, classes, or categories of security-based swaps or
activities.
``(C) Exception.--The term `security-based swap dealer'
does not include a person that enters into security-based swaps
for such person's own account, either individually or in a
fiduciary capacity, but not as a part of regular business.
``(D) De minimis exception.--The Commission shall exempt
from designation as a security-based swap dealer an entity that
engages in a de minimis quantity of security-based swap dealing
in connection with transactions with or on behalf of its
customers. The Commission shall promulgate regulations to
establish factors with respect to the making of any
determination to exempt.
``(72) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the same meaning as in
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)).
``(73) Board.--The term `Board' means the Board of Governors of
the Federal Reserve System.
``(74) Prudential regulator.--The term `prudential regulator'
has the same meaning as in section 1a of the Commodity Exchange Act
(7 U.S.C. 1a).
``(75) Security-based swap data repository.--The term
`security-based swap data repository' means any person that
collects and maintains information or records with respect to
transactions or positions in, or the terms and conditions of,
security-based swaps entered into by third parties for the purpose
of providing a centralized recordkeeping facility for security-
based swaps.
``(76) Swap dealer.--The term `swap dealer' has the same
meaning as in section 1a of the Commodity Exchange Act (7 U.S.C.
1a).
``(77) Security-based swap execution facility.--The term
`security-based swap execution facility' means a trading system or
platform in which multiple participants have the ability to execute
or trade security-based swaps by accepting bids and offers made by
multiple participants in the facility or system, through any means
of interstate commerce, including any trading facility, that--
``(A) facilitates the execution of security-based swaps
between persons; and
``(B) is not a national securities exchange.
``(78) Security-based swap agreement.--
``(A) In general.--For purposes of sections 9, 10, 16, 20,
and 21A of this Act, and section 17 of the Securities Act of
1933 (15 U.S.C. 77q), the term `security-based swap agreement'
means a swap agreement as defined in section 206A of the Gramm-
Leach-Bliley Act (15 U.S.C. 78c note) of which a material term
is based on the price, yield, value, or volatility of any
security or any group or index of securities, or any interest
therein.
``(B) Exclusions.--The term `security-based swap agreement'
does not include any security-based swap.''.
(b) Authority To Further Define Terms.--The Securities and Exchange
Commission may, by rule, further define--
(1) the term ``commercial risk'';
(2) any other term included in an amendment to the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)) made by this subtitle; and
(3) the terms ``security-based swap'', ``security-based swap
dealer'', ``major security-based swap participant'', and ``eligible
contract participant'', with regard to security-based swaps (as
such terms are defined in the amendments made by subsection (a))
for the purpose of including transactions and entities that have
been structured to evade this subtitle or the amendments made by
this subtitle.
SEC. 762. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-BASED
SWAP AGREEMENTS.
(a) Repeal.--Sections 206B and 206C of the Gramm-Leach-Bliley Act
(Public Law 106-102; 15 U.S.C. 78c note) are repealed.
(b) Conforming Amendments to Gramm-Leach-Bliley.--Section 206A(a)
of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) is amended in the
material preceding paragraph (1), by striking ``Except as'' and all
that follows through ``that--'' and inserting the following: ``Except
as provided in subsection (b), as used in this section, the term `swap
agreement' means any agreement, contract, or transaction that--''.
(c) Conforming Amendments to the Securities Act of 1933.--
(1) Section 2A of the Securities Act of 1933 (15 U.S.C. 77b-1)
is amended--
(A) by striking subsection (a) and reserving that
subsection; and
(B) by striking ``(as defined in section 206B of the Gramm-
Leach-Bliley Act)'' each place that such term appears and
inserting ``(as defined in section 3(a)(78) of the Securities
Exchange Act of 1934)''.
(2) Section 17 of the Securities Act of 1933 (15 U.S.C. 77q) is
amended--
(A) in subsection (a)--
(i) by inserting ``(including security-based swaps)''
after ``securities''; and
(ii) by striking ``(as defined in section 206B of the
Gramm-Leach-Bliley Act)'' and inserting ``(as defined in
section 3(a)(78) of the Securities Exchange Act)''; and
(B) in subsection (d), by striking ``206B of the Gramm-
Leach-Bliley Act'' and inserting ``3(a)(78) of the Securities
Exchange Act of 1934''.
(d) Conforming Amendments to the Securities Exchange Act of 1934.--
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended--
(1) in section 3A (15 U.S.C. 78c-1)--
(A) by striking subsection (a) and reserving that
subsection; and
(B) by striking ``(as defined in section 206B of the Gramm-
Leach-Bliley Act)'' each place that the term appears;
(2) in section 9 (15 U.S.C. 78i)--
(A) in subsection (a), by striking paragraphs (2) through
(5) and inserting the following:
``(2) To effect, alone or with 1 or more other persons, a series of
transactions in any security registered on a national securities
exchange, any security not so registered, or in connection with any
security-based swap or security-based swap agreement with respect to
such security creating actual or apparent active trading in such
security, or raising or depressing the price of such security, for the
purpose of inducing the purchase or sale of such security by others.
``(3) If a dealer, broker, security-based swap dealer, major
security-based swap participant, or other person selling or offering
for sale or purchasing or offering to purchase the security, a
security-based swap, or a security-based swap agreement with respect to
such security, to induce the purchase or sale of any security
registered on a national securities exchange, any security not so
registered, any security-based swap, or any security-based swap
agreement with respect to such security by the circulation or
dissemination in the ordinary course of business of information to the
effect that the price of any such security will or is likely to rise or
fall because of market operations of any 1 or more persons conducted
for the purpose of raising or depressing the price of such security.
``(4) If a dealer, broker, security-based swap dealer, major
security-based swap participant, or other person selling or offering
for sale or purchasing or offering to purchase the security, a
security-based swap, or security-based swap agreement with respect to
such security, to make, regarding any security registered on a national
securities exchange, any security not so registered, any security-based
swap, or any security-based swap agreement with respect to such
security, for the purpose of inducing the purchase or sale of such
security, such security-based swap, or such security-based swap
agreement any statement which was at the time and in the light of the
circumstances under which it was made, false or misleading with respect
to any material fact, and which that person knew or had reasonable
ground to believe was so false or misleading.
``(5) For a consideration, received directly or indirectly from a
broker, dealer, security-based swap dealer, major security-based swap
participant, or other person selling or offering for sale or purchasing
or offering to purchase the security, a security-based swap, or
security-based swap agreement with respect to such security, to induce
the purchase of any security registered on a national securities
exchange, any security not so registered, any security-based swap, or
any security-based swap agreement with respect to such security by the
circulation or dissemination of information to the effect that the
price of any such security will or is likely to rise or fall because of
the market operations of any 1 or more persons conducted for the
purpose of raising or depressing the price of such security.''; and
(B) in subsection (i), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'';
(3) in section 10 (15 U.S.C. 78j)--
(A) in subsection (b), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act),'' each place that term
appears; and
(B) in the matter following subsection (b), by striking
``(as defined in section 206B of the Gramm-Leach-Bliley Act),
in each place that such terms appear'';
(4) in section 15 (15 U.S.C. 78o)--
(A) in subsection (c)(1)(A), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act),'';
(B) in subparagraphs (B) and (C) of subsection (c)(1), by
striking ``(as defined in section 206B of the Gramm-Leach-
Bliley Act)'' each place that term appears;
(C) by redesignating subsection (i), as added by section
303(f) of the Commodity Futures Modernization Act of 2000
(Public Law 106-554; 114 Stat. 2763A-455)), as subsection (j);
and
(D) in subsection (j), as redesignated by subparagraph (C),
by striking ``(as defined in section 206B of the Gramm-Leach-
Bliley Act)'';
(5) in section 16 (15 U.S.C. 78p)--
(A) in subsection (a)(2)(C), by striking ``(as defined in
section 206(b) of the Gramm-Leach-Bliley Act (15 U.S.C. 78c
note))'';
(B) in subsection (a)(3)(B), by inserting ``or security-
based swaps'' after ``security-based swap agreement'';
(C) in the first sentence of subsection (b), by striking
``(as defined in section 206B of the Gramm-Leach-Bliley Act)'';
(D) in the third sentence of subsection (b), by striking
``(as defined in section 206B of the Gramm-Leach Bliley Act)''
and inserting ``or a security-based swap''; and
(E) in subsection (g), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'';
(6) in section 20 (15 U.S.C. 78t),
(A) in subsection (d), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)''; and
(B) in subsection (f), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)''; and
(7) in section 21A (15 U.S.C. 78u-1)--
(A) in subsection (a)(1), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''; and
(B) in subsection (g), by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)''.
SEC. 763. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) Clearing for Security-based Swaps.--The Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.) is amended by inserting after section
3B (as added by section 717 of this Act):
``SEC. 3C. CLEARING FOR SECURITY-BASED SWAPS.
``(a) In General.--
``(1) Standard for clearing.--It shall be unlawful for any
person to engage in a security-based swap unless that person
submits such security-based swap for clearing to a clearing agency
that is registered under this Act or a clearing agency that is
exempt from registration under this Act if the security-based swap
is required to be cleared.
``(2) Open access.--The rules of a clearing agency described in
paragraph (1) shall--
``(A) prescribe that all security-based swaps submitted to
the clearing agency with the same terms and conditions are
economically equivalent within the clearing agency and may be
offset with each other within the clearing agency; and
``(B) provide for non-discriminatory clearing of a
security-based swap executed bilaterally or on or through the
rules of an unaffiliated national securities exchange or
security-based swap execution facility.
``(b) Commission Review.--
``(1) Commission-initiated review.--
``(A) The Commission on an ongoing basis shall review each
security-based swap, or any group, category, type, or class of
security-based swaps to make a determination that such
security-based swap, or group, category, type, or class of
security-based swaps should be required to be cleared.
``(B) The Commission shall provide at least a 30-day public
comment period regarding any determination under subparagraph
(A).
``(2) Swap submissions.--
``(A) A clearing agency shall submit to the Commission each
security-based swap, or any group, category, type, or class of
security-based swaps that it plans to accept for clearing and
provide notice to its members (in a manner to be determined by
the Commission) of such submission.
``(B) Any security-based swap or group, category, type, or
class of security-based swaps listed for clearing by a clearing
agency as of the date of enactment of this subsection shall be
considered submitted to the Commission.
``(C) The Commission shall--
``(i) make available to the public any submission
received under subparagraphs (A) and (B);
``(ii) review each submission made under subparagraphs
(A) and (B), and determine whether the security-based swap,
or group, category, type, or class of security-based swaps,
described in the submission is required to be cleared; and
``(iii) provide at least a 30-day public comment period
regarding its determination whether the clearing
requirement under subsection (a)(1) shall apply to the
submission.
``(3) Deadline.--The Commission shall make its determination
under paragraph (2)(C) not later than 90 days after receiving a
submission made under paragraphs (2)(A) and (2)(B), unless the
submitting clearing agency agrees to an extension for the time
limitation established under this paragraph.
``(4) Determination.--
``(A) In reviewing a submission made under paragraph (2),
the Commission shall review whether the submission is
consistent with section 17A.
``(B) In reviewing a security-based swap, group of
security-based swaps or class of security-based swaps pursuant
to paragraph (1) or a submission made under paragraph (2), the
Commission shall take into account the following factors:
``(i) The existence of significant outstanding notional
exposures, trading liquidity and adequate pricing data.
``(ii) The availability of rule framework, capacity,
operational expertise and resources, and credit support
infrastructure to clear the contract on terms that are
consistent with the material terms and trading conventions
on which the contract is then traded.
``(iii) The effect on the mitigation of systemic risk,
taking into account the size of the market for such
contract and the resources of the clearing agency available
to clear the contract.
``(iv) The effect on competition, including appropriate
fees and charges applied to clearing.
``(v) The existence of reasonable legal certainty in
the event of the insolvency of the relevant clearing agency
or 1 or more of its clearing members with regard to the
treatment of customer and security-based swap counterparty
positions, funds, and property.
``(C) In making a determination under subsection (b)(1) or
paragraph (2)(C) that the clearing requirement shall apply, the
Commission may require such terms and conditions to the
requirement as the Commission determines to be appropriate.
``(5) Rules.--Not later than 1 year after the date of the
enactment of this section, the Commission shall adopt rules for a
clearing agency's submission for review, pursuant to this
subsection, of a security-based swap, or a group, category, type,
or class of security-based swaps, that it seeks to accept for
clearing. Nothing in this paragraph limits the Commission from
making a determination under paragraph (2)(C) for security-based
swaps described in paragraph (2)(B).
``(c) Stay of Clearing Requirement.--
``(1) In general.--After making a determination pursuant to
subsection (b)(2), the Commission, on application of a counterparty
to a security-based swap or on its own initiative, may stay the
clearing requirement of subsection (a)(1) until the Commission
completes a review of the terms of the security-based swap (or the
group, category, type, or class of security-based swaps) and the
clearing arrangement.
``(2) Deadline.--The Commission shall complete a review
undertaken pursuant to paragraph (1) not later than 90 days after
issuance of the stay, unless the clearing agency that clears the
security-based swap, or group, category, type, or class of
security-based swaps, agrees to an extension of the time limitation
established under this paragraph.
``(3) Determination.--Upon completion of the review undertaken
pursuant to paragraph (1), the Commission may--
``(A) determine, unconditionally or subject to such terms
and conditions as the Commission determines to be appropriate,
that the security-based swap, or group, category, type, or
class of security-based swaps, must be cleared pursuant to this
subsection if it finds that such clearing is consistent with
subsection (b)(4); or
``(B) determine that the clearing requirement of subsection
(a)(1) shall not apply to the security-based swap, or group,
category, type, or class of security-based swaps.
``(4) Rules.--Not later than 1 year after the date of the
enactment of this section, the Commission shall adopt rules for
reviewing, pursuant to this subsection, a clearing agency's
clearing of a security-based swap, or a group, category, type, or
class of security-based swaps, that it has accepted for clearing.
``(d) Prevention of Evasion.--
``(1) In general.--The Commission shall prescribe rules under
this section (and issue interpretations of rules prescribed under
this section), as determined by the Commission to be necessary to
prevent evasions of the mandatory clearing requirements under this
Act.
``(2) Duty of commission to investigate and take certain
actions.--To the extent the Commission finds that a particular
security-based swap or any group, category, type, or class of
security-based swaps that would otherwise be subject to mandatory
clearing but no clearing agency has listed the security-based swap
or the group, category, type, or class of security-based swaps for
clearing, the Commission shall--
``(A) investigate the relevant facts and circumstances;
``(B) within 30 days issue a public report containing the
results of the investigation; and
``(C) take such actions as the Commission determines to be
necessary and in the public interest, which may include
requiring the retaining of adequate margin or capital by
parties to the security-based swap or the group, category,
type, or class of security-based swaps.
``(3) Effect on authority.--Nothing in this subsection--
``(A) authorizes the Commission to adopt rules requiring a
clearing agency to list for clearing a security-based swap or
any group, category, type, or class of security-based swaps if
the clearing of the security-based swap or the group, category,
type, or class of security-based swaps would threaten the
financial integrity of the clearing agency; and
``(B) affects the authority of the Commission to enforce
the open access provisions of subsection (a)(2) with respect to
a security-based swap or the group, category, type, or class of
security-based swaps that is listed for clearing by a clearing
agency.
``(e) Reporting Transition Rules.--Rules adopted by the Commission
under this section shall provide for the reporting of data, as follows:
``(1) Security-based swaps entered into before the date of the
enactment of this section shall be reported to a registered
security-based swap data repository or the Commission no later than
180 days after the effective date of this section.
``(2) Security-based swaps entered into on or after such date
of enactment shall be reported to a registered security-based swap
data repository or the Commission no later than the later of--
``(A) 90 days after such effective date; or
``(B) such other time after entering into the security-
based swap as the Commission may prescribe by rule or
regulation.
``(f) Clearing Transition Rules.--
``(1) Security-based swaps entered into before the date of the
enactment of this section are exempt from the clearing requirements
of this subsection if reported pursuant to subsection (e)(1).
``(2) Security-based swaps entered into before application of
the clearing requirement pursuant to this section are exempt from
the clearing requirements of this section if reported pursuant to
subsection (e)(2).
``(g) Exceptions.--
``(1) In general.--The requirements of subsection (a)(1) shall
not apply to a security-based swap if 1 of the counterparties to
the security-based swap--
``(A) is not a financial entity;
``(B) is using security-based swaps to hedge or mitigate
commercial risk; and
``(C) notifies the Commission, in a manner set forth by the
Commission, how it generally meets its financial obligations
associated with entering into non-cleared security-based swaps.
``(2) Option to clear.--The application of the clearing
exception in paragraph (1) is solely at the discretion of the
counterparty to the security-based swap that meets the conditions
of subparagraphs (A) through (C) of paragraph (1).
``(3) Financial entity definition.--
``(A) In general.--For the purposes of this subsection, the
term `financial entity' means--
``(i) a swap dealer;
``(ii) a security-based swap dealer;
``(iii) a major swap participant;
``(iv) a major security-based swap participant;
``(v) a commodity pool as defined in section 1a(10) of
the Commodity Exchange Act;
``(vi) a private fund as defined in section 202(a) of
the Investment Advisers Act of 1940 (15 U.S.C. 80-b-2(a));
``(vii) an employee benefit plan as defined in
paragraphs (3) and (32) of section 3 of the Employee
Retirement Income Security Act of 1974 (29 U.S.C. 1002);
``(viii) a person predominantly engaged in activities
that are in the business of banking or financial in nature,
as defined in section 4(k) of the Bank Holding Company Act
of 1956.
``(B) Exclusion.--The Commission shall consider whether to
exempt small banks, savings associations, farm credit system
institutions, and credit unions, including--
``(i) depository institutions with total assets of
$10,000,000,000 or less;
``(ii) farm credit system institutions with total
assets of $10,000,000,000 or less; or
``(iii) credit unions with total assets of
$10,000,000,000 or less.
``(4) Treatment of affiliates.--
``(A) In general.--An affiliate of a person that qualifies
for an exception under this subsection (including affiliate
entities predominantly engaged in providing financing for the
purchase of the merchandise or manufactured goods of the
person) may qualify for the exception only if the affiliate,
acting on behalf of the person and as an agent, uses the
security-based swap to hedge or mitigate the commercial risk of
the person or other affiliate of the person that is not a
financial entity.
``(B) Prohibition relating to certain affiliates.--The
exception in subparagraph (A) shall not apply if the affiliate
is--
``(i) a swap dealer;
``(ii) a security-based swap dealer;
``(iii) a major swap participant;
``(iv) a major security-based swap participant;
``(v) an issuer that would be an investment company, as
defined in section 3 of the Investment Company Act of 1940
(15 U.S.C. 80a-3), but for paragraph (1) or (7) of
subsection (c) of that Act (15 U.S.C. 80a-3(c));
``(vi) a commodity pool; or
``(vii) a bank holding company with over
$50,000,000,000 in consolidated assets.
``(C) Transition rule for affiliates.--An affiliate,
subsidiary, or a wholly owned entity of a person that qualifies
for an exception under subparagraph (A) and is predominantly
engaged in providing financing for the purchase or lease of
merchandise or manufactured goods of the person shall be exempt
from the margin requirement described in section 15F(e) and the
clearing requirement described in subsection (a) with regard to
security-based swaps entered into to mitigate the risk of the
financing activities for not less than a 2-year period
beginning on the date of enactment of this subparagraph.
``(5) Election of counterparty.--
``(A) Security-based swaps required to be cleared.--With
respect to any security-based swap that is subject to the
mandatory clearing requirement under subsection (a) and entered
into by a security-based swap dealer or a major security-based
swap participant with a counterparty that is not a swap dealer,
major swap participant, security-based swap dealer, or major
security-based swap participant, the counterparty shall have
the sole right to select the clearing agency at which the
security-based swap will be cleared.
``(B) Security-based swaps not required to be cleared.--
With respect to any security-based swap that is not subject to
the mandatory clearing requirement under subsection (a) and
entered into by a security-based swap dealer or a major
security-based swap participant with a counterparty that is not
a swap dealer, major swap participant, security-based swap
dealer, or major security-based swap participant, the
counterparty--
``(i) may elect to require clearing of the security-
based swap; and
``(ii) shall have the sole right to select the clearing
agency at which the security-based swap will be cleared.
``(6) Abuse of exception.--The Commission may prescribe such
rules or issue interpretations of the rules as the Commission
determines to be necessary to prevent abuse of the exceptions
described in this subsection. The Commission may also request
information from those persons claiming the clearing exception as
necessary to prevent abuse of the exceptions described in this
subsection.
``(h) Trade Execution.--
``(1) In general.--With respect to transactions involving
security-based swaps subject to the clearing requirement of
subsection (a)(1), counterparties shall--
``(A) execute the transaction on an exchange; or
``(B) execute the transaction on a security-based swap
execution facility registered under section 3D or a security-
based swap execution facility that is exempt from registration
under section 3D(e).
``(2) Exception.--The requirements of subparagraphs (A) and (B)
of paragraph (1) shall not apply if no exchange or security-based
swap execution facility makes the security-based swap available to
trade or for security-based swap transactions subject to the
clearing exception under subsection (g).
``(i) Board Approval.--Exemptions from the requirements of this
section to clear a security-based swap or execute a security-based swap
through a national securities exchange or security-based swap execution
facility shall be available to a counterparty that is an issuer of
securities that are registered under section 12 or that is required to
file reports pursuant to section 15(d), only if an appropriate
committee of the issuer's board or governing body has reviewed and
approved the issuer's decision to enter into security-based swaps that
are subject to such exemptions.
``(j) Designation of Chief Compliance Officer.--
``(1) In general.--Each registered clearing agency shall
designate an individual to serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the clearing agency;
``(B) in consultation with its board, a body performing a
function similar thereto, or the senior officer of the
registered clearing agency, resolve any conflicts of interest
that may arise;
``(C) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(D) ensure compliance with this title (including
regulations issued under this title) relating to agreements,
contracts, or transactions, including each rule prescribed by
the Commission under this section;
``(E) establish procedures for the remediation of
noncompliance issues identified by the compliance officer
through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(F) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the registered clearing agency
or security-based swap execution facility of the compliance
officer with respect to this title (including regulations
under this title); and
``(ii) each policy and procedure of the registered
clearing agency of the compliance officer (including the
code of ethics and conflict of interest policies of the
registered clearing agency).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of
the registered clearing agency that is required to be
furnished to the Commission pursuant to this section; and
``(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.''.
(b) Clearing Agency Requirements.--Section 17A of the Securities
Exchange Act of 1934 (15 U.S.C. 78q-1) is amended by adding at the end
the following:
``(g) Registration Requirement.--It shall be unlawful for a
clearing agency, unless registered with the Commission, directly or
indirectly to make use of the mails or any means or instrumentality of
interstate commerce to perform the functions of a clearing agency with
respect to a security-based swap.
``(h) Voluntary Registration.--A person that clears agreements,
contracts, or transactions that are not required to be cleared under
this title may register with the Commission as a clearing agency.
``(i) Standards for Clearing Agencies Clearing Security-based Swap
Transactions.--To be registered and to maintain registration as a
clearing agency that clears security-based swap transactions, a
clearing agency shall comply with such standards as the Commission may
establish by rule. In establishing any such standards, and in the
exercise of its oversight of such a clearing agency pursuant to this
title, the Commission may conform such standards or oversight to
reflect evolving United States and international standards. Except
where the Commission determines otherwise by rule or regulation, a
clearing agency shall have reasonable discretion in establishing the
manner in which it complies with any such standards.
``(j) Rules.--The Commission shall adopt rules governing persons
that are registered as clearing agencies for security-based swaps under
this title.
``(k) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a clearing agency from registration under this section
for the clearing of security-based swaps if the Commission determines
that the clearing agency is subject to comparable, comprehensive
supervision and regulation by the Commodity Futures Trading Commission
or the appropriate government authorities in the home country of the
agency. Such conditions may include, but are not limited to, requiring
that the clearing agency be available for inspection by the Commission
and make available all information requested by the Commission.
``(l) Existing Depository Institutions and Derivative Clearing
Organizations.--
``(1) In general.--A depository institution or derivative
clearing organization registered with the Commodity Futures Trading
Commission under the Commodity Exchange Act that is required to be
registered as a clearing agency under this section is deemed to be
registered under this section solely for the purpose of clearing
security-based swaps to the extent that, before the date of
enactment of this subsection--
``(A) the depository institution cleared swaps as a
multilateral clearing organization; or
``(B) the derivative clearing organization cleared swaps
pursuant to an exemption from registration as a clearing
agency.
``(2) Conversion of depository institutions.--A depository
institution to which this subsection applies may, by the vote of
the shareholders owning not less than 51 percent of the voting
interests of the depository institution, be converted into a State
corporation, partnership, limited liability company, or similar
legal form pursuant to a plan of conversion, if the conversion is
not in contravention of applicable State law.
``(3) Sharing of information.--The Commodity Futures Trading
Commission shall make available to the Commission, upon request,
all information determined to be relevant by the Commodity Futures
Trading Commission regarding a derivatives clearing organization
deemed to be registered with the Commission under paragraph (1).
``(m) Modification of Core Principles.--The Commission may conform
the core principles established in this section to reflect evolving
United States and international standards.''.
(c) Security-based Swap Execution Facilities.--The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting
after section 3C (as added by subsection (a) of this section) the
following:
``SEC. 3D. SECURITY-BASED SWAP EXECUTION FACILITIES.
``(a) Registration.--
``(1) In general.--No person may operate a facility for the
trading or processing of security-based swaps, unless the facility
is registered as a security-based swap execution facility or as a
national securities exchange under this section.
``(2) Dual registration.--Any person that is registered as a
security-based swap execution facility under this section shall
register with the Commission regardless of whether the person also
is registered with the Commodity Futures Trading Commission as a
swap execution facility.
``(b) Trading and Trade Processing.--A security-based swap
execution facility that is registered under subsection (a) may--
``(1) make available for trading any security-based swap; and
``(2) facilitate trade processing of any security-based swap.
``(c) Identification of Facility Used To Trade Security-based Swaps
by National Securities Exchanges.--A national securities exchange
shall, to the extent that the exchange also operates a security-based
swap execution facility and uses the same electronic trade execution
system for listing and executing trades of security-based swaps on or
through the exchange and the facility, identify whether electronic
trading of such security-based swaps is taking place on or through the
national securities exchange or the security-based swap execution
facility.
``(d) Core Principles for Security-based Swap Execution
Facilities.--
``(1) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a security-based swap execution facility, the
security-based swap execution facility shall comply with--
``(i) the core principles described in this subsection;
and
``(ii) any requirement that the Commission may impose
by rule or regulation.
``(B) Reasonable discretion of security-based swap
execution facility.--Unless otherwise determined by the
Commission, by rule or regulation, a security-based swap
execution facility described in subparagraph (A) shall have
reasonable discretion in establishing the manner in which it
complies with the core principles described in this subsection.
``(2) Compliance with rules.--A security-based swap execution
facility shall--
``(A) establish and enforce compliance with any rule
established by such security-based swap execution facility,
including--
``(i) the terms and conditions of the security-based
swaps traded or processed on or through the facility; and
``(ii) any limitation on access to the facility;
``(B) establish and enforce trading, trade processing, and
participation rules that will deter abuses and have the
capacity to detect, investigate, and enforce those rules,
including means--
``(i) to provide market participants with impartial
access to the market; and
``(ii) to capture information that may be used in
establishing whether rule violations have occurred; and
``(C) establish rules governing the operation of the
facility, including rules specifying trading procedures to be
used in entering and executing orders traded or posted on the
facility, including block trades.
``(3) Security-based swaps not readily susceptible to
manipulation.--The security-based swap execution facility shall
permit trading only in security-based swaps that are not readily
susceptible to manipulation.
``(4) Monitoring of trading and trade processing.--The
security-based swap execution facility shall--
``(A) establish and enforce rules or terms and conditions
defining, or specifications detailing--
``(i) trading procedures to be used in entering and
executing orders traded on or through the facilities of the
security-based swap execution facility; and
``(ii) procedures for trade processing of security-
based swaps on or through the facilities of the security-
based swap execution facility; and
``(B) monitor trading in security-based swaps to prevent
manipulation, price distortion, and disruptions of the delivery
or cash settlement process through surveillance, compliance,
and disciplinary practices and procedures, including methods
for conducting real-time monitoring of trading and
comprehensive and accurate trade reconstructions.
``(5) Ability to obtain information.--The security-based swap
execution facility shall--
``(A) establish and enforce rules that will allow the
facility to obtain any necessary information to perform any of
the functions described in this subsection;
``(B) provide the information to the Commission on request;
and
``(C) have the capacity to carry out such international
information-sharing agreements as the Commission may require.
``(6) Financial integrity of transactions.--The security-based
swap execution facility shall establish and enforce rules and
procedures for ensuring the financial integrity of security-based
swaps entered on or through the facilities of the security-based
swap execution facility, including the clearance and settlement of
security-based swaps pursuant to section 3C(a)(1).
``(7) Emergency authority.--The security-based swap execution
facility shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission, as
is necessary and appropriate, including the authority to liquidate
or transfer open positions in any security-based swap or to suspend
or curtail trading in a security-based swap.
``(8) Timely publication of trading information.--
``(A) In general.--The security-based swap execution
facility shall make public timely information on price, trading
volume, and other trading data on security-based swaps to the
extent prescribed by the Commission.
``(B) Capacity of security-based swap execution facility.--
The security-based swap execution facility shall be required to
have the capacity to electronically capture and transmit and
disseminate trade information with respect to transactions
executed on or through the facility.
``(9) Recordkeeping and reporting.--
``(A) In general.--A security-based swap execution facility
shall--
``(i) maintain records of all activities relating to
the business of the facility, including a complete audit
trail, in a form and manner acceptable to the Commission
for a period of 5 years; and
``(ii) report to the Commission, in a form and manner
acceptable to the Commission, such information as the
Commission determines to be necessary or appropriate for
the Commission to perform the duties of the Commission
under this title.
``(B) Requirements.--The Commission shall adopt data
collection and reporting requirements for security-based swap
execution facilities that are comparable to corresponding
requirements for clearing agencies and security-based swap data
repositories.
``(10) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the security-
based swap execution facility shall not--
``(A) adopt any rules or taking any actions that result in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(11) Conflicts of interest.--The security-based swap
execution facility shall--
``(A) establish and enforce rules to minimize conflicts of
interest in its decision-making process; and
``(B) establish a process for resolving the conflicts of
interest.
``(12) Financial resources.--
``(A) In general.--The security-based swap execution
facility shall have adequate financial, operational, and
managerial resources to discharge each responsibility of the
security-based swap execution facility, as determined by the
Commission.
``(B) Determination of resource adequacy.--The financial
resources of a security-based swap execution facility shall be
considered to be adequate if the value of the financial
resources--
``(i) enables the organization to meet its financial
obligations to its members and participants notwithstanding
a default by the member or participant creating the largest
financial exposure for that organization in extreme but
plausible market conditions; and
``(ii) exceeds the total amount that would enable the
security-based swap execution facility to cover the
operating costs of the security-based swap execution
facility for a 1-year period, as calculated on a rolling
basis.
``(13) System safeguards.--The security-based swap execution
facility shall--
``(A) establish and maintain a program of risk analysis and
oversight to identify and minimize sources of operational risk,
through the development of appropriate controls and procedures,
and automated systems, that--
``(i) are reliable and secure; and
``(ii) have adequate scalable capacity;
``(B) establish and maintain emergency procedures, backup
facilities, and a plan for disaster recovery that allow for--
``(i) the timely recovery and resumption of operations;
and
``(ii) the fulfillment of the responsibilities and
obligations of the security-based swap execution facility;
and
``(C) periodically conduct tests to verify that the backup
resources of the security-based swap execution facility are
sufficient to ensure continued--
``(i) order processing and trade matching;
``(ii) price reporting;
``(iii) market surveillance; and
``(iv) maintenance of a comprehensive and accurate
audit trail.
``(14) Designation of chief compliance officer.--
``(A) In general.--Each security-based swap execution
facility shall designate an individual to serve as a chief
compliance officer.
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the senior
officer of the facility;
``(ii) review compliance with the core principles in
this subsection;
``(iii) in consultation with the board of the facility,
a body performing a function similar to that of a board, or
the senior officer of the facility, resolve any conflicts
of interest that may arise;
``(iv) be responsible for establishing and
administering the policies and procedures required to be
established pursuant to this section;
``(v) ensure compliance with this title and the rules
and regulations issued under this title, including rules
prescribed by the Commission pursuant to this section;
``(vi) establish procedures for the remediation of
noncompliance issues found during--
``(I) compliance office reviews;
``(II) look backs;
``(III) internal or external audit findings;
``(IV) self-reported errors; or
``(V) through validated complaints; and
``(vii) establish and follow appropriate procedures for
the handling, management response, remediation, retesting,
and closing of noncompliance issues.
``(C) Annual reports.--
``(i) In general.--In accordance with rules prescribed
by the Commission, the chief compliance officer shall
annually prepare and sign a report that contains a
description of--
``(I) the compliance of the security-based swap
execution facility with this title; and
``(II) the policies and procedures, including the
code of ethics and conflict of interest policies, of
the security-based security-based swap execution
facility.
``(ii) Requirements.--The chief compliance officer
shall--
``(I) submit each report described in clause (i)
with the appropriate financial report of the security-
based swap execution facility that is required to be
submitted to the Commission pursuant to this section;
and
``(II) include in the report a certification that,
under penalty of law, the report is accurate and
complete.
``(e) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a security-based swap execution facility from
registration under this section if the Commission finds that the
facility is subject to comparable, comprehensive supervision and
regulation on a consolidated basis by the Commodity Futures Trading
Commission.
``(f) Rules.--The Commission shall prescribe rules governing the
regulation of security-based swap execution facilities under this
section.''.
(d) Segregation of Assets Held as Collateral in Security-based Swap
Transactions.--The Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended by inserting after section 3D (as added by subsection
(b)) the following:
``SEC. 3E. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED
SWAP TRANSACTIONS.
``(a) Registration Requirement.--It shall be unlawful for any
person to accept any money, securities, or property (or to extend any
credit in lieu of money, securities, or property) from, for, or on
behalf of a security-based swaps customer to margin, guarantee, or
secure a security-based swap cleared by or through a clearing agency
(including money, securities, or property accruing to the customer as
the result of such a security-based swap), unless the person shall have
registered under this title with the Commission as a broker, dealer, or
security-based swap dealer, and the registration shall not have expired
nor been suspended nor revoked.
``(b) Cleared Security-based Swaps.--
``(1) Segregation required.--A broker, dealer, or security-
based swap dealer shall treat and deal with all money, securities,
and property of any security-based swaps customer received to
margin, guarantee, or secure a security-based swap cleared by or
though a clearing agency (including money, securities, or property
accruing to the security-based swaps customer as the result of such
a security-based swap) as belonging to the security-based swaps
customer.
``(2) Commingling prohibited.--Money, securities, and property
of a security-based swaps customer described in paragraph (1) shall
be separately accounted for and shall not be commingled with the
funds of the broker, dealer, or security-based swap dealer or be
used to margin, secure, or guarantee any trades or contracts of any
security-based swaps customer or person other than the person for
whom the same are held.
``(c) Exceptions.--
``(1) Use of funds.--
``(A) In general.--Notwithstanding subsection (b), money,
securities, and property of a security-based swaps customer of
a broker, dealer, or security-based swap dealer described in
subsection (b) may, for convenience, be commingled and
deposited in the same 1 or more accounts with any bank or trust
company or with a clearing agency.
``(B) Withdrawal.--Notwithstanding subsection (b), such
share of the money, securities, and property described in
subparagraph (A) as in the normal course of business shall be
necessary to margin, guarantee, secure, transfer, adjust, or
settle a cleared security-based swap with a clearing agency, or
with any member of the clearing agency, may be withdrawn and
applied to such purposes, including the payment of commissions,
brokerage, interest, taxes, storage, and other charges,
lawfully accruing in connection with the cleared security-based
swap.
``(2) Commission action.--Notwithstanding subsection (b), in
accordance with such terms and conditions as the Commission may
prescribe by rule, regulation, or order, any money, securities, or
property of the security-based swaps customer of a broker, dealer,
or security-based swap dealer described in subsection (b) may be
commingled and deposited as provided in this section with any other
money, securities, or property received by the broker, dealer, or
security-based swap dealer and required by the Commission to be
separately accounted for and treated and dealt with as belonging to
the security-based swaps customer of the broker, dealer, or
security-based swap dealer.
``(d) Permitted Investments.--Money described in subsection (b) may
be invested in obligations of the United States, in general obligations
of any State or of any political subdivision of a State, and in
obligations fully guaranteed as to principal and interest by the United
States, or in any other investment that the Commission may by rule or
regulation prescribe, and such investments shall be made in accordance
with such rules and regulations and subject to such conditions as the
Commission may prescribe.
``(e) Prohibition.--It shall be unlawful for any person, including
any clearing agency and any depository institution, that has received
any money, securities, or property for deposit in a separate account or
accounts as provided in subsection (b) to hold, dispose of, or use any
such money, securities, or property as belonging to the depositing
broker, dealer, or security-based swap dealer or any person other than
the swaps customer of the broker, dealer, or security-based swap
dealer.
``(f) Segregation Requirements for Uncleared Security-based
Swaps.--
``(1) Segregation of assets held as collateral in uncleared
security-based swap transactions.--
``(A) Notification.--A security-based swap dealer or major
security-based swap participant shall be required to notify the
counterparty of the security-based swap dealer or major
security-based swap participant at the beginning of a security-
based swap transaction that the counterparty has the right to
require segregation of the funds of other property supplied to
margin, guarantee, or secure the obligations of the
counterparty.
``(B) Segregation and maintenance of funds.--At the request
of a counterparty to a security-based swap that provides funds
or other property to a security-based swap dealer or major
security-based swap participant to margin, guarantee, or secure
the obligations of the counterparty, the security-based swap
dealer or major security-based swap participant shall--
``(i) segregate the funds or other property for the
benefit of the counterparty; and
``(ii) in accordance with such rules and regulations as
the Commission may promulgate, maintain the funds or other
property in a segregated account separate from the assets
and other interests of the security-based swap dealer or
major security-based swap participant.
``(2) Applicability.--The requirements described in paragraph
(1) shall--
``(A) apply only to a security-based swap between a
counterparty and a security-based swap dealer or major
security-based swap participant that is not submitted for
clearing to a clearing agency; and
``(B)(i) not apply to variation margin payments; or
``(ii) not preclude any commercial arrangement regarding--
``(I) the investment of segregated funds or other
property that may only be invested in such investments as
the Commission may permit by rule or regulation; and
``(II) the related allocation of gains and losses
resulting from any investment of the segregated funds or
other property.
``(3) Use of independent third-party custodians.--The
segregated account described in paragraph (1) shall be--
``(A) carried by an independent third-party custodian; and
``(B) designated as a segregated account for and on behalf
of the counterparty.
``(4) Reporting requirement.--If the counterparty does not
choose to require segregation of the funds or other property
supplied to margin, guarantee, or secure the obligations of the
counterparty, the security-based swap dealer or major security-
based swap participant shall report to the counterparty of the
security-based swap dealer or major security-based swap participant
on a quarterly basis that the back office procedures of the
security-based swap dealer or major security-based swap participant
relating to margin and collateral requirements are in compliance
with the agreement of the counterparties.
``(g) Bankruptcy.--A security-based swap, as defined in section
3(a)(68) shall be considered to be a security as such term is used in
section 101(53A)(B) and subchapter III of title 11, United States Code.
An account that holds a security-based swap, other than a portfolio
margining account referred to in section 15(c)(3)(C) shall be
considered to be a securities account, as that term is defined in
section 741 of title 11, United States Code. The definitions of the
terms `purchase' and `sale' in section 3(a)(13) and (14) shall be
applied to the terms `purchase' and `sale', as used in section 741 of
title 11, United States Code. The term `customer', as defined in
section 741 of title 11, United States Code, excludes any person, to
the extent that such person has a claim based on any open repurchase
agreement, open reverse repurchase agreement, stock borrowed agreement,
non-cleared option, or non-cleared security-based swap except to the
extent of any margin delivered to or by the customer with respect to
which there is a customer protection requirement under section 15(c)(3)
or a segregation requirement.''.
(e) Trading in Security-based Swaps.--Section 6 of the Securities
Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding at the end
the following:
``(l) Security-based Swaps.--It shall be unlawful for any person to
effect a transaction in a security-based swap with or for a person that
is not an eligible contract participant, unless such transaction is
effected on a national securities exchange registered pursuant to
subsection (b).''.
(f) Additions of Security-based Swaps to Certain Enforcement
Provisions.--Section 9(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78i(b)) is amended by striking paragraphs (1) through (3) and
inserting the following:
``(1) any transaction in connection with any security whereby
any party to such transaction acquires--
``(A) any put, call, straddle, or other option or privilege
of buying the security from or selling the security to another
without being bound to do so;
``(B) any security futures product on the security; or
``(C) any security-based swap involving the security or the
issuer of the security;
``(2) any transaction in connection with any security with
relation to which such person has, directly or indirectly, any
interest in any--
``(A) such put, call, straddle, option, or privilege;
``(B) such security futures product; or
``(C) such security-based swap; or
``(3) any transaction in any security for the account of any
person who such person has reason to believe has, and who actually
has, directly or indirectly, any interest in any--
``(A) such put, call, straddle, option, or privilege;
``(B) such security futures product with relation to such
security; or
``(C) any security-based swap involving such security or
the issuer of such security.''.
(g) Rulemaking Authority To Prevent Fraud, Manipulation and
Deceptive Conduct in Security-based Swaps.--Section 9 of the Securities
Exchange Act of 1934 (15 U.S.C. 78i) is amended by adding at the end
the following:
``(j) It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate commerce or of
the mails, or of any facility of any national securities exchange, to
effect any transaction in, or to induce or attempt to induce the
purchase or sale of, any security-based swap, in connection with which
such person engages in any fraudulent, deceptive, or manipulative act
or practice, makes any fictitious quotation, or engages in any
transaction, practice, or course of business which operates as a fraud
or deceit upon any person. The Commission shall, for the purposes of
this subsection, by rules and regulations define, and prescribe means
reasonably designed to prevent, such transactions, acts, practices, and
courses of business as are fraudulent, deceptive, or manipulative, and
such quotations as are fictitious.''.
(h) Position Limits and Position Accountability for Security-based
Swaps.--The Securities Exchange Act of 1934 is amended by inserting
after section 10A (15 U.S.C. 78j-1) the following:
``SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR
SECURITY-BASED SWAPS AND LARGE TRADER REPORTING.
``(a) Position Limits.--As a means reasonably designed to prevent
fraud and manipulation, the Commission shall, by rule or regulation, as
necessary or appropriate in the public interest or for the protection
of investors, establish limits (including related hedge exemption
provisions) on the size of positions in any security-based swap that
may be held by any person. In establishing such limits, the Commission
may require any person to aggregate positions in--
``(1) any security-based swap and any security or loan or group
of securities or loans on which such security-based swap is based,
which such security-based swap references, or to which such
security-based swap is related as described in paragraph (68) of
section 3(a), and any other instrument relating to such security or
loan or group or index of securities or loans; or
``(2) any security-based swap and--
``(A) any security or group or index of securities, the
price, yield, value, or volatility of which, or of which any
interest therein, is the basis for a material term of such
security-based swap as described in paragraph (68) of section
3(a); and
``(B) any other instrument relating to the same security or
group or index of securities described under subparagraph (A).
``(b) Exemptions.--The Commission, by rule, regulation, or order,
may conditionally or unconditionally exempt any person or class of
persons, any security-based swap or class of security-based swaps, or
any transaction or class of transactions from any requirement the
Commission may establish under this section with respect to position
limits.
``(c) SRO Rules.--
``(1) In general.--As a means reasonably designed to prevent
fraud or manipulation, the Commission, by rule, regulation, or
order, as necessary or appropriate in the public interest, for the
protection of investors, or otherwise in furtherance of the
purposes of this title, may direct a self-regulatory organization--
``(A) to adopt rules regarding the size of positions in any
security-based swap that may be held by--
``(i) any member of such self-regulatory organization;
or
``(ii) any person for whom a member of such self-
regulatory organization effects transactions in such
security-based swap; and
``(B) to adopt rules reasonably designed to ensure
compliance with requirements prescribed by the Commission under
this subsection.
``(2) Requirement to aggregate positions.--In establishing the
limits under paragraph (1), the self-regulatory organization may
require such member or person to aggregate positions in--
``(A) any security-based swap and any security or loan or
group or narrow-based security index of securities or loans on
which such security-based swap is based, which such security-
based swap references, or to which such security-based swap is
related as described in section 3(a)(68), and any other
instrument relating to such security or loan or group or
narrow-based security index of securities or loans; or
``(B)(i) any security-based swap; and
``(ii) any security-based swap and any other instrument
relating to the same security or group or narrow-based security
index of securities.
``(d) Large Trader Reporting.--The Commission, by rule or
regulation, may require any person that effects transactions for such
person's own account or the account of others in any securities-based
swap or uncleared security-based swap and any security or loan or group
or narrow-based security index of securities or loans as set forth in
paragraphs (1) and (2) of subsection (a) under this section to report
such information as the Commission may prescribe regarding any position
or positions in any security-based swap or uncleared security-based
swap and any security or loan or group or narrow-based security index
of securities or loans and any other instrument relating to such
security or loan or group or narrow-based security index of securities
or loans as set forth in paragraphs (1) and (2) of subsection (a) under
this section.''.
(i) Public Reporting and Repositories for Security-based Swaps.--
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is
amended by adding at the end the following:
``(m) Public Availability of Security-based Swap Transaction
Data.--
``(1) In general.--
``(A) Definition of real-time public reporting.--In this
paragraph, the term `real-time public reporting' means to
report data relating to a security-based swap transaction,
including price and volume, as soon as technologically
practicable after the time at which the security-based swap
transaction has been executed.
``(B) Purpose.--The purpose of this subsection is to
authorize the Commission to make security-based swap
transaction and pricing data available to the public in such
form and at such times as the Commission determines appropriate
to enhance price discovery.
``(C) General rule.--The Commission is authorized to
provide by rule for the public availability of security-based
swap transaction, volume, and pricing data as follows:
``(i) With respect to those security-based swaps that
are subject to the mandatory clearing requirement described
in section 3C(a)(1) (including those security-based swaps
that are excepted from the requirement pursuant to section
3C(g)), the Commission shall require real-time public
reporting for such transactions.
``(ii) With respect to those security-based swaps that
are not subject to the mandatory clearing requirement
described in section 3C(a)(1), but are cleared at a
registered clearing agency, the Commission shall require
real-time public reporting for such transactions.
``(iii) With respect to security-based swaps that are
not cleared at a registered clearing agency and which are
reported to a security-based swap data repository or the
Commission under section 3C(a)(6), the Commission shall
require real-time public reporting for such transactions,
in a manner that does not disclose the business
transactions and market positions of any person.
``(iv) With respect to security-based swaps that are
determined to be required to be cleared under section 3C(b)
but are not cleared, the Commission shall require real-time
public reporting for such transactions.
``(D) Registered entities and public reporting.--The
Commission may require registered entities to publicly
disseminate the security-based swap transaction and pricing
data required to be reported under this paragraph.
``(E) Rulemaking required.--With respect to the rule
providing for the public availability of transaction and
pricing data for security-based swaps described in clauses (i)
and (ii) of subparagraph (C), the rule promulgated by the
Commission shall contain provisions--
``(i) to ensure such information does not identify the
participants;
``(ii) to specify the criteria for determining what
constitutes a large notional security-based swap
transaction (block trade) for particular markets and
contracts;
``(iii) to specify the appropriate time delay for
reporting large notional security-based swap transactions
(block trades) to the public; and
``(iv) that take into account whether the public
disclosure will materially reduce market liquidity.
``(F) Timeliness of reporting.--Parties to a security-based
swap (including agents of the parties to a security-based swap)
shall be responsible for reporting security-based swap
transaction information to the appropriate registered entity in
a timely manner as may be prescribed by the Commission.
``(G) Reporting of swaps to registered security-based swap
data repositories.--Each security-based swap (whether cleared
or uncleared) shall be reported to a registered security-based
swap data repository.
``(H) Registration of clearing agencies.--A clearing agency
may register as a security-based swap data repository.
``(2) Semiannual and annual public reporting of aggregate
security-based swap data.--
``(A) In general.--In accordance with subparagraph (B), the
Commission shall issue a written report on a semiannual and
annual basis to make available to the public information
relating to--
``(i) the trading and clearing in the major security-
based swap categories; and
``(ii) the market participants and developments in new
products.
``(B) Use; consultation.--In preparing a report under
subparagraph (A), the Commission shall--
``(i) use information from security-based swap data
repositories and clearing agencies; and
``(ii) consult with the Office of the Comptroller of
the Currency, the Bank for International Settlements, and
such other regulatory bodies as may be necessary.
``(C) Authority of commission.--The Commission may, by
rule, regulation, or order, delegate the public reporting
responsibilities of the Commission under this paragraph in
accordance with such terms and conditions as the Commission
determines to be appropriate and in the public interest.
``(n) Security-based Swap Data Repositories.--
``(1) Registration requirement.--It shall be unlawful for any
person, unless registered with the Commission, directly or
indirectly, to make use of the mails or any means or
instrumentality of interstate commerce to perform the functions of
a security-based swap data repository.
``(2) Inspection and examination.--Each registered security-
based swap data repository shall be subject to inspection and
examination by any representative of the Commission.
``(3) Compliance with core principles.--
``(A) In general.--To be registered, and maintain
registration, as a security-based swap data repository, the
security-based swap data repository shall comply with--
``(i) the requirements and core principles described in
this subsection; and
``(ii) any requirement that the Commission may impose
by rule or regulation.
``(B) Reasonable discretion of security-based swap data
repository.--Unless otherwise determined by the Commission, by
rule or regulation, a security-based swap data repository
described in subparagraph (A) shall have reasonable discretion
in establishing the manner in which the security-based swap
data repository complies with the core principles described in
this subsection.
``(4) Standard setting.--
``(A) Data identification.--
``(i) In general.--In accordance with clause (ii), the
Commission shall prescribe standards that specify the data
elements for each security-based swap that shall be
collected and maintained by each registered security-based
swap data repository.
``(ii) Requirement.--In carrying out clause (i), the
Commission shall prescribe consistent data element
standards applicable to registered entities and reporting
counterparties.
``(B) Data collection and maintenance.--The Commission
shall prescribe data collection and data maintenance standards
for security-based swap data repositories.
``(C) Comparability.--The standards prescribed by the
Commission under this subsection shall be comparable to the
data standards imposed by the Commission on clearing agencies
in connection with their clearing of security-based swaps.
``(5) Duties.--A security-based swap data repository shall--
``(A) accept data prescribed by the Commission for each
security-based swap under subsection (b);
``(B) confirm with both counterparties to the security-
based swap the accuracy of the data that was submitted;
``(C) maintain the data described in subparagraph (A) in
such form, in such manner, and for such period as may be
required by the Commission;
``(D)(i) provide direct electronic access to the Commission
(or any designee of the Commission, including another
registered entity); and
``(ii) provide the information described in subparagraph
(A) in such form and at such frequency as the Commission may
require to comply with the public reporting requirements set
forth in subsection (m);
``(E) at the direction of the Commission, establish
automated systems for monitoring, screening, and analyzing
security-based swap data;
``(F) maintain the privacy of any and all security-based
swap transaction information that the security-based swap data
repository receives from a security-based swap dealer,
counterparty, or any other registered entity; and
``(G) on a confidential basis pursuant to section 24, upon
request, and after notifying the Commission of the request,
make available all data obtained by the security-based swap
data repository, including individual counterparty trade and
position data, to--
``(i) each appropriate prudential regulator;
``(ii) the Financial Stability Oversight Council;
``(iii) the Commodity Futures Trading Commission;
``(iv) the Department of Justice; and
``(v) any other person that the Commission determines
to be appropriate, including--
``(I) foreign financial supervisors (including
foreign futures authorities);
``(II) foreign central banks; and
``(III) foreign ministries.
``(H) Confidentiality and indemnification agreement.--
Before the security-based swap data repository may share
information with any entity described in subparagraph (G)--
``(i) the security-based swap data repository shall
receive a written agreement from each entity stating that
the entity shall abide by the confidentiality requirements
described in section 24 relating to the information on
security-based swap transactions that is provided; and
``(ii) each entity shall agree to indemnify the
security-based swap data repository and the Commission for
any expenses arising from litigation relating to the
information provided under section 24.
``(6) Designation of chief compliance officer.--
``(A) In general.--Each security-based swap data repository
shall designate an individual to serve as a chief compliance
officer.
``(B) Duties.--The chief compliance officer shall--
``(i) report directly to the board or to the senior
officer of the security-based swap data repository;
``(ii) review the compliance of the security-based swap
data repository with respect to the requirements and core
principles described in this subsection;
``(iii) in consultation with the board of the security-
based swap data repository, a body performing a function
similar to the board of the security-based swap data
repository, or the senior officer of the security-based
swap data repository, resolve any conflicts of interest
that may arise;
``(iv) be responsible for administering each policy and
procedure that is required to be established pursuant to
this section;
``(v) ensure compliance with this title (including
regulations) relating to agreements, contracts, or
transactions, including each rule prescribed by the
Commission under this section;
``(vi) establish procedures for the remediation of
noncompliance issues identified by the chief compliance
officer through any--
``(I) compliance office review;
``(II) look-back;
``(III) internal or external audit finding;
``(IV) self-reported error; or
``(V) validated complaint; and
``(vii) establish and follow appropriate procedures for
the handling, management response, remediation, retesting,
and closing of noncompliance issues.
``(C) Annual reports.--
``(i) In general.--In accordance with rules prescribed
by the Commission, the chief compliance officer shall
annually prepare and sign a report that contains a
description of--
``(I) the compliance of the security-based swap
data repository of the chief compliance officer with
respect to this title (including regulations); and
``(II) each policy and procedure of the security-
based swap data repository of the chief compliance
officer (including the code of ethics and conflict of
interest policies of the security-based swap data
repository).
``(ii) Requirements.--A compliance report under clause
(i) shall--
``(I) accompany each appropriate financial report
of the security-based swap data repository that is
required to be furnished to the Commission pursuant to
this section; and
``(II) include a certification that, under penalty
of law, the compliance report is accurate and complete.
``(7) Core principles applicable to security-based swap data
repositories.--
``(A) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the swap
data repository shall not--
``(i) adopt any rule or take any action that results in
any unreasonable restraint of trade; or
``(ii) impose any material anticompetitive burden on
the trading, clearing, or reporting of transactions.
``(B) Governance arrangements.--Each security-based swap
data repository shall establish governance arrangements that
are transparent--
``(i) to fulfill public interest requirements; and
``(ii) to support the objectives of the Federal
Government, owners, and participants.
``(C) Conflicts of interest.--Each security-based swap data
repository shall--
``(i) establish and enforce rules to minimize conflicts
of interest in the decision-making process of the security-
based swap data repository; and
``(ii) establish a process for resolving any conflicts
of interest described in clause (i).
``(D) Additional duties developed by commission.--
``(i) In general.--The Commission may develop 1 or more
additional duties applicable to security-based swap data
repositories.
``(ii) Consideration of evolving standards.--In
developing additional duties under subparagraph (A), the
Commission may take into consideration any evolving
standard of the United States or the international
community.
``(iii) Additional duties for commission designees.--
The Commission shall establish additional duties for any
registrant described in section 13(m)(2)(C) in order to
minimize conflicts of interest, protect data, ensure
compliance, and guarantee the safety and security of the
security-based swap data repository.
``(8) Required registration for security-based swap data
repositories.--Any person that is required to be registered as a
security-based swap data repository under this subsection shall
register with the Commission, regardless of whether that person is
also licensed under the Commodity Exchange Act as a swap data
repository.
``(9) Rules.--The Commission shall adopt rules governing
persons that are registered under this subsection.''.
SEC. 764. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP
DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by inserting after section 15E (15 U.S.C. 78o-7)
the following:
``SEC. 15F. REGISTRATION AND REGULATION OF SECURITY-BASED SWAP
DEALERS AND MAJOR SECURITY-BASED SWAP PARTICIPANTS.
``(a) Registration.--
``(1) Security-based swap dealers.--It shall be unlawful for
any person to act as a security-based swap dealer unless the person
is registered as a security-based swap dealer with the Commission.
``(2) Major security-based swap participants.--It shall be
unlawful for any person to act as a major security-based swap
participant unless the person is registered as a major security-
based swap participant with the Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a security-based
swap dealer or major security-based swap participant by filing a
registration application with the Commission.
``(2) Contents.--
``(A) In general.--The application shall be made in such
form and manner as prescribed by the Commission, and shall
contain such information, as the Commission considers necessary
concerning the business in which the applicant is or will be
engaged.
``(B) Continual reporting.--A person that is registered as
a security-based swap dealer or major security-based swap
participant shall continue to submit to the Commission reports
that contain such information pertaining to the business of the
person as the Commission may require.
``(3) Expiration.--Each registration under this section shall
expire at such time as the Commission may prescribe by rule or
regulation.
``(4) Rules.--Except as provided in subsections (d) and (e),
the Commission may prescribe rules applicable to security-based
swap dealers and major security-based swap participants, including
rules that limit the activities of non-bank security-based swap
dealers and major security-based swap participants.
``(5) Transition.--Not later than 1 year after the date of
enactment of the Wall Street Transparency and Accountability Act of
2010, the Commission shall issue rules under this section to
provide for the registration of security-based swap dealers and
major security-based swap participants.
``(6) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or order of
the Commission, it shall be unlawful for a security-based swap
dealer or a major security-based swap participant to permit any
person associated with a security-based swap dealer or a major
security-based swap participant who is subject to a statutory
disqualification to effect or be involved in effecting security-
based swaps on behalf of the security-based swap dealer or major
security-based swap participant, if the security-based swap dealer
or major security-based swap participant knew, or in the exercise
of reasonable care should have known, of the statutory
disqualification.
``(c) Dual Registration.--
``(1) Security-based swap dealer.--Any person that is required
to be registered as a security-based swap dealer under this section
shall register with the Commission, regardless of whether the
person also is registered with the Commodity Futures Trading
Commission as a swap dealer.
``(2) Major security-based swap participant.--Any person that
is required to be registered as a major security-based swap
participant under this section shall register with the Commission,
regardless of whether the person also is registered with the
Commodity Futures Trading Commission as a major swap participant.
``(d) Rulemaking.--
``(1) In general.--The Commission shall adopt rules for persons
that are registered as security-based swap dealers or major
security-based swap participants under this section.
``(2) Exception for prudential requirements.--
``(A) In general.--The Commission may not prescribe rules
imposing prudential requirements on security-based swap dealers
or major security-based swap participants for which there is a
prudential regulator.
``(B) Applicability.--Subparagraph (A) does not limit the
authority of the Commission to prescribe rules as directed
under this section.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Security-based swap dealers and major security-based
swap participants that are banks.--Each registered security-
based swap dealer and major security-based swap participant for
which there is not a prudential regulator shall meet such
minimum capital requirements and minimum initial and variation
margin requirements as the prudential regulator shall by rule
or regulation prescribe under paragraph (2)(A).
``(B) Security-based swap dealers and major security-based
swap participants that are not banks.--Each registered
security-based swap dealer and major security-based swap
participant for which there is not a prudential regulator shall
meet such minimum capital requirements and minimum initial and
variation margin requirements as the Commission shall by rule
or regulation prescribe under paragraph (2)(B).
``(2) Rules.--
``(A) Security-based swap dealers and major security-based
swap participants that are banks.--The prudential regulators,
in consultation with the Commission and the Commodity Futures
Trading Commission, shall adopt rules for security-based swap
dealers and major security-based swap participants, with
respect to their activities as a swap dealer or major swap
participant, for which there is a prudential regulator
imposing--
``(i) capital requirements; and
``(ii) both initial and variation margin requirements
on all security-based swaps that are not cleared by a
registered clearing agency.
``(B) Security-based swap dealers and major security-based
swap participants that are not banks.--The Commission shall
adopt rules for security-based swap dealers and major security-
based swap participants, with respect to their activities as a
swap dealer or major swap participant, for which there is not a
prudential regulator imposing--
``(i) capital requirements; and
``(ii) both initial and variation margin requirements
on all swaps that are not cleared by a registered clearing
agency.
``(C) Capital.--In setting capital requirements for a
person that is designated as a security-based swap dealer or a
major security-based swap participant for a single type or
single class or category of security-based swap or activities,
the prudential regulator and the Commission shall take into
account the risks associated with other types of security-based
swaps or classes of security-based swaps or categories of
security-based swaps engaged in and the other activities
conducted by that person that are not otherwise subject to
regulation applicable to that person by virtue of the status of
the person.
``(3) Standards for capital and margin.--
``(A) In general.--To offset the greater risk to the
security-based swap dealer or major security-based swap
participant and the financial system arising from the use of
security-based swaps that are not cleared, the requirements
imposed under paragraph (2) shall --
``(i) help ensure the safety and soundness of the
security-based swap dealer or major security-based swap
participant; and
``(ii) be appropriate for the risk associated with the
non-cleared security-based swaps held as a security-based
swap dealer or major security-based swap participant.
``(B) Rule of construction.--
``(i) In general.--Nothing in this section shall limit,
or be construed to limit, the authority--
``(I) of the Commission to set financial
responsibility rules for a broker or dealer registered
pursuant to section 15(b) (except for section 15(b)(11)
thereof) in accordance with section 15(c)(3); or
``(II) of the Commodity Futures Trading Commission
to set financial responsibility rules for a futures
commission merchant or introducing broker registered
pursuant to section 4f(a) of the Commodity Exchange Act
(except for section 4f(a)(3) thereof) in accordance
with section 4f(b) of the Commodity Exchange Act.
``(ii) Futures commission merchants and other
dealers.--A futures commission merchant, introducing
broker, broker, or dealer shall maintain sufficient capital
to comply with the stricter of any applicable capital
requirements to which such futures commission merchant,
introducing broker, broker, or dealer is subject to under
this title or the Commodity Exchange Act.
``(C) Margin requirements.--In prescribing margin
requirements under this subsection, the prudential regulator
with respect to security-based swap dealers and major security-
based swap participants that are depository institutions, and
the Commission with respect to security-based swap dealers and
major security-based swap participants that are not depository
institutions shall permit the use of noncash collateral, as the
regulator or the Commission determines to be consistent with--
``(i) preserving the financial integrity of markets
trading security-based swaps; and
``(ii) preserving the stability of the United States
financial system.
``(D) Comparability of capital and margin requirements.--
``(i) In general.--The prudential regulators, the
Commission, and the Securities and Exchange Commission
shall periodically (but not less frequently than annually)
consult on minimum capital requirements and minimum initial
and variation margin requirements.
``(ii) Comparability.--The entities described in clause
(i) shall, to the maximum extent practicable, establish and
maintain comparable minimum capital requirements and
minimum initial and variation margin requirements,
including the use of noncash collateral, for--
``(I) security-based swap dealers; and
``(II) major security-based swap participants.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered security-based swap dealer
and major security-based swap participant--
``(A) shall make such reports as are required by the
Commission, by rule or regulation, regarding the transactions
and positions and financial condition of the registered
security-based swap dealer or major security-based swap
participant;
``(B)(i) for which there is a prudential regulator, shall
keep books and records of all activities related to the
business as a security-based swap dealer or major security-
based swap participant in such form and manner and for such
period as may be prescribed by the Commission by rule or
regulation; and
``(ii) for which there is no prudential regulator, shall
keep books and records in such form and manner and for such
period as may be prescribed by the Commission by rule or
regulation; and
``(C) shall keep books and records described in
subparagraph (B) open to inspection and examination by any
representative of the Commission.
``(2) Rules.--The Commission shall adopt rules governing
reporting and recordkeeping for security-based swap dealers and
major security-based swap participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered security-based swap dealer
and major security-based swap participant shall maintain daily
trading records of the security-based swaps of the registered
security-based swap dealer and major security-based swap
participant and all related records (including related cash or
forward transactions) and recorded communications, including
electronic mail, instant messages, and recordings of telephone
calls, for such period as may be required by the Commission by rule
or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall require by
rule or regulation.
``(3) Counterparty records.--Each registered security-based
swap dealer and major security-based swap participant shall
maintain daily trading records for each counterparty in a manner
and form that is identifiable with each security-based swap
transaction.
``(4) Audit trail.--Each registered security-based swap dealer
and major security-based swap participant shall maintain a complete
audit trail for conducting comprehensive and accurate trade
reconstructions.
``(5) Rules.--The Commission shall adopt rules governing daily
trading records for security-based swap dealers and major security-
based swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered security-based swap dealer
and major security-based swap participant shall conform with such
business conduct standards as prescribed in paragraph (3) and as
may be prescribed by the Commission by rule or regulation that
relate to--
``(A) fraud, manipulation, and other abusive practices
involving security-based swaps (including security-based swaps
that are offered but not entered into);
``(B) diligent supervision of the business of the
registered security-based swap dealer and major security-based
swap participant;
``(C) adherence to all applicable position limits; and
``(D) such other matters as the Commission determines to be
appropriate.
``(2) Responsibilities with respect to special entities.--
``(A) Advising special entities.--A security-based swap
dealer or major security-based swap participant that acts as an
advisor to special entity regarding a security-based swap shall
comply with the requirements of paragraph (4) with respect to
such special entity.
``(B) Entering of security-based swaps with respect to
special entities.--A security-based swap dealer that enters
into or offers to enter into security-based swap with a special
entity shall comply with the requirements of paragraph (5) with
respect to such special entity.
``(C) Special entity defined.--For purposes of this
subsection, the term `special entity' means--
``(i) a Federal agency;
``(ii) a State, State agency, city, county,
municipality, or other political subdivision of a State or;
``(iii) any employee benefit plan, as defined in
section 3 of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1002);
``(iv) any governmental plan, as defined in section 3
of the Employee Retirement Income Security Act of 1974 (29
U.S.C. 1002); or
``(v) any endowment, including an endowment that is an
organization described in section 501(c)(3) of the Internal
Revenue Code of 1986.
``(3) Business conduct requirements.--Business conduct
requirements adopted by the Commission shall--
``(A) establish a duty for a security-based swap dealer or
major security-based swap participant to verify that any
counterparty meets the eligibility standards for an eligible
contract participant;
``(B) require disclosure by the security-based swap dealer
or major security-based swap participant to any counterparty to
the transaction (other than a security-based swap dealer, major
security-based swap participant, security-based swap dealer, or
major security-based swap participant) of--
``(i) information about the material risks and
characteristics of the security-based swap;
``(ii) any material incentives or conflicts of interest
that the security-based swap dealer or major security-based
swap participant may have in connection with the security-
based swap; and
``(iii)(I) for cleared security-based swaps, upon the
request of the counterparty, receipt of the daily mark of
the transaction from the appropriate derivatives clearing
organization; and
``(II) for uncleared security-based swaps, receipt of
the daily mark of the transaction from the security-based
swap dealer or the major security-based swap participant;
``(C) establish a duty for a security-based swap dealer or
major security-based swap participant to communicate in a fair
and balanced manner based on principles of fair dealing and
good faith; and
``(D) establish such other standards and requirements as
the Commission may determine are appropriate in the public
interest, for the protection of investors, or otherwise in
furtherance of the purposes of this Act.
``(4) Special requirements for security-based swap dealers
acting as advisors.--
``(A) In general.--It shall be unlawful for a security-
based swap dealer or major security-based swap participant--
``(i) to employ any device, scheme, or artifice to
defraud any special entity or prospective customer who is a
special entity;
``(ii) to engage in any transaction, practice, or
course of business that operates as a fraud or deceit on
any special entity or prospective customer who is a special
entity; or
``(iii) to engage in any act, practice, or course of
business that is fraudulent, deceptive, or manipulative.
``(B) Duty.--Any security-based swap dealer that acts as an
advisor to a special entity shall have a duty to act in the
best interests of the special entity.
``(C) Reasonable efforts.--Any security-based swap dealer
that acts as an advisor to a special entity shall make
reasonable efforts to obtain such information as is necessary
to make a reasonable determination that any security-based swap
recommended by the security-based swap dealer is in the best
interests of the special entity, including information relating
to--
``(i) the financial status of the special entity;
``(ii) the tax status of the special entity;
``(iii) the investment or financing objectives of the
special entity; and
``(iv) any other information that the Commission may
prescribe by rule or regulation.
``(5) Special requirements for security-based swap dealers as
counterparties to special entities.--
``(A) In general.--Any security-based swap dealer or major
security-based swap participant that offers to or enters into a
security-based swap with a special entity shall--
``(i) comply with any duty established by the
Commission for a security-based swap dealer or major
security-based swap participant, with respect to a
counterparty that is an eligible contract participant
within the meaning of subclause (I) or (II) of clause (vii)
of section 1a(18) of the Commodity Exchange Act, that
requires the security-based swap dealer or major security-
based swap participant to have a reasonable basis to
believe that the counterparty that is a special entity has
an independent representative that--
``(I) has sufficient knowledge to evaluate the
transaction and risks;
``(II) is not subject to a statutory
disqualification;
``(III) is independent of the security-based swap
dealer or major security-based swap participant;
``(IV) undertakes a duty to act in the best
interests of the counterparty it represents;
``(V) makes appropriate disclosures;
``(VI) will provide written representations to the
special entity regarding fair pricing and the
appropriateness of the transaction; and
``(VII) in the case of employee benefit plans
subject to the Employee Retirement Income Security act
of 1974, is a fiduciary as defined in section 3 of that
Act (29 U.S.C. 1002); and
``(ii) before the initiation of the transaction,
disclose to the special entity in writing the capacity in
which the security-based swap dealer is acting.
``(B) Commission authority.--The Commission may establish
such other standards and requirements under this paragraph as
the Commission may determine are appropriate in the public
interest, for the protection of investors, or otherwise in
furtherance of the purposes of this Act.
``(6) Rules.--The Commission shall prescribe rules under this
subsection governing business conduct standards for security-based
swap dealers and major security-based swap participants.
``(7) Applicability.--This subsection shall not apply with
respect to a transaction that is--
``(A) initiated by a special entity on an exchange or
security-based swaps execution facility; and
``(B) the security-based swap dealer or major security-
based swap participant does not know the identity of the
counterparty to the transaction.''
``(i) Documentation Standards.--
``(1) In general.--Each registered security-based swap dealer
and major security-based swap participant shall conform with such
standards as may be prescribed by the Commission, by rule or
regulation, that relate to timely and accurate confirmation,
processing, netting, documentation, and valuation of all security-
based swaps.
``(2) Rules.--The Commission shall adopt rules governing
documentation standards for security-based swap dealers and major
security-based swap participants.
``(j) Duties.--Each registered security-based swap dealer and major
security-based swap participant shall, at all times, comply with the
following requirements:
``(1) Monitoring of trading.--The security-based swap dealer or
major security-based swap participant shall monitor its trading in
security-based swaps to prevent violations of applicable position
limits.
``(2) Risk management procedures.--The security-based swap
dealer or major security-based swap participant shall establish
robust and professional risk management systems adequate for
managing the day-to-day business of the security-based swap dealer
or major security-based swap participant.
``(3) Disclosure of general information.--The security-based
swap dealer or major security-based swap participant shall disclose
to the Commission and to the prudential regulator for the security-
based swap dealer or major security-based swap participant, as
applicable, information concerning--
``(A) terms and conditions of its security-based swaps;
``(B) security-based swap trading operations, mechanisms,
and practices;
``(C) financial integrity protections relating to security-
based swaps; and
``(D) other information relevant to its trading in
security-based swaps.
``(4) Ability to obtain information.--The security-based swap
dealer or major security-based swap participant shall--
``(A) establish and enforce internal systems and procedures
to obtain any necessary information to perform any of the
functions described in this section; and
``(B) provide the information to the Commission and to the
prudential regulator for the security-based swap dealer or
major security-based swap participant, as applicable, on
request.
``(5) Conflicts of interest.--The security-based swap dealer
and major security-based swap participant shall implement conflict-
of-interest systems and procedures that--
``(A) establish structural and institutional safeguards to
ensure that the activities of any person within the firm
relating to research or analysis of the price or market for any
security-based swap or acting in a role of providing clearing
activities or making determinations as to accepting clearing
customers are separated by appropriate informational partitions
within the firm from the review, pressure, or oversight of
persons whose involvement in pricing, trading, or clearing
activities might potentially bias their judgment or supervision
and contravene the core principles of open access and the
business conduct standards described in this title; and
``(B) address such other issues as the Commission
determines to be appropriate.
``(6) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this title, the security-
based swap dealer or major security-based swap participant shall
not--
``(A) adopt any process or take any action that results in
any unreasonable restraint of trade; or
``(B) impose any material anticompetitive burden on trading
or clearing.
``(7) Rules.--The Commission shall prescribe rules under this
subsection governing duties of security-based swap dealers and
major security-based swap participants.
``(k) Designation of Chief Compliance Officer.--
``(1) In general.--Each security-based swap dealer and major
security-based swap participant shall designate an individual to
serve as a chief compliance officer.
``(2) Duties.--The chief compliance officer shall--
``(A) report directly to the board or to the senior officer
of the security-based swap dealer or major security-based swap
participant;
``(B) review the compliance of the security-based swap
dealer or major security-based swap participant with respect to
the security-based swap dealer and major security-based swap
participant requirements described in this section;
``(C) in consultation with the board of directors, a body
performing a function similar to the board, or the senior
officer of the organization, resolve any conflicts of interest
that may arise;
``(D) be responsible for administering each policy and
procedure that is required to be established pursuant to this
section;
``(E) ensure compliance with this title (including
regulations) relating to security-based swaps, including each
rule prescribed by the Commission under this section;
``(F) establish procedures for the remediation of
noncompliance issues identified by the chief compliance officer
through any--
``(i) compliance office review;
``(ii) look-back;
``(iii) internal or external audit finding;
``(iv) self-reported error; or
``(v) validated complaint; and
``(G) establish and follow appropriate procedures for the
handling, management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports.--
``(A) In general.--In accordance with rules prescribed by
the Commission, the chief compliance officer shall annually
prepare and sign a report that contains a description of--
``(i) the compliance of the security-based swap dealer
or major swap participant with respect to this title
(including regulations); and
``(ii) each policy and procedure of the security-based
swap dealer or major security-based swap participant of the
chief compliance officer (including the code of ethics and
conflict of interest policies).
``(B) Requirements.--A compliance report under subparagraph
(A) shall--
``(i) accompany each appropriate financial report of
the security-based swap dealer or major security-based swap
participant that is required to be furnished to the
Commission pursuant to this section; and
``(ii) include a certification that, under penalty of
law, the compliance report is accurate and complete.
``(l) Enforcement and Administrative Proceeding Authority.--
``(1) Primary enforcement authority.--
``(A) Securities and exchange commission.--Except as
provided in subparagraph (B), (C), or (D), the Commission shall
have primary authority to enforce subtitle B, and the
amendments made by subtitle B of the Wall Street Transparency
and Accountability Act of 2010, with respect to any person.
``(B) Prudential regulators.--The prudential regulators
shall have exclusive authority to enforce the provisions of
subsection (e) and other prudential requirements of this title
(including risk management standards), with respect to
security-based swap dealers or major security-based swap
participants for which they are the prudential regulator.
``(C) Referral.--
``(i) Violations of nonprudential requirements.--If the
appropriate Federal banking agency for security-based swap
dealers or major security-based swap participants that are
depository institutions has cause to believe that such
security-based swap dealer or major security-based swap
participant may have engaged in conduct that constitutes a
violation of the nonprudential requirements of this section
or rules adopted by the Commission thereunder, the agency
may recommend in writing to the Commission that the
Commission initiate an enforcement proceeding as authorized
under this title. The recommendation shall be accompanied
by a written explanation of the concerns giving rise to the
recommendation.
``(ii) Violations of prudential requirements.--If the
Commission has cause to believe that a securities-based
swap dealer or major securities-based swap participant that
has a prudential regulator may have engaged in conduct that
constitute a violation of the prudential requirements of
subsection (e) or rules adopted thereunder, the Commission
may recommend in writing to the prudential regulator that
the prudential regulator initiate an enforcement proceeding
as authorized under this title. The recommendation shall be
accompanied by a written explanation of the concerns giving
rise to the recommendation.
``(D) Backstop enforcement authority.--
``(i) Initiation of enforcement proceeding by
prudential regulator.--If the Commission does not initiate
an enforcement proceeding before the end of the 90-day
period beginning on the date on which the Commission
receives a written report under subsection (C)(i), the
prudential regulator may initiate an enforcement
proceeding.
``(ii) Initiation of enforcement proceeding by
commission.--If the prudential regulator does not initiate
an enforcement proceeding before the end of the 90-day
period beginning on the date on which the prudential
regulator receives a written report under subsection
(C)(ii), the Commission may initiate an enforcement
proceeding.
``(2) Censure, denial, suspension; notice and hearing.--The
Commission, by order, shall censure, place limitations on the
activities, functions, or operations of, or revoke the registration
of any security-based swap dealer or major security-based swap
participant that has registered with the Commission pursuant to
subsection (b) if the Commission finds, on the record after notice
and opportunity for hearing, that such censure, placing of
limitations, or revocation is in the public interest and that such
security-based swap dealer or major security-based swap
participant, or any person associated with such security-based swap
dealer or major security-based swap participant effecting or
involved in effecting transactions in security-based swaps on
behalf of such security-based swap dealer or major security-based
swap participant, whether prior or subsequent to becoming so
associated--
``(A) has committed or omitted any act, or is subject to an
order or finding, enumerated in subparagraph (A), (D), or (E)
of paragraph (4) of section 15(b);
``(B) has been convicted of any offense specified in
subparagraph (B) of such paragraph (4) within 10 years of the
commencement of the proceedings under this subsection;
``(C) is enjoined from any action, conduct, or practice
specified in subparagraph (C) of such paragraph (4);
``(D) is subject to an order or a final order specified in
subparagraph (F) or (H), respectively, of such paragraph (4);
or
``(E) has been found by a foreign financial regulatory
authority to have committed or omitted any act, or violated any
foreign statute or regulation, enumerated in subparagraph (G)
of such paragraph (4).
``(3) Associated persons.--With respect to any person who is
associated, who is seeking to become associated, or, at the time of
the alleged misconduct, who was associated or was seeking to become
associated with a security-based swap dealer or major security-
based swap participant for the purpose of effecting or being
involved in effecting security-based swaps on behalf of such
security-based swap dealer or major security-based swap
participant, the Commission, by order, shall censure, place
limitations on the activities or functions of such person, or
suspend for a period not exceeding 12 months, or bar such person
from being associated with a security-based swap dealer or major
security-based swap participant, if the Commission finds, on the
record after notice and opportunity for a hearing, that such
censure, placing of limitations, suspension, or bar is in the
public interest and that such person--
``(A) has committed or omitted any act, or is subject to an
order or finding, enumerated in subparagraph (A), (D), or (E)
of paragraph (4) of section 15(b);
``(B) has been convicted of any offense specified in
subparagraph (B) of such paragraph (4) within 10 years of the
commencement of the proceedings under this subsection;
``(C) is enjoined from any action, conduct, or practice
specified in subparagraph (C) of such paragraph (4);
``(D) is subject to an order or a final order specified in
subparagraph (F) or (H), respectively, of such paragraph (4);
or
``(E) has been found by a foreign financial regulatory
authority to have committed or omitted any act, or violated any
foreign statute or regulation, enumerated in subparagraph (G)
of such paragraph (4).
``(4) Unlawful conduct.--It shall be unlawful--
``(A) for any person as to whom an order under paragraph
(3) is in effect, without the consent of the Commission,
willfully to become, or to be, associated with a security-based
swap dealer or major security-based swap participant in
contravention of such order; or
``(B) for any security-based swap dealer or major security-
based swap participant to permit such a person, without the
consent of the Commission, to become or remain a person
associated with the security-based swap dealer or major
security-based swap participant in contravention of such order,
if such security-based swap dealer or major security-based swap
participant knew, or in the exercise of reasonable care should
have known, of such order.''.
(b) Savings Clause.--Notwithstanding any other provision of this
title, nothing in this subtitle shall be construed as divesting any
appropriate Federal banking agency of any authority it may have to
establish or enforce, with respect to a person for which such agency is
the appropriate Federal banking agency, prudential or other standards
pursuant to authority by Federal law other than this title.
SEC. 765. RULEMAKING ON CONFLICT OF INTEREST.
(a) In General.--In order to mitigate conflicts of interest, not
later than 180 days after the date of enactment of the Wall Street
Transparency and Accountability Act of 2010, the Securities and
Exchange Commission shall adopt rules which may include numerical
limits on the control of, or the voting rights with respect to, any
clearing agency that clears security-based swaps, or on the control of
any security-based swap execution facility or national securities
exchange that posts or makes available for trading security-based
swaps, by a bank holding company (as defined in section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841)) with total consolidated
assets of $50,000,000,000 or more, a nonbank financial company (as
defined in section 102) supervised by the Board of Governors of the
Federal Reserve System, affiliate of such a bank holding company or
nonbank financial company, a security-based swap dealer, major
security-based swap participant, or person associated with a security-
based swap dealer or major security-based swap participant.
(b) Purposes.--The Securities and Exchange Commission shall adopt
rules if the Commission determines, after the review described in
subsection (a), that such rules are necessary or appropriate to improve
the governance of, or to mitigate systemic risk, promote competition,
or mitigate conflicts of interest in connection with a security-based
swap dealer or major security-based swap participant's conduct of
business with, a clearing agency, national securities exchange, or
security-based swap execution facility that clears, posts, or makes
available for trading security-based swaps and in which such security-
based swap dealer or major security-based swap participant has a
material debt or equity investment.
(c) Considerations.--In adopting rules pursuant to this section,
the Securities and Exchange Commission shall consider any conflicts of
interest arising from the amount of equity owned by a single investor,
the ability to vote, cause the vote of, or withhold votes entitled to
be cast on any matters by the holders of the ownership interest, and
the governance arrangements of any derivatives clearing organization
that clears swaps, or swap execution facility or board of trade
designated as a contract market that posts swaps or makes swaps
available for trading.
SEC. 766. REPORTING AND RECORDKEEPING.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by inserting after section 13 the following:
``SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-BASED
SWAPS.
``(a) Required Reporting of Security-based Swaps Not Accepted by
Any Clearing Agency or Derivatives Clearing Organization.--
``(1) In general.--Each security-based swap that is not
accepted for clearing by any clearing agency or derivatives
clearing organization shall be reported to--
``(A) a security-based swap data repository described in
section 13(n); or
``(B) in the case in which there is no security-based swap
data repository that would accept the security-based swap, to
the Commission pursuant to this section within such time period
as the Commission may by rule or regulation prescribe.
``(2) Transition rule for preenactment security-based swaps.--
``(A) Security-based swaps entered into before the date of
enactment of the wall street transparency and accountability
act of 2010.--Each security-based swap entered into before the
date of enactment of the Wall Street Transparency and
Accountability Act of 2010, the terms of which have not expired
as of the date of enactment of that Act, shall be reported to a
registered security-based swap data repository or the
Commission by a date that is not later than--
``(i) 30 days after issuance of the interim final rule;
or
``(ii) such other period as the Commission determines
to be appropriate.
``(B) Commission rulemaking.--The Commission shall
promulgate an interim final rule within 90 days of the date of
enactment of this section providing for the reporting of each
security-based swap entered into before the date of enactment
as referenced in subparagraph (A).
``(C) Effective date.--The reporting provisions described
in this section shall be effective upon the date of the
enactment of this section.
``(3) Reporting obligations.--
``(A) Security-based swaps in which only 1 counterparty is
a security-based swap dealer or major security-based swap
participant.--With respect to a security-based swap in which
only 1 counterparty is a security-based swap dealer or major
security-based swap participant, the security-based swap dealer
or major security-based swap participant shall report the
security-based swap as required under paragraphs (1) and (2).
``(B) Security-based swaps in which 1 counterparty is a
security-based swap dealer and the other a major security-based
swap participant.--With respect to a security-based swap in
which 1 counterparty is a security-based swap dealer and the
other a major security-based swap participant, the security-
based swap dealer shall report the security-based swap as
required under paragraphs (1) and (2).
``(C) Other security-based swaps.--With respect to any
other security-based swap not described in subparagraph (A) or
(B), the counterparties to the security-based swap shall select
a counterparty to report the security-based swap as required
under paragraphs (1) and (2).
``(b) Duties of Certain Individuals.--Any individual or entity that
enters into a security-based swap shall meet each requirement described
in subsection (c) if the individual or entity did not--
``(1) clear the security-based swap in accordance with section
3C(a)(1); or
``(2) have the data regarding the security-based swap accepted
by a security-based swap data repository in accordance with rules
(including timeframes) adopted by the Commission under this title.
``(c) Requirements.--An individual or entity described in
subsection (b) shall--
``(1) upon written request from the Commission, provide reports
regarding the security-based swaps held by the individual or entity
to the Commission in such form and in such manner as the Commission
may request; and
``(2) maintain books and records pertaining to the security-
based swaps held by the individual or entity in such form, in such
manner, and for such period as the Commission may require, which
shall be open to inspection by--
``(A) any representative of the Commission;
``(B) an appropriate prudential regulator;
``(C) the Commodity Futures Trading Commission;
``(D) the Financial Stability Oversight Council; and
``(E) the Department of Justice.
``(d) Identical Data.--In prescribing rules under this section, the
Commission shall require individuals and entities described in
subsection (b) to submit to the Commission a report that contains data
that is not less comprehensive than the data required to be collected
by security-based swap data repositories under this title.''.
(b) Beneficial Ownership Reporting.--Section 13 of the Securities
Exchange Act of 1934 (15 U.S.C. 78m) is amended--
(1) in subsection (d)(1), by inserting ``or otherwise becomes
or is deemed to become a beneficial owner of any of the foregoing
upon the purchase or sale of a security-based swap that the
Commission may define by rule, and'' after ``Alaska Native Claims
Settlement Act,''; and
(2) in subsection (g)(1), by inserting ``or otherwise becomes
or is deemed to become a beneficial owner of any security of a
class described in subsection (d)(1) upon the purchase or sale of a
security-based swap that the Commission may define by rule'' after
``subsection (d)(1) of this section''.
(c) Reports by Institutional Investment Managers.--Section 13(f)(1)
of the Securities Exchange Act of 1934 (15 U.S.C. 78m(f)(1)) is amended
by inserting ``or otherwise becomes or is deemed to become a beneficial
owner of any security of a class described in subsection (d)(1) upon
the purchase or sale of a security-based swap that the Commission may
define by rule,'' after ``subsection (d)(1) of this section''.
(d) Administrative Proceeding Authority.--Section 15(b)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is amended--
(1) in subparagraph (C), by inserting ``security-based swap
dealer, major security-based swap participant,'' after ``government
securities dealer,''; and
(2) in subparagraph (F), by striking ``broker or dealer'' and
inserting ``broker, dealer, security-based swap dealer, or a major
security-based swap participant''.
(e) Security-based Swap Beneficial Ownership.--Section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m) is amended by adding at
the end the following:
``(o) Beneficial Ownership.--For purposes of this section and
section 16, a person shall be deemed to acquire beneficial ownership of
an equity security based on the purchase or sale of a security-based
swap, only to the extent that the Commission, by rule, determines after
consultation with the prudential regulators and the Secretary of the
Treasury, that the purchase or sale of the security-based swap, or
class of security-based swap, provides incidents of ownership
comparable to direct ownership of the equity security, and that it is
necessary to achieve the purposes of this section that the purchase or
sale of the security-based swaps, or class of security-based swap, be
deemed the acquisition of beneficial ownership of the equity
security.''.
SEC. 767. STATE GAMING AND BUCKET SHOP LAWS.
Section 28(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78bb(a)) is amended to read as follows:
``(a) Limitation on Judgments.--
``(1) In general.--No person permitted to maintain a suit for
damages under the provisions of this title shall recover, through
satisfaction of judgment in 1 or more actions, a total amount in
excess of the actual damages to that person on account of the act
complained of. Except as otherwise specifically provided in this
title, nothing in this title shall affect the jurisdiction of the
securities commission (or any agency or officer performing like
functions) of any State over any security or any person insofar as
it does not conflict with the provisions of this title or the rules
and regulations under this title.
``(2) Rule of construction.--Except as provided in subsection
(f), the rights and remedies provided by this title shall be in
addition to any and all other rights and remedies that may exist at
law or in equity.
``(3) State bucket shop laws.--No State law which prohibits or
regulates the making or promoting of wagering or gaming contracts,
or the operation of `bucket shops' or other similar or related
activities, shall invalidate--
``(A) any put, call, straddle, option, privilege, or other
security subject to this title (except any security that has a
pari-mutuel payout or otherwise is determined by the
Commission, acting by rule, regulation, or order, to be
appropriately subject to such laws), or apply to any activity
which is incidental or related to the offer, purchase, sale,
exercise, settlement, or closeout of any such security;
``(B) any security-based swap between eligible contract
participants; or
``(C) any security-based swap effected on a national
securities exchange registered pursuant to section 6(b).
``(4) Other state provisions.--No provision of State law
regarding the offer, sale, or distribution of securities shall
apply to any transaction in a security-based swap or a security
futures product, except that this paragraph may not be construed as
limiting any State antifraud law of general applicability. A
security-based swap may not be regulated as an insurance contract
under any provision of State law.''.
SEC. 768. AMENDMENTS TO THE SECURITIES ACT OF 1933; TREATMENT OF
SECURITY-BASED SWAPS.
(a) Definitions.--Section 2(a) of the Securities Act of 1933 (15
U.S.C. 77b(a)) is amended--
(1) in paragraph (1), by inserting ``security-based swap,''
after ``security future,'';
(2) in paragraph (3), by adding at the end the following: ``Any
offer or sale of a security-based swap by or on behalf of the
issuer of the securities upon which such security-based swap is
based or is referenced, an affiliate of the issuer, or an
underwriter, shall constitute a contract for sale of, sale of,
offer for sale, or offer to sell such securities.''; and
(3) by adding at the end the following:
``(17) The terms `swap' and `security-based swap' have the same
meanings as in section 1a of the Commodity Exchange Act (7 U.S.C.
1a).
``(18) The terms `purchase' or `sale' of a security-based swap
shall be deemed to mean the execution, termination (prior to its
scheduled maturity date), assignment, exchange, or similar transfer
or conveyance of, or extinguishing of rights or obligations under,
a security-based swap, as the context may require.''.
(b) Registration of Security-based Swaps.--Section 5 of the
Securities Act of 1933 (15 U.S.C. 77e) is amended by adding at the end
the following:
``(d) Notwithstanding the provisions of section 3 or 4, unless a
registration statement meeting the requirements of section 10(a) is in
effect as to a security-based swap, it shall be unlawful for any
person, directly or indirectly, to make use of any means or instruments
of transportation or communication in interstate commerce or of the
mails to offer to sell, offer to buy or purchase or sell a security-
based swap to any person who is not an eligible contract participant as
defined in section 1a(18) of the Commodity Exchange Act (7 U.S.C.
1a(18)).''.
SEC. 769. DEFINITIONS UNDER THE INVESTMENT COMPANY ACT OF 1940.
Section 2(a) of the Investment Company Act of 1940 (15 U.S.C. 80a-
2) is amended by adding at the end the following:
``(54) The terms `commodity pool', `commodity pool operator',
`commodity trading advisor', `major swap participant', `swap',
`swap dealer', and `swap execution facility' have the same meanings
as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).''.
SEC. 770. DEFINITIONS UNDER THE INVESTMENT ADVISERS ACT OF 1940.
Section 202(a) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-2) is amended by adding at the end the following:
``(29) The terms `commodity pool', `commodity pool operator',
`commodity trading advisor', `major swap participant', `swap',
`swap dealer', and `swap execution facility' have the same meanings
as in section 1a of the Commodity Exchange Act (7 U.S.C. 1a).''.
SEC. 771. OTHER AUTHORITY.
Unless otherwise provided by its terms, this subtitle does not
divest any appropriate Federal banking agency, the Securities and
Exchange Commission, the Commodity Futures Trading Commission, or any
other Federal or State agency, of any authority derived from any other
provision of applicable law.
SEC. 772. JURISDICTION.
(a) In General.--Section 36 of the Securities Exchange Act of 1934
(15 U.S.C. 78mm) is amended by adding at the end the following:
``(c) Derivatives.--Unless the Commission is expressly authorized
by any provision described in this subsection to grant exemptions, the
Commission shall not grant exemptions, with respect to amendments made
by subtitle B of the Wall Street Transparency and Accountability Act of
2010, with respect to paragraphs (65), (66), (68), (69), (70), (71),
(72), (73), (74), (75), (76), and (79) of section 3(a), and sections
10B(a), 10B(b), 10B(c), 13A, 15F, 17A(g), 17A(h), 17A(i), 17A(j),
17A(k), and 17A(l); provided that the Commission shall have exemptive
authority under this title with respect to security-based swaps as to
the same matters that the Commodity Futures Trading Commission has
under the Wall Street Transparency and Accountability Act of 2010 with
respect to swaps, including under section 4(c) of the Commodity
Exchange Act.''.
(b) Rule of Construction.--Section 30 of the Securities Exchange
Act of 1934 (15 U.S.C. 78dd) is amended by adding at the end the
following:
``(c) Rule of Construction.--No provision of this title that was
added by the Wall Street Transparency and Accountability Act of 2010,
or any rule or regulation thereunder, shall apply to any person insofar
as such person transacts a business in security-based swaps without the
jurisdiction of the United States, unless such person transacts such
business in contravention of such rules and regulations as the
Commission may prescribe as necessary or appropriate to prevent the
evasion of any provision of this title that was added by the Wall
Street Transparency and Accountability Act of 2010. This subsection
shall not be construed to limit the jurisdiction of the Commission
under any provision of this title, as in effect prior to the date of
enactment of the Wall Street Transparency and Accountability Act of
2010.''.
SEC. 773. CIVIL PENALTIES.
Section 21B of the Securities Exchange Act of 1934 (15 U.S.C. 78p-
2) is amended by adding at the end the following:
``(f) Security-based Swaps.--
``(1) Clearing agency.--Any clearing agency that knowingly or
recklessly evades or participates in or facilitates an evasion of
the requirements of section 3C shall be liable for a civil money
penalty in twice the amount otherwise available for a violation of
section 3C.
``(2) Security-based swap dealer or major security-based swap
participant.--Any security-based swap dealer or major security-
based swap participant that knowingly or recklessly evades or
participates in or facilitates an evasion of the requirements of
section 3C shall be liable for a civil money penalty in twice the
amount otherwise available for a violation of section 3C.''.
SEC. 774. EFFECTIVE DATE.
Unless otherwise provided, the provisions of this subtitle shall
take effect on the later of 360 days after the date of the enactment of
this subtitle or, to the extent a provision of this subtitle requires a
rulemaking, not less than 60 days after publication of the final rule
or regulation implementing such provision of this subtitle.
TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
SEC. 801. SHORT TITLE.
This title may be cited as the ``Payment, Clearing, and Settlement
Supervision Act of 2010''.
SEC. 802. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds the following:
(1) The proper functioning of the financial markets is
dependent upon safe and efficient arrangements for the clearing and
settlement of payment, securities, and other financial
transactions.
(2) Financial market utilities that conduct or support
multilateral payment, clearing, or settlement activities may reduce
risks for their participants and the broader financial system, but
such utilities may also concentrate and create new risks and thus
must be well designed and operated in a safe and sound manner.
(3) Payment, clearing, and settlement activities conducted by
financial institutions also present important risks to the
participating financial institutions and to the financial system.
(4) Enhancements to the regulation and supervision of
systemically important financial market utilities and the conduct
of systemically important payment, clearing, and settlement
activities by financial institutions are necessary--
(A) to provide consistency;
(B) to promote robust risk management and safety and
soundness;
(C) to reduce systemic risks; and
(D) to support the stability of the broader financial
system.
(b) Purpose.--The purpose of this title is to mitigate systemic
risk in the financial system and promote financial stability by--
(1) authorizing the Board of Governors to promote uniform
standards for the--
(A) management of risks by systemically important financial
market utilities; and
(B) conduct of systemically important payment, clearing,
and settlement activities by financial institutions;
(2) providing the Board of Governors an enhanced role in the
supervision of risk management standards for systemically important
financial market utilities;
(3) strengthening the liquidity of systemically important
financial market utilities; and
(4) providing the Board of Governors an enhanced role in the
supervision of risk management standards for systemically important
payment, clearing, and settlement activities by financial
institutions.
SEC. 803. DEFINITIONS.
In this title, the following definitions shall apply:
(1) Appropriate financial regulator.--The term ``appropriate
financial regulator'' means--
(A) the primary financial regulatory agency, as defined in
section 2 of this Act;
(B) the National Credit Union Administration, with respect
to any insured credit union under the Federal Credit Union Act
(12 U.S.C. 1751 et seq.); and
(C) the Board of Governors, with respect to organizations
operating under section 25A of the Federal Reserve Act (12
U.S.C. 611), and any other financial institution engaged in a
designated activity.
(2) Designated activity.--The term ``designated activity''
means a payment, clearing, or settlement activity that the Council
has designated as systemically important under section 804.
(3) Designated clearing entity.--The term ``designated clearing
entity'' means a designated financial market utility that is a
derivatives clearing organization registered under section 5b of
the Commodity Exchange Act (7 U.S.C. 7a-1) or a clearing agency
registered with the Securities and Exchange Commission under
section 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78q-
1).
(4) Designated financial market utility.--The term ``designated
financial market utility'' means a financial market utility that
the Council has designated as systemically important under section
804.
(5) Financial institution.--
(A) In general.--The term ``financial institution'' means--
(i) a depository institution, as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(ii) a branch or agency of a foreign bank, as defined
in section 1(b) of the International Banking Act of 1978
(12 U.S.C. 3101);
(iii) an organization operating under section 25 or 25A
of the Federal Reserve Act (12 U.S.C. 601-604a and 611
through 631);
(iv) a credit union, as defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752);
(v) a broker or dealer, as defined in section 3 of the
Securities Exchange Act of 1934 (15 U.S.C. 78c);
(vi) an investment company, as defined in section 3 of
the Investment Company Act of 1940 (15 U.S.C. 80a-3);
(vii) an insurance company, as defined in section 2 of
the Investment Company Act of 1940 (15 U.S.C. 80a-2);
(viii) an investment adviser, as defined in section 202
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2);
(ix) a futures commission merchant, commodity trading
advisor, or commodity pool operator, as defined in section
1a of the Commodity Exchange Act (7 U.S.C. 1a); and
(x) any company engaged in activities that are
financial in nature or incidental to a financial activity,
as described in section 4 of the Bank Holding Company Act
of 1956 (12 U.S.C. 1843(k)).
(B) Exclusions.--The term ``financial institution'' does
not include designated contract markets, registered futures
associations, swap data repositories, and swap execution
facilities registered under the Commodity Exchange Act (7
U.S.C. 1 et seq.), or national securities exchanges, national
securities associations, alternative trading systems,
securities information processors solely with respect to the
activities of the entity as a securities information processor,
security-based swap data repositories, and swap execution
facilities registered under the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.), or designated clearing entities,
provided that the exclusions in this subparagraph apply only
with respect to the activities that require the entity to be so
registered.
(6) Financial market utility.--
(A) Inclusion.--The term ``financial market utility'' means
any person that manages or operates a multilateral system for
the purpose of transferring, clearing, or settling payments,
securities, or other financial transactions among financial
institutions or between financial institutions and the person.
(B) Exclusions.--The term ``financial market utility'' does
not include--
(i) designated contract markets, registered futures
associations, swap data repositories, and swap execution
facilities registered under the Commodity Exchange Act (7
U.S.C. 1 et seq.), or national securities exchanges,
national securities associations, alternative trading
systems, security-based swap data repositories, and swap
execution facilities registered under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.), solely by
reason of their providing facilities for comparison of data
respecting the terms of settlement of securities or futures
transactions effected on such exchange or by means of any
electronic system operated or controlled by such entities,
provided that the exclusions in this clause apply only with
respect to the activities that require the entity to be so
registered; and
(ii) any broker, dealer, transfer agent, or investment
company, or any futures commission merchant, introducing
broker, commodity trading advisor, or commodity pool
operator, solely by reason of functions performed by such
institution as part of brokerage, dealing, transfer agency,
or investment company activities, or solely by reason of
acting on behalf of a financial market utility or a
participant therein in connection with the furnishing by
the financial market utility of services to its
participants or the use of services of the financial market
utility by its participants, provided that services
performed by such institution do not constitute critical
risk management or processing functions of the financial
market utility.
(7) Payment, clearing, or settlement activity.--
(A) In general.--The term ``payment, clearing, or
settlement activity'' means an activity carried out by 1 or
more financial institutions to facilitate the completion of
financial transactions, but shall not include any offer or sale
of a security under the Securities Act of 1933 (15 U.S.C. 77a
et seq.), or any quotation, order entry, negotiation, or other
pre-trade activity or execution activity.
(B) Financial transaction.--For the purposes of
subparagraph (A), the term ``financial transaction'' includes--
(i) funds transfers;
(ii) securities contracts;
(iii) contracts of sale of a commodity for future
delivery;
(iv) forward contracts;
(v) repurchase agreements;
(vi) swaps;
(vii) security-based swaps;
(viii) swap agreements;
(ix) security-based swap agreements;
(x) foreign exchange contracts;
(xi) financial derivatives contracts; and
(xii) any similar transaction that the Council
determines to be a financial transaction for purposes of
this title.
(C) Included activities.--When conducted with respect to a
financial transaction, payment, clearing, and settlement
activities may include--
(i) the calculation and communication of unsettled
financial transactions between counterparties;
(ii) the netting of transactions;
(iii) provision and maintenance of trade, contract, or
instrument information;
(iv) the management of risks and activities associated
with continuing financial transactions;
(v) transmittal and storage of payment instructions;
(vi) the movement of funds;
(vii) the final settlement of financial transactions;
and
(viii) other similar functions that the Council may
determine.
(D) Exclusion.--Payment, clearing, and settlement
activities shall not include public reporting of swap
transaction data under section 727 or 763(i) of the Wall Street
Transparency and Accountability Act of 2010.
(8) Supervisory agency.--
(A) In general.--The term ``Supervisory Agency'' means the
Federal agency that has primary jurisdiction over a designated
financial market utility under Federal banking, securities, or
commodity futures laws, as follows:
(i) The Securities and Exchange Commission, with
respect to a designated financial market utility that is a
clearing agency registered with the Securities and Exchange
Commission.
(ii) The Commodity Futures Trading Commission, with
respect to a designated financial market utility that is a
derivatives clearing organization registered with the
Commodity Futures Trading Commission.
(iii) The appropriate Federal banking agency, with
respect to a designated financial market utility that is an
institution described in section 3(q) of the Federal
Deposit Insurance Act.
(iv) The Board of Governors, with respect to a
designated financial market utility that is otherwise not
subject to the jurisdiction of any agency listed in clauses
(i), (ii), and (iii).
(B) Multiple agency jurisdiction.--If a designated
financial market utility is subject to the jurisdictional
supervision of more than 1 agency listed in subparagraph (A),
then such agencies should agree on 1 agency to act as the
Supervisory Agency, and if such agencies cannot agree on which
agency has primary jurisdiction, the Council shall decide which
agency is the Supervisory Agency for purposes of this title.
(9) Systemically important and systemic importance.--The terms
``systemically important'' and ``systemic importance'' mean a
situation where the failure of or a disruption to the functioning
of a financial market utility or the conduct of a payment,
clearing, or settlement activity could create, or increase, the
risk of significant liquidity or credit problems spreading among
financial institutions or markets and thereby threaten the
stability of the financial system of the United States.
SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE.
(a) Designation.--
(1) Financial stability oversight council.--The Council, on a
nondelegable basis and by a vote of not fewer than \2/3\ of members
then serving, including an affirmative vote by the Chairperson of
the Council, shall designate those financial market utilities or
payment, clearing, or settlement activities that the Council
determines are, or are likely to become, systemically important.
(2) Considerations.--In determining whether a financial market
utility or payment, clearing, or settlement activity is, or is
likely to become, systemically important, the Council shall take
into consideration the following:
(A) The aggregate monetary value of transactions processed
by the financial market utility or carried out through the
payment, clearing, or settlement activity.
(B) The aggregate exposure of the financial market utility
or a financial institution engaged in payment, clearing, or
settlement activities to its counterparties.
(C) The relationship, interdependencies, or other
interactions of the financial market utility or payment,
clearing, or settlement activity with other financial market
utilities or payment, clearing, or settlement activities.
(D) The effect that the failure of or a disruption to the
financial market utility or payment, clearing, or settlement
activity would have on critical markets, financial
institutions, or the broader financial system.
(E) Any other factors that the Council deems appropriate.
(b) Rescission of Designation.--
(1) In general.--The Council, on a nondelegable basis and by a
vote of not fewer than \2/3\ of members then serving, including an
affirmative vote by the Chairperson of the Council, shall rescind a
designation of systemic importance for a designated financial
market utility or designated activity if the Council determines
that the utility or activity no longer meets the standards for
systemic importance.
(2) Effect of rescission.--Upon rescission, the financial
market utility or financial institutions conducting the activity
will no longer be subject to the provisions of this title or any
rules or orders prescribed under this title.
(c) Consultation and Notice and Opportunity for Hearing.--
(1) Consultation.--Before making any determination under
subsection (a) or (b), the Council shall consult with the relevant
Supervisory Agency and the Board of Governors.
(2) Advance notice and opportunity for hearing.--
(A) In general.--Before making any determination under
subsection (a) or (b), the Council shall provide the financial
market utility or, in the case of a payment, clearing, or
settlement activity, financial institutions with advance notice
of the proposed determination of the Council.
(B) Notice in federal register.--The Council shall provide
such advance notice to financial institutions by publishing a
notice in the Federal Register.
(C) Requests for hearing.--Within 30 days from the date of
any notice of the proposed determination of the Council, the
financial market utility or, in the case of a payment,
clearing, or settlement activity, a financial institution
engaged in the designated activity may request, in writing, an
opportunity for a written or oral hearing before the Council to
demonstrate that the proposed designation or rescission of
designation is not supported by substantial evidence.
(D) Written submissions.--Upon receipt of a timely request,
the Council shall fix a time, not more than 30 days after
receipt of the request, unless extended at the request of the
financial market utility or financial institution, and place at
which the financial market utility or financial institution may
appear, personally or through counsel, to submit written
materials, or, at the sole discretion of the Council, oral
testimony or oral argument.
(3) Emergency exception.--
(A) Waiver or modification by vote of the council.--The
Council may waive or modify the requirements of paragraph (2)
if the Council determines, by an affirmative vote of not fewer
than \2/3\ of members then serving, including an affirmative
vote by the Chairperson of the Council, that the waiver or
modification is necessary to prevent or mitigate an immediate
threat to the financial system posed by the financial market
utility or the payment, clearing, or settlement activity.
(B) Notice of waiver or modification.--The Council shall
provide notice of the waiver or modification to the financial
market utility concerned or, in the case of a payment,
clearing, or settlement activity, to financial institutions, as
soon as practicable, which shall be no later than 24 hours
after the waiver or modification in the case of a financial
market utility and 3 business days in the case of financial
institutions. The Council shall provide the notice to financial
institutions by posting a notice on the website of the Council
and by publishing a notice in the Federal Register.
(d) Notification of Final Determination.--
(1) After hearing.--Within 60 days of any hearing under
subsection (c)(2), the Council shall notify the financial market
utility or financial institutions of the final determination of the
Council in writing, which shall include findings of fact upon which
the determination of the Council is based.
(2) When no hearing requested.--If the Council does not receive
a timely request for a hearing under subsection (c)(2), the Council
shall notify the financial market utility or financial institutions
of the final determination of the Council in writing not later than
30 days after the expiration of the date by which a financial
market utility or a financial institution could have requested a
hearing. All notices to financial institutions under this
subsection shall be published in the Federal Register.
(e) Extension of Time Periods.--The Council may extend the time
periods established in subsections (c) and (d) as the Council
determines to be necessary or appropriate.
SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL MARKET
UTILITIES AND PAYMENT, CLEARING, OR SETTLEMENT ACTIVITIES.
(a) Authority to Prescribe Standards.--
(1) Board of governors.--Except as provided in paragraph (2),
the Board of Governors, by rule or order, and in consultation with
the Council and the Supervisory Agencies, shall prescribe risk
management standards, taking into consideration relevant
international standards and existing prudential requirements,
governing--
(A) the operations related to the payment, clearing, and
settlement activities of designated financial market utilities;
and
(B) the conduct of designated activities by financial
institutions.
(2) Special procedures for designated clearing entities and
designated activities of certain financial institutions.--
(A) CFTC and commission.--The Commodity Futures Trading
Commission and the Commission may each prescribe regulations,
in consultation with the Council and the Board of Governors,
containing risk management standards, taking into consideration
relevant international standards and existing prudential
requirements, for those designated clearing entities and
financial institutions engaged in designated activities for
which each is the Supervisory Agency or the appropriate
financial regulator, governing--
(i) the operations related to payment, clearing, and
settlement activities of such designated clearing entities;
and
(ii) the conduct of designated activities by such
financial institutions.
(B) Review and determination.--The Board of Governors may
determine that existing prudential requirements of the
Commodity Futures Trading Commission, the Commission, or both
(including requirements prescribed pursuant to subparagraph
(A)) with respect to designated clearing entities and financial
institutions engaged in designated activities for which the
Commission or the Commodity Futures Trading Commission is the
Supervisory Agency or the appropriate financial regulator are
insufficient to prevent or mitigate significant liquidity,
credit, operational, or other risks to the financial markets or
to the financial stability of the United States.
(C) Written determination.--Any determination by the Board
of Governors under subparagraph (B) shall be provided in
writing to the Commodity Futures Trading Commission or the
Commission, as applicable, and the Council, and shall explain
why existing prudential requirements, considered as a whole,
are insufficient to ensure that the operations and activities
of the designated clearing entities or the activities of
financial institutions described in subparagraph (B) will not
pose significant liquidity, credit, operational, or other risks
to the financial markets or to the financial stability of the
United States. The Board of Governors' determination shall
contain a detailed analysis supporting its findings and
identify the specific prudential requirements that are
insufficient.
(D) CFTC and commission response.--The Commodity Futures
Trading Commission or the Commission, as applicable, shall
within 60 days either object to the Board of Governors'
determination with a detailed analysis as to why existing
prudential requirements are sufficient, or submit an
explanation to the Council and the Board of Governors
describing the actions to be taken in response to the Board of
Governors' determination.
(E) Authorization.--Upon an affirmative vote by not fewer
than 2/3 of members then serving on the Council, the Council
shall either find that the response submitted under
subparagraph (D) is sufficient, or require the Commodity
Futures Trading Commission, or the Commission, as applicable,
to prescribe such risk management standards as the Council
determines is necessary to address the specific prudential
requirements that are determined to be insufficient.''
(b) Objectives and Principles.--The objectives and principles for
the risk management standards prescribed under subsection (a) shall be
to--
(1) promote robust risk management;
(2) promote safety and soundness;
(3) reduce systemic risks; and
(4) support the stability of the broader financial system.
(c) Scope.--The standards prescribed under subsection (a) may
address areas such as--
(1) risk management policies and procedures;
(2) margin and collateral requirements;
(3) participant or counterparty default policies and
procedures;
(4) the ability to complete timely clearing and settlement of
financial transactions;
(5) capital and financial resource requirements for designated
financial market utilities; and
(6) other areas that are necessary to achieve the objectives
and principles in subsection (b).
(d) Limitation on Scope.--Except as provided in subsections (e) and
(f) of section 807, nothing in this title shall be construed to permit
the Council or the Board of Governors to take any action or exercise
any authority granted to the Commodity Futures Trading Commission under
section 2(h) of the Commodity Exchange Act or the Securities and
Exchange Commission under section 3C(a) of the Securities Exchange Act
of 1934, including--
(1) the approval of, disapproval of, or stay of the clearing
requirement for any group, category, type, or class of swaps that a
designated clearing entity may accept for clearing;
(2) the determination that any group, category, type, or class
of swaps shall be subject to the mandatory clearing requirement of
section 2(h)(1) of the Commodity Exchange Act or section 3C(a)(1)
of the Securities Exchange Act of 1934;
(3) the determination that any person is exempt from the
mandatory clearing requirement of section 2(h)(1) of the Commodity
Exchange Act or section 3C(a)(1) of the Securities Exchange Act of
1934; or
(4) any authority granted to the Commodity Futures Trading
Commission or the Securities and Exchange Commission with respect
to transaction reporting or trade execution.
(e) Threshold Level.--The standards prescribed under subsection (a)
governing the conduct of designated activities by financial
institutions shall, where appropriate, establish a threshold as to the
level or significance of engagement in the activity at which a
financial institution will become subject to the standards with respect
to that activity.
(f) Compliance Required.--Designated financial market utilities and
financial institutions subject to the standards prescribed under
subsection (a) for a designated activity shall conduct their operations
in compliance with the applicable risk management standards.
SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MARKET UTILITIES.
(a) Federal Reserve Account and Services.--The Board of Governors
may authorize a Federal Reserve Bank to establish and maintain an
account for a designated financial market utility and provide the
services listed in section 11A(b) of the Federal Reserve Act (12 U.S.C.
248a(b)) and deposit accounts under the first undesignated paragraph of
section 13 of the Federal Reserve Act (12 U.S.C. 342) to the designated
financial market utility that the Federal Reserve Bank is authorized
under the Federal Reserve Act to provide to a depository institution,
subject to any applicable rules, orders, standards, or guidelines
prescribed by the Board of Governors.
(b) Advances.--The Board of Governors may authorize a Federal
Reserve bank under section 10B of the Federal Reserve Act (12 U.S.C.
347b) to provide to a designated financial market utility discount and
borrowing privileges only in unusual or exigent circumstances, upon the
affirmative vote of a majority of the Board of Governors then serving
(or such other number in accordance with the provisions of section
11(r)(2) of the Federal Reserve Act (12 U.S.C. 248(r)(2)) after
consultation with the Secretary, and upon a showing by the designated
financial market utility that it is unable to secure adequate credit
accommodations from other banking institutions. All such discounts and
borrowing privileges shall be subject to such other limitations,
restrictions, and regulations as the Board of Governors may prescribe.
Access to discount and borrowing privileges under section 10B of the
Federal Reserve Act as authorized in this section does not require a
designated financial market utility to be or become a bank or bank
holding company.
(c) Earnings on Federal Reserve Balances.--A Federal Reserve Bank
may pay earnings on balances maintained by or on behalf of a designated
financial market utility in the same manner and to the same extent as
the Federal Reserve Bank may pay earnings to a depository institution
under the Federal Reserve Act, subject to any applicable rules, orders,
standards, or guidelines prescribed by the Board of Governors.
(d) Reserve Requirements.--The Board of Governors may exempt a
designated financial market utility from, or modify any, reserve
requirements under section 19 of the Federal Reserve Act (12 U.S.C.
461) applicable to a designated financial market utility.
(e) Changes to Rules, Procedures, or Operations.--
(1) Advance notice.--
(A) Advance notice of proposed changes required.--A
designated financial market utility shall provide notice 60
days in advance notice to its Supervisory Agency of any
proposed change to its rules, procedures, or operations that
could, as defined in rules of each Supervisory Agency,
materially affect, the nature or level of risks presented by
the designated financial market utility.
(B) Terms and standards prescribed by the supervisory
agencies.--Each Supervisory Agency, in consultation with the
Board of Governors, shall prescribe regulations that define and
describe the standards for determining when notice is required
to be provided under subparagraph (A).
(C) Contents of notice.--The notice of a proposed change
shall describe--
(i) the nature of the change and expected effects on
risks to the designated financial market utility, its
participants, or the market; and
(ii) how the designated financial market utility plans
to manage any identified risks.
(D) Additional information.--The Supervisory Agency may
require a designated financial market utility to provide any
information necessary to assess the effect the proposed change
would have on the nature or level of risks associated with the
designated financial market utility's payment, clearing, or
settlement activities and the sufficiency of any proposed risk
management techniques.
(E) Notice of objection.--The Supervisory Agency shall
notify the designated financial market utility of any objection
regarding the proposed change within 60 days from the later
of--
(i) the date that the notice of the proposed change is
received; or
(ii) the date any further information requested for
consideration of the notice is received.
(F) Change not allowed if objection.--A designated
financial market utility shall not implement a change to which
the Supervisory Agency has an objection.
(G) Change allowed if no objection within 60 days.--A
designated financial market utility may implement a change if
it has not received an objection to the proposed change within
60 days of the later of--
(i) the date that the Supervisory Agency receives the
notice of proposed change; or
(ii) the date the Supervisory Agency receives any
further information it requests for consideration of the
notice.
(H) Review extension for novel or complex issues.--The
Supervisory Agency may, during the 60-day review period, extend
the review period for an additional 60 days for proposed
changes that raise novel or complex issues, subject to the
Supervisory Agency providing the designated financial market
utility with prompt written notice of the extension. Any
extension under this subparagraph will extend the time periods
under subparagraphs (E) and (G).
(I) Change allowed earlier if notified of no objection.--A
designated financial market utility may implement a change in
less than 60 days from the date of receipt of the notice of
proposed change by the Supervisory Agency, or the date the
Supervisory Agency receives any further information it
requested, if the Supervisory Agency notifies the designated
financial market utility in writing that it does not object to
the proposed change and authorizes the designated financial
market utility to implement the change on an earlier date,
subject to any conditions imposed by the Supervisory Agency.
(2) Emergency changes.--
(A) In general.--A designated financial market utility may
implement a change that would otherwise require advance notice
under this subsection if it determines that--
(i) an emergency exists; and
(ii) immediate implementation of the change is
necessary for the designated financial market utility to
continue to provide its services in a safe and sound
manner.
(B) Notice required within 24 hours.--The designated
financial market utility shall provide notice of any such
emergency change to its Supervisory Agency, as soon as
practicable, which shall be no later than 24 hours after
implementation of the change.
(C) Contents of emergency notice.--In addition to the
information required for changes requiring advance notice, the
notice of an emergency change shall describe--
(i) the nature of the emergency; and
(ii) the reason the change was necessary for the
designated financial market utility to continue to provide
its services in a safe and sound manner.
(D) Modification or rescission of change may be required.--
The Supervisory Agency may require modification or rescission
of the change if it finds that the change is not consistent
with the purposes of this Act or any applicable rules, orders,
or standards prescribed under section 805(a).
(3) Copying the board of governors.--The Supervisory Agency
shall provide the Board of Governors concurrently with a complete
copy of any notice, request, or other information it issues,
submits, or receives under this subsection.
(4) Consultation with board of governors.--Before taking any
action on, or completing its review of, a change proposed by a
designated financial market utility, the Supervisory Agency shall
consult with the Board of Governors.
SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST DESIGNATED
FINANCIAL MARKET UTILITIES.
(a) Examination.--Notwithstanding any other provision of law and
subject to subsection (d), the Supervisory Agency shall conduct
examinations of a designated financial market utility at least once
annually in order to determine the following:
(1) The nature of the operations of, and the risks borne by,
the designated financial market utility.
(2) The financial and operational risks presented by the
designated financial market utility to financial institutions,
critical markets, or the broader financial system.
(3) The resources and capabilities of the designated financial
market utility to monitor and control such risks.
(4) The safety and soundness of the designated financial market
utility.
(5) The designated financial market utility's compliance with--
(A) this title; and
(B) the rules and orders prescribed under this title.
(b) Service Providers.--Whenever a service integral to the
operation of a designated financial market utility is performed for the
designated financial market utility by another entity, whether an
affiliate or non-affiliate and whether on or off the premises of the
designated financial market utility, the Supervisory Agency may examine
whether the provision of that service is in compliance with applicable
law, rules, orders, and standards to the same extent as if the
designated financial market utility were performing the service on its
own premises.
(c) Enforcement.--For purposes of enforcing the provisions of this
title, a designated financial market utility shall be subject to, and
the appropriate Supervisory Agency shall have authority under the
provisions of subsections (b) through (n) of section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the
same extent as if the designated financial market utility was an
insured depository institution and the Supervisory Agency was the
appropriate Federal banking agency for such insured depository
institution.
(d) Board of Governors Involvement in Examinations.--
(1) Board of governors consultation on examination planning.--
The Supervisory Agency shall consult annually with the Board of
Governors regarding the scope and methodology of any examination
conducted under subsections (a) and (b). The Supervisory Agency
shall lead all examinations conducted under subsections (a) and (b)
(2) Board of governors participation in examination.--The Board
of Governors may, in its discretion, participate in any examination
led by a Supervisory Agency and conducted under subsections (a) and
(b).
(e) Board of Governors Enforcement Recommendations.--
(1) Recommendation.--The Board of Governors may, after
consulting with the Council and the Supervisory Agency, at any time
recommend to the Supervisory Agency that such agency take
enforcement action against a designated financial market utility in
order to prevent or mitigate significant liquidity, credit,
operational, or other risks to the financial markets or to the
financial stability of the United States. Any such recommendation
for enforcement action shall provide a detailed analysis supporting
the recommendation of the Board of Governors.
(2) Consideration.--The Supervisory Agency shall consider the
recommendation of the Board of Governors and submit a response to
the Board of Governors within 60 days.
(3) Binding arbitration.--If the Supervisory Agency rejects, in
whole or in part, the recommendation of the Board of Governors, the
Board of Governors may refer the recommendation to the Council for
a binding decision on whether an enforcement action is warranted.
(4) Enforcement action.--Upon an affirmative vote by a majority
of the Council in favor of the Board of Governors' recommendation
under paragraph (3), the Council may require the Supervisory Agency
to--
(A) exercise the enforcement authority referenced in
subsection (c); and
(B) take enforcement action against the designated
financial market utility.
(f) Emergency Enforcement Actions by the Board of Governors.--
(1) Imminent risk of substantial harm.--The Board of Governors
may, after consulting with the Supervisory Agency and upon an
affirmative vote by a majority the Council, take enforcement action
against a designated financial market utility if the Board of
Governors has reasonable cause to conclude that--
(A) either--
(i) an action engaged in, or contemplated by, a
designated financial market utility (including any change
proposed by the designated financial market utility to its
rules, procedures, or operations that would otherwise be
subject to section 806(e)) poses an imminent risk of
substantial harm to financial institutions, critical
markets, or the broader financial system of the United
States; or
(ii) the condition of a designated financial market
utility poses an imminent risk of substantial harm to
financial institutions, critical markets, or the broader
financial system; and
(B) the imminent risk of substantial harm precludes the
Board of Governors' use of the procedures in subsection (e).
(2) Enforcement authority.--For purposes of taking enforcement
action under paragraph (1), a designated financial market utility
shall be subject to, and the Board of Governors shall have
authority under the provisions of subsections (b) through (n) of
section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) in
the same manner and to the same extent as if the designated
financial market utility was an insured depository institution and
the Board of Governors was the appropriate Federal banking agency
for such insured depository institution.
SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST FINANCIAL
INSTITUTIONS SUBJECT TO STANDARDS FOR DESIGNATED ACTIVITIES.
(a) Examination.--The appropriate financial regulator is authorized
to examine a financial institution subject to the standards prescribed
under section 805(a) for a designated activity in order to determine
the following:
(1) The nature and scope of the designated activities engaged
in by the financial institution.
(2) The financial and operational risks the designated
activities engaged in by the financial institution may pose to the
safety and soundness of the financial institution.
(3) The financial and operational risks the designated
activities engaged in by the financial institution may pose to
other financial institutions, critical markets, or the broader
financial system.
(4) The resources available to and the capabilities of the
financial institution to monitor and control the risks described in
paragraphs (2) and (3).
(5) The financial institution's compliance with this title and
the rules and orders prescribed under section 805(a).
(b) Enforcement.--For purposes of enforcing the provisions of this
title, and the rules and orders prescribed under this section, a
financial institution subject to the standards prescribed under section
805(a) for a designated activity shall be subject to, and the
appropriate financial regulator shall have authority under the
provisions of subsections (b) through (n) of section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the
same extent as if the financial institution was an insured depository
institution and the appropriate financial regulator was the appropriate
Federal banking agency for such insured depository institution.
(c) Technical Assistance.--The Board of Governors shall consult
with and provide such technical assistance as may be required by the
appropriate financial regulators to ensure that the rules and orders
prescribed under this title are interpreted and applied in as
consistent and uniform a manner as practicable.
(d) Delegation.--
(1) Examination.--
(A) Request to board of governors.--The appropriate
financial regulator may request the Board of Governors to
conduct or participate in an examination of a financial
institution subject to the standards prescribed under section
805(a) for a designated activity in order to assess the
compliance of such financial institution with--
(i) this title; or
(ii) the rules or orders prescribed under this title.
(B) Examination by board of governors.--Upon receipt of an
appropriate written request, the Board of Governors will
conduct the examination under such terms and conditions to
which the Board of Governors and the appropriate financial
regulator mutually agree.
(2) Enforcement.--
(A) Request to board of governors.--The appropriate
financial regulator may request the Board of Governors to
enforce this title or the rules or orders prescribed under this
title against a financial institution that is subject to the
standards prescribed under section 805(a) for a designated
activity.
(B) Enforcement by board of governors.--Upon receipt of an
appropriate written request, the Board of Governors shall
determine whether an enforcement action is warranted, and, if
so, it shall enforce compliance with this title or the rules or
orders prescribed under this title and, if so, the financial
institution shall be subject to, and the Board of Governors
shall have authority under the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818) in the same manner and to the same extent as
if the financial institution was an insured depository
institution and the Board of Governors was the appropriate
Federal banking agency for such insured depository institution.
(e) Back-up Authority of the Board of Governors.--
(1) Examination and enforcement.--Notwithstanding any other
provision of law, the Board of Governors may--
(A) conduct an examination of the type described in
subsection (a) of any financial institution that is subject to
the standards prescribed under section 805(a) for a designated
activity; and
(B) enforce the provisions of this title or any rules or
orders prescribed under this title against any financial
institution that is subject to the standards prescribed under
section 805(a) for a designated activity.
(2) Limitations.--
(A) Examination.--The Board of Governors may exercise the
authority described in paragraph (1)(A) only if the Board of
Governors has--
(i) reasonable cause to believe that a financial
institution is not in compliance with this title or the
rules or orders prescribed under this title with respect to
a designated activity;
(ii) notified, in writing, the appropriate financial
regulator and the Council of its belief under clause (i)
with supporting documentation included;
(iii) requested the appropriate financial regulator to
conduct a prompt examination of the financial institution;
(iv) either--
(I) not been afforded a reasonable opportunity to
participate in an examination of the financial
institution by the appropriate financial regulator
within 30 days after the date of the Board's
notification under clause (ii); or
(II) reasonable cause to believe that the financial
institution's noncompliance with this title or the
rules or orders prescribed under this title poses a
substantial risk to other financial institutions,
critical markets, or the broader financial system,
subject to the Board of Governors affording the
appropriate financial regulator a reasonable
opportunity to participate in the examination; and
(v) obtained the approval of the Council upon an
affirmative vote by a majority of the Council.
(B) Enforcement.--The Board of Governors may exercise the
authority described in paragraph (1)(B) only if the Board of
Governors has--
(i) reasonable cause to believe that a financial
institution is not in compliance with this title or the
rules or orders prescribed under this title with respect to
a designated activity;
(ii) notified, in writing, the appropriate financial
regulator and the Council of its belief under clause (i)
with supporting documentation included and with a
recommendation that the appropriate financial regulator
take 1 or more specific enforcement actions against the
financial institution;
(iii) either--
(I) not been notified, in writing, by the
appropriate financial regulator of the commencement of
an enforcement action recommended by the Board of
Governors against the financial institution within 60
days from the date of the notification under clause
(ii); or
(II) reasonable cause to believe that the financial
institution's noncompliance with this title or the
rules or orders prescribed under this title poses
significant liquidity, credit, operational, or other
risks to the financial markets or to the financial
stability of the United States, subject to the Board of
Governors notifying the appropriate financial regulator
of the Board's enforcement action; and
(iv) obtained the approval of the Council upon an
affirmative vote by a majority of the Council.
(3) Enforcement provisions.--For purposes of taking enforcement
action under paragraph (1), the financial institution shall be
subject to, and the Board of Governors shall have authority under
the provisions of subsections (b) through (n) of section 8 of the
Federal Deposit Insurance Act (12 U.S.C. 1818) in the same manner
and to the same extent as if the financial institution was an
insured depository institution and the Board of Governors was the
appropriate Federal banking agency for such insured depository
institution.
SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.
(a) Information To Assess Systemic Importance.--
(1) Financial market utilities.--The Council is authorized to
require any financial market utility to submit such information as
the Council may require for the sole purpose of assessing whether
that financial market utility is systemically important, but only
if the Council has reasonable cause to believe that the financial
market utility meets the standards for systemic importance set
forth in section 804.
(2) Financial institutions engaged in payment, clearing, or
settlement activities.--The Council is authorized to require any
financial institution to submit such information as the Council may
require for the sole purpose of assessing whether any payment,
clearing, or settlement activity engaged in or supported by a
financial institution is systemically important, but only if the
Council has reasonable cause to believe that the activity meets the
standards for systemic importance set forth in section 804.
(b) Reporting After Designation.--
(1) Designated financial market utilities.--The Board of
Governors and the Council may each require a designated financial
market utility to submit reports or data to the Board of Governors
and the Council in such frequency and form as deemed necessary by
the Board of Governors or the Council in order to assess the safety
and soundness of the utility and the systemic risk that the
utility's operations pose to the financial system.
(2) Financial institutions subject to standards for designated
activities.--The Board of Governors and the Council may each
require 1 or more financial institutions subject to the standards
prescribed under section 805(a) for a designated activity to
submit, in such frequency and form as deemed necessary by the Board
of Governors or the Council, reports and data to the Board of
Governors and the Council solely with respect to the conduct of the
designated activity and solely to assess whether--
(A) the rules, orders, or standards prescribed under
section 805(a) with respect to the designated activity
appropriately address the risks to the financial system
presented by such activity; and
(B) the financial institutions are in compliance with this
title and the rules and orders prescribed under section 805(a)
with respect to the designated activity.
(3) Limitation.--The Board of Governors may, upon an
affirmative vote by a majority of the Council, prescribe
regulations under this section that impose a recordkeeping or
reporting requirement on designated clearing entities or financial
institutions engaged in designated activities that are subject to
standards that have been prescribed under section 805(a)(2).
(c) Coordination With Appropriate Federal Supervisory Agency.--
(1) Advance coordination.--Before requesting any material
information from, or imposing reporting or recordkeeping
requirements on, any financial market utility or any financial
institution engaged in a payment, clearing, or settlement activity,
the Board of Governors or the Council shall coordinate with the
Supervisory Agency for a financial market utility or the
appropriate financial regulator for a financial institution to
determine if the information is available from or may be obtained
by the agency in the form, format, or detail required by the Board
of Governors or the Council.
(2) Supervisory reports.--Notwithstanding any other provision
of law, the Supervisory Agency, the appropriate financial
regulator, and the Board of Governors are authorized to disclose to
each other and the Council copies of its examination reports or
similar reports regarding any financial market utility or any
financial institution engaged in payment, clearing, or settlement
activities.
(d) Timing of Response From Appropriate Federal Supervisory
Agency.--If the information, report, records, or data requested by the
Board of Governors or the Council under subsection (c)(1) are not
provided in full by the Supervisory Agency or the appropriate financial
regulator in less than 15 days after the date on which the material is
requested, the Board of Governors or the Council may request the
information or impose recordkeeping or reporting requirements directly
on such persons as provided in subsections (a) and (b) with notice to
the agency.
(e) Sharing of Information.--
(1) Material concerns.--Notwithstanding any other provision of
law, the Board of Governors, the Council, the appropriate financial
regulator, and any Supervisory Agency are authorized to--
(A) promptly notify each other of material concerns about a
designated financial market utility or any financial
institution engaged in designated activities; and
(B) share appropriate reports, information, or data
relating to such concerns.
(2) Other information.--Notwithstanding any other provision of
law, the Board of Governors, the Council, the appropriate financial
regulator, or any Supervisory Agency may, under such terms and
conditions as it deems appropriate, provide confidential
supervisory information and other information obtained under this
title to each other, and to the Secretary, Federal Reserve Banks,
State financial institution supervisory agencies, foreign financial
supervisors, foreign central banks, and foreign finance ministries,
subject to reasonable assurances of confidentiality, provided,
however, that no person or entity receiving information pursuant to
this section may disseminate such information to entities or
persons other than those listed in this paragraph without complying
with applicable law, including section 8 of the Commodity Exchange
Act (7 U.S.C. 12).
(f) Privilege Maintained.--The Board of Governors, the Council, the
appropriate financial regulator, and any Supervisory Agency providing
reports or data under this section shall not be deemed to have waived
any privilege applicable to those reports or data, or any portion
thereof, by providing the reports or data to the other party or by
permitting the reports or data, or any copies thereof, to be used by
the other party.
(g) Disclosure Exemption.--Information obtained by the Board of
Governors, the Supervisory Agencies, or the Council under this section
and any materials prepared by the Board of Governors, the Supervisory
Agencies, or the Council regarding their assessment of the systemic
importance of financial market utilities or any payment, clearing, or
settlement activities engaged in by financial institutions, and in
connection with their supervision of designated financial market
utilities and designated activities, shall be confidential supervisory
information exempt from disclosure under section 552 of title 5, United
States Code. For purposes of such section 552, this subsection shall be
considered a statute described in subsection (b)(3) of such section
552.
SEC. 810. RULEMAKING.
The Board of Governors, the Supervisory Agencies, and the Council
are authorized to prescribe such rules and issue such orders as may be
necessary to administer and carry out their respective authorities and
duties granted under this title and prevent evasions thereof.
SEC. 811. OTHER AUTHORITY.
Unless otherwise provided by its terms, this title does not divest
any appropriate financial regulator, any Supervisory Agency, or any
other Federal or State agency, of any authority derived from any other
applicable law, except that any standards prescribed by the Board of
Governors under section 805 shall supersede any less stringent
requirements established under other authority to the extent of any
conflict.
SEC. 812. CONSULTATION.
(a) CFTC.--The Commodity Futures Trading Commission shall consult
with the Board of Governors--
(1) prior to exercising its authorities under sections
2(h)(2)(C), 2(h)(3)(A), 2(h)(3)(C), 2(h)(4)(A), and 2(h)(4)(B) of
the Commodity Exchange Act, as amended by the Wall Street
Transparency and Accountability Act of 2010;
(2) with respect to any rule or rule amendment of a derivatives
clearing organization for which a stay of certification has been
issued under section 745(b)(3) of the Wall Street Transparency and
Accountability Act of 2010; and
(3) prior to exercising its rulemaking authorities under
section 728 of the Wall Street Transparency and Accountability Act
of 2010.
(b) SEC.--The Commission shall consult with the Board of
Governors--
(1) prior to exercising its authorities under sections
3C(a)(2)(C), 3C(a)(3)(A), 3C(a)(3)(C), 3C(a)(4)(A), and 3C(a)(4)(B)
of the Securities Exchange Act of 1934, as amended by the Wall
Street Transparency and Accountability Act of 2010;
(2) with respect to any proposed rule change of a clearing
agency for which an extension of the time for review has been
designated under section 19(b)(2) of the Securities Exchange Act of
1934; and
(3) prior to exercising its rulemaking authorities under
section 13(n) of the Securities Exchange Act of 1934, as added by
section 763(i) of the Wall Street Transparency and Accountability
Act of 2010.
SEC. 813. COMMON FRAMEWORK FOR DESIGNATED CLEARING ENTITY RISK
MANAGEMENT.
The Commodity Futures Trading Commission and the Commission shall
coordinate with the Board of Governors to jointly develop risk
management supervision programs for designated clearing entities. Not
later than 1 year after the date of enactment of this Act, the
Commodity Futures Trading Commission, the Commission, and the Board of
Governors shall submit a joint report to the Committee on Banking,
Housing, and Urban Affairs and the Committee on Agriculture, Nutrition,
and Forestry of the Senate, and the Committee on Financial Services and
the Committee on Agriculture of the House of Representatives
recommendations for--
(1) improving consistency in the designated clearing entity
oversight programs of the Commission and the Commodity Futures
Trading Commission;
(2) promoting robust risk management by designated clearing
entities;
(3) promoting robust risk management oversight by regulators of
designated clearing entities; and
(4) improving regulators' ability to monitor the potential
effects of designated clearing entity risk management on the
stability of the financial system of the United States.
SEC. 814. EFFECTIVE DATE.
This title is effective as of the date of enactment of this Act.
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
SEC. 901. SHORT TITLE.
This title may be cited as the ``Investor Protection and Securities
Reform Act of 2010''.
Subtitle A--Increasing Investor Protection
SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED.
Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended by adding at the end the following:
``SEC. 39. INVESTOR ADVISORY COMMITTEE.
``(a) Establishment and Purpose.--
``(1) Establishment.--There is established within the
Commission the Investor Advisory Committee (referred to in this
section as the `Committee').
``(2) Purpose.--The Committee shall--
``(A) advise and consult with the Commission on--
``(i) regulatory priorities of the Commission;
``(ii) issues relating to the regulation of securities
products, trading strategies, and fee structures, and the
effectiveness of disclosure;
``(iii) initiatives to protect investor interest; and
``(iv) initiatives to promote investor confidence and
the integrity of the securities marketplace; and
``(B) submit to the Commission such findings and
recommendations as the Committee determines are appropriate,
including recommendations for proposed legislative changes.
``(b) Membership.--
``(1) In general.--The members of the Committee shall be--
``(A) the Investor Advocate;
``(B) a representative of State securities commissions;
``(C) a representative of the interests of senior citizens;
and
``(D) not fewer than 10, and not more than 20, members
appointed by the Commission, from among individuals who--
``(i) represent the interests of individual equity and
debt investors, including investors in mutual funds;
``(ii) represent the interests of institutional
investors, including the interests of pension funds and
registered investment companies;
``(iii) are knowledgeable about investment issues and
decisions; and
``(iv) have reputations of integrity.
``(2) Term.--Each member of the Committee appointed under
paragraph (1)(B) shall serve for a term of 4 years.
``(3) Members not commission employees.--Members appointed
under paragraph (1)(B) shall not be deemed to be employees or
agents of the Commission solely because of membership on the
Committee.
``(c) Chairman; Vice Chairman; Secretary; Assistant Secretary.--
``(1) In general.--The members of the Committee shall elect,
from among the members of the Committee--
``(A) a chairman, who may not be employed by an issuer;
``(B) a vice chairman, who may not be employed by an
issuer;
``(C) a secretary; and
``(D) an assistant secretary.
``(2) Term.--Each member elected under paragraph (1) shall
serve for a term of 3 years in the capacity for which the member
was elected under paragraph (1).
``(d) Meetings.--
``(1) Frequency of meetings.--The Committee shall meet--
``(A) not less frequently than twice annually, at the call
of the chairman of the Committee; and
``(B) from time to time, at the call of the Commission.
``(2) Notice.--The chairman of the Committee shall give the
members of the Committee written notice of each meeting, not later
than 2 weeks before the date of the meeting.
``(e) Compensation and Travel Expenses.--Each member of the
Committee who is not a full-time employee of the United States shall--
``(1) be entitled to receive compensation at a rate not to
exceed the daily equivalent of the annual rate of basic pay in
effect for a position at level V of the Executive Schedule under
section 5316 of title 5, United States Code, for each day during
which the member is engaged in the actual performance of the duties
of the Committee; and
``(2) while away from the home or regular place of business of
the member in the performance of services for the Committee, 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.
``(f) Staff.--The Commission shall make available to the Committee
such staff as the chairman of the Committee determines are necessary to
carry out this section.
``(g) Review by Commission.--The Commission shall--
``(1) review the findings and recommendations of the Committee;
and
``(2) each time the Committee submits a finding or
recommendation to the Commission, promptly issue a public
statement--
``(A) assessing the finding or recommendation of the
Committee; and
``(B) disclosing the action, if any, the Commission intends
to take with respect to the finding or recommendation.
``(h) Committee Findings.--Nothing in this section shall require
the Commission to agree to or act upon any finding or recommendation of
the Committee.
``(i) Federal Advisory Committee Act.--The Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply with respect to the
Committee and its activities.
``(j) Authorization of Appropriations.--There is authorized to be
appropriated to the Commission such sums as are necessary to carry out
this section.''.
SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMISSION TO ENGAGE IN
INVESTOR TESTING.
Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) is amended
by adding at the end the following:
``(e) Evaluation of Rules or Programs.--For the purpose of
evaluating any rule or program of the Commission issued or carried out
under any provision of the securities laws, as defined in section 3 of
the Securities Exchange Act of 1934 (15 U.S.C. 78c), and the purposes
of considering, proposing, adopting, or engaging in any such rule or
program or developing new rules or programs, the Commission may--
``(1) gather information from and communicate with investors or
other members of the public;
``(2) engage in such temporary investor testing programs as the
Commission determines are in the public interest or would protect
investors; and
``(3) consult with academics and consultants, as necessary to
carry out this subsection.
``(f) Rule of Construction.--For purposes of the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.), any action taken under
subsection (e) shall not be construed to be a collection of
information.''.
SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF BROKERS,
DEALERS, AND INVESTMENT ADVISERS.
(a) Definition.--For purposes of this section, the term ``retail
customer'' means a natural person, or the legal representative of such
natural person, who--
(1) receives personalized investment advice about securities
from a broker or dealer or investment adviser; and
(2) uses such advice primarily for personal, family, or
household purposes.
(b) Study.--The Commission shall conduct a study to evaluate--
(1) the effectiveness of existing legal or regulatory standards
of care for brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers for providing personalized investment advice
and recommendations about securities to retail customers imposed by
the Commission and a national securities association, and other
Federal and State legal or regulatory standards; and
(2) whether there are legal or regulatory gaps, shortcomings,
or overlaps in legal or regulatory standards in the protection of
retail customers relating to the standards of care for brokers,
dealers, investment advisers, persons associated with brokers or
dealers, and persons associated with investment advisers for
providing personalized investment advice about securities to retail
customers that should be addressed by rule or statute.
(c) Considerations.--In conducting the study required under
subsection (b), the Commission shall consider--
(1) the effectiveness of existing legal or regulatory standards
of care for brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers for providing personalized investment advice
and recommendations about securities to retail customers imposed by
the Commission and a national securities association, and other
Federal and State legal or regulatory standards;
(2) whether there are legal or regulatory gaps, shortcomings,
or overlaps in legal or regulatory standards in the protection of
retail customers relating to the standards of care for brokers,
dealers, investment advisers, persons associated with brokers or
dealers, and persons associated with investment advisers for
providing personalized investment advice about securities to retail
customers that should be addressed by rule or statute;
(3) whether retail customers understand that there are
different standards of care applicable to brokers, dealers,
investment advisers, persons associated with brokers or dealers,
and persons associated with investment advisers in the provision of
personalized investment advice about securities to retail
customers;
(4) whether the existence of different standards of care
applicable to brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers is a source of confusion for retail customers
regarding the quality of personalized investment advice that retail
customers receive;
(5) the regulatory, examination, and enforcement resources
devoted to, and activities of, the Commission, the States, and a
national securities association to enforce the standards of care
for brokers, dealers, investment advisers, persons associated with
brokers or dealers, and persons associated with investment advisers
when providing personalized investment advice and recommendations
about securities to retail customers, including--
(A) the effectiveness of the examinations of brokers,
dealers, and investment advisers in determining compliance with
regulations;
(B) the frequency of the examinations; and
(C) the length of time of the examinations;
(6) the substantive differences in the regulation of brokers,
dealers, and investment advisers, when providing personalized
investment advice and recommendations about securities to retail
customers;
(7) the specific instances related to the provision of
personalized investment advice about securities in which--
(A) the regulation and oversight of investment advisers
provide greater protection to retail customers than the
regulation and oversight of brokers and dealers; and
(B) the regulation and oversight of brokers and dealers
provide greater protection to retail customers than the
regulation and oversight of investment advisers;
(8) the existing legal or regulatory standards of State
securities regulators and other regulators intended to protect
retail customers;
(9) the potential impact on retail customers, including the
potential impact on access of retail customers to the range of
products and services offered by brokers and dealers, of imposing
upon brokers, dealers, and persons associated with brokers or
dealers--
(A) the standard of care applied under the Investment
Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) for providing
personalized investment advice about securities to retail
customers of investment advisers, as interpreted by the
Commission and the courts; and
(B) other requirements of the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.);
(10) the potential impact of eliminating the broker and dealer
exclusion from the definition of ``investment adviser'' under
section 202(a)(11)(C) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2(a)(11)(C)), in terms of--
(A) the impact and potential benefits and harm to retail
customers that could result from such a change, including any
potential impact on access to personalized investment advice
and recommendations about securities to retail customers or the
availability of such advice and recommendations;
(B) the number of additional entities and individuals that
would be required to register under, or become subject to, the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.), and
the additional requirements to which brokers, dealers, and
persons associated with brokers and dealers would become
subject, including--
(i) any potential additional associated person
licensing, registration, and examination requirements; and
(ii) the additional costs, if any, to the additional
entities and individuals; and
(C) the impact on Commission and State resources to--
(i) conduct examinations of registered investment
advisers and the representatives of registered investment
advisers, including the impact on the examination cycle;
and
(ii) enforce the standard of care and other applicable
requirements imposed under the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.);
(11) the varying level of services provided by brokers,
dealers, investment advisers, persons associated with brokers or
dealers, and persons associated with investment advisers to retail
customers and the varying scope and terms of retail customer
relationships of brokers, dealers, investment advisers, persons
associated with brokers or dealers, and persons associated with
investment advisers with such retail customers;
(12) the potential impact upon retail customers that could
result from potential changes in the regulatory requirements or
legal standards of care affecting brokers, dealers, investment
advisers, persons associated with brokers or dealers, and persons
associated with investment advisers relating to their obligations
to retail customers regarding the provision of investment advice,
including any potential impact on--
(A) protection from fraud;
(B) access to personalized investment advice, and
recommendations about securities to retail customers; or
(C) the availability of such advice and recommendations;
(13) the potential additional costs and expenses to--
(A) retail customers regarding and the potential impact on
the profitability of their investment decisions; and
(B) brokers, dealers, and investment advisers resulting
from potential changes in the regulatory requirements or legal
standards affecting brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers relating to their
obligations, including duty of care, to retail customers; and
(14) any other consideration that the Commission considers
necessary and appropriate in determining whether to conduct a
rulemaking under subsection (f).
(d) Report.--
(1) In general.--Not later than 6 months after the date of
enactment of this Act, the Commission shall submit a report on the
study required under subsection (b) to--
(A) the Committee on Banking, Housing, and Urban Affairs of
the Senate; and
(B) the Committee on Financial Services of the House of
Representatives.
(2) Content requirements.--The report required under paragraph
(1) shall describe the findings, conclusions, and recommendations
of the Commission from the study required under subsection (b),
including--
(A) a description of the considerations, analysis, and
public and industry input that the Commission considered, as
required under subsection (b), to make such findings,
conclusions, and policy recommendations; and
(B) an analysis of whether any identified legal or
regulatory gaps, shortcomings, or overlap in legal or
regulatory standards in the protection of retail customers
relating to the standards of care for brokers, dealers,
investment advisers, persons associated with brokers or
dealers, and persons associated with investment advisers for
providing personalized investment advice about securities to
retail customers.
(e) Public Comment.--The Commission shall seek and consider public
input, comments, and data in order to prepare the report required under
subsection (d).
(f) Rulemaking.--The Commission may commence a rulemaking, as
necessary or appropriate in the public interest and for the protection
of retail customers (and such other customers as the Commission may by
rule provide), to address the legal or regulatory standards of care for
brokers, dealers, investment advisers, persons associated with brokers
or dealers, and persons associated with investment advisers for
providing personalized investment advice about securities to such
retail customers. The Commission shall consider the findings
conclusions, and recommendations of the study required under subsection
(b).
(g) Authority to Establish a Fiduciary Duty for Brokers and
Dealers.--
(1) Securities exchange act of 1934.--Section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o) is amended by
adding at the end the following:
``(k) Standard of Conduct.--
``(1) In general.--Notwithstanding any other provision of this
Act or the Investment Advisers Act of 1940, the Commission may
promulgate rules to provide that, with respect to a broker or
dealer, when providing personalized investment advice about
securities to a retail customer (and such other customers as the
Commission may by rule provide), the standard of conduct for such
broker or dealer with respect to such customer shall be the same as
the standard of conduct applicable to an investment adviser under
section 211 of the Investment Advisers Act of 1940. The receipt of
compensation based on commission or other standard compensation for
the sale of securities shall not, in and of itself, be considered a
violation of such standard applied to a broker or dealer. Nothing
in this section shall require a broker or dealer or registered
representative to have a continuing duty of care or loyalty to the
customer after providing personalized investment advice about
securities.
``(2) Disclosure of range of products offered.--Where a broker
or dealer sells only proprietary or other limited range of
products, as determined by the Commission, the Commission may by
rule require that such broker or dealer provide notice to each
retail customer and obtain the consent or acknowledgment of the
customer. The sale of only proprietary or other limited range of
products by a broker or dealer shall not, in and of itself, be
considered a violation of the standard set forth in paragraph (1).
``(l) Other Matters.--The Commission shall--
``(1) facilitate the provision of simple and clear disclosures
to investors regarding the terms of their relationships with
brokers, dealers, and investment advisers, including any material
conflicts of interest; and
``(2) examine and, where appropriate, promulgate rules
prohibiting or restricting certain sales practices, conflicts of
interest, and compensation schemes for brokers, dealers, and
investment advisers that the Commission deems contrary to the
public interest and the protection of investors.''.
(2) Investment advisers act of 1940.--Section 211 of the
Investment Advisers Act of 1940, is further amended by adding at
the end the following new subsections:
``(g) Standard of Conduct.--
``(1) In general.--The Commission may promulgate rules to
provide that the standard of conduct for all brokers, dealers, and
investment advisers, when providing personalized investment advice
about securities to retail customers (and such other customers as
the Commission may by rule provide), shall be to act in the best
interest of the customer without regard to the financial or other
interest of the broker, dealer, or investment adviser providing the
advice. In accordance with such rules, any material conflicts of
interest shall be disclosed and may be consented to by the
customer. Such rules shall provide that such standard of conduct
shall be no less stringent than the standard applicable to
investment advisers under section 206(1) and (2) of this Act when
providing personalized investment advice about securities, except
the Commission shall not ascribe a meaning to the term `customer'
that would include an investor in a private fund managed by an
investment adviser, where such private fund has entered into an
advisory contract with such adviser. The receipt of compensation
based on commission or fees shall not, in and of itself, be
considered a violation of such standard applied to a broker,
dealer, or investment adviser.
``(2) Retail customer defined.--For purposes of this
subsection, the term `retail customer' means a natural person, or
the legal representative of such natural person, who--
``(A) receives personalized investment advice about
securities from a broker, dealer, or investment adviser; and
``(B) uses such advice primarily for personal, family, or
household purposes.
``(h) Other Matters.--The Commission shall--
``(1) facilitate the provision of simple and clear disclosures
to investors regarding the terms of their relationships with
brokers, dealers, and investment advisers, including any material
conflicts of interest; and
``(2) examine and, where appropriate, promulgate rules
prohibiting or restricting certain sales practices, conflicts of
interest, and compensation schemes for brokers, dealers, and
investment advisers that the Commission deems contrary to the
public interest and the protection of investors.''.
(h) Harmonization of Enforcement.--
(1) Securities exchange act of 1934.--Section 15 of the
Securities Exchange Act of 1934, as amended by subsection (g)(1),
is further amended by adding at the end the following new
subsection:
``(m) Harmonization of Enforcement.--The enforcement authority of
the Commission with respect to violations of the standard of conduct
applicable to a broker or dealer providing personalized investment
advice about securities to a retail customer shall include--
``(1) the enforcement authority of the Commission with respect
to such violations provided under this Act; and
``(2) the enforcement authority of the Commission with respect
to violations of the standard of conduct applicable to an
investment adviser under the Investment Advisers Act of 1940,
including the authority to impose sanctions for such violations,
and
the Commission shall seek to prosecute and sanction violators of the
standard of conduct applicable to a broker or dealer providing
personalized investment advice about securities to a retail customer
under this Act to same extent as the Commission prosecutes and
sanctions violators of the standard of conduct applicable to an
investment advisor under the Investment Advisers Act of 1940.''.
(2) Investment advisers act of 1940.--Section 211 of the
Investment Advisers Act of 1940, as amended by subsection (g)(2),
is further amended by adding at the end the following new
subsection:
``(i) Harmonization of Enforcement.--The enforcement authority of
the Commission with respect to violations of the standard of conduct
applicable to an investment adviser shall include--
``(1) the enforcement authority of the Commission with respect
to such violations provided under this Act; and
``(2) the enforcement authority of the Commission with respect
to violations of the standard of conduct applicable to a broker or
dealer providing personalized investment advice about securities to
a retail customer under the Securities Exchange Act of 1934,
including the authority to impose sanctions for such violations,
and
the Commission shall seek to prosecute and sanction violators of the
standard of conduct applicable to an investment adviser under this Act
to same extent as the Commission prosecutes and sanctions violators of
the standard of conduct applicable to a broker or dealer providing
personalized investment advice about securities to a retail customer
under the Securities Exchange Act of 1934.''.
SEC. 914. STUDY ON ENHANCING INVESTMENT ADVISER EXAMINATIONS.
(a) Study Required.--
(1) In general.--The Commission shall review and analyze the
need for enhanced examination and enforcement resources for
investment advisers.
(2) Areas of consideration.--The study required by this
subsection shall examine--
(A) the number and frequency of examinations of investment
advisers by the Commission over the 5 years preceding the date
of the enactment of this subtitle;
(B) the extent to which having Congress authorize the
Commission to designate one or more self-regulatory
organizations to augment the Commission's efforts in overseeing
investment advisers would improve the frequency of examinations
of investment advisers; and
(C) current and potential approaches to examining the
investment advisory activities of dually registered broker-
dealers and investment advisers or affiliated broker-dealers
and investment advisers.
(b) Report Required.--The Commission shall report its findings to
the Committee on Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of the Senate, not
later than 180 days after the date of enactment of this subtitle, and
shall use such findings to revise its rules and regulations, as
necessary. The report shall include a discussion of regulatory or
legislative steps that are recommended or that may be necessary to
address concerns identified in the study.
SEC. 915. OFFICE OF THE INVESTOR ADVOCATE.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
amended by adding at the end the following:
``(g) Office of the Investor Advocate.--
``(1) Office established.--There is established within the
Commission the Office of the Investor Advocate (in this subsection
referred to as the `Office').
``(2) Investor advocate.--
``(A) In general.--The head of the Office shall be the
Investor Advocate, who shall--
``(i) report directly to the Chairman; and
``(ii) be appointed by the Chairman, in consultation
with the Commission, from among individuals having
experience in advocating for the interests of investors in
securities and investor protection issues, from the
perspective of investors.
``(B) Compensation.--The annual rate of pay for the
Investor Advocate shall be equal to the highest rate of annual
pay for other senior executives who report to the Chairman of
the Commission.
``(C) Limitation on service.--An individual who serves as
the Investor Advocate may not be employed by the Commission--
``(i) during the 2-year period ending on the date of
appointment as Investor Advocate; or
``(ii) during the 5-year period beginning on the date
on which the person ceases to serve as the Investor
Advocate.
``(3) Staff of office.--The Investor Advocate, after
consultation with the Chairman of the Commission, may retain or
employ independent counsel, research staff, and service staff, as
the Investor Advocate deems necessary to carry out the functions,
powers, and duties of the Office.
``(4) Functions of the investor advocate.--The Investor
Advocate shall--
``(A) assist retail investors in resolving significant
problems such investors may have with the Commission or with
self-regulatory organizations;
``(B) identify areas in which investors would benefit from
changes in the regulations of the Commission or the rules of
self-regulatory organizations;
``(C) identify problems that investors have with financial
service providers and investment products;
``(D) analyze the potential impact on investors of--
``(i) proposed regulations of the Commission; and
``(ii) proposed rules of self-regulatory organizations
registered under this title; and
``(E) to the extent practicable, propose to the Commission
changes in the regulations or orders of the Commission and to
Congress any legislative, administrative, or personnel changes
that may be appropriate to mitigate problems identified under
this paragraph and to promote the interests of investors.
``(5) Access to documents.--The Commission shall ensure that
the Investor Advocate has full access to the documents of the
Commission and any self-regulatory organization, as necessary to
carry out the functions of the Office.
``(6) Annual reports.--
``(A) Report on objectives.--
``(i) In general.--Not later than June 30 of each year
after 2010, the Investor Advocate shall submit to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives a report on the objectives of the
Investor Advocate for the following fiscal year.
``(ii) Contents.--Each report required under clause (i)
shall contain full and substantive analysis and
explanation.
``(B) Report on activities.--
``(i) In general.--Not later than December 31 of each
year after 2010, the Investor Advocate shall submit to the
Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House
of Representatives a report on the activities of the
Investor Advocate during the immediately preceding fiscal
year.
``(ii) Contents.--Each report required under clause (i)
shall include--
``(I) appropriate statistical information and full
and substantive analysis;
``(II) information on steps that the Investor
Advocate has taken during the reporting period to
improve investor services and the responsiveness of the
Commission and self-regulatory organizations to
investor concerns;
``(III) a summary of the most serious problems
encountered by investors during the reporting period;
``(IV) an inventory of the items described in
subclause (III) that includes--
``(aa) identification of any action taken by
the Commission or the self-regulatory organization
and the result of such action;
``(bb) the length of time that each item has
remained on such inventory; and
``(cc) for items on which no action has been
taken, the reasons for inaction, and an
identification of any official who is responsible
for such action;
``(V) recommendations for such administrative and
legislative actions as may be appropriate to resolve
problems encountered by investors; and
``(VI) any other information, as determined
appropriate by the Investor Advocate.
``(iii) Independence.--Each report required under this
paragraph shall be provided directly to the Committees
listed in clause (i) without any prior review or comment
from the Commission, any commissioner, any other officer or
employee of the Commission, or the Office of Management and
Budget.
``(iv) Confidentiality.--No report required under
clause (i) may contain confidential information.
``(7) Regulations.--The Commission shall, by regulation,
establish procedures requiring a formal response to all
recommendations submitted to the Commission by the Investor
Advocate, not later than 3 months after the date of such
submission.''.
SEC. 916. STREAMLINING OF FILING PROCEDURES FOR SELF-REGULATORY
ORGANIZATIONS.
(a) Filing Procedures.--Section 19(b) of the Securities Exchange
Act of 1934 (15 U.S.C. 78s(b)) is amended by striking paragraph (2)
(including the undesignated matter immediately following subparagraph
(B)) and inserting the following:
``(2) Approval process.--
``(A) Approval process established.--
``(i) In general.--Except as provided in clause (ii),
not later than 45 days after the date of publication of a
proposed rule change under paragraph (1), the Commission
shall--
``(I) by order, approve or disapprove the proposed
rule change; or
``(II) institute proceedings under subparagraph (B)
to determine whether the proposed rule change should be
disapproved.
``(ii) Extension of time period.--The Commission may
extend the period established under clause (i) by not more
than an additional 45 days, if--
``(I) the Commission determines that a longer
period is appropriate and publishes the reasons for
such determination; or
``(II) the self-regulatory organization that filed
the proposed rule change consents to the longer period.
``(B) Proceedings.--
``(i) Notice and hearing.--If the Commission does not
approve or disapprove a proposed rule change under
subparagraph (A), the Commission shall provide to the self-
regulatory organization that filed the proposed rule
change--
``(I) notice of the grounds for disapproval under
consideration; and
``(II) opportunity for hearing, to be concluded not
later than 180 days after the date of publication of
notice of the filing of the proposed rule change.
``(ii) Order of approval or disapproval.--
``(I) In general.--Except as provided in subclause
(II), not later than 180 days after the date of
publication under paragraph (1), the Commission shall
issue an order approving or disapproving the proposed
rule change.
``(II) Extension of time period.--The Commission
may extend the period for issuance under clause (I) by
not more than 60 days, if--
``(aa) the Commission determines that a longer
period is appropriate and publishes the reasons for
such determination; or
``(bb) the self-regulatory organization that
filed the proposed rule change consents to the
longer period.
``(C) Standards for approval and disapproval.--
``(i) Approval.--The Commission shall approve a
proposed rule change of a self-regulatory organization if
it finds that such proposed rule change is consistent with
the requirements of this title and the rules and
regulations issued under this title that are applicable to
such organization.
``(ii) Disapproval.--The Commission shall disapprove a
proposed rule change of a self-regulatory organization if
it does not make a finding described in clause (i).
``(iii) Time for approval.--The Commission may not
approve a proposed rule change earlier than 30 days after
the date of publication under paragraph (1), unless the
Commission finds good cause for so doing and publishes the
reason for the finding.
``(D) Result of failure to institute or conclude
proceedings.--A proposed rule change shall be deemed to have
been approved by the Commission, if--
``(i) the Commission does not approve or disapprove the
proposed rule change or begin proceedings under
subparagraph (B) within the period described in
subparagraph (A); or
``(ii) the Commission does not issue an order approving
or disapproving the proposed rule change under subparagraph
(B) within the period described in subparagraph (B)(ii).
``(E) Publication date based on federal register
publishing.--For purposes of this paragraph, if, after filing a
proposed rule change with the Commission pursuant to paragraph
(1), a self-regulatory organization publishes a notice of the
filing of such proposed rule change, together with the
substantive terms of such proposed rule change, on a publicly
accessible website, the Commission shall thereafter send the
notice to the Federal Register for publication thereof under
paragraph (1) within 15 days of the date on which such website
publication is made. If the Commission fails to send the notice
for publication thereof within such 15 day period, then the
date of publication shall be deemed to be the date on which
such website publication was made.
``(F) Rulemaking.--
``(i) In general.--Not later than 180 days after the
date of enactment of the Investor Protection and Securities
Reform Act of 2010, after consultation with other
regulatory agencies, the Commission shall promulgate rules
setting forth the procedural requirements of the
proceedings required under this paragraph.
``(ii) Notice and comment not required.--The rules
promulgated by the Commission under clause (i) are not
required to include republication of proposed rule changes
or solicitation of public comment.''.
(b) Clarification of Filing Date.--
(1) Rule of construction.--Section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding at the
end the following:
``(10) Rule of construction relating to filing date of proposed
rule changes.--
``(A) In general.--For purposes of this subsection, the
date of filing of a proposed rule change shall be deemed to be
the date on which the Commission receives the proposed rule
change.
``(B) Exception.--A proposed rule change has not been
received by the Commission for purposes of subparagraph (A) if,
not later than 7 business days after the date of receipt by the
Commission, the Commission notifies the self-regulatory
organization that such proposed rule change does not comply
with the rules of the Commission relating to the required form
of a proposed rule change, except that if the Commission
determines that the proposed rule change is unusually lengthy
and is complex or raises novel regulatory issues, the
Commission shall inform the self-regulatory organization of
such determination not later than 7 business days after the
date of receipt by the Commission and, for the purposes of
subparagraph (A), a proposed rule change has not been received
by the Commission, if, not later than 21 days after the date of
receipt by the Commission, the Commission notifies the self-
regulatory organization that such proposed rule change does not
comply with the rules of the Commission relating to the
required form of a proposed rule change.''.
(2) Publication.--Section 19(b)(1) of the Securities Exchange
Act of 1934 (15 U.S.C. 78s(b)(1)) is amended by striking ``upon''
and inserting ``as soon as practicable after the date of''.
(c) Effective Date of Proposed Rules.--Section 19(b)(3) of the
Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``may take effect'' and inserting ``shall
take effect''; and
(B) by inserting ``on any person, whether or not the person
is a member of the self-regulatory organization'' after
``charge imposed by the self-regulatory organization''; and
(2) in subparagraph (C)--
(A) by amending the second sentence to read as follows:
``At any time within the 60-day period beginning on the date of
filing of such a proposed rule change in accordance with the
provisions of paragraph (1), the Commission summarily may
temporarily suspend the change in the rules of the self-
regulatory organization made thereby, if it appears to the
Commission that such action is necessary or appropriate in the
public interest, for the protection of investors, or otherwise
in furtherance of the purposes of this title.'';
(B) by inserting after the second sentence the following:
``If the Commission takes such action, the Commission shall
institute proceedings under paragraph (2)(B) to determine
whether the proposed rule should be approved or disapproved.'';
and
(C) in the third sentence, by striking ``the preceding
sentence'' and inserting ``this subparagraph''.
(d) Conforming Change.--Section 19(b)(4)(D) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) is amended to read as
follows:
``(D)(i) The Commission shall order the temporary
suspension of any change in the rules of a clearing agency made
by a proposed rule change that has taken effect under paragraph
(3), if the appropriate regulatory agency for the clearing
agency notifies the Commission not later than 30 days after the
date on which the proposed rule change was filed of--
``(I) the determination by the appropriate regulatory
agency that the rules of such clearing agency, as so
changed, may be inconsistent with the safeguarding of
securities or funds in the custody or control of such
clearing agency or for which it is responsible; and
``(II) the reasons for the determination described in
subclause (I).
``(ii) If the Commission takes action under clause (i), the
Commission shall institute proceedings under paragraph (2)(B)
to determine if the proposed rule change should be approved or
disapproved.''.
SEC. 917. STUDY REGARDING FINANCIAL LITERACY AMONG INVESTORS.
(a) In General.--The Commission shall conduct a study to identify--
(1) the existing level of financial literacy among retail
investors, including subgroups of investors identified by the
Commission;
(2) methods to improve the timing, content, and format of
disclosures to investors with respect to financial intermediaries,
investment products, and investment services;
(3) the most useful and understandable relevant information
that retail investors need to make informed financial decisions
before engaging a financial intermediary or purchasing an
investment product or service that is typically sold to retail
investors, including shares of open-end companies, as that term is
defined in section 5 of the Investment Company Act of 1940 (15
U.S.C. 80a-5) that are registered under section 8 of that Act;
(4) methods to increase the transparency of expenses and
conflicts of interests in transactions involving investment
services and products, including shares of open-end companies
described in paragraph (3);
(5) the most effective existing private and public efforts to
educate investors; and
(6) in consultation with the Financial Literacy and Education
Commission, a strategy (including, to the extent practicable,
measurable goals and objectives) to increase the financial literacy
of investors in order to bring about a positive change in investor
behavior.
(b) Report.--Not later than 2 years after the date of enactment of
this Act, the Commission shall submit a report on the study required
under subsection (a) to--
(1) the Committee on Banking, Housing, and Urban Affairs of the
Senate; and
(2) the Committee on Financial Services of the House of
Representatives.
SEC. 918. STUDY REGARDING MUTUAL FUND ADVERTISING.
(a) In General.--The Comptroller General of the United States shall
conduct a study on mutual fund advertising to identify--
(1) existing and proposed regulatory requirements for open-end
investment company advertisements;
(2) current marketing practices for the sale of open-end
investment company shares, including the use of past performance
data, funds that have merged, and incubator funds;
(3) the impact of such advertising on consumers; and
(4) recommendations to improve investor protections in mutual
fund advertising and additional information necessary to ensure
that investors can make informed financial decisions when
purchasing shares.
(b) Report.--Not later than 18 months after the date of enactment
of this Act, the Comptroller General of the United States shall submit
a report on the results of the study conducted under subsection (a)
to--
(1) the Committee on Banking, Housing, and Urban Affairs of the
United States Senate; and
(2) the Committee on Financial Services of the House of
Representatives.
SEC. 919. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE INVESTOR
DISCLOSURES BEFORE PURCHASE OF INVESTMENT PRODUCTS AND SERVICES.
Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
is amended by adding at the end the following:
``(n) Disclosures to Retail Investors.--
``(1) In general.--Notwithstanding any other provision of the
securities laws, the Commission may issue rules designating
documents or information that shall be provided by a broker or
dealer to a retail investor before the purchase of an investment
product or service by the retail investor.
``(2) Considerations.--In developing any rules under paragraph
(1), the Commission shall consider whether the rules will promote
investor protection, efficiency, competition, and capital
formation.
``(3) Form and contents of documents and information.--Any
documents or information designated under a rule promulgated under
paragraph (1) shall--
``(A) be in a summary format; and
``(B) contain clear and concise information about--
``(i) investment objectives, strategies, costs, and
risks; and
``(ii) any compensation or other financial incentive
received by a broker, dealer, or other intermediary in
connection with the purchase of retail investment
products.''.
SEC. 919A. STUDY ON CONFLICTS OF INTEREST.
(a) In General.--The Comptroller General of the United States shall
conduct a study--
(1) to identify and examine potential conflicts of interest
that exist between the staffs of the investment banking and equity
and fixed income securities analyst functions within the same firm;
and
(2) to make recommendations to Congress designed to protect
investors in light of such conflicts.
(b) Considerations.--In conducting the study under subsection (a),
the Comptroller General shall--
(1) consider--
(A) the potential for investor harm resulting from
conflicts, including consideration of the forms of misconduct
engaged in by the several securities firms and individuals that
entered into the Global Analyst Research Settlements in 2003
(also known as the ``Global Settlement'');
(B) the nature and benefits of the undertakings to which
those firms agreed in enforcement proceedings, including
firewalls between research and investment banking, separate
reporting lines, dedicated legal and compliance staffs,
allocation of budget, physical separation, compensation,
employee performance evaluations, coverage decisions,
limitations on soliciting investment banking business,
disclosures, transparency, and other measures;
(C) whether any such undertakings should be codified and
applied permanently to securities firms, or whether the
Commission should adopt rules applying any such undertakings to
securities firms; and
(D) whether to recommend regulatory or legislative measures
designed to mitigate possible adverse consequences to investors
arising from the conflicts of interest or to enhance investor
protection or confidence in the integrity of the securities
markets; and
(2) consult with State attorneys general, State securities
officials, the Commission, the Financial Industry Regulatory
Authority (``FINRA''), NYSE Regulation, investor advocates,
brokers, dealers, retail investors, institutional investors, and
academics.
(c) Report.--The Comptroller General shall submit a report on the
results of the study required by this section to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives, not later than 18
months after the date of enactment of this Act.
SEC. 919B. STUDY ON IMPROVED INVESTOR ACCESS TO INFORMATION ON
INVESTMENT ADVISERS AND BROKER-DEALERS.
(a) Study.--
(1) In general.--Not later than 6 months after the date of
enactment of this Act, the Commission shall complete a study,
including recommendations, of ways to improve the access of
investors to registration information (including disciplinary
actions, regulatory, judicial, and arbitration proceedings, and
other information) about registered and previously registered
investment advisers, associated persons of investment advisers,
brokers and dealers and their associated persons on the existing
Central Registration Depository and Investment Adviser Registration
Depository systems, as well as identify additional information that
should be made publicly available.
(2) Contents.--The study required by subsection (a) shall
include an analysis of the advantages and disadvantages of further
centralizing access to the information contained in the 2 systems,
including--
(A) identification of those data pertinent to investors;
and
(B) the identification of the method and format for
displaying and publishing such data to enhance accessibility by
and utility to investors.
(b) Implementation.--Not later than 18 months after the date of
completion of the study required by subsection (a), the Commission
shall implement any recommendations of the study.
SEC. 919C. STUDY ON FINANCIAL PLANNERS AND THE USE OF FINANCIAL
DESIGNATIONS.
(a) In General.--The Comptroller General of the United States shall
conduct a study to evaluate--
(1) the effectiveness of State and Federal regulations to
protect investors and other consumers from individuals who hold
themselves out as financial planners through the use of misleading
titles, designations, or marketing materials;
(2) current State and Federal oversight structure and
regulations for financial planners; and
(3) legal or regulatory gaps in the regulation of financial
planners and other individuals who provide or offer to provide
financial planning services to consumers.
(b) Considerations.--In conducting the study required under
subsection (a), the Comptroller General shall consider--
(1) the role of financial planners in providing advice
regarding the management of financial resources, including
investment planning, income tax planning, education planning,
retirement planning, estate planning, and risk management;
(2) whether current regulations at the State and Federal level
provide adequate ethical and professional standards for financial
planners;
(3) the possible risk posed to investors and other consumers by
individuals who hold themselves out as financial planners or as
otherwise providing financial planning services in connection with
the sale of financial products, including insurance and securities;
(4) the possible risk posed to investors and other consumers by
individuals who otherwise use titles, designations, or marketing
materials in a misleading way in connection with the delivery of
financial advice;
(6) the ability of investors and other consumers to understand
licensing requirements and standards of care that apply to
individuals who hold themselves out as financial planners or as
otherwise providing financial planning services;
(7) the possible benefits to investors and other consumers of
regulation and professional oversight of financial planners; and
(8) any other consideration that the Comptroller General deems
necessary or appropriate to effectively execute the study required
under subsection (a).
(c) Recommendations.--In providing recommendations for the
appropriate regulation of financial planners and other individuals who
provide or offer to provide financial planning services, in order to
protect investors and other consumers of financial planning services,
the Comptroller General shall consider--
(1) the appropriate structure for regulation of financial
planners and individuals providing financial planning services; and
(2) the appropriate scope of the regulations needed to protect
investors and other consumers, including but not limited to the
need to establish competency standards, practice standards, ethical
guidelines, disciplinary authority, and transparency to investors
and other consumers.
(d) Report.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Comptroller General shall submit a
report on the study required under subsection (a) to--
(A) the Committee on Banking, Housing, and Urban Affairs of
the Senate;
(B) the Special Committee on Aging of the Senate; and
(C) the Committee on Financial Services of the House of
Representatives.
(2) Content requirements.--The report required under paragraph
(1) shall describe the findings and determinations made by the
Comptroller General in carrying out the study required under
subsection (a), including a description of the considerations,
analysis, and government, public, industry, nonprofit and consumer
input that the Comptroller General considered to make such
findings, conclusions, and legislative, regulatory, or other
recommendations.
SEC. 919D. OMBUDSMAN.
Section 4(g) of the Securities Exchange Act of 1934, as added by
section 914, is amended by adding at the end the following:
``(8) Ombudsman.--
``(A) Appointment.--Not later than 180 days after the date
on which the first Investor Advocate is appointed under
paragraph (2)(A)(i), the Investor Advocate shall appoint an
Ombudsman, who shall report directly to the Investor Advocate.
``(B) Duties.--The Ombudsman appointed under subparagraph
(A) shall--
``(i) act as a liaison between the Commission and any
retail investor in resolving problems that retail investors
may have with the Commission or with self-regulatory
organizations;
``(ii) review and make recommendations regarding
policies and procedures to encourage persons to present
questions to the Investor Advocate regarding compliance
with the securities laws; and
``(iii) establish safeguards to maintain the
confidentiality of communications between the persons
described in clause (ii) and the Ombudsman.
``(C) Limitation.--In carrying out the duties of the
Ombudsman under subparagraph (B), the Ombudsman shall utilize
personnel of the Commission to the extent practicable. Nothing
in this paragraph shall be construed as replacing, altering, or
diminishing the activities of any ombudsman or similar office
of any other agency.
``(D) Report.--The Ombudsman shall submit a semiannual
report to the Investor Advocate that describes the activities
and evaluates the effectiveness of the Ombudsman during the
preceding year. The Investor Advocate shall include the reports
required under this section in the reports required to be
submitted by the Inspector Advocate under paragraph (6).''.
Subtitle B--Increasing Regulatory Enforcement and Remedies
SEC. 921. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.
(a) Amendment to Securities Exchange Act of 1934.--Section 15 of
the Securities Exchange Act of 1934 (15 U.S.C. 78o), as amended by this
title, is further amended by adding at the end the following new
subsection:
``(o) Authority to Restrict Mandatory Pre-dispute Arbitration.--The
Commission, by rule, may prohibit, or impose conditions or limitations
on the use of, agreements that require customers or clients of any
broker, dealer, or municipal securities dealer to arbitrate any future
dispute between them arising under the Federal securities laws, the
rules and regulations thereunder, or the rules of a self-regulatory
organization if it finds that such prohibition, imposition of
conditions, or limitations are in the public interest and for the
protection of investors.''.
(b) Amendment to Investment Advisers Act of 1940.--Section 205 of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-5) is amended by
adding at the end the following new subsection:
``(f) Authority to Restrict Mandatory Pre-dispute Arbitration.--The
Commission, by rule, may prohibit, or impose conditions or limitations
on the use of, agreements that require customers or clients of any
investment adviser to arbitrate any future dispute between them arising
under the Federal securities laws, the rules and regulations
thereunder, or the rules of a self-regulatory organization if it finds
that such prohibition, imposition of conditions, or limitations are in
the public interest and for the protection of investors.''.
SEC. 922. WHISTLEBLOWER PROTECTION.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by inserting after section 21E the following:
``SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTECTION.
``(a) Definitions.--In this section the following definitions shall
apply:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any judicial or
administrative action brought by the Commission under the
securities laws that results in monetary sanctions exceeding
$1,000,000.
``(2) Fund.--The term `Fund' means the Securities and Exchange
Commission Investor Protection Fund.
``(3) Original information.--The term `original information'
means information that--
``(A) is derived from the independent knowledge or analysis
of a whistleblower;
``(B) is not known to the Commission from any other source,
unless the whistleblower is the original source of the
information; and
``(C) is not exclusively derived from an allegation made in
a judicial or administrative hearing, in a governmental report,
hearing, audit, or investigation, or from the news media,
unless the whistleblower is a source of the information.
``(4) Monetary sanctions.--The term `monetary sanctions', when
used with respect to any judicial or administrative action, means--
``(A) any monies, including penalties, disgorgement, and
interest, ordered to be paid; and
``(B) any monies deposited into a disgorgement fund or
other fund pursuant to section 308(b) of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7246(b)), as a result of such action or any
settlement of such action.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought by
the Commission under the securities laws, means any judicial or
administrative action brought by an entity described in subclauses
(I) through (IV) of subsection (h)(2)(D)(i) that is based upon the
original information provided by a whistleblower pursuant to
subsection (a) that led to the successful enforcement of the
Commission action.
``(6) Whistleblower.--The term `whistleblower' means any
individual who provides, or 2 or more individuals acting jointly
who provide, information relating to a violation of the securities
laws to the Commission, in a manner established, by rule or
regulation, by the Commission.
``(b) Awards.--
``(1) In general.--In any covered judicial or administrative
action, or related action, the Commission, under regulations
prescribed by the Commission and subject to subsection (c), shall
pay an award or awards to 1 or more whistleblowers who voluntarily
provided original information to the Commission that led to the
successful enforcement of the covered judicial or administrative
action, or related action, in an aggregate amount equal to--
``(A) not less than 10 percent, in total, of what has been
collected of the monetary sanctions imposed in the action or
related actions; and
``(B) not more than 30 percent, in total, of what has been
collected of the monetary sanctions imposed in the action or
related actions.
``(2) Payment of awards.--Any amount paid under paragraph (1)
shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount of an
award made under subsection (b) shall be in the discretion of
the Commission.
``(B) Criteria.--In determining the amount of an award made
under subsection (b), the Commission--
``(i) shall take into consideration--
``(I) the significance of the information provided
by the whistleblower to the success of the covered
judicial or administrative action;
``(II) the degree of assistance provided by the
whistleblower and any legal representative of the
whistleblower in a covered judicial or administrative
action;
``(III) the programmatic interest of the Commission
in deterring violations of the securities laws by
making awards to whistleblowers who provide information
that lead to the successful enforcement of such laws;
and
``(IV) such additional relevant factors as the
Commission may establish by rule or regulation; and
``(ii) shall not take into consideration the balance of
the Fund.
``(2) Denial of award.--No award under subsection (b) shall be
made--
``(A) to any whistleblower who is, or was at the time the
whistleblower acquired the original information submitted to
the Commission, a member, officer, or employee of--
``(i) an appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a self-regulatory organization;
``(iv) the Public Company Accounting Oversight Board;
or
``(v) a law enforcement organization;
``(B) to any whistleblower who is convicted of a criminal
violation related to the judicial or administrative action for
which the whistleblower otherwise could receive an award under
this section;
``(C) to any whistleblower who gains the information
through the performance of an audit of financial statements
required under the securities laws and for whom such submission
would be contrary to the requirements of section 10A of the
Securities Exchange Act of 1934 (15 U.S.C. 78j-1); or
``(D) to any whistleblower who fails to submit information
to the Commission in such form as the Commission may, by rule,
require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who makes a
claim for an award under subsection (b) may be represented by
counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who anonymously makes
a claim for an award under subsection (b) shall be represented
by counsel if the whistleblower anonymously submits the
information upon which the claim is based.
``(B) Disclosure of identity.--Prior to the payment of an
award, a whistleblower shall disclose the identity of the
whistleblower and provide such other information as the
Commission may require, directly or through counsel for the
whistleblower.
``(e) No Contract Necessary.--No contract with the Commission is
necessary for any whistleblower to receive an award under subsection
(b), unless otherwise required by the Commission by rule or regulation.
``(f) Appeals.--Any determination made under this section,
including whether, to whom, or in what amount to make awards, shall be
in the discretion of the Commission. Any such determination, except the
determination of the amount of an award if the award was made in
accordance with subsection (b), may be appealed to the appropriate
court of appeals of the United States not more than 30 days after the
determination is issued by the Commission. The court shall review the
determination made by the Commission in accordance with section 706 of
title 5, United States Code.
``(g) Investor Protection Fund.--
``(1) Fund established.--There is established in the Treasury
of the United States a fund to be known as the `Securities and
Exchange Commission Investor Protection Fund'.
``(2) Use of fund.--The Fund shall be available to the
Commission, without further appropriation or fiscal year
limitation, for--
``(A) paying awards to whistleblowers as provided in
subsection (b); and
``(B) funding the activities of the Inspector General of
the Commission under section 4(i).
``(3) Deposits and credits.--
``(A) In general.--There shall be deposited into or
credited to the Fund an amount equal to--
``(i) any monetary sanction collected by the Commission
in any judicial or administrative action brought by the
Commission under the securities laws that is not added to a
disgorgement fund or other fund under section 308 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246) or otherwise
distributed to victims of a violation of the securities
laws, or the rules and regulations thereunder, underlying
such action, unless the balance of the Fund at the time the
monetary sanction is collected exceeds $300,000,000;
``(ii) any monetary sanction added to a disgorgement
fund or other fund under section 308 of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7246) that is not distributed to the
victims for whom the Fund was established, unless the
balance of the disgorgement fund at the time the
determination is made not to distribute the monetary
sanction to such victims exceeds $200,000,000; and
``(iii) all income from investments made under
paragraph (4).
``(B) Additional amounts.--If the amounts deposited into or
credited to the Fund under subparagraph (A) are not sufficient
to satisfy an award made under subsection (b), there shall be
deposited into or credited to the Fund an amount equal to the
unsatisfied portion of the award from any monetary sanction
collected by the Commission in the covered judicial or
administrative action on which the award is based.
``(4) Investments.--
``(A) Amounts in fund may be invested.--The Commission may
request the Secretary of the Treasury to invest the portion of
the Fund that is not, in the discretion of the Commission,
required to meet the current needs of the Fund.
``(B) Eligible investments.--Investments shall be made by
the Secretary of the Treasury in obligations of the United
States or obligations that are guaranteed as to principal and
interest by the United States, with maturities suitable to the
needs of the Fund as determined by the Commission on the
record.
``(C) Interest and proceeds credited.--The interest on, and
the proceeds from the sale or redemption of, any obligations
held in the Fund shall be credited to the Fund.
``(5) Reports to congress.--Not later than October 30 of each
fiscal year beginning after the date of enactment of this
subsection, the Commission shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of Representatives a
report on--
``(A) the whistleblower award program, established under
this section, including--
``(i) a description of the number of awards granted;
and
``(ii) the types of cases in which awards were granted
during the preceding fiscal year;
``(B) the balance of the Fund at the beginning of the
preceding fiscal year;
``(C) the amounts deposited into or credited to the Fund
during the preceding fiscal year;
``(D) the amount of earnings on investments made under
paragraph (4) during the preceding fiscal year;
``(E) the amount paid from the Fund during the preceding
fiscal year to whistleblowers pursuant to subsection (b);
``(F) the balance of the Fund at the end of the preceding
fiscal year; and
``(G) a complete set of audited financial statements,
including--
``(i) a balance sheet;
``(ii) income statement; and
``(iii) cash flow analysis.
``(h) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(A) In general.--No employer may discharge, demote,
suspend, threaten, harass, directly or indirectly, or in any
other manner discriminate against, a whistleblower in the terms
and conditions of employment because of any lawful act done by
the whistleblower--
``(i) in providing information to the Commission in
accordance with this section;
``(ii) in initiating, testifying in, or assisting in
any investigation or judicial or administrative action of
the Commission based upon or related to such information;
or
``(iii) in making disclosures that are required or
protected under the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7201 et seq.), the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.), including section 10A(m) of such Act
(15 U.S.C. 78f(m)), section 1513(e) of title 18, United
States Code, and any other law, rule, or regulation subject
to the jurisdiction of the Commission.
``(B) Enforcement.--
``(i) Cause of action.--An individual who alleges
discharge or other discrimination in violation of
subparagraph (A) may bring an action under this subsection
in the appropriate district court of the United States for
the relief provided in subparagraph (C).
``(ii) Subpoenas.--A subpoena requiring the attendance
of a witness at a trial or hearing conducted under this
section may be served at any place in the United States.
``(iii) Statute of limitations.--
``(I) In general.--An action under this subsection
may not be brought--
``(aa) more than 6 years after the date on
which the violation of subparagraph (A) occurred;
or
``(bb) more than 3 years after the date when
facts material to the right of action are known or
reasonably should have been known by the employee
alleging a violation of subparagraph (A).
``(II) Required action within 10 years.--
Notwithstanding subclause (I), an action under this
subsection may not in any circumstance be brought more
than 10 years after the date on which the violation
occurs.
``(C) Relief.--Relief for an individual prevailing in an
action brought under subparagraph (B) shall include--
``(i) reinstatement with the same seniority status that
the individual would have had, but for the discrimination;
``(ii) 2 times the amount of back pay otherwise owed to
the individual, with interest; and
``(iii) compensation for litigation costs, expert
witness fees, and reasonable attorneys' fees.
``(2) Confidentiality.--
``(A) In general.--Except as provided in subparagraphs (B)
and (C), the Commission and any officer or employee of the
Commission shall not disclose any information, including
information provided by a whistleblower to the Commission,
which could reasonably be expected to reveal the identity of a
whistleblower, except in accordance with the provisions of
section 552a of title 5, United States Code, unless and until
required to be disclosed to a defendant or respondent in
connection with a public proceeding instituted by the
Commission or any entity described in subparagraph (C). For
purposes of section 552 of title 5, United States Code, this
paragraph shall be considered a statute described in subsection
(b)(3)(B) of such section.
``(B) Exempted statute.--For purposes of section 552 of
title 5, United States Code, this paragraph shall be considered
a statute described in subsection (b)(3)(B) of such section
552.
``(C) Rule of construction.--Nothing in this section is
intended to limit, or shall be construed to limit, the ability
of the Attorney General to present such evidence to a grand
jury or to share such evidence with potential witnesses or
defendants in the course of an ongoing criminal investigation.
``(D) Availability to government agencies.--
``(i) In general.--Without the loss of its status as
confidential in the hands of the Commission, all
information referred to in subparagraph (A) may, in the
discretion of the Commission, when determined by the
Commission to be necessary to accomplish the purposes of
this Act and to protect investors, be made available to--
``(I) the Attorney General of the United States;
``(II) an appropriate regulatory authority;
``(III) a self-regulatory organization;
``(IV) a State attorney general in connection with
any criminal investigation;
``(V) any appropriate State regulatory authority;
``(VI) the Public Company Accounting Oversight
Board;
``(VII) a foreign securities authority; and
``(VIII) a foreign law enforcement authority.
``(ii) Confidentiality.--
``(I) In general.--Each of the entities described
in subclauses (I) through (VI) of clause (i) shall
maintain such information as confidential in accordance
with the requirements established under subparagraph
(A).
``(II) Foreign authorities.--Each of the entities
described in subclauses (VII) and (VIII) of clause (i)
shall maintain such information in accordance with such
assurances of confidentiality as the Commission
determines appropriate.
``(3) Rights retained.--Nothing in this section shall be deemed
to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
``(i) Provision of False Information.--A whistleblower shall not be
entitled to an award under this section if the whistleblower--
``(1) knowingly and willfully makes any false, fictitious, or
fraudulent statement or representation; or
``(2) uses any false writing or document knowing the writing or
document contains any false, fictitious, or fraudulent statement or
entry.
``(j) Rulemaking Authority.--The Commission shall have the
authority to issue such rules and regulations as may be necessary or
appropriate to implement the provisions of this section consistent with
the purposes of this section.''.
(b) Protection for Employees of Nationally Recognized Statistical
Rating Organizations.--Section 1514A(a) of title 18, United States
Code, is amended--
(1) by inserting ``or nationally recognized statistical rating
organization (as defined in section 3(a) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c),'' after ``78o(d)),''; and
(2) by inserting ``or nationally recognized statistical rating
organization'' after ``such company''.
(c) Section 1514A of Title 18, United States Code.--
(1) Statute of limitations; jury trial.--Section 1514A(b)(2) of
title 18, United States Code, is amended--
(A) in subparagraph (D)--
(i) by striking ``90'' and inserting ``180''; and
(ii) by striking the period at the end and inserting
``, or after the date on which the employee became aware of
the violation.''; and
(B) by adding at the end the following:
``(E) Jury trial.--A party to an action brought under
paragraph (1)(B) shall be entitled to trial by jury.''.
(2) Private securities litigation witnesses; nonenforceability;
information.--Section 1514A of title 18, United States Code, is
amended by adding at the end the following:
``(e) Nonenforceability of Certain Provisions Waiving Rights and
Remedies or Requiring Arbitration of Disputes.--
``(1) Waiver of rights and remedies.--The rights and remedies
provided for in this section may not be waived by any agreement,
policy form, or condition of employment, including by a predispute
arbitration agreement.
``(2) Predispute arbitration agreements.--No predispute
arbitration agreement shall be valid or enforceable, if the
agreement requires arbitration of a dispute arising under this
section.''.
(d) Study of Whistleblower Protection Program.--
(1) Study.--The Inspector General of the Commission shall
conduct a study of the whistleblower protections established under
the amendments made by this section, including--
(A) whether the final rules and regulation issued under the
amendments made by this section have made the whistleblower
protection program (referred to in this subsection as the
``program'') clearly defined and user-friendly;
(B) whether the program is promoted on the website of the
Commission and has been widely publicized;
(C) whether the Commission is prompt in--
(i) responding to--
(I) information provided by whistleblowers; and
(II) applications for awards filed by
whistleblowers;
(ii) updating whistleblowers about the status of their
applications; and
(iii) otherwise communicating with the interested
parties;
(D) whether the minimum and maximum reward levels are
adequate to entice whistleblowers to come forward with
information and whether the reward levels are so high as to
encourage illegitimate whistleblower claims;
(E) whether the appeals process has been unduly burdensome
for the Commission;
(F) whether the funding mechanism for the Investor
Protection Fund is adequate;
(G) whether, in the interest of protecting investors and
identifying and preventing fraud, it would be useful for
Congress to consider empowering whistleblowers or other
individuals, who have already attempted to pursue the case
through the Commission, to have a private right of action to
bring suit based on the facts of the same case, on behalf of
the Government and themselves, against persons who have
committee securities fraud;
(H)(i) whether the exemption under section 552(b)(3) of
title 5 (known as the Freedom of Information Act) established
in section 21F(h)(2)(A) of the Securities Exchange Act of 1934,
as added by this Act, aids whistleblowers in disclosing
information to the Commission;
(ii) what impact the exemption described in clause (i) has
had on the ability of the public to access information about
the regulation and enforcement by the Commission of securities;
and
(iii) any recommendations on whether the exemption
described in clause (i) should remain in effect; and
(I) such other matters as the Inspector General deems
appropriate.
(2) Report.--Not later than 30 months after the date of
enactment of this Act, the Inspector General shall--
(A) submit a report on the findings of the study required
under paragraph (1) to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House; and
(B) make the report described in subparagraph (A) available
to the public through publication of the report on the website
of the Commission.
SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.
(a) In General.--
(1) Securities act of 1933.--Section 20(d)(3)(A) of the
Securities Act of 1933 (15 U.S.C. 77t(d)(3)(A)) is amended by
inserting ``and section 21F of the Securities Exchange Act of
1934'' after ``the Sarbanes-Oxley Act of 2002''.
(2) Investment company act of 1940.--Section 42(e)(3)(A) of the
Investment Company Act of 1940 (15 U.S.C. 80a-41(e)(3)(A)) is
amended by inserting ``and section 21F of the Securities Exchange
Act of 1934'' after ``the Sarbanes-Oxley Act of 2002''.
(3) Investment advisers act of 1940.--Section 209(e)(3)(A) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-9(e)(3)(A)) is
amended by inserting ``and section 21F of the Securities Exchange
Act of 1934'' after ``the Sarbanes-Oxley Act of 2002''.
(b) Securities Exchange Act.--
(1) Section 21.--Section 21(d)(3)(C)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u(d)(3)(C)(i)) is amended by
inserting ``and section 21F of this title'' after ``the Sarbanes-
Oxley Act of 2002''.
(2) Section 21a.--Section 21A of the Securities Exchange Act of
1934 (15 U.S.C. 78u-1) is amended--
(A) in subsection (d)(1) by--
(i) striking ``(subject to subsection (e))''; and
(ii) inserting ``and section 21F of this title'' after
``the Sarbanes-Oxley Act of 2002'';
(B) by striking subsection (e); and
(C) by redesignating subsections (f) and (g) as subsections
(e) and (f), respectively.
SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS FOR
WHISTLEBLOWER PROTECTION.
(a) Implementing Rules.--The Commission shall issue final
regulations implementing the provisions of section 21F of the
Securities Exchange Act of 1934, as added by this subtitle, not later
than 270 days after the date of enactment of this Act.
(b) Original Information.--Information provided to the Commission
in writing by a whistleblower shall not lose the status of original
information (as defined in section 21F(a)(3) of the Securities Exchange
Act of 1934, as added by this subtitle) solely because the
whistleblower provided the information prior to the effective date of
the regulations, if the information is provided by the whistleblower
after the date of enactment of this subtitle.
(c) Awards.--A whistleblower may receive an award pursuant to
section 21F of the Securities Exchange Act of 1934, as added by this
subtitle, regardless of whether any violation of a provision of the
securities laws, or a rule or regulation thereunder, underlying the
judicial or administrative action upon which the award is based,
occurred prior to the date of enactment of this subtitle.
(d) Administration and Enforcement.--The Securities and Exchange
Commission shall establish a separate office within the Commission to
administer and enforce the provisions of section 21F of the Securities
Exchange Act of 1934 (as add by section 922(a)). Such office shall
report annually to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House of
Representatives on its activities, whistleblower complaints, and the
response of the Commission to such complaints.
SEC. 925. COLLATERAL BARS.
(a) Securities Exchange Act of 1934.--
(1) Section 15.--Section 15(b)(6)(A) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by striking ``12
months, or bar such person from being associated with a broker or
dealer,'' and inserting ``12 months, or bar any such person from
being associated with a broker, dealer, investment adviser,
municipal securities dealer, municipal advisor, transfer agent, or
nationally recognized statistical rating organization,''.
(2) Section 15b.--Section 15B(c)(4) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-4(c)(4)) is amended by striking ``twelve
months or bar any such person from being associated with a
municipal securities dealer,'' and inserting ``12 months or bar any
such person from being associated with a broker, dealer, investment
adviser, municipal securities dealer, municipal advisor, transfer
agent, or nationally recognized statistical rating organization,''.
(3) Section 17a.--Section 17A(c)(4)(C) of the Securities
Exchange Act of 1934 (15 U.S.C. 78q-1(c)(4)(C)) is amended by
striking ``twelve months or bar any such person from being
associated with the transfer agent,'' and inserting ``12 months or
bar any such person from being associated with any transfer agent,
broker, dealer, investment adviser, municipal securities dealer,
municipal advisor, or nationally recognized statistical rating
organization,''.
(b) Investment Advisers Act of 1940.--Section 203(f) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is amended by
striking ``twelve months or bar any such person from being associated
with an investment adviser,'' and inserting ``12 months or bar any such
person from being associated with an investment adviser, broker,
dealer, municipal securities dealer, municipal advisor, transfer agent,
or nationally recognized statistical rating organization,''.
SEC. 926. DISQUALIFYING FELONS AND OTHER ``BAD ACTORS'' FROM
REGULATION D OFFERINGS.
Not later than 1 year after the date of enactment of this Act, the
Commission shall issue rules for the disqualification of offerings and
sales of securities made under section 230.506 of title 17, Code of
Federal Regulations, that--
(1) are substantially similar to the provisions of section
230.262 of title 17, Code of Federal Regulations, or any successor
thereto; and
(2) disqualify any offering or sale of securities by a person
that--
(A) is subject to a final order of a State securities
commission (or an agency or officer of a State performing like
functions), a State authority that supervises or examines
banks, savings associations, or credit unions, a State
insurance commission (or an agency or officer of a State
performing like functions), an appropriate Federal banking
agency, or the National Credit Union Administration, that--
(i) bars the person from--
(I) association with an entity regulated by such
commission, authority, agency, or officer;
(II) engaging in the business of securities,
insurance, or banking; or
(III) engaging in savings association or credit
union activities; or
(ii) constitutes a final order based on a violation of
any law or regulation that prohibits fraudulent,
manipulative, or deceptive conduct within the 10-year
period ending on the date of the filing of the offer or
sale; or
(B) has been convicted of any felony or misdemeanor in
connection with the purchase or sale of any security or
involving the making of any false filing with the Commission.
SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION RULES.
Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78cc(a)) is amended by striking ``an exchange required thereby'' and
inserting ``a self-regulatory organization,''.
SEC. 928. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT ADVISERS
ACT OF 1940 DOES NOT APPLY TO STATE-REGISTERED ADVISERS.
Section 205(a) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-5(a)) is amended, in the matter preceding paragraph (1)--
(1) by striking ``, unless exempt from registration pursuant to
section 203(b),'' and inserting ``registered or required to be
registered with the Commission'';
(2) by striking ``make use of the mails or any means or
instrumentality of interstate commerce, directly or indirectly,
to''; and
(3) by striking ``to'' after ``in any way''.
SEC. 929. UNLAWFUL MARGIN LENDING.
Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15
U.S.C. 78g(c)(1)(A)) is amended by striking ``; and'' and inserting ``;
or''.
SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES AND AFFILIATES OF
PUBLICLY TRADED COMPANIES.
Section 1514A of title 18, United States Code, is amended by
inserting ``including any subsidiary or affiliate whose financial
information is included in the consolidated financial statements of
such company'' after ``the Securities Exchange Act of 1934 (15 U.S.C.
78o(d))''.
SEC. 929B. FAIR FUND AMENDMENTS.
Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a))
is amended--
(1) by striking subsection (a) and inserting the following:
``(a) Civil Penalties to Be Used for the Relief of Victims.--If, in
any judicial or administrative action brought by the Commission under
the securities laws, the Commission obtains a civil penalty against any
person for a violation of such laws, or such person agrees, in
settlement of any such action, to such civil penalty, the amount of
such civil penalty shall, on the motion or at the direction of the
Commission, be added to and become part of a disgorgement fund or other
fund established for the benefit of the victims of such violation.'';
(2) in subsection (b)--
(A) by striking ``for a disgorgement fund described in
subsection (a)'' and inserting ``for a disgorgement fund or
other fund described in subsection (a)''; and
(B) by striking ``in the disgorgement fund'' and inserting
``in such fund''; and
(3) by striking subsection (e).
SEC. 929C. INCREASING THE BORROWING LIMIT ON TREASURY LOANS.
Section 4(h) of the Securities Investor Protection Act of 1970 (15
U.S.C. 78ddd(h)) is amended in the first sentence, by striking
``$1,000,000,000'' and inserting ``$2,500,000,000''.
SEC. 929D. LOST AND STOLEN SECURITIES.
Section 17(f)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78q(f)(1)) is amended--
(1) in subparagraph (A), by striking ``missing, lost,
counterfeit, or stolen securities'' and inserting ``securities that
are missing, lost, counterfeit, stolen, or cancelled''; and
(2) in subparagraph (B), by striking ``or stolen'' and
inserting ``stolen, cancelled, or reported in such other manner as
the Commission, by rule, may prescribe''.
SEC. 929E. NATIONWIDE SERVICE OF SUBPOENAS.
(a) Securities Act of 1933.--Section 22(a) of the Securities Act of
1933 (15 U.S.C. 77v(a)) is amended by inserting after the second
sentence the following: ``In any action or proceeding instituted by the
Commission under this title in a United States district court for any
judicial district, a subpoena issued to compel the attendance of a
witness or the production of documents or tangible things (or both) at
a hearing or trial may be served at any place within the United States.
Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure shall not
apply to a subpoena issued under the preceding sentence.''.
(b) Securities Exchange Act of 1934.--Section 27 of the Securities
Exchange Act of 1934 (15 U.S.C. 78aa) is amended by inserting after the
third sentence the following: ``In any action or proceeding instituted
by the Commission under this title in a United States district court
for any judicial district, a subpoena issued to compel the attendance
of a witness or the production of documents or tangible things (or
both) at a hearing or trial may be served at any place within the
United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil
Procedure shall not apply to a subpoena issued under the preceding
sentence.''.
(c) Investment Company Act of 1940.--Section 44 of the Investment
Company Act of 1940 (15 U.S.C. 80a-43) is amended by inserting after
the fourth sentence the following: ``In any action or proceeding
instituted by the Commission under this title in a United States
district court for any judicial district, a subpoena issued to compel
the attendance of a witness or the production of documents or tangible
things (or both) at a hearing or trial may be served at any place
within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of
Civil Procedure shall not apply to a subpoena issued under the
preceding sentence.''.
(d) Investment Advisers Act of 1940.--Section 214 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-14) is amended by inserting after
the third sentence the following: ``In any action or proceeding
instituted by the Commission under this title in a United States
district court for any judicial district, a subpoena issued to compel
the attendance of a witness or the production of documents or tangible
things (or both) at a hearing or trial may be served at any place
within the United States. Rule 45(c)(3)(A)(ii) of the Federal Rules of
Civil Procedure shall not apply to a subpoena issued under the
preceding sentence.''.
SEC. 929F. FORMERLY ASSOCIATED PERSONS.
(a) Member or Employee of the Municipal Securities Rulemaking
Board.--Section 15B(c)(8) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-4(c)(8)) is amended by striking ``any member or employee''
and inserting ``any person who is, or at the time of the alleged
violation or abuse was, a member or employee''.
(b) Person Associated With a Government Securities Broker or
Dealer.--Section 15C(c) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-5(c)) is amended--
(1) in paragraph (1)(C), by striking ``any person associated,
or seeking to become associated,'' and inserting ``any person who
is, or at the time of the alleged misconduct was, associated or
seeking to become associated''; and
(2) in paragraph (2)--
(A) in subparagraph (A), by inserting ``, seeking to become
associated, or, at the time of the alleged misconduct,
associated or seeking to become associated'' after ``any person
associated''; and
(B) in subparagraph (B), by inserting ``, seeking to become
associated, or, at the time of the alleged misconduct,
associated or seeking to become associated'' after ``any person
associated''.
(c) Person Associated With a Member of a National Securities
Exchange or Registered Securities Association.--Section 21(a)(1) of the
Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is amended, in
the first sentence, by inserting ``, or, as to any act or practice, or
omission to act, while associated with a member, formerly associated''
after ``member or a person associated''.
(d) Participant of a Registered Clearing Agency.--Section 21(a)(1)
of the Securities Exchange Act of 1934 (15 U.S.C. 78u(a)(1)) is
amended, in the first sentence, by inserting ``or, as to any act or
practice, or omission to act, while a participant, was a participant,''
after ``in which such person is a participant,''.
(e) Officer or Director of a Self-regulatory Organization.--Section
19(h)(4) of the Securities Exchange Act of 1934 (15 U.S.C. 78s(h)(4))
is amended--
(1) by striking ``any officer or director'' and inserting ``any
person who is, or at the time of the alleged misconduct was, an
officer or director''; and
(2) by striking ``such officer or director'' and inserting
``such person''.
(f) Officer or Director of an Investment Company.--Section 36(a) of
the Investment Company Act of 1940 (15 U.S.C. 80a-35(a)) is amended--
(1) by striking ``a person serving or acting'' and inserting
``a person who is, or at the time of the alleged misconduct was,
serving or acting''; and
(2) by striking ``such person so serves or acts'' and inserting
``such person so serves or acts, or at the time of the alleged
misconduct, so served or acted''.
(g) Person Associated With a Public Accounting Firm.--
(1) Sarbanes-oxley act of 2002 amendment.--Section 2(a)(9) of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(9)) is amended by
adding at the end the following:
``(C) Investigative and enforcement authority.--For
purposes of sections 3(c), 101(c), 105, and 107(c) and the
rules of the Board and Commission issued thereunder, except to
the extent specifically excepted by such rules, the terms
defined in subparagraph (A) shall include any person
associated, seeking to become associated, or formerly
associated with a public accounting firm, except that--
``(i) the authority to conduct an investigation of such
person under section 105(b) shall apply only with respect
to any act or practice, or omission to act, by the person
while such person was associated or seeking to become
associated with a registered public accounting firm; and
``(ii) the authority to commence a disciplinary
proceeding under section 105(c)(1), or impose sanctions
under section 105(c)(4), against such person shall apply
only with respect to--
``(I) conduct occurring while such person was
associated or seeking to become associated with a
registered public accounting firm; or
``(II) non-cooperation, as described in section
105(b)(3), with respect to a demand in a Board
investigation for testimony, documents, or other
information relating to a period when such person was
associated or seeking to become associated with a
registered public accounting firm.''.
(2) Securities exchange act of 1934 amendment.--Section
21(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C.
78u(a)(1)) is amended by striking ``or a person associated with
such a firm'' and inserting ``, a person associated with such a
firm, or, as to any act, practice, or omission to act, while
associated with such firm, a person formerly associated with such a
firm''.
(h) Supervisory Personnel of an Audit Firm.--Section 105(c)(6) of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(c)(6)) is amended--
(1) in subparagraph (A), by striking ``the supervisory
personnel'' and inserting ``any person who is, or at the time of
the alleged failure reasonably to supervise was, a supervisory
person''; and
(2) in subparagraph (B)--
(A) by striking ``No associated person'' and inserting ``No
current or former supervisory person''; and
(B) by striking ``any other person'' and inserting ``any
associated person''.
(i) Member of the Public Company Accounting Oversight Board.--
Section 107(d)(3) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7217(d)(3)) is amended by striking ``any member'' and inserting ``any
person who is, or at the time of the alleged misconduct was, a
member''.
SEC. 929G. STREAMLINED HIRING AUTHORITY FOR MARKET SPECIALISTS.
(a) Appointment Authority.--Section 3114 of title 5, United States
Code, is amended by striking the section heading and all that follows
through the end of subsection (a) and inserting the following:
``Sec. 3114. Appointment of candidates to certain positions in the
competitive service by the Securities and Exchange Commission
``(a) Applicability.--This section applies with respect to any
position of accountant, economist, and securities compliance examiner
at the Commission that is in the competitive service, and any position
at the Commission in the competitive service that requires specialized
knowledge of financial and capital market formation or regulation,
financial market structures or surveillance, or information
technology.''.
(b) Clerical Amendment.--The table of sections for chapter 31 of
title 5, United States Code, is amended by striking the item relating
to section 3114 and inserting the following:
``3114. Appointment of candidates to positions in the competitive
service by the Securities and Exchange Commission.''.
(c) Pay Authority.--The Commission may set the rate of pay for
experts and consultants appointed under the authority of section 3109
of title 5, United States Code, in the same manner in which it sets the
rate of pay for employees of the Commission.
SEC. 929H. SIPC REFORMS.
(a) Increasing the Cash Limit of Protection.--Section 9 of the
Securities Investor Protection Act of 1970 (15 U.S.C. 78fff-3) is
amended--
(1) in subsection (a)(1), by striking ``$100,000 for each such
customer'' and inserting ``the standard maximum cash advance amount
for each such customer, as determined in accordance with subsection
(d)''; and
(2) by adding the following new subsections:
``(d) Standard Maximum Cash Advance Amount Defined.--For purposes
of this section, the term `standard maximum cash advance amount' means
$250,000, as such amount may be adjusted after December 31, 2010, as
provided under subsection (e).
``(e) Inflation Adjustment.--
``(1) In general.--Not later than January 1, 2011, and every 5
years thereafter, and subject to the approval of the Commission as
provided under section 3(e)(2), the Board of Directors of SIPC
shall determine whether an inflation adjustment to the standard
maximum cash advance amount is appropriate. If the Board of
Directors of SIPC determines such an adjustment is appropriate,
then the standard maximum cash advance amount shall be an amount
equal to--
``(A) $250,000 multiplied by--
``(B) the ratio of the annual value of the Personal
Consumption Expenditures Chain-Type Price Index (or any
successor index thereto), published by the Department of
Commerce, for the calendar year preceding the year in which
such determination is made, to the published annual value of
such index for the calendar year preceding the year in which
this subsection was enacted.
The index values used in calculations under this paragraph shall
be, as of the date of the calculation, the values most recently
published by the Department of Commerce.
``(2) Rounding.--If the standard maximum cash advance amount
determined under paragraph (1) for any period is not a multiple of
$10,000, the amount so determined shall be rounded down to the
nearest $10,000.
``(3) Publication and report to the congress.--Not later than
April 5 of any calendar year in which a determination is required
to be made under paragraph (1)--
``(A) the Commission shall publish in the Federal Register
the standard maximum cash advance amount; and
``(B) the Board of Directors of SIPC shall submit a report
to the Congress stating the standard maximum cash advance
amount.
``(4) Implementation period.--Any adjustment to the standard
maximum cash advance amount shall take effect on January 1 of the
year immediately succeeding the calendar year in which such
adjustment is made.
``(5) Inflation adjustment considerations.--In making any
determination under paragraph (1) to increase the standard maximum
cash advance amount, the Board of Directors of SIPC shall
consider--
``(A) the overall state of the fund and the economic
conditions affecting members of SIPC;
``(B) the potential problems affecting members of SIPC; and
``(C) such other factors as the Board of Directors of SIPC
may determine appropriate.''.
(b) Liquidation of a Carrying Broker-dealer.--Section 5(a)(3) of
the Securities Investor Protection Act of 1970 (15 U.S.C. 78eee(a)(3))
is amended--
(1) by striking the undesignated matter immediately following
subparagraph (B);
(2) in subparagraph (A), by striking ``any member of SIPC'' and
inserting ``the member'';
(3) in subparagraph (B), by striking the comma at the end and
inserting a period;
(4) by striking ``If SIPC'' and inserting the following:
``(A) In general.--SIPC may, upon notice to a member of
SIPC, file an application for a protective decree with any
court of competent jurisdiction specified in section 21(e) or
27 of the Securities Exchange Act of 1934, except that no such
application shall be filed with respect to a member, the only
customers of which are persons whose claims could not be
satisfied by SIPC advances pursuant to section 9, if SIPC'';
and
(5) by adding at the end the following:
``(B) Consent required.--No member of SIPC that has a
customer may enter into an insolvency, receivership, or
bankruptcy proceeding, under Federal or State law, without the
specific consent of SIPC, except as provided in title II of the
Dodd-Frank Wall Street Reform and Consumer Protection Act.''.
SEC. 929I. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED TO THE
COMMISSION.
(a) Securities Exchange Act of 1934.--Section 24 of the Securities
Exchange Act of 1934 (15 U.S.C. 78x) is amended--
(1) in subsection (d), by striking ``subsection (e)'' and
inserting ``subsection (f)'';
(2) by redesignating subsection (e) as subsection (f); and
(3) by inserting after subsection (d) the following:
``(e) Records Obtained From Registered Persons.--
``(1) In general.--Except as provided in subsection (f), the
Commission shall not be compelled to disclose records or
information obtained pursuant to section 17(b), or records or
information based upon or derived from such records or information,
if such records or information have been obtained by the Commission
for use in furtherance of the purposes of this title, including
surveillance, risk assessments, or other regulatory and oversight
activities.
``(2) Treatment of information.--For purposes of section 552 of
title 5, United States Code, this subsection shall be considered a
statute described in subsection (b)(3)(B) of such section 552.
Collection of information pursuant to section 17 shall be an
administrative action involving an agency against specific
individuals or agencies pursuant to section 3518(c)(1) of title 44,
United States Code.''.
(b) Investment Company Act of 1940.--Section 31 of the Investment
Company Act of 1940 (15 U.S.C. 80a-30) is amended--
(1) by striking subsection (c) and inserting the following:
``(c) Limitations on Disclosure by Commission.--Notwithstanding any
other provision of law, the Commission shall not be compelled to
disclose any records or information provided to the Commission under
this section, or records or information based upon or derived from such
records or information, if such records or information have been
obtained by the Commission for use in furtherance of the purposes of
this title, including surveillance, risk assessments, or other
regulatory and oversight activities. Nothing in this subsection
authorizes the Commission to withhold information from the Congress or
prevent the Commission from complying with a request for information
from any other Federal department or agency requesting the information
for purposes within the scope of jurisdiction of that department or
agency, or complying with an order of a court of the United States in
an action brought by the United States or the Commission. For purposes
of section 552 of title 5, United States Code, this section shall be
considered a statute described in subsection (b)(3)(B) of such section
552. Collection of information pursuant to section 31 shall be an
administrative action involving an agency against specific individuals
or agencies pursuant to section 3518(c)(1) of title 44, United States
Code.'';
(2) by striking subsection (d); and
(3) by redesignating subsections (e) and (f) as subsections (d)
and (e), respectively.
(c) Investment Advisers Act of 1940.--Section 210 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-10) is amended by adding at the end
the following:
``(d) Limitations on Disclosure by the Commission.--Notwithstanding
any other provision of law, the Commission shall not be compelled to
disclose any records or information provided to the Commission under
section 204, or records or information based upon or derived from such
records or information, if such records or information have been
obtained by the Commission for use in furtherance of the purposes of
this title, including surveillance, risk assessments, or other
regulatory and oversight activities. Nothing in this subsection
authorizes the Commission to withhold information from the Congress or
prevent the Commission from complying with a request for information
from any other Federal department or agency requesting the information
for purposes within the scope of jurisdiction of that department or
agency, or complying with an order of a court of the United States in
an action brought by the United States or the Commission. For purposes
of section 552 of title 5, United States Code, this subsection shall be
considered a statute described in subsection (b)(3)(B) of such section
552. Collection of information pursuant to section 204 shall be an
administrative action involving an agency against specific individuals
or agencies pursuant to section 3518(c)(1) of title 44, United States
Code.''.
SEC. 929J. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED AND EXCHANGED.
Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216) is
amended--
(1) by striking subsection (b) and inserting the following:
``(b) Production of Documents.--
``(1) Production by foreign firms.--If a foreign public
accounting firm performs material services upon which a registered
public accounting firm relies in the conduct of an audit or interim
review, issues an audit report, performs audit work, or conducts
interim reviews, the foreign public accounting firm shall--
``(A) produce the audit work papers of the foreign public
accounting firm and all other documents of the firm related to
any such audit work or interim review to the Commission or the
Board, upon request of the Commission or the Board; and
``(B) be subject to the jurisdiction of the courts of the
United States for purposes of enforcement of any request for
such documents.
``(2) Other production.--Any registered public accounting firm
that relies, in whole or in part, on the work of a foreign public
accounting firm in issuing an audit report, performing audit work,
or conducting an interim review, shall--
``(A) produce the audit work papers of the foreign public
accounting firm and all other documents related to any such
work in response to a request for production by the Commission
or the Board; and
``(B) secure the agreement of any foreign public accounting
firm to such production, as a condition of the reliance by the
registered public accounting firm on the work of that foreign
public accounting firm.'';
(2) by redesignating subsection (d) as subsection (g); and
(3) by inserting after subsection (c) the following:
``(d) Service of Requests or Process.--
``(1) In general.--Any foreign public accounting firm that
performs work for a domestic registered public accounting firm
shall furnish to the domestic registered public accounting firm a
written irrevocable consent and power of attorney that designates
the domestic registered public accounting firm as an agent upon
whom may be served any request by the Commission or the Board under
this section or upon whom may be served any process, pleadings, or
other papers in any action brought to enforce this section.
``(2) Specific audit work.--Any foreign public accounting firm
that performs material services upon which a registered public
accounting firm relies in the conduct of an audit or interim
review, issues an audit report, performs audit work, or, performs
interim reviews, shall designate to the Commission or the Board an
agent in the United States upon whom may be served any request by
the Commission or the Board under this section or upon whom may be
served any process, pleading, or other papers in any action brought
to enforce this section.
``(e) Sanctions.--A willful refusal to comply, in whole in or in
part, with any request by the Commission or the Board under this
section, shall be deemed a violation of this Act.
``(f) Other Means of Satisfying Production Obligations.--
Notwithstanding any other provisions of this section, the staff of the
Commission or the Board may allow a foreign public accounting firm that
is subject to this section to meet production obligations under this
section through alternate means, such as through foreign counterparts
of the Commission or the Board.''.
SEC. 929K. SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORITIES.
Section 24 of the Securities Exchange Act of 1934 (15 U.S.C. 78x)
is amended--
(1) in subsection (d), as amended by subsection (d)(1)(A), by
striking ``subsection (f)'' and inserting ``subsection (g)'';
(2) in subsection (e), as added by subsection (d)(1)(C), by
striking ``subsection (f)'' and inserting ``subsection (g)'';
(3) by redesignating subsection (f) as subsection (g); and
(4) by inserting after subsection (e) the following:
``(f) Sharing Privileged Information With Other Authorities.--
``(1) Privileged information provided by the commission.--The
Commission shall not be deemed to have waived any privilege
applicable to any information by transferring that information to
or permitting that information to be used by--
``(A) any agency (as defined in section 6 of title 18,
United States Code);
``(B) the Public Company Accounting Oversight Board;
``(C) any self-regulatory organization;
``(D) any foreign securities authority;
``(E) any foreign law enforcement authority; or
``(F) any State securities or law enforcement authority.
``(2) Nondisclosure of privileged information provided to the
commission.--The Commission shall not be compelled to disclose
privileged information obtained from any foreign securities
authority, or foreign law enforcement authority, if the authority
has in good faith determined and represented to the Commission that
the information is privileged.
``(3) Nonwaiver of privileged information provided to the
commission.--
``(A) In general.--Federal agencies, State securities and
law enforcement authorities, self-regulatory organizations, and
the Public Company Accounting Oversight Board shall not be
deemed to have waived any privilege applicable to any
information by transferring that information to or permitting
that information to be used by the Commission.
``(B) Exception.--The provisions of subparagraph (A) shall
not apply to a self-regulatory organization or the Public
Company Accounting Oversight Board with respect to information
used by the Commission in an action against such organization.
``(4) Definitions.--For purposes of this subsection--
``(A) the term `privilege' includes any work-product
privilege, attorney-client privilege, governmental privilege,
or other privilege recognized under Federal, State, or foreign
law;
``(B) the term `foreign law enforcement authority' means
any foreign authority that is empowered under foreign law to
detect, investigate or prosecute potential violations of law;
and
``(C) the term `State securities or law enforcement
authority' means the authority of any State or territory that
is empowered under State or territory law to detect,
investigate, or prosecute potential violations of law.''.
SEC. 929L. ENHANCED APPLICATION OF ANTIFRAUD PROVISIONS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended--
(1) in section 9--
(A) by striking ``registered on a national securities
exchange'' each place that term appears and inserting ``other
than a government security'';
(B) in subsection (b), by striking ``by use of any facility
of a national securities exchange,''; and
(C) in subsection (c), by inserting after ``unlawful for
any'' the following: ``broker, dealer, or'';
(2) in section 10(a)(1), by striking ``registered on a national
securities exchange'' and inserting ``other than a government
security''; and
(3) in section 15(c)(1)(A), by striking ``otherwise than on a
national securities exchange of which it is a member''.
SEC. 929M. AIDING AND ABETTING AUTHORITY UNDER THE SECURITIES ACT AND
THE INVESTMENT COMPANY ACT.
(a) Under the Securities Act of 1933.--Section 15 of the Securities
Act of 1933 (15 U.S.C. 77o) is amended--
(1) by striking ``Every person who'' and inserting ``(a)
Controlling Persons.--Every person who''; and
(2) by adding at the end the following:
``(b) Prosecution of Persons Who Aid and Abet Violations.--For
purposes of any action brought by the Commission under subparagraph (b)
or (d) of section 20, any person that knowingly or recklessly provides
substantial assistance to another person in violation of a provision of
this Act, or of any rule or regulation issued under this Act, shall be
deemed to be in violation of such provision to the same extent as the
person to whom such assistance is provided.''.
(b) Under the Investment Company Act of 1940.--Section 48 of the
Investment Company Act of 1940 (15 U.S.C. 80a-48) is amended by
redesignating subsection (b) as subsection (c) and inserting after
subsection (a) the following:
``(b) For purposes of any action brought by the Commission under
subsection (d) or (e) of section 42, any person that knowingly or
recklessly provides substantial assistance to another person in
violation of a provision of this Act, or of any rule or regulation
issued under this Act, shall be deemed to be in violation of such
provision to the same extent as the person to whom such assistance is
provided.''.
SEC. 929N. AUTHORITY TO IMPOSE PENALTIES FOR AIDING AND ABETTING
VIOLATIONS OF THE INVESTMENT ADVISERS ACT.
Section 209 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
9) is amended by inserting at the end the following new subsection:
``(f) Aiding and Abetting.--For purposes of any action brought by
the Commission under subsection (e), any person that knowingly or
recklessly has aided, abetted, counseled, commanded, induced, or
procured a violation of any provision of this Act, or of any rule,
regulation, or order hereunder, shall be deemed to be in violation of
such provision, rule, regulation, or order to the same extent as the
person that committed such violation.''.
SEC. 929O. AIDING AND ABETTING STANDARD OF KNOWLEDGE SATISFIED BY
RECKLESSNESS.
Section 20(e) of the Securities Exchange Act of 1934 (15 U.S.C.
78t(e)) is amended by inserting ``or recklessly'' after ``knowingly''.
SEC. 929P. STRENGTHENING ENFORCEMENT BY THE COMMISSION.
(a) Authority to Impose Civil Penalties in Cease and Desist
Proceedings.--
(1) Under the securities act of 1933.--Section 8A of the
Securities Act of 1933 (15 U.S.C. 77h-1) is amended by adding at
the end the following new subsection:
``(g) Authority to Impose Money Penalties.--
``(1) Grounds.--In any cease-and-desist proceeding under
subsection (a), the Commission may impose a civil penalty on a
person if the Commission finds, on the record, after notice and
opportunity for hearing, that--
``(A) such person--
``(i) is violating or has violated any provision of
this title, or any rule or regulation issued under this
title; or
``(ii) is or was a cause of the violation of any
provision of this title, or any rule or regulation
thereunder; and
``(B) such penalty is in the public interest.
``(2) Maximum amount of penalty.--
``(A) First tier.--The maximum amount of a penalty for each
act or omission described in paragraph (1) shall be $7,500 for
a natural person or $75,000 for any other person.
``(B) Second tier.--Notwithstanding subparagraph (A), the
maximum amount of penalty for each such act or omission shall
be $75,000 for a natural person or $375,000 for any other
person, if the act or omission described in paragraph (1)
involved fraud, deceit, manipulation, or deliberate or reckless
disregard of a regulatory requirement.
``(C) Third tier.--Notwithstanding subparagraphs (A) and
(B), the maximum amount of penalty for each such act or
omission shall be $150,000 for a natural person or $725,000 for
any other person, if--
``(i) the act or omission described in paragraph (1)
involved fraud, deceit, manipulation, or deliberate or
reckless disregard of a regulatory requirement; and
``(ii) such act or omission directly or indirectly
resulted in--
``(I) substantial losses or created a significant
risk of substantial losses to other persons; or
``(II) substantial pecuniary gain to the person who
committed the act or omission.
``(3) Evidence concerning ability to pay.--In any proceeding in
which the Commission may impose a penalty under this section, a
respondent may present evidence of the ability of the respondent to
pay such penalty. The Commission may, in its discretion, consider
such evidence in determining whether such penalty is in the public
interest. Such evidence may relate to the extent of the ability of
the respondent to continue in business and the collectability of a
penalty, taking into account any other claims of the United States
or third parties upon the assets of the respondent and the amount
of the assets of the respondent.''.
(2) Under the securities exchange act of 1934.--Section 21B(a)
of the Securities Exchange Act of 1934 (15 U.S.C. 78u-2(a)) is
amended--
(A) by striking the matter following paragraph (4);
(B) in the matter preceding paragraph (1), by inserting
after ``opportunity for hearing,'' the following: ``that such
penalty is in the public interest and'';
(C) by redesignating paragraphs (1) through (4) as
subparagraphs (A) through (D), respectively, and adjusting the
margins accordingly;
(D) by striking ``In any proceeding'' and inserting the
following:
``(1) In general.--In any proceeding''; and
(E) by adding at the end the following:
``(2) Cease-and-desist proceedings.--In any proceeding
instituted under section 21C against any person, the Commission may
impose a civil penalty, if the Commission finds, on the record
after notice and opportunity for hearing, that such person--
``(A) is violating or has violated any provision of this
title, or any rule or regulation issued under this title; or
``(B) is or was a cause of the violation of any provision
of this title, or any rule or regulation issued under this
title.''.
(3) Under the investment company act of 1940.--Section 9(d)(1)
of the Investment Company Act of 1940 (15 U.S.C. 80a-9(d)(1)) is
amended--
(A) by striking the matter following subparagraph (C);
(B) in the matter preceding subparagraph (A), by inserting
after ``opportunity for hearing,'' the following: ``that such
penalty is in the public interest, and'';
(C) by redesignating subparagraphs (A) through (C) as
clauses (i) through (iii), respectively, and adjusting the
margins accordingly;
(D) by striking ``In any proceeding'' and inserting the
following:
``(A) In general.--In any proceeding''; and
(E) by adding at the end the following:
``(B) Cease-and-desist proceedings.--In any proceeding
instituted pursuant to subsection (f) against any person, the
Commission may impose a civil penalty if the Commission finds,
on the record, after notice and opportunity for hearing, that
such person--
``(i) is violating or has violated any provision of
this title, or any rule or regulation issued under this
title; or
``(ii) is or was a cause of the violation of any
provision of this title, or any rule or regulation issued
under this title.''.
(4) Under the investment advisers act of 1940.--Section
203(i)(1) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3(i)(1)) is amended--
(A) by striking the matter following subparagraph (D);
(B) in the matter preceding subparagraph (A), by inserting
after ``opportunity for hearing,'' the following: ``that such
penalty is in the public interest and'';
(C) by redesignating subparagraphs (A) through (D) as
clauses (i) through (iv), respectively, and adjusting the
margins accordingly;
(D) by striking ``In any proceeding'' and inserting the
following:
``(A) In general.--In any proceeding''; and
(E) by adding at the end the following new subparagraph:
``(B) Cease-and-desist proceedings.--In any proceeding
instituted pursuant to subsection (k) against any person, the
Commission may impose a civil penalty if the Commission finds,
on the record, after notice and opportunity for hearing, that
such person--
``(i) is violating or has violated any provision of
this title, or any rule or regulation issued under this
title; or
``(ii) is or was a cause of the violation of any
provision of this title, or any rule or regulation issued
under this title.''.
(b) Extraterritorial Jurisdiction of the Antifraud Provisions of
the Federal Securities Laws.--
(1) Under the securities act of 1933.--Section 22 of the
Securities Act of 1933 (15 U.S.C. 77v(a)) is amended by adding at
the end the following new subsection:
``(c) Extraterritorial Jurisdiction.--The district courts of the
United States and the United States courts of any Territory shall have
jurisdiction of an action or proceeding brought or instituted by the
Commission or the United States alleging a violation of section 17(a)
involving--
``(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
securities transaction occurs outside the United States and
involves only foreign investors; or
``(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.''.
(2) Under the securities exchange act of 1934.--Section 27 of
the Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended--
(A) by striking ``The district'' and inserting the
following:
``(a) In General.--The district''; and
(B) by adding at the end the following new subsection:
``(b) Extraterritorial Jurisdiction.--The district courts of the
United States and the United States courts of any Territory shall have
jurisdiction of an action or proceeding brought or instituted by the
Commission or the United States alleging a violation of the antifraud
provisions of this title involving--
``(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
securities transaction occurs outside the United States and
involves only foreign investors; or
``(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.''.
(3) Under the investment advisers act of 1940.--Section 214 of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is amended--
(A) by striking ``The district'' and inserting the
following:
``(a) In General.--The district''; and
(B) by adding at the end the following new subsection:
``(b) Extraterritorial Jurisdiction.--The district courts of the
United States and the United States courts of any Territory shall have
jurisdiction of an action or proceeding brought or instituted by the
Commission or the United States alleging a violation of section 206
involving--
``(1) conduct within the United States that constitutes
significant steps in furtherance of the violation, even if the
violation is committed by a foreign adviser and involves only
foreign investors; or
``(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.''.
(c) Control Person Liability Under the Securities Exchange Act of
1934.--Section 20(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78t(a)) is amended by inserting after ``controlled person is liable''
the following: ``(including to the Commission in any action brought
under paragraph (1) or (3) of section 21(d))''.
SEC. 929Q. REVISION TO RECORDKEEPING RULE.
(a) Investment Company Act of 1940 Amendments.--Section 31 of the
Investment Company Act of 1940 (15 U.S.C. 80a-30) is amended--
(1) in subsection (a)(1), by adding at the end the following:
``Each person having custody or use of the securities, deposits, or
credits of a registered investment company shall maintain and
preserve all records that relate to the custody or use by such
person of the securities, deposits, or credits of the registered
investment company for such period or periods as the Commission, by
rule or regulation, may prescribe, as necessary or appropriate in
the public interest or for the protection of investors.''; and
(2) in subsection (b), by adding at the end the following:
``(4) Records of persons with custody or use.--
``(A) In general.--Records of persons having custody or use
of the securities, deposits, or credits of a registered
investment company that relate to such custody or use, are
subject at any time, or from time to time, to such reasonable
periodic, special, or other examinations and other information
and document requests by representatives of the Commission, as
the Commission deems necessary or appropriate in the public
interest or for the protection of investors.
``(B) Certain persons subject to other regulation.--Any
person that is subject to regulation and examination by a
Federal financial institution regulatory agency (as such term
is defined under section 212(c)(2) of title 18, United States
Code) may satisfy any examination request, information request,
or document request described under subparagraph (A), by
providing to the Commission a detailed listing, in writing, of
the securities, deposits, or credits of the registered
investment company within the custody or use of such person.''.
(b) Investment Advisers Act of 1940 Amendment.--Section 204 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-4) is amended by adding
at the end the following new subsection:
``(d) Records of Persons With Custody or Use.--
``(1) In general.--Records of persons having custody or use of
the securities, deposits, or credits of a client, that relate to
such custody or use, are subject at any time, or from time to time,
to such reasonable periodic, special, or other examinations and
other information and document requests by representatives of the
Commission, as the Commission deems necessary or appropriate in the
public interest or for the protection of investors.
``(2) Certain persons subject to other regulation.--Any person
that is subject to regulation and examination by a Federal
financial institution regulatory agency (as such term is defined
under section 212(c)(2) of title 18, United States Code) may
satisfy any examination request, information request, or document
request described under paragraph (1), by providing the Commission
with a detailed listing, in writing, of the securities, deposits,
or credits of the client within the custody or use of such
person.''.
SEC. 929R. BENEFICIAL OWNERSHIP AND SHORT-SWING PROFIT REPORTING.
(a) Beneficial Ownership Reporting.--Section 13 of the Securities
Exchange Act of 1934 (15 U.S.C. 78m) is amended--
(1) in subsection (d)(1)--
(A) by inserting after ``within ten days after such
acquisition'' the following: ``or within such shorter time as
the Commission may establish by rule''; and
(B) by striking ``send to the issuer of the security at its
principal executive office, by registered or certified mail,
send to each exchange where the security is traded, and'';
(2) in subsection (d)(2)--
(A) by striking ``in the statements to the issuer and the
exchange, and''; and
(B) by striking ``shall be transmitted to the issuer and
the exchange and'';
(3) in subsection (g)(1), by striking ``shall send to the
issuer of the security and''; and
(4) in subsection (g)(2)--
(A) by striking ``sent to the issuer and''; and
(B) by striking ``shall be transmitted to the issuer and''.
(b) Short-swing Profit Reporting.--Section 16(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78p(a)) is amended--
(1) in paragraph (1), by striking ``(and, if such security is
registered on a national securities exchange, also with the
exchange)''; and
(2) in paragraph (2)(B), by inserting after ``officer'' the
following: ``, or within such shorter time as the Commission may
establish by rule''.
SEC. 929S. FINGERPRINTING.
Section 17(f)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
78q(f)(2)) is amended--
(1) in the first sentence, by striking ``and registered
clearing agency,'' and inserting ``registered clearing agency,
registered securities information processor, national securities
exchange, and national securities association''; and
(2) in the second sentence, by striking ``or clearing agency,''
and inserting ``clearing agency, securities information processor,
national securities exchange, or national securities
association,''.
SEC. 929T. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION RULES.
Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78cc(a)) is amended by striking ``an exchange required thereby'' and
inserting ``a self-regulatory organization,''.
SEC. 929U. DEADLINE FOR COMPLETING EXAMINATIONS, INSPECTIONS AND
ENFORCEMENT ACTIONS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 4D the following new section:
``SEC. 4E. DEADLINE FOR COMPLETING ENFORCEMENT INVESTIGATIONS AND
COMPLIANCE EXAMINATIONS AND INSPECTIONS.
``(a) Enforcement Investigations.--
``(1) In general.--Not later than 180 days after the date on
which Commission staff provide a written Wells notification to any
person, the Commission staff shall either file an action against
such person or provide notice to the Director of the Division of
Enforcement of its intent to not file an action.
``(2) Exceptions for certain complex actions.--Notwithstanding
paragraph (1), if the Director of the Division of Enforcement of
the Commission or the Director's designee determines that a
particular enforcement investigation is sufficiently complex such
that a determination regarding the filing of an action against a
person cannot be completed within the deadline specified in
paragraph (1), the Director of the Division of Enforcement of the
Commission or the Director's designee may, after providing notice
to the Chairman of the Commission, extend such deadline as needed
for one additional 180-day period. If after the additional 180-day
period the Director of the Division of Enforcement of the
Commission or the Director's designee determines that a particular
enforcement investigation is sufficiently complex such that a
determination regarding the filing of an action against a person
cannot be completed within the additional 180-day period, the
Director of the Division of Enforcement of the Commission or the
Director's designee may, after providing notice to and receiving
approval of the Commission, extend such deadline as needed for one
or more additional successive 180-day periods.
``(b) Compliance Examinations and Inspections.--
``(1) In general.--Not later than 180 days after the date on
which Commission staff completes the on-site portion of its
compliance examination or inspection or receives all records
requested from the entity being examined or inspected, whichever is
later, Commission staff shall provide the entity being examined or
inspected with written notification indicating either that the
examination or inspection has concluded, has concluded without
findings, or that the staff requests the entity undertake
corrective action.
``(2) Exception for certain complex actions.--Notwithstanding
paragraph (1), if the head of any division or office within the
Commission responsible for compliance examinations and inspections
or his designee determines that a particular compliance examination
or inspection is sufficiently complex such that a determination
regarding concluding the examination or inspection, or regarding
the staff requests the entity undertake corrective action, cannot
be completed within the deadline specified in paragraph (1), the
head of any division or office within the Commission responsible
for compliance examinations and inspections or his designee may,
after providing notice to the Chairman of the Commission, extend
such deadline as needed for one additional 180-day period.''.
SEC. 929V. SECURITY INVESTOR PROTECTION ACT AMENDMENTS.
(a) Increasing the Minimum Assessment Paid by SIPC Members.--
Section 4(d)(1)(C) of the Securities Investor Protection Act of 1970
(15 U.S.C. 78ddd(d)(1)(C)) is amended by striking ``$150 per annum''
and inserting the following: ``0.02 percent of the gross revenues from
the securities business of such member of SIPC''.
(b) Increasing the Fine for Prohibited Acts Under SIPA.--Section
14(c) of the Securities Investor Protection Act of 1970 (15 U.S.C.
78jjj(c)) is amended--
(1) in paragraph (1), by striking ``$50,000'' and inserting
``$250,000''; and
(2) in paragraph (2), by striking ``$50,000'' and inserting
``$250,000''.
(c) Penalty for Misrepresentation of SIPC Membership or
Protection.--Section 14 of the Securities Investor Protection Act of
1970 (15 U.S.C. 78jjj) is amended by adding at the end the following
new subsection:
``(d) Misrepresentation of SIPC Membership or Protection.--
``(1) In general.--Any person who falsely represents by any
means (including, without limitation, through the Internet or any
other medium of mass communication), with actual knowledge of the
falsity of the representation and with an intent to deceive or
cause injury to another, that such person, or another person, is a
member of SIPC or that any person or account is protected or is
eligible for protection under this Act or by SIPC, shall be liable
for any damages caused thereby and shall be fined not more than
$250,000 or imprisoned for not more than 5 years.
``(2) Injunctions.--Any court having jurisdiction of a civil
action arising under this Act may grant temporary injunctions and
final injunctions on such terms as the court deems reasonable to
prevent or restrain any violation of paragraph (1). Any such
injunction may be served anywhere in the United States on the
person enjoined, shall be operative throughout the United States,
and shall be enforceable, by proceedings in contempt or otherwise,
by any United States court having jurisdiction over that person.
The clerk of the court granting the injunction shall, when
requested by any other court in which enforcement of the injunction
is sought, transmit promptly to the other court a certified copy of
all papers in the case on file in such clerk's office.''.
SEC. 929W. NOTICE TO MISSING SECURITY HOLDERS.
Section 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78q-
1) is amended by adding at the end the following new subsection:
``(g) Due Diligence for the Delivery of Dividends, Interest, and
Other Valuable Property Rights.--
``(1) Revision of rules required.--The Commission shall revise
its regulations in section 240.17Ad-17 of title 17, Code of Federal
Regulations, as in effect on December 8, 1997, to extend the
application of such section to brokers and dealers and to provide
for the following:
``(A) A requirement that the paying agent provide a single
written notification to each missing security holder that the
missing security holder has been sent a check that has not yet
been negotiated. The written notification may be sent along
with a check or other mailing subsequently sent to the missing
security holder but must be provided no later than 7 months
after the sending of the not yet negotiated check.
``(B) An exclusion for paying agents from the notification
requirements when the value of the not yet negotiated check is
less than $25.
``(C) A provision clarifying that the requirements
described in subparagraph (A) shall have no effect on State
escheatment laws.
``(D) For purposes of such revised regulations--
``(i) a security holder shall be considered a `missing
security holder' if a check is sent to the security holder
and the check is not negotiated before the earlier of the
paying agent sending the next regularly scheduled check or
the elapsing of 6 months after the sending of the not yet
negotiated check; and
``(ii) the term `paying agent' includes any issuer,
transfer agent, broker, dealer, investment adviser,
indenture trustee, custodian, or any other person that
accepts payments from the issuer of a security and
distributes the payments to the holders of the security.
``(2) Rulemaking.--The Commission shall adopt such rules,
regulations, and orders necessary to implement this subsection no
later than 1 year after the date of enactment of this subsection.
In proposing such rules, the Commission shall seek to minimize
disruptions to current systems used by or on behalf of paying
agents to process payment to account holders and avoid requiring
multiple paying agents to send written notification to a missing
security holder regarding the same not yet negotiated check.''.
SEC. 929X. SHORT SALE REFORMS.
(a) Short Sale Disclosure.--Section 13(f) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(f)) is amended by redesignating
paragraphs (2), (3), (4), and (5) as paragraphs (3), (4), (5), and (6),
respectively, and inserting after paragraph (1) the following:
``(2) The Commission shall prescribe rules providing for the
public disclosure of the name of the issuer and the title, class,
CUSIP number, aggregate amount of the number of short sales of each
security, and any additional information determined by the
Commission following the end of the reporting period. At a minimum,
such public disclosure shall occur every month.''.
(b) Short Selling Enforcement.--Section 9 of the Securities
Exchange Act of 1934 (15 U.S.C. 78i) is amended--
(1) by redesignating subsections (d), (e), (f), (g), (h), and
(i) as subsections (e), (f), (g), (h), (i), and (j), respectively;
and
(2) inserting after subsection (c), the following new
subsection:
``(d) Transactions Relating to Short Sales of Securities.--It shall
be unlawful for any person, directly or indirectly, by the use of the
mails or any means or instrumentality of interstate commerce, or of any
facility of any national securities exchange, or for any member of a
national securities exchange to effect, alone or with one or more other
persons, a manipulative short sale of any security. The Commission
shall issue such other rules as are necessary or appropriate to ensure
that the appropriate enforcement options and remedies are available for
violations of this subsection in the public interest or for the
protection of investors.''.
(c) Investor Notification.--Section 15 of the Securities Exchange
Act of 1934 (15 U.S.C. 78o) is amended--
(1) by redesignating subsections (e), (f), (g), (h), and (i) as
subsections (f), (g), (h), (i), and (j), respectively; and
(2) inserting after subsection (d) the following new
subsection:
``(e) Notices to Customers Regarding Securities Lending.--Every
registered broker or dealer shall provide notice to its customers that
they may elect not to allow their fully paid securities to be used in
connection with short sales. If a broker or dealer uses a customer's
securities in connection with short sales, the broker or dealer shall
provide notice to its customer that the broker or dealer may receive
compensation in connection with lending the customer's securities. The
Commission, by rule, as it deems necessary or appropriate in the public
interest and for the protection of investors, may prescribe the form,
content, time, and manner of delivery of any notice required under this
paragraph.''.
SEC. 929Y. STUDY ON EXTRATERRITORIAL PRIVATE RIGHTS OF ACTION.
(a) In General.--The Securities and Exchange Commission of the
United States shall solicit public comment and thereafter conduct a
study to determine the extent to which private rights of action under
the antifraud provisions of the Securities and Exchange Act of 1934 (15
U.S.C. 78u-4) should be extended to cover--
(1) conduct within the United States that constitutes a
significant step in the furtherance of the violation, even if the
securities transaction occurs outside the United States and
involves only foreign investors; and
(2) conduct occurring outside the United States that has a
foreseeable substantial effect within the United States.
(b) Contents.--The study shall consider and analyze, among other
things--
(1) the scope of such a private right of action, including
whether it should extend to all private actors or whether it should
be more limited to extend just to institutional investors or
otherwise;
(2) what implications such a private right of action would have
on international comity;
(3) the economic costs and benefits of extending a private
right of action for transnational securities frauds; and
(4) whether a narrower extraterritorial standard should be
adopted.
(c) Report.--A report of the study shall be submitted and
recommendations made to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the
House not later than 18 months after the date of enactment of this Act.
SEC. 929Z. GAO STUDY ON SECURITIES LITIGATION.
(a) Study.--The Comptroller General of the United States shall
conduct a study on the impact of authorizing a private right of action
against any person who aids or abets another person in violation of the
securities laws. To the extent feasible, this study shall include--
(1) a review of the role of secondary actors in companies
issuance of securities;
(2) the courts interpretation of the scope of liability for
secondary actors under Federal securities laws after January 14,
2008; and
(3) the types of lawsuits decided under the Private Securities
Litigation Act of 1995.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General shall submit a report to Congress on
the findings of the study required under subsection (a).
Subtitle C--Improvements to the Regulation of Credit Rating Agencies
SEC. 931. FINDINGS.
Congress finds the following:
(1) Because of the systemic importance of credit ratings and
the reliance placed on credit ratings by individual and
institutional investors and financial regulators, the activities
and performances of credit rating agencies, including nationally
recognized statistical rating organizations, are matters of
national public interest, as credit rating agencies are central to
capital formation, investor confidence, and the efficient
performance of the United States economy.
(2) Credit rating agencies, including nationally recognized
statistical rating organizations, play a critical ``gatekeeper''
role in the debt market that is functionally similar to that of
securities analysts, who evaluate the quality of securities in the
equity market, and auditors, who review the financial statements of
firms. Such role justifies a similar level of public oversight and
accountability.
(3) Because credit rating agencies perform evaluative and
analytical services on behalf of clients, much as other financial
``gatekeepers'' do, the activities of credit rating agencies are
fundamentally commercial in character and should be subject to the
same standards of liability and oversight as apply to auditors,
securities analysts, and investment bankers.
(4) In certain activities, particularly in advising arrangers
of structured financial products on potential ratings of such
products, credit rating agencies face conflicts of interest that
need to be carefully monitored and that therefore should be
addressed explicitly in legislation in order to give clearer
authority to the Securities and Exchange Commission.
(5) In the recent financial crisis, the ratings on structured
financial products have proven to be inaccurate. This inaccuracy
contributed significantly to the mismanagement of risks by
financial institutions and investors, which in turn adversely
impacted the health of the economy in the United States and around
the world. Such inaccuracy necessitates increased accountability on
the part of credit rating agencies.
SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND TRANSPARENCY OF
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS.
(a) In General.--Section 15E of the Securities Exchange Act of 1934
(15 U.S.C. 78o-7) is amended--
(1) in subsection (b)--
(A) in paragraph (1)(A), by striking ``furnished'' and
inserting ``filed'' and by striking ``furnishing'' and
inserting ``filing'';
(B) in paragraph (1)(B), by striking ``furnishing'' and
inserting ``filing''; and
(C) in the first sentence of paragraph (2), by striking
``furnish to'' and inserting ``file with'';
(2) in subsection (c)--
(A) in paragraph (2)--
(i) in the second sentence, by inserting ``any other
provision of this section, or'' after ``Notwithstanding'';
and
(ii) by inserting after the period at the end the
following: ``Nothing in this paragraph may be construed to
afford a defense against any action or proceeding brought
by the Commission to enforce the antifraud provisions of
the securities laws.''; and
(B) by adding at the end the following:
``(3) Internal controls over processes for determining credit
ratings.--
``(A) In general.--Each nationally recognized statistical
rating organization shall establish, maintain, enforce, and
document an effective internal control structure governing the
implementation of and adherence to policies, procedures, and
methodologies for determining credit ratings, taking into
consideration such factors as the Commission may prescribe, by
rule.
``(B) Attestation requirement.--The Commission shall
prescribe rules requiring each nationally recognized
statistical rating organization to submit to the Commission an
annual internal controls report, which shall contain--
``(i) a description of the responsibility of the
management of the nationally recognized statistical rating
organization in establishing and maintaining an effective
internal control structure under subparagraph (A);
``(ii) an assessment of the effectiveness of the
internal control structure of the nationally recognized
statistical rating organization; and
``(iii) the attestation of the chief executive officer,
or equivalent individual, of the nationally recognized
statistical rating organization.'';
(3) in subsection (d)--
(A) by inserting after ``or revoke the registration of any
nationally recognized statistical rating organization'' the
following: ``, or with respect to any person who is associated
with, who is seeking to become associated with, or, at the time
of the alleged misconduct, who was associated or was seeking to
become associated with a nationally recognized statistical
rating organization, the Commission, by order, shall censure,
place limitations on the activities or functions of such
person, suspend for a period not exceeding 1 year, or bar such
person from being associated with a nationally recognized
statistical rating organization,'';
(B) by inserting ``bar'' after ``placing of limitations,
suspension,'';
(C) in paragraph (2), by striking ``furnished to'' and
inserting ``filed with'';
(D) in paragraph (2), by redesignating subparagraphs (A)
and (B) as clauses (i) and (ii), respectively, and adjusting
the clause margins accordingly;
(E) by redesignating paragraphs (1) through (5) as
subparagraphs (A) through (E), respectively, and adjusting the
subparagraph margins accordingly;
(F) in the matter preceding subparagraph (A), as so
redesignated, by striking ``The Commission'' and inserting the
following:
``(1) In general.--The Commission'';
(G) in subparagraph (D), as so redesignated--
(i) by striking ``furnish'' and inserting ``file''; and
(ii) by striking ``or'' at the end.
(H) in subparagraph (E), as so redesignated, by striking
the period at the end and inserting a semicolon; and
(I) by adding at the end the following:
``(F) has failed reasonably to supervise, with a view to
preventing a violation of the securities laws, an individual
who commits such a violation, if the individual is subject to
the supervision of that person.
``(2) Suspension or revocation for particular class of
securities.--
``(A) In general.--The Commission may temporarily suspend
or permanently revoke the registration of a nationally
recognized statistical rating organization with respect to a
particular class or subclass of securities, if the Commission
finds, on the record after notice and opportunity for hearing,
that the nationally recognized statistical rating organization
does not have adequate financial and managerial resources to
consistently produce credit ratings with integrity.
``(B) Considerations.--In making any determination under
subparagraph (A), the Commission shall consider--
``(i) whether the nationally recognized statistical
rating organization has failed over a sustained period of
time, as determined by the Commission, to produce ratings
that are accurate for that class or subclass of securities;
and
``(ii) such other factors as the Commission may
determine.'';
(4) in subsection (h), by adding at the end the following:
``(3) Separation of ratings from sales and marketing.--
``(A) Rules required.--The Commission shall issue rules to
prevent the sales and marketing considerations of a nationally
recognized statistical rating organization from influencing the
production of ratings by the nationally recognized statistical
rating organization.
``(B) Contents of rules.--The rules issued under
subparagraph (A) shall provide for--
``(i) exceptions for small nationally recognized
statistical rating organizations with respect to which the
Commission determines that the separation of the production
of ratings and sales and marketing activities is not
appropriate; and
``(ii) suspension or revocation of the registration of
a nationally recognized statistical rating organization, if
the Commission finds, on the record, after notice and
opportunity for a hearing, that--
``(I) the nationally recognized statistical rating
organization has committed a violation of a rule issued
under this subsection; and
``(II) the violation of a rule issued under this
subsection affected a rating.
``(4) Look-back requirement.--
``(A) Review by the nationally recognized statistical
rating organization.--Each nationally recognized statistical
rating organization shall establish, maintain, and enforce
policies and procedures reasonably designed to ensure that, in
any case in which an employee of a person subject to a credit
rating of the nationally recognized statistical rating
organization or the issuer, underwriter, or sponsor of a
security or money market instrument subject to a credit rating
of the nationally recognized statistical rating organization
was employed by the nationally recognized statistical rating
organization and participated in any capacity in determining
credit ratings for the person or the securities or money market
instruments during the 1-year period preceding the date an
action was taken with respect to the credit rating, the
nationally recognized statistical rating organization shall--
``(i) conduct a review to determine whether any
conflicts of interest of the employee influenced the credit
rating; and
``(ii) take action to revise the rating if appropriate,
in accordance with such rules as the Commission shall
prescribe.
``(B) Review by commission.--
``(i) In general.--The Commission shall conduct
periodic reviews of the policies described in subparagraph
(A) and the implementation of the policies at each
nationally recognized statistical rating organization to
ensure they are reasonably designed and implemented to most
effectively eliminate conflicts of interest.
``(ii) Timing of reviews.--The Commission shall review
the code of ethics and conflict of interest policy of each
nationally recognized statistical rating organization--
``(I) not less frequently than annually; and
``(II) whenever such policies are materially
modified or amended.
``(5) Report to commission on certain employment transitions.--
``(A) Report required.--Each nationally recognized
statistical rating organization shall report to the Commission
any case such organization knows or can reasonably be expected
to know where a person associated with such organization within
the previous 5 years obtains employment with any obligor,
issuer, underwriter, or sponsor of a security or money market
instrument for which the organization issued a credit rating
during the 12-month period prior to such employment, if such
employee--
``(i) was a senior officer of such organization;
``(ii) participated in any capacity in determining
credit ratings for such obligor, issuer, underwriter, or
sponsor; or
``(iii) supervised an employee described in clause
(ii).
``(B) Public disclosure.--Upon receiving such a report, the
Commission shall make such information publicly available.'';
(5) in subsection (j)--
(A) by striking ``Each'' and inserting the following:
``(1) In general.--Each''; and
(B) by adding at the end the following:
``(2) Limitations.--
``(A) In general.--Except as provided in subparagraph (B),
an individual designated under paragraph (1) may not, while
serving in the designated capacity--
``(i) perform credit ratings;
``(ii) participate in the development of ratings
methodologies or models;
``(iii) perform marketing or sales functions; or
``(iv) participate in establishing compensation levels,
other than for employees working for that individual.
``(B) Exception.--The Commission may exempt a small
nationally recognized statistical rating organization from the
limitations under this paragraph, if the Commission finds that
compliance with such limitations would impose an unreasonable
burden on the nationally recognized statistical rating
organization.
``(3) Other duties.--Each individual designated under paragraph
(1) shall establish procedures for the receipt, retention, and
treatment of--
``(A) complaints regarding credit ratings, models,
methodologies, and compliance with the securities laws and the
policies and procedures developed under this section; and
``(B) confidential, anonymous complaints by employees or
users of credit ratings.
``(4) Compensation.--The compensation of each compliance
officer appointed under paragraph (1) shall not be linked to the
financial performance of the nationally recognized statistical
rating organization and shall be arranged so as to ensure the
independence of the officer's judgment.
``(5) Annual reports required.--
``(A) Annual reports required.--Each individual designated
under paragraph (1) shall submit to the nationally recognized
statistical rating organization an annual report on the
compliance of the nationally recognized statistical rating
organization with the securities laws and the policies and
procedures of the nationally recognized statistical rating
organization that includes--
``(i) a description of any material changes to the code
of ethics and conflict of interest policies of the
nationally recognized statistical rating organization; and
``(ii) a certification that the report is accurate and
complete.
``(B) Submission of reports to the commission.--Each
nationally recognized statistical rating organization shall
file the reports required under subparagraph (A) together with
the financial report that is required to be submitted to the
Commission under this section.'';
(6) in subsection (k), by striking ``furnish to'' and inserting
``file with'';
(7) in subsection (l)(2)(A)(i), by striking ``furnished'' and
inserting ``filed''; and
(8) by striking subsection (p) and inserting the following:
``(p) Regulation of Nationally Recognized Statistical Rating
Organizations.--
``(1) Establishment of office of credit ratings.--
``(A) Office established.--The Commission shall establish
within the Commission an Office of Credit Ratings (referred to
in this subsection as the `Office') to administer the rules of
the Commission--
``(i) with respect to the practices of nationally
recognized statistical rating organizations in determining
ratings, for the protection of users of credit ratings and
in the public interest;
``(ii) to promote accuracy in credit ratings issued by
nationally recognized statistical rating organizations; and
``(iii) to ensure that such ratings are not unduly
influenced by conflicts of interest.
``(B) Director of the office.--The head of the Office shall
be the Director, who shall report to the Chairman.
``(2) Staffing.--The Office established under this subsection
shall be staffed sufficiently to carry out fully the requirements
of this section. The staff shall include persons with knowledge of
and expertise in corporate, municipal, and structured debt finance.
``(3) Commission examinations.--
``(A) Annual examinations required.--The Office shall
conduct an examination of each nationally recognized
statistical rating organization at least annually.
``(B) Conduct of examinations.--Each examination under
subparagraph (A) shall include a review of--
``(i) whether the nationally recognized statistical
rating organization conducts business in accordance with
the policies, procedures, and rating methodologies of the
nationally recognized statistical rating organization;
``(ii) the management of conflicts of interest by the
nationally recognized statistical rating organization;
``(iii) implementation of ethics policies by the
nationally recognized statistical rating organization;
``(iv) the internal supervisory controls of the
nationally recognized statistical rating organization;
``(v) the governance of the nationally recognized
statistical rating organization;
``(vi) the activities of the individual designated by
the nationally recognized statistical rating organization
under subsection (j)(1);
``(vii) the processing of complaints by the nationally
recognized statistical rating organization; and
``(viii) the policies of the nationally recognized
statistical rating organization governing the post-
employment activities of former staff of the nationally
recognized statistical rating organization.
``(C) Inspection reports.--The Commission shall make
available to the public, in an easily understandable format, an
annual report summarizing--
``(i) the essential findings of all examinations
conducted under subparagraph (A), as deemed appropriate by
the Commission;
``(ii) the responses by the nationally recognized
statistical rating organizations to any material regulatory
deficiencies identified by the Commission under clause (i);
and
``(iii) whether the nationally recognized statistical
rating organizations have appropriately addressed the
recommendations of the Commission contained in previous
reports under this subparagraph.
``(4) Rulemaking authority.--The Commission shall--
``(A) establish, by rule, fines, and other penalties
applicable to any nationally recognized statistical rating
organization that violates the requirements of this section and
the rules thereunder; and
``(B) issue such rules as may be necessary to carry out
this section.
``(q) Transparency of Ratings Performance.--
``(1) Rulemaking required.--The Commission shall, by rule,
require that each nationally recognized statistical rating
organization publicly disclose information on the initial credit
ratings determined by the nationally recognized statistical rating
organization for each type of obligor, security, and money market
instrument, and any subsequent changes to such credit ratings, for
the purpose of allowing users of credit ratings to evaluate the
accuracy of ratings and compare the performance of ratings by
different nationally recognized statistical rating organizations.
``(2) Content.--The rules of the Commission under this
subsection shall require, at a minimum, disclosures that--
``(A) are comparable among nationally recognized
statistical rating organizations, to allow users of credit
ratings to compare the performance of credit ratings across
nationally recognized statistical rating organizations;
``(B) are clear and informative for investors having a wide
range of sophistication who use or might use credit ratings;
``(C) include performance information over a range of years
and for a variety of types of credit ratings, including for
credit ratings withdrawn by the nationally recognized
statistical rating organization;
``(D) are published and made freely available by the
nationally recognized statistical rating organization, on an
easily accessible portion of its website, and in writing, when
requested;
``(E) are appropriate to the business model of a nationally
recognized statistical rating organization; and
``(F) each nationally recognized statistical rating
organization include an attestation with any credit rating it
issues affirming that no part of the rating was influenced by
any other business activities, that the rating was based solely
on the merits of the instruments being rated, and that such
rating was an independent evaluation of the risks and merits of
the instrument.
``(r) Credit Ratings Methodologies.--The Commission shall prescribe
rules, for the protection of investors and in the public interest, with
respect to the procedures and methodologies, including qualitative and
quantitative data and models, used by nationally recognized statistical
rating organizations that require each nationally recognized
statistical rating organization--
``(1) to ensure that credit ratings are determined using
procedures and methodologies, including qualitative and
quantitative data and models, that are--
``(A) approved by the board of the nationally recognized
statistical rating organization, a body performing a function
similar to that of a board; and
``(B) in accordance with the policies and procedures of the
nationally recognized statistical rating organization for the
development and modification of credit rating procedures and
methodologies;
``(2) to ensure that when material changes to credit rating
procedures and methodologies (including changes to qualitative and
quantitative data and models) are made, that--
``(A) the changes are applied consistently to all credit
ratings to which the changed procedures and methodologies
apply;
``(B) to the extent that changes are made to credit rating
surveillance procedures and methodologies, the changes are
applied to then-current credit ratings by the nationally
recognized statistical rating organization within a reasonable
time period determined by the Commission, by rule; and
``(C) the nationally recognized statistical rating
organization publicly discloses the reason for the change; and
``(3) to notify users of credit ratings--
``(A) of the version of a procedure or methodology,
including the qualitative methodology or quantitative inputs,
used with respect to a particular credit rating;
``(B) when a material change is made to a procedure or
methodology, including to a qualitative model or quantitative
inputs;
``(C) when a significant error is identified in a procedure
or methodology, including a qualitative or quantitative model,
that may result in credit rating actions; and
``(D) of the likelihood of a material change described in
subparagraph (B) resulting in a change in current credit
ratings.
``(s) Transparency of Credit Rating Methodologies and Information
Reviewed.--
``(1) Form for disclosures.--The Commission shall require, by
rule, each nationally recognized statistical rating organization to
prescribe a form to accompany the publication of each credit rating
that discloses--
``(A) information relating to--
``(i) the assumptions underlying the credit rating
procedures and methodologies;
``(ii) the data that was relied on to determine the
credit rating; and
``(iii) if applicable, how the nationally recognized
statistical rating organization used servicer or remittance
reports, and with what frequency, to conduct surveillance
of the credit rating; and
``(B) information that can be used by investors and other
users of credit ratings to better understand credit ratings in
each class of credit rating issued by the nationally recognized
statistical rating organization.
``(2) Format.--The form developed under paragraph (1) shall--
``(A) be easy to use and helpful for users of credit
ratings to understand the information contained in the report;
``(B) require the nationally recognized statistical rating
organization to provide the content described in paragraph
(3)(B) in a manner that is directly comparable across types of
securities; and
``(C) be made readily available to users of credit ratings,
in electronic or paper form, as the Commission may, by rule,
determine.
``(3) Content of form.--
``(A) Qualitative content.--Each nationally recognized
statistical rating organization shall disclose on the form
developed under paragraph (1)--
``(i) the credit ratings produced by the nationally
recognized statistical rating organization;
``(ii) the main assumptions and principles used in
constructing procedures and methodologies, including
qualitative methodologies and quantitative inputs and
assumptions about the correlation of defaults across
underlying assets used in rating structured products;
``(iii) the potential limitations of the credit
ratings, and the types of risks excluded from the credit
ratings that the nationally recognized statistical rating
organization does not comment on, including liquidity,
market, and other risks;
``(iv) information on the uncertainty of the credit
rating, including--
``(I) information on the reliability, accuracy, and
quality of the data relied on in determining the credit
rating; and
``(II) a statement relating to the extent to which
data essential to the determination of the credit
rating were reliable or limited, including--
``(aa) any limits on the scope of historical
data; and
``(bb) any limits in accessibility to certain
documents or other types of information that would
have better informed the credit rating;
``(v) whether and to what extent third party due
diligence services have been used by the nationally
recognized statistical rating organization, a description
of the information that such third party reviewed in
conducting due diligence services, and a description of the
findings or conclusions of such third party;
``(vi) a description of the data about any obligor,
issuer, security, or money market instrument that were
relied upon for the purpose of determining the credit
rating;
``(vii) a statement containing an overall assessment of
the quality of information available and considered in
producing a rating for an obligor, security, or money
market instrument, in relation to the quality of
information available to the nationally recognized
statistical rating organization in rating similar
issuances;
``(viii) information relating to conflicts of interest
of the nationally recognized statistical rating
organization; and
``(ix) such additional information as the Commission
may require.
``(B) Quantitative content.--Each nationally recognized
statistical rating organization shall disclose on the form
developed under this subsection--
``(i) an explanation or measure of the potential
volatility of the credit rating, including--
``(I) any factors that might lead to a change in
the credit ratings; and
``(II) the magnitude of the change that a user can
expect under different market conditions;
``(ii) information on the content of the rating,
including--
``(I) the historical performance of the rating; and
``(II) the expected probability of default and the
expected loss in the event of default;
``(iii) information on the sensitivity of the rating to
assumptions made by the nationally recognized statistical
rating organization, including--
``(I) 5 assumptions made in the ratings process
that, without accounting for any other factor, would
have the greatest impact on a rating if the assumptions
were proven false or inaccurate; and
``(II) an analysis, using specific examples, of how
each of the 5 assumptions identified under subclause
(I) impacts a rating;
``(iv) such additional information as may be required
by the Commission.
``(4) Due diligence services for asset-backed securities.--
``(A) Findings.--The issuer or underwriter of any asset-
backed security shall make publicly available the findings and
conclusions of any third-party due diligence report obtained by
the issuer or underwriter.
``(B) Certification required.--In any case in which third-
party due diligence services are employed by a nationally
recognized statistical rating organization, an issuer, or an
underwriter, the person providing the due diligence services
shall provide to any nationally recognized statistical rating
organization that produces a rating to which such services
relate, written certification, as provided in subparagraph (C).
``(C) Format and content.--The Commission shall establish
the appropriate format and content for the written
certifications required under subparagraph (B), to ensure that
providers of due diligence services have conducted a thorough
review of data, documentation, and other relevant information
necessary for a nationally recognized statistical rating
organization to provide an accurate rating.
``(D) Disclosure of certification.--The Commission shall
adopt rules requiring a nationally recognized statistical
rating organization, at the time at which the nationally
recognized statistical rating organization produces a rating,
to disclose the certification described in subparagraph (B) to
the public in a manner that allows the public to determine the
adequacy and level of due diligence services provided by a
third party.
``(t) Corporate Governance, Organization, and Management of
Conflicts of Interest.--
``(1) Board of directors.--Each nationally recognized
statistical rating organization shall have a board of directors.
``(2) Independent directors.--
``(A) In general.--At least \1/2\ of the board of
directors, but not fewer than 2 of the members thereof, shall
be independent of the nationally recognized statistical rating
agency. A portion of the independent directors shall include
users of ratings from a nationally recognized statistical
rating organization.
``(B) Independence determination.--In order to be
considered independent for purposes of this subsection, a
member of the board of directors of a nationally recognized
statistical rating organization--
``(i) may not, other than in his or her capacity as a
member of the board of directors or any committee thereof--
``(I) accept any consulting, advisory, or other
compensatory fee from the nationally recognized
statistical rating organization; or
``(II) be a person associated with the nationally
recognized statistical rating organization or with any
affiliated company thereof; and
``(ii) shall be disqualified from any deliberation
involving a specific rating in which the independent board
member has a financial interest in the outcome of the
rating.
``(C) Compensation and term.--The compensation of the
independent members of the board of directors of a nationally
recognized statistical rating organization shall not be linked
to the business performance of the nationally recognized
statistical rating organization, and shall be arranged so as to
ensure the independence of their judgment. The term of office
of the independent directors shall be for a pre-agreed fixed
period, not to exceed 5 years, and shall not be renewable.
``(3) Duties of board of directors.--In addition to the overall
responsibilities of the board of directors, the board shall
oversee--
``(A) the establishment, maintenance, and enforcement of
policies and procedures for determining credit ratings;
``(B) the establishment, maintenance, and enforcement of
policies and procedures to address, manage, and disclose any
conflicts of interest;
``(C) the effectiveness of the internal control system with
respect to policies and procedures for determining credit
ratings; and
``(D) the compensation and promotion policies and practices
of the nationally recognized statistical rating organization.
``(4) Treatment of nrsro subsidiaries.--If a nationally
recognized statistical rating organization is a subsidiary of a
parent entity, the board of the directors of the parent entity may
satisfy the requirements of this subsection by assigning to a
committee of such board of directors the duties under paragraph
(3), if--
``(A) at least \1/2\ of the members of the committee
(including the chairperson of the committee) are independent,
as defined in this section; and
``(B) at least 1 member of the committee is a user of
ratings from a nationally recognized statistical rating
organization.
``(5) Exception authority.--If the Commission finds that
compliance with the provisions of this subsection present an
unreasonable burden on a small nationally recognized statistical
rating organization, the Commission may permit the nationally
recognized statistical rating organization to delegate such
responsibilities to a committee that includes at least one
individual who is a user of ratings of a nationally recognized
statistical rating organization.''.
(b) Conforming Amendment.--Section 3(a)(62) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(62)) is amended by striking
subparagraph (A) and redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively.
SEC. 933. STATE OF MIND IN PRIVATE ACTIONS.
(a) Accountability.--Section 15E(m) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-7(m)) is amended to read as follows:
``(m) Accountability.--
``(1) In general.--The enforcement and penalty provisions of
this title shall apply to statements made by a credit rating agency
in the same manner and to the same extent as such provisions apply
to statements made by a registered public accounting firm or a
securities analyst under the securities laws, and such statements
shall not be deemed forward-looking statements for the purposes of
section 21E.
``(2) Rulemaking.--The Commission shall issue such rules as may
be necessary to carry out this subsection.''.
(b) State of Mind.--Section 21D(b)(2) of the Securities Exchange
Act of 1934 (15 U.S.C. 78u-4(b)(2)) is amended--
(1) by striking ``In any'' and inserting the following:
``(A) In general.--Except as provided in subparagraph (B),
in any''; and
(2) by adding at the end the following:
``(B) Exception.--In the case of an action for money
damages brought against a credit rating agency or a controlling
person under this title, it shall be sufficient, for purposes
of pleading any required state of mind in relation to such
action, that the complaint state with particularity facts
giving rise to a strong inference that the credit rating agency
knowingly or recklessly failed--
``(i) to conduct a reasonable investigation of the
rated security with respect to the factual elements relied
upon by its own methodology for evaluating credit risk; or
``(ii) to obtain reasonable verification of such
factual elements (which verification may be based on a
sampling technique that does not amount to an audit) from
other sources that the credit rating agency considered to
be competent and that were independent of the issuer and
underwriter.''.
SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REGULATORY
AUTHORITIES.
Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7), as amended by this subtitle, is amended by adding at the end the
following:
``(u) Duty To Report Tips Alleging Material Violations of Law.--
``(1) Duty to report.--Each nationally recognized statistical
rating organization shall refer to the appropriate law enforcement
or regulatory authorities any information that the nationally
recognized statistical rating organization receives from a third
party and finds credible that alleges that an issuer of securities
rated by the nationally recognized statistical rating organization
has committed or is committing a material violation of law that has
not been adjudicated by a Federal or State court.
``(2) Rule of construction.--Nothing in paragraph (1) may be
construed to require a nationally recognized statistical rating
organization to verify the accuracy of the information described in
paragraph (1).''.
SEC. 935. CONSIDERATION OF INFORMATION FROM SOURCES OTHER THAN THE
ISSUER IN RATING DECISIONS.
Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7), as amended by this subtitle, is amended by adding at the end the
following:
``(v) Information From Sources Other Than the Issuer.--In producing
a credit rating, a nationally recognized statistical rating
organization shall consider information about an issuer that the
nationally recognized statistical rating organization has, or receives
from a source other than the issuer or underwriter, that the nationally
recognized statistical rating organization finds credible and
potentially significant to a rating decision.''.
SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RATING ANALYSTS.
Not later than 1 year after the date of enactment of this Act, the
Commission shall issue rules that are reasonably designed to ensure
that any person employed by a nationally recognized statistical rating
organization to perform credit ratings--
(1) meets standards of training, experience, and competence
necessary to produce accurate ratings for the categories of issuers
whose securities the person rates; and
(2) is tested for knowledge of the credit rating process.
SEC. 937. TIMING OF REGULATIONS.
Unless otherwise specifically provided in this subtitle, the
Commission shall issue final regulations, as required by this subtitle
and the amendments made by this subtitle, not later than 1 year after
the date of enactment of this Act.
SEC. 938. UNIVERSAL RATINGS SYMBOLS.
(a) Rulemaking.--The Commission shall require, by rule, each
nationally recognized statistical rating organization to establish,
maintain, and enforce written policies and procedures that--
(1) assess the probability that an issuer of a security or
money market instrument will default, fail to make timely payments,
or otherwise not make payments to investors in accordance with the
terms of the security or money market instrument;
(2) clearly define and disclose the meaning of any symbol used
by the nationally recognized statistical rating organization to
denote a credit rating; and
(3) apply any symbol described in paragraph (2) in a manner
that is consistent for all types of securities and money market
instruments for which the symbol is used.
(b) Rule of Construction.--Nothing in this section shall prohibit a
nationally recognized statistical rating organization from using
distinct sets of symbols to denote credit ratings for different types
of securities or money market instruments.
SEC. 939. REMOVAL OF STATUTORY REFERENCES TO CREDIT RATINGS.
(a) Federal Deposit Insurance Act.--The Federal Deposit Insurance
Act (12 U.S.C. 1811 et seq.) is amended--
(1) in section 7(b)(1)(E)(i), by striking ``credit rating
entities, and other private economic'' and insert ``private
economic, credit,'';
(2) in section 28(d)--
(A) in the subsection heading, by striking ``Not of
Investment Grade'';
(B) in paragraph (1), by striking ``not of investment
grade'' and inserting ``that does not meet standards of credit-
worthiness as established by the Corporation'';
(C) in paragraph (2), by striking ``not of investment
grade'';
(D) by striking paragraph (3);
(E) by redesignating paragraph (4) as paragraph (3); and
(F) in paragraph (3), as so redesignated--
(i) by striking subparagraph (A);
(ii) by redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively; and
(iii) in subparagraph (B), as so redesignated, by
striking ``not of investment grade'' and inserting ``that
does not meet standards of credit-worthiness as established
by the Corporation''; and
(3) in section 28(e)--
(A) in the subsection heading, by striking ``Not of
Investment Grade'';
(B) in paragraph (1), by striking ``not of investment
grade'' and inserting ``that does not meet standards of credit-
worthiness as established by the Corporation''; and
(C) in paragraphs (2) and (3), by striking ``not of
investment grade'' each place that it appears and inserting
``that does not meet standards of credit-worthiness established
by the Corporation''.
(b) Federal Housing Enterprises Financial Safety and Soundness Act
of 1992.--Section 1319 of the Federal Housing Enterprises Financial
Safety and Soundness Act of 1992 (12 U.S.C. 4519) is amended by
striking ``that is a nationally recognized statistical rating
organization, as such term is defined in section 3(a) of the Securities
Exchange Act of 1934,''.
(c) Investment Company Act of 1940.--Section 6(a)(5)(A)(iv)(I)
Investment Company Act of 1940 (15 U.S.C. 80a-6(a)(5)(A)(iv)(I)) is
amended by striking ``is rated investment grade by not less than 1
nationally recognized statistical rating organization'' and inserting
``meets such standards of credit-worthiness as the Commission shall
adopt''.
(d) Revised Statutes.--Section 5136A of title LXII of the Revised
Statutes of the United States (12 U.S.C. 24a) is amended--
(1) in subsection (a)(2)(E), by striking ``any applicable
rating'' and inserting ``standards of credit-worthiness established
by the Comptroller of the Currency'';
(2) in the heading for subsection (a)(3) by striking ``Rating
or Comparable Requirement'' and inserting ``Requirement'';
(3) subsection (a)(3), by amending subparagraph (A) to read as
follows:
``(A) In general.--A national bank meets the requirements
of this paragraph if the bank is one of the 100 largest insured
banks and has not fewer than 1 issue of outstanding debt that
meets standards of credit-worthiness or other criteria as the
Secretary of the Treasury and the Board of Governors of the
Federal Reserve System may jointly establish.''.
(4) in the heading for subsection (f), by striking ``Maintain
Public Rating or'' and inserting ``Meet Standards of Credit-
worthiness''; and
(5) in subsection (f)(1), by striking ``any applicable rating''
and inserting ``standards of credit-worthiness established by the
Comptroller of the Currency''.
(e) Securities Exchange Act of 1934.--Section 3(a) Securities
Exchange Act of 1934 (15 U.S.C. 78a(3)(a)) is amended--
(1) in paragraph (41), by striking ``is rated in one of the two
highest rating categories by at least one nationally recognized
statistical rating organization'' and inserting ``meets standards
of credit-worthiness as established by the Commission''; and
(2) in paragraph (53)(A), by striking ``is rated in 1 of the 4
highest rating categories by at least 1 nationally recognized
statistical rating organization'' and inserting ``meets standards
of credit-worthiness as established by the Commission''.
(f) World Bank Discussions.--Section 3(a)(6) of the amendment in
the nature of a substitute to the text of H.R. 4645, as ordered
reported from the Committee on Banking, Finance and Urban Affairs on
September 22, 1988, as enacted into law by section 555 of Public Law
100-461, (22 U.S.C. 286hh(a)(6)), is amended by striking ``credit
rating'' and inserting ``credit-worthiness''.
(g) Effective Date.--The amendments made by this section shall take
effect 2 years after the date of enactment of this Act.
(h) Study and Report.--
(1) In general.--Commission shall undertake a study on the
feasability and desirability of--
(A) standardizing credit ratings terminology, so that all
credit rating agencies issue credit ratings using identical
terms;
(B) standardizing the market stress conditions under which
ratings are evaluated;
(C) requiring a quantitative correspondence between credit
ratings and a range of default probabilities and loss
expectations under standardized conditions of economic stress;
and
(D) standardizing credit rating terminology across asset
classes, so that named ratings correspond to a standard range
of default probabilities and expected losses independent of
asset class and issuing entity.
(2) Report.--Not later than 1 year after the date of enactment
of this Act, the Commission shall submit to Congress a report
containing the findings of the study under paragraph (1) and the
recommendations, if any, of the Commission with respect to the
study.
SEC. 939A. REVIEW OF RELIANCE ON RATINGS.
(a) Agency Review.--Not later than 1 year after the date of the
enactment of this subtitle, each Federal agency shall, to the extent
applicable, review--
(1) any regulation issued by such agency that requires the use
of an assessment of the credit-worthiness of a security or money
market instrument; and
(2) any references to or requirements in such regulations
regarding credit ratings.
(b) Modifications Required.--Each such agency shall modify any such
regulations identified by the review conducted under subsection (a) to
remove any reference to or requirement of reliance on credit ratings
and to substitute in such regulations such standard of credit-
worthiness as each respective agency shall determine as appropriate for
such regulations. In making such determination, such agencies shall
seek to establish, to the extent feasible, uniform standards of credit-
worthiness for use by each such agency, taking into account the
entities regulated by each such agency and the purposes for which such
entities would rely on such standards of credit-worthiness.
(c) Report.--Upon conclusion of the review required under
subsection (a), each Federal agency shall transmit a report to Congress
containing a description of any modification of any regulation such
agency made pursuant to subsection (b).
SEC. 939B. ELIMINATION OF EXEMPTION FROM FAIR DISCLOSURE RULE.
Not later than 90 days after the date of enactment of this
subtitle, the Securities Exchange Commission shall revise Regulation FD
(17 C.F.R. 243.100) to remove from such regulation the exemption for
entities whose primary business is the issuance of credit ratings (17
C.F.R. 243.100(b)(2)(iii)).
SEC. 939C. SECURITIES AND EXCHANGE COMMISSION STUDY ON STRENGTHENING
CREDIT RATING AGENCY INDEPENDENCE.
(a) Study.--The Commission shall conduct a study of--
(1) the independence of nationally recognized statistical
rating organizations; and
(2) how the independence of nationally recognized statistical
rating organizations affects the ratings issued by the nationally
recognized statistical rating organizations.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Commission shall evaluate--
(1) the management of conflicts of interest raised by a
nationally recognized statistical rating organization providing
other services, including risk management advisory services,
ancillary assistance, or consulting services;
(2) the potential impact of rules prohibiting a nationally
recognized statistical rating organization that provides a rating
to an issuer from providing other services to the issuer; and
(3) any other issue relating to nationally recognized
statistical rating organizations, as the Chairman of the Commission
determines is appropriate.
(c) Report.--Not later than 3 years after the date of enactment of
this Act, the Chairman of the Commission shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives a report on the
results of the study conducted under subsection (a), including
recommendations, if any, for improving the integrity of ratings issued
by nationally recognized statistical rating organizations.
SEC. 939D. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON ALTERNATIVE
BUSINESS MODELS.
(a) Study.--The Comptroller General of the United States shall
conduct a study on alternative means for compensating nationally
recognized statistical rating organizations in order to create
incentives for nationally recognized statistical rating organizations
to provide more accurate credit ratings, including any statutory
changes that would be required to facilitate the use of an alternative
means of compensation.
(b) Report.--Not later than 18 months after the date of enactment
of this Act, the Comptroller General shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on the
results of the study conducted under subsection (a), including
recommendations, if any, for providing incentives to credit rating
agencies to improve the credit rating process.
SEC. 939E. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE CREATION OF AN
INDEPENDENT PROFESSIONAL ANALYST ORGANIZATION.
(a) Study.--The Comptroller General of the United States shall
conduct a study on the feasibility and merits of creating an
independent professional organization for rating analysts employed by
nationally recognized statistical rating organizations that would be
responsible for--
(1) establishing independent standards for governing the
profession of rating analysts;
(2) establishing a code of ethical conduct; and
(3) overseeing the profession of rating analysts.
(b) Report.--Not later than 1 year after the date of publication of
the rules issued by the Commission pursuant to section 936, the
Comptroller General shall submit to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives a report on the results of the study
conducted under subsection (a).
SEC. 939F. STUDY AND RULEMAKING ON ASSIGNED CREDIT RATINGS.
(a) Definition.--In this section, the term ``structured finance
product'' means an asset-backed security, as defined in section
3(a)(77) of the Securities Exchange Act of 1934, as added by section
941, and any structured product based on an asset-backed security, as
determined by the Commission, by rule.
(b) Study.--The Commission shall carry out a study of--
(1) the credit rating process for structured finance products
and the conflicts of interest associated with the issuer-pay and
the subscriber-pay models;
(2) the feasibility of establishing a system in which a public
or private utility or a self-regulatory organization assigns
nationally recognized statistical rating organizations to determine
the credit ratings of structured finance products, including--
(A) an assessment of potential mechanisms for determining
fees for the nationally recognized statistical rating
organizations;
(B) appropriate methods for paying fees to the nationally
recognized statistical rating organizations;
(C) the extent to which the creation of such a system would
be viewed as the creation of moral hazard by the Federal
Government; and
(D) any constitutional or other issues concerning the
establishment of such a system;
(3) the range of metrics that could be used to determine the
accuracy of credit ratings; and
(4) alternative means for compensating nationally recognized
statistical rating organizations that would create incentives for
accurate credit ratings.
(c) Report and Recommendation.--Not later than 24 months after the
date of enactment of this Act, the Commission shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives a
report that contains--
(1) the findings of the study required under subsection (b);
and
(2) any recommendations for regulatory or statutory changes
that the Commission determines should be made to implement the
findings of the study required under subsection (b).
(d) Rulemaking.--
(1) Rulemaking.--After submission of the report under
subsection (c), the Commission shall, by rule, as the Commission
determines is necessary or appropriate in the public interest or
for the protection of investors, establish a system for the
assignment of nationally recognized statistical rating
organizations to determine the initial credit ratings of structured
finance products, in a manner that prevents the issuer, sponsor, or
underwriter of the structured finance product from selecting the
nationally recognized statistical rating organization that will
determine the initial credit ratings and monitor such credit
ratings. In issuing any rule under this paragraph, the Commission
shall give thorough consideration to the provisions of section
15E(w) of the Securities Exchange Act of 1934, as that provision
would have been added by section 939D of H.R. 4173 (111th
Congress), as passed by the Senate on May 20, 2010, and shall
implement the system described in such section 939D unless the
Commission determines that an alternative system would better serve
the public interest and the protection of investors.
(2) Rule of construction.--Nothing in this subsection may be
construed to limit or suspend any other rulemaking authority of the
Commission.
SEC. 939G. EFFECT OF RULE 436(G).
Rule 436(g), promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, shall have no force or effect.
SEC. 939H. SENSE OF CONGRESS.
It is the sense of Congress that the Securities and Exchange
Commission should exercise the rulemaking authority of the Commission
under section 15E(h)(2)(B) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-7(h)(2)(B)) to prevent improper conflicts of interest
arising from employees of nationally recognized statistical rating
organizations providing services to issuers of securities that are
unrelated to the issuance of credit ratings, including consulting,
advisory, and other services.
Subtitle D--Improvements to the Asset-Backed Securitization Process
SEC. 941. REGULATION OF CREDIT RISK RETENTION.
(a) Definition of Asset-backed Security.--Section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding
at the end the following:
``(77) Asset-backed security.--The term `asset-backed
security'--
``(A) means a fixed-income or other security collateralized
by any type of self-liquidating financial asset (including a
loan, a lease, a mortgage, or a secured or unsecured
receivable) that allows the holder of the security to receive
payments that depend primarily on cash flow from the asset,
including--
``(i) a collateralized mortgage obligation;
``(ii) a collateralized debt obligation;
``(iii) a collateralized bond obligation;
``(iv) a collateralized debt obligation of asset-backed
securities;
``(v) a collateralized debt obligation of
collateralized debt obligations; and
``(vi) a security that the Commission, by rule,
determines to be an asset-backed security for purposes of
this section; and
``(B) does not include a security issued by a finance
subsidiary held by the parent company or a company controlled
by the parent company, if none of the securities issued by the
finance subsidiary are held by an entity that is not controlled
by the parent company.''.
(b) Credit Risk Retention.--The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 15F, as added
by this Act, the following:
``SEC. 15G. CREDIT RISK RETENTION.
``(a) Definitions.--In this section--
``(1) the term `Federal banking agencies' means the Office of
the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System, and the Federal Deposit Insurance
Corporation;
``(2) the term `insured depository institution' has the same
meaning as in section 3(c) of the Federal Deposit Insurance Act (12
U.S.C. 1813(c));
``(3) the term `securitizer' means--
``(A) an issuer of an asset-backed security; or
``(B) a person who organizes and initiates an asset-backed
securities transaction by selling or transferring assets,
either directly or indirectly, including through an affiliate,
to the issuer; and
``(4) the term `originator' means a person who--
``(A) through the extension of credit or otherwise, creates
a financial asset that collateralizes an asset-backed security;
and
``(B) sells an asset directly or indirectly to a
securitizer.
``(b) Regulations Required.--
``(1) In general.--Not later than 270 days after the date of
enactment of this section, the Federal banking agencies and the
Commission shall jointly prescribe regulations to require any
securitizer to retain an economic interest in a portion of the
credit risk for any asset that the securitizer, through the
issuance of an asset-backed security, transfers, sells, or conveys
to a third party.
``(2) Residential mortgages.--Not later than 270 days after the
date of the enactment of this section, the Federal banking
agencies, the Commission, the Secretary of Housing and Urban
Development, and the Federal Housing Finance Agency, shall jointly
prescribe regulations to require any securitizer to retain an
economic interest in a portion of the credit risk for any
residential mortgage asset that the securitizer, through the
issuance of an asset-backed security, transfers, sells, or conveys
to a third party.
``(c) Standards for Regulations.--
``(1) Standards.--The regulations prescribed under subsection
(b) shall--
``(A) prohibit a securitizer from directly or indirectly
hedging or otherwise transferring the credit risk that the
securitizer is required to retain with respect to an asset;
``(B) require a securitizer to retain--
``(i) not less than 5 percent of the credit risk for
any asset--
``(I) that is not a qualified residential mortgage
that is transferred, sold, or conveyed through the
issuance of an asset-backed security by the
securitizer; or
``(II) that is a qualified residential mortgage
that is transferred, sold, or conveyed through the
issuance of an asset-backed security by the
securitizer, if 1 or more of the assets that
collateralize the asset-backed security are not
qualified residential mortgages; or
``(ii) less than 5 percent of the credit risk for an
asset that is not a qualified residential mortgage that is
transferred, sold, or conveyed through the issuance of an
asset-backed security by the securitizer, if the originator
of the asset meets the underwriting standards prescribed
under paragraph (2)(B);
``(C) specify--
``(i) the permissible forms of risk retention for
purposes of this section;
``(ii) the minimum duration of the risk retention
required under this section; and
``(iii) that a securitizer is not required to retain
any part of the credit risk for an asset that is
transferred, sold or conveyed through the issuance of an
asset-backed security by the securitizer, if all of the
assets that collateralize the asset-backed security are
qualified residential mortgages;
``(D) apply, regardless of whether the securitizer is an
insured depository institution;
``(E) with respect to a commercial mortgage, specify the
permissible types, forms, and amounts of risk retention that
would meet the requirements of subparagraph (B), which in the
determination of the Federal banking agencies and the
Commission may include--
``(i) retention of a specified amount or percentage of
the total credit risk of the asset;
``(ii) retention of the first-loss position by a third-
party purchaser that specifically negotiates for the
purchase of such first loss position, holds adequate
financial resources to back losses, provides due diligence
on all individual assets in the pool before the issuance of
the asset-backed securities, and meets the same standards
for risk retention as the Federal banking agencies and the
Commission require of the securitizer;
``(iii) a determination by the Federal banking agencies
and the Commission that the underwriting standards and
controls for the asset are adequate; and
``(iv) provision of adequate representations and
warranties and related enforcement mechanisms; and
``(F) establish appropriate standards for retention of an
economic interest with respect to collateralized debt
obligations, securities collateralized by collateralized debt
obligations, and similar instruments collateralized by other
asset-backed securities; and
``(G) provide for--
``(i) a total or partial exemption of any
securitization, as may be appropriate in the public
interest and for the protection of investors;
``(ii) a total or partial exemption for the
securitization of an asset issued or guaranteed by the
United States, or an agency of the United States, as the
Federal banking agencies and the Commission jointly
determine appropriate in the public interest and for the
protection of investors, except that, for purposes of this
clause, the Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation are not agencies of
the United States;
``(iii) a total or partial exemption for any asset-
backed security that is a security issued or guaranteed by
any State of the United States, or by any political
subdivision of a State or territory, or by any public
instrumentality of a State or territory that is exempt from
the registration requirements of the Securities Act of 1933
by reason of section 3(a)(2) of that Act (15 U.S.C.
77c(a)(2)), or a security defined as a qualified
scholarship funding bond in section 150(d)(2) of the
Internal Revenue Code of 1986, as may be appropriate in the
public interest and for the protection of investors; and
``(iv) the allocation of risk retention obligations
between a securitizer and an originator in the case of a
securitizer that purchases assets from an originator, as
the Federal banking agencies and the Commission jointly
determine appropriate.
``(2) Asset classes.--
``(A) Asset classes.--The regulations prescribed under
subsection (b) shall establish asset classes with separate
rules for securitizers of different classes of assets,
including residential mortgages, commercial mortgages,
commercial loans, auto loans, and any other class of assets
that the Federal banking agencies and the Commission deem
appropriate.
``(B) Contents.--For each asset class established under
subparagraph (A), the regulations prescribed under subsection
(b) shall include underwriting standards established by the
Federal banking agencies that specify the terms, conditions,
and characteristics of a loan within the asset class that
indicate a low credit risk with respect to the loan.
``(d) Originators.--In determining how to allocate risk retention
obligations between a securitizer and an originator under subsection
(c)(1)(E)(iv), the Federal banking agencies and the Commission shall--
``(1) reduce the percentage of risk retention obligations
required of the securitizer by the percentage of risk retention
obligations required of the originator; and
``(2) consider--
``(A) whether the assets sold to the securitizer have
terms, conditions, and characteristics that reflect low credit
risk;
``(B) whether the form or volume of transactions in
securitization markets creates incentives for imprudent
origination of the type of loan or asset to be sold to the
securitizer; and
``(C) the potential impact of the risk retention
obligations on the access of consumers and businesses to credit
on reasonable terms, which may not include the transfer of
credit risk to a third party.
``(e) Exemptions, Exceptions, and Adjustments.--
``(1) In general.--The Federal banking agencies and the
Commission may jointly adopt or issue exemptions, exceptions, or
adjustments to the rules issued under this section, including
exemptions, exceptions, or adjustments for classes of institutions
or assets relating to the risk retention requirement and the
prohibition on hedging under subsection (c)(1).
``(2) Applicable standards.--Any exemption, exception, or
adjustment adopted or issued by the Federal banking agencies and
the Commission under this paragraph shall--
``(A) help ensure high quality underwriting standards for
the securitizers and originators of assets that are securitized
or available for securitization; and
``(B) encourage appropriate risk management practices by
the securitizers and originators of assets, improve the access
of consumers and businesses to credit on reasonable terms, or
otherwise be in the public interest and for the protection of
investors.
``(3) Certain institutions and programs exempt.--
``(A) Farm credit system institutions.--Notwithstanding any
other provision of this section, the requirements of this
section shall not apply to any loan or other financial asset
made, insured, guaranteed, or purchased by any institution that
is subject to the supervision of the Farm Credit
Administration, including the Federal Agricultural Mortgage
Corporation.
``(B) Other federal programs.--This section shall not apply
to any residential, multifamily, or health care facility
mortgage loan asset, or securitization based directly or
indirectly on such an asset, which is insured or guaranteed by
the United States or an agency of the United States. For
purposes of this subsection, the Federal National Mortgage
Association, the Federal Home Loan Mortgage Corporation, and
the Federal home loan banks shall not be considered an agency
of the United States.
``(4) Exemption for qualified residential mortgages.--
``(A) In general.--The Federal banking agencies, the
Commission, the Secretary of Housing and Urban Development, and
the Director of the Federal Housing Finance Agency shall
jointly issue regulations to exempt qualified residential
mortgages from the risk retention requirements of this
subsection.
``(B) Qualified residential mortgage.--The Federal banking
agencies, the Commission, the Secretary of Housing and Urban
Development, and the Director of the Federal Housing Finance
Agency shall jointly define the term `qualified residential
mortgage' for purposes of this subsection, taking into
consideration underwriting and product features that historical
loan performance data indicate result in a lower risk of
default, such as--
``(i) documentation and verification of the financial
resources relied upon to qualify the mortgagor;
``(ii) standards with respect to--
``(I) the residual income of the mortgagor after
all monthly obligations;
``(II) the ratio of the housing payments of the
mortgagor to the monthly income of the mortgagor;
``(III) the ratio of total monthly installment
payments of the mortgagor to the income of the
mortgagor;
``(iii) mitigating the potential for payment shock on
adjustable rate mortgages through product features and
underwriting standards;
``(iv) mortgage guarantee insurance or other types of
insurance or credit enhancement obtained at the time of
origination, to the extent such insurance or credit
enhancement reduces the risk of default; and
``(v) prohibiting or restricting the use of balloon
payments, negative amortization, prepayment penalties,
interest-only payments, and other features that have been
demonstrated to exhibit a higher risk of borrower default.
``(C) Limitation on definition.--The Federal banking
agencies, the Commission, the Secretary of Housing and Urban
Development, and the Director of the Federal Housing Finance
Agency in defining the term `qualified residential mortgage',
as required by subparagraph (B), shall define that term to be
no broader than the definition `qualified mortgage' as the term
is defined under section 129C(c)(2) of the Truth in Lending
Act, as amended by the Consumer Financial Protection Act of
2010, and regulations adopted thereunder.
``(5) Condition for qualified residential mortgage exemption.--
The regulations issued under paragraph (4) shall provide that an
asset-backed security that is collateralized by tranches of other
asset-backed securities shall not be exempt from the risk retention
requirements of this subsection.
``(6) Certification.--The Commission shall require an issuer to
certify, for each issuance of an asset-backed security
collateralized exclusively by qualified residential mortgages, that
the issuer has evaluated the effectiveness of the internal
supervisory controls of the issuer with respect to the process for
ensuring that all assets that collateralize the asset-backed
security are qualified residential mortgages.
``(f) Enforcement.--The regulations issued under this section shall
be enforced by--
``(1) the appropriate Federal banking agency, with respect to
any securitizer that is an insured depository institution; and
``(2) the Commission, with respect to any securitizer that is
not an insured depository institution.
``(g) Authority of Commission.--The authority of the Commission
under this section shall be in addition to the authority of the
Commission to otherwise enforce the securities laws.
``(h) Authority to Coordinate on Rulemaking.--The Chairperson of
the Financial Stability Oversight Council shall coordinate all joint
rulemaking required under this section.
``(i) Effective Date of Regulations.--The regulations issued under
this section shall become effective--
``(1) with respect to securitizers and originators of asset-
backed securities backed by residential mortgages, 1 year after the
date on which final rules under this section are published in the
Federal Register; and
``(2) with respect to securitizers and originators of all other
classes of asset-backed securities, 2 years after the date on which
final rules under this section are published in the Federal
Register.''.
(c) Study on Risk Retention.--
(1) Study.--The Board of Governors of the Federal Reserve
System, in coordination and consultation with the Comptroller of
the Currency, the Director of the Office of Thrift Supervision, the
Chairperson of the Federal Deposit Insurance Corporation, and the
Securities and Exchange Commission shall conduct a study of the
combined impact on each individual class of asset-backed security
established under section 15G(c)(2) of the Securities Exchange Act
of 1934, as added by subsection (b), of--
(A) the new credit risk retention requirements contained in
the amendment made by subsection (b), including the effect
credit risk retention requirements have on increasing the
market for Federally subsidized loans; and
(B) the Financial Accounting Statements 166 and 167 issued
by the Financial Accounting Standards Board.
(2) Report.--Not later than 90 days after the date of enactment
of this Act, the Board of Governors of the Federal Reserve System
shall submit to Congress a report on the study conducted under
paragraph (1). Such report shall include statutory and regulatory
recommendations for eliminating any negative impacts on the
continued viability of the asset-backed securitization markets and
on the availability of credit for new lending identified by the
study conducted under paragraph (1).
SEC. 942. DISCLOSURES AND REPORTING FOR ASSET-BACKED SECURITIES.
(a) Securities Exchange Act of 1934.--Section 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended--
(1) by striking ``(d) Each'' and inserting the following:
``(d) Supplementary and Periodic Information.--
``(1) In general.--Each'';
(2) in the third sentence, by inserting after ``securities of
each class'' the following: ``, other than any class of asset-
backed securities,''; and
(3) by adding at the end the following:
``(2) Asset-backed securities.--
``(A) Suspension of duty to file.--The Commission may, by
rule or regulation, provide for the suspension or termination
of the duty to file under this subsection for any class of
asset-backed security, on such terms and conditions and for
such period or periods as the Commission deems necessary or
appropriate in the public interest or for the protection of
investors.
``(B) Classification of issuers.--The Commission may, for
purposes of this subsection, classify issuers and prescribe
requirements appropriate for each class of issuers of asset-
backed securities.''.
(b) Securities Act of 1933.--Section 7 of the Securities Act of
1933 (15 U.S.C. 77g) is amended by adding at the end the following:
``(c) Disclosure Requirements.--
``(1) In general.--The Commission shall adopt regulations under
this subsection requiring each issuer of an asset-backed security
to disclose, for each tranche or class of security, information
regarding the assets backing that security.
``(2) Content of regulations.--In adopting regulations under
this subsection, the Commission shall--
``(A) set standards for the format of the data provided by
issuers of an asset-backed security, which shall, to the extent
feasible, facilitate comparison of such data across securities
in similar types of asset classes; and
``(B) require issuers of asset-backed securities, at a
minimum, to disclose asset-level or loan-level data, if such
data are necessary for investors to independently perform due
diligence, including--
``(i) data having unique identifiers relating to loan
brokers or originators;
``(ii) the nature and extent of the compensation of the
broker or originator of the assets backing the security;
and
``(iii) the amount of risk retention by the originator
and the securitizer of such assets.''.
SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED OFFERINGS.
Not later than 180 days after the date of enactment of this Act,
the Securities and Exchange Commission shall prescribe regulations on
the use of representations and warranties in the market for asset-
backed securities (as that term is defined in section 3(a)(77) of the
Securities Exchange Act of 1934, as added by this subtitle) that--
(1) require each national recognized statistical rating
organization to include in any report accompanying a credit rating
a description of--
(A) the representations, warranties, and enforcement
mechanisms available to investors; and
(B) how they differ from the representations, warranties,
and enforcement mechanisms in issuances of similar securities;
and
(2) require any securitizer (as that term is defined in section
15G(a) of the Securities Exchange Act of 1934, as added by this
subtitle) to disclose fulfilled and unfulfilled repurchase requests
across all trusts aggregated by the securitizer, so that investors
may identify asset originators with clear underwriting
deficiencies.
SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF 1933.
(a) Exemption Eliminated.--Section 4 of the Securities Act of 1933
(15 U.S.C. 77d) is amended--
(1) by striking paragraph (5); and
(2) by striking ``(6) transactions'' and inserting the
following:
``(5) transactions''.
(b) Conforming Amendment.--Section 3(a)(4)(B)(vii)(I) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is
amended by striking ``4(6)'' and inserting ``4(5)''.
SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN ASSET-BACKED
SECURITIES ISSUES.
Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), as amended
by this subtitle, is amended by adding at the end the following:
``(d) Registration Statement for Asset-backed Securities.--Not
later than 180 days after the date of enactment of this subsection, the
Commission shall issue rules relating to the registration statement
required to be filed by any issuer of an asset-backed security (as that
term is defined in section 3(a)(77) of the Securities Exchange Act of
1934) that require any issuer of an asset-backed security--
``(1) to perform a review of the assets underlying the asset-
backed security; and
``(2) to disclose the nature of the review under paragraph
(1).''.
SEC. 946. STUDY ON THE MACROECONOMIC EFFECTS OF RISK RETENTION
REQUIREMENTS.
(a) Study Required.--The Chairman of the Financial Services
Oversight Council shall carry out a study on the macroeconomic effects
of the risk retention requirements under this subtitle, and the
amendments made by this subtitle, with emphasis placed on potential
beneficial effects with respect to stabilizing the real estate market.
Such study shall include--
(1) an analysis of the effects of risk retention on real estate
asset price bubbles, including a retrospective estimate of what
fraction of real estate losses may have been averted had such
requirements been in force in recent years;
(2) an analysis of the feasibility of minimizing real estate
price bubbles by proactively adjusting the percentage of risk
retention that must be borne by creditors and securitizers of real
estate debt, as a function of regional or national market
conditions;
(3) a comparable analysis for proactively adjusting mortgage
origination requirements;
(4) an assessment of whether such proactive adjustments should
be made by an independent regulator, or in a formulaic and
transparent manner;
(5) an assessment of whether such adjustments should take place
independently or in concert with monetary policy; and
(6) recommendations for implementation and enabling
legislation.
(b) Report.--Not later than the end of the 180-day period beginning
on the date of the enactment of this title, the Chairman of the
Financial Services Oversight Council shall issue a report to the
Congress containing any findings and determinations made in carrying
out the study required under subsection (a).
Subtitle E--Accountability and Executive Compensation
SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION DISCLOSURES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 14 (15 U.S.C. 78n) the following:
``SEC. 14A. SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.
``(a) Separate Resolution Required.--
``(1) In general.--Not less frequently than once every 3 years,
a proxy or consent or authorization for an annual or other meeting
of the shareholders for which the proxy solicitation rules of the
Commission require compensation disclosure shall include a separate
resolution subject to shareholder vote to approve the compensation
of executives, as disclosed pursuant to section 229.402 of title
17, Code of Federal Regulations, or any successor thereto.
``(2) Frequency of vote.--Not less frequently than once every 6
years, a proxy or consent or authorization for an annual or other
meeting of the shareholders for which the proxy solicitation rules
of the Commission require compensation disclosure shall include a
separate resolution subject to shareholder vote to determine
whether votes on the resolutions required under paragraph (1) will
occur every 1, 2, or 3 years.
``(3) Effective date.--The proxy or consent or authorization
for the first annual or other meeting of the shareholders occurring
after the end of the 6-month period beginning on the date of
enactment of this section shall include--
``(A) the resolution described in paragraph (1); and
``(B) a separate resolution subject to shareholder vote to
determine whether votes on the resolutions required under
paragraph (1) will occur every 1, 2, or 3 years.
``(b) Shareholder Approval of Golden Parachute Compensation.--
``(1) Disclosure.--In any proxy or consent solicitation
material (the solicitation of which is subject to the rules of the
Commission pursuant to subsection (a)) for a meeting of the
shareholders occurring after the end of the 6-month period
beginning on the date of enactment of this section, at which
shareholders are asked to approve an acquisition, merger,
consolidation, or proposed sale or other disposition of all or
substantially all the assets of an issuer, the person making such
solicitation shall disclose in the proxy or consent solicitation
material, in a clear and simple form in accordance with regulations
to be promulgated by the Commission, any agreements or
understandings that such person has with any named executive
officers of such issuer (or of the acquiring issuer, if such issuer
is not the acquiring issuer) concerning any type of compensation
(whether present, deferred, or contingent) that is based on or
otherwise relates to the acquisition, merger, consolidation, sale,
or other disposition of all or substantially all of the assets of
the issuer and the aggregate total of all such compensation that
may (and the conditions upon which it may) be paid or become
payable to or on behalf of such executive officer.
``(2) Shareholder approval.--Any proxy or consent or
authorization relating to the proxy or consent solicitation
material containing the disclosure required by paragraph (1) shall
include a separate resolution subject to shareholder vote to
approve such agreements or understandings and compensation as
disclosed, unless such agreements or understandings have been
subject to a shareholder vote under subsection (a).
``(c) Rule of Construction.--The shareholder vote referred to in
subsections (a) and (b) shall not be binding on the issuer or the board
of directors of an issuer, and may not be construed--
``(1) as overruling a decision by such issuer or board of
directors;
``(2) to create or imply any change to the fiduciary duties of
such issuer or board of directors;
``(3) to create or imply any additional fiduciary duties for
such issuer or board of directors; or
``(4) to restrict or limit the ability of shareholders to make
proposals for inclusion in proxy materials related to executive
compensation.
``(d) Disclosure of Votes.--Every institutional investment manager
subject to section 13(f) shall report at least annually how it voted on
any shareholder vote pursuant to subsections (a) and (b), unless such
vote is otherwise required to be reported publicly by rule or
regulation of the Commission.
``(e) Exemption.--The Commission may, by rule or order, exempt an
issuer or class of issuers from the requirement under subsection (a) or
(b). In determining whether to make an exemption under this subsection,
the Commission shall take into account, among other considerations,
whether the requirements under subsections (a) and (b)
disproportionately burdens small issuers.''.
SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78
et seq.) is amended by inserting after section 10B, as added by section
753, the following:
``SEC. 10C. COMPENSATION COMMITTEES.
``(a) Independence of Compensation Committees.--
``(1) Listing standards.--The Commission shall, by rule, direct
the national securities exchanges and national securities
associations to prohibit the listing of any equity security of an
issuer, other than an issuer that is a controlled company, limited
partnership, company in bankruptcy proceedings, open-ended
management investment company that is registered under the
Investment Company Act of 1940, or a foreign private issuer that
provides annual disclosures to shareholders of the reasons that the
foreign private issuer does not have an independent compensation
committee, that does not comply with the requirements of this
subsection.
``(2) Independence of compensation committees.--The rules of
the Commission under paragraph (1) shall require that each member
of the compensation committee of the board of directors of an
issuer be--
``(A) a member of the board of directors of the issuer; and
``(B) independent.
``(3) Independence.--The rules of the Commission under
paragraph (1) shall require that, in determining the definition of
the term `independence' for purposes of paragraph (2), the national
securities exchanges and the national securities associations shall
consider relevant factors, including--
``(A) the source of compensation of a member of the board
of directors of an issuer, including any consulting, advisory,
or other compensatory fee paid by the issuer to such member of
the board of directors; and
``(B) whether a member of the board of directors of an
issuer is affiliated with the issuer, a subsidiary of the
issuer, or an affiliate of a subsidiary of the issuer.
``(4) Exemption authority.--The rules of the Commission under
paragraph (1) shall permit a national securities exchange or a
national securities association to exempt a particular relationship
from the requirements of paragraph (2), with respect to the members
of a compensation committee, as the national securities exchange or
national securities association determines is appropriate, taking
into consideration the size of an issuer and any other relevant
factors.
``(b) Independence of Compensation Consultants and Other
Compensation Committee Advisers.--
``(1) In general.--The compensation committee of an issuer may
only select a compensation consultant, legal counsel, or other
adviser to the compensation committee after taking into
consideration the factors identified by the Commission under
paragraph (2).
``(2) Rules.--The Commission shall identify factors that affect
the independence of a compensation consultant, legal counsel, or
other adviser to a compensation committee of an issuer. Such
factors shall be competitively neutral among categories of
consultants, legal counsel, or other advisers and preserve the
ability of compensation committees to retain the services of
members of any such category, and shall include--
``(A) the provision of other services to the issuer by the
person that employs the compensation consultant, legal counsel,
or other adviser;
``(B) the amount of fees received from the issuer by the
person that employs the compensation consultant, legal counsel,
or other adviser, as a percentage of the total revenue of the
person that employs the compensation consultant, legal counsel,
or other adviser;
``(C) the policies and procedures of the person that
employs the compensation consultant, legal counsel, or other
adviser that are designed to prevent conflicts of interest;
``(D) any business or personal relationship of the
compensation consultant, legal counsel, or other adviser with a
member of the compensation committee; and
``(E) any stock of the issuer owned by the compensation
consultant, legal counsel, or other adviser.
``(c) Compensation Committee Authority Relating to Compensation
Consultants.--
``(1) Authority to retain compensation consultant.--
``(A) In general.--The compensation committee of an issuer,
in its capacity as a committee of the board of directors, may,
in its sole discretion, retain or obtain the advice of a
compensation consultant.
``(B) Direct responsibility of compensation committee.--The
compensation committee of an issuer shall be directly
responsible for the appointment, compensation, and oversight of
the work of a compensation consultant.
``(C) Rule of construction.--This paragraph may not be
construed--
``(i) to require the compensation committee to
implement or act consistently with the advice or
recommendations of the compensation consultant; or
``(ii) to affect the ability or obligation of a
compensation committee to exercise its own judgment in
fulfillment of the duties of the compensation committee.
``(2) Disclosure.--In any proxy or consent solicitation
material for an annual meeting of the shareholders (or a special
meeting in lieu of the annual meeting) occurring on or after the
date that is 1 year after the date of enactment of this section,
each issuer shall disclose in the proxy or consent material, in
accordance with regulations of the Commission, whether--
``(A) the compensation committee of the issuer retained or
obtained the advice of a compensation consultant; and
``(B) the work of the compensation consultant has raised
any conflict of interest and, if so, the nature of the conflict
and how the conflict is being addressed.
``(d) Authority To Engage Independent Legal Counsel and Other
Advisers.--
``(1) In general.--The compensation committee of an issuer, in
its capacity as a committee of the board of directors, may, in its
sole discretion, retain and obtain the advice of independent legal
counsel and other advisers.
``(2) Direct responsibility of compensation committee.--The
compensation committee of an issuer shall be directly responsible
for the appointment, compensation, and oversight of the work of
independent legal counsel and other advisers.
``(3) Rule of construction.--This subsection may not be
construed--
``(A) to require a compensation committee to implement or
act consistently with the advice or recommendations of
independent legal counsel or other advisers under this
subsection; or
``(B) to affect the ability or obligation of a compensation
committee to exercise its own judgment in fulfillment of the
duties of the compensation committee.
``(e) Compensation of Compensation Consultants, Independent Legal
Counsel, and Other Advisers.--Each issuer shall provide for appropriate
funding, as determined by the compensation committee in its capacity as
a committee of the board of directors, for payment of reasonable
compensation--
``(1) to a compensation consultant; and
``(2) to independent legal counsel or any other adviser to the
compensation committee.
``(f) Commission Rules.--
``(1) In general.--Not later than 360 days after the date of
enactment of this section, the Commission shall, by rule, direct
the national securities exchanges and national securities
associations to prohibit the listing of any security of an issuer
that is not in compliance with the requirements of this section.
``(2) Opportunity to cure defects.--The rules of the Commission
under paragraph (1) shall provide for appropriate procedures for an
issuer to have a reasonable opportunity to cure any defects that
would be the basis for the prohibition under paragraph (1), before
the imposition of such prohibition.
``(3) Exemption authority.--
``(A) In general.--The rules of the Commission under
paragraph (1) shall permit a national securities exchange or a
national securities association to exempt a category of issuers
from the requirements under this section, as the national
securities exchange or the national securities association
determines is appropriate.
``(B) Considerations.--In determining appropriate
exemptions under subparagraph (A), the national securities
exchange or the national securities association shall take into
account the potential impact of the requirements of this
section on smaller reporting issuers.
``(g) Controlled Company Exemption.--
``(1) In general.--This section shall not apply to any
controlled company.
``(2) Definition.--For purposes of this section, the term
`controlled company' means an issuer--
``(A) that is listed on a national securities exchange or
by a national securities association; and
``(B) that holds an election for the board of directors of
the issuer in which more than 50 percent of the voting power is
held by an individual, a group, or another issuer.''.
(b) Study and Report.--
(1) Study.--The Securities and Exchange Commission shall
conduct a study and review of the use of compensation consultants
and the effects of such use.
(2) Report.--Not later than 2 years after the date of the
enactment of this Act, the Commission shall submit a report to
Congress on the results of the study and review required by this
subsection.
SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES.
(a) Disclosure of Pay Versus Performance.--Section 14 of the
Securities Exchange Act of 1934 (15 U.S.C. 78n), as amended by this
title, is amended by adding at the end the following:
``(i) Disclosure of Pay Versus Performance.--The Commission shall,
by rule, require each issuer to disclose in any proxy or consent
solicitation material for an annual meeting of the shareholders of the
issuer a clear description of any compensation required to be disclosed
by the issuer under section 229.402 of title 17, Code of Federal
Regulations (or any successor thereto), including information that
shows the relationship between executive compensation actually paid and
the financial performance of the issuer, taking into account any change
in the value of the shares of stock and dividends of the issuer and any
distributions. The disclosure under this subsection may include a
graphic representation of the information required to be disclosed.''.
(b) Additional Disclosure Requirements.--
(1) In general.--The Commission shall amend section 229.402 of
title 17, Code of Federal Regulations, to require each issuer to
disclose in any filing of the issuer described in section 229.10(a)
of title 17, Code of Federal Regulations (or any successor
thereto)--
(A) the median of the annual total compensation of all
employees of the issuer, except the chief executive officer (or
any equivalent position) of the issuer;
(B) the annual total compensation of the chief executive
officer (or any equivalent position) of the issuer; and
(C) the ratio of the amount described in subparagraph (A)
to the amount described in subparagraph (B).
(2) Total compensation.--For purposes of this subsection, the
total compensation of an employee of an issuer shall be determined
in accordance with section 229.402(c)(2)(x) of title 17, Code of
Federal Regulations, as in effect on the day before the date of
enactment of this Act.
SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
The Securities Exchange Act of 1934 is amended by inserting after
section 10C, as added by section 952, the following:
``SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION POLICY.
``(a) Listing Standards.--The Commission shall, by rule, direct the
national securities exchanges and national securities associations to
prohibit the listing of any security of an issuer that does not comply
with the requirements of this section.
``(b) Recovery of Funds.--The rules of the Commission under
subsection (a) shall require each issuer to develop and implement a
policy providing--
``(1) for disclosure of the policy of the issuer on incentive-
based compensation that is based on financial information required
to be reported under the securities laws; and
``(2) that, in the event that the issuer is required to prepare
an accounting restatement due to the material noncompliance of the
issuer with any financial reporting requirement under the
securities laws, the issuer will recover from any current or former
executive officer of the issuer who received incentive-based
compensation (including stock options awarded as compensation)
during the 3-year period preceding the date on which the issuer is
required to prepare an accounting restatement, based on the
erroneous data, in excess of what would have been paid to the
executive officer under the accounting restatement.''.
SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIRECTOR HEDGING.
Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n),
as amended by this title, is amended by adding at the end the
following:
``(j) Disclosure of Hedging by Employees and Directors.--The
Commission shall, by rule, require each issuer to disclose in any proxy
or consent solicitation material for an annual meeting of the
shareholders of the issuer whether any employee or member of the board
of directors of the issuer, or any designee of such employee or member,
is permitted to purchase financial instruments (including prepaid
variable forward contracts, equity swaps, collars, and exchange funds)
that are designed to hedge or offset any decrease in the market value
of equity securities--
``(1) granted to the employee or member of the board of
directors by the issuer as part of the compensation of the employee
or member of the board of directors; or
``(2) held, directly or indirectly, by the employee or member
of the board of directors.''.
SEC. 956. ENHANCED COMPENSATION STRUCTURE REPORTING.
(a) Enhanced Disclosure and Reporting of Compensation
Arrangements.--
(1) In general.--Not later than 9 months after the date of
enactment of this title, the appropriate Federal regulators jointly
shall prescribe regulations or guidelines to require each covered
financial institution to disclose to the appropriate Federal
regulator the structures of all incentive-based compensation
arrangements offered by such covered financial institutions
sufficient to determine whether the compensation structure--
(A) provides an executive officer, employee, director, or
principal shareholder of the covered financial institution with
excessive compensation, fees, or benefits; or
(B) could lead to material financial loss to the covered
financial institution.
(2) Rules of construction.--Nothing in this section shall be
construed as requiring the reporting of the actual compensation of
particular individuals. Nothing in this section shall be construed
to require a covered financial institution that does not have an
incentive-based payment arrangement to make the disclosures
required under this subsection.
(b) Prohibition on Certain Compensation Arrangements.--Not later
than 9 months after the date of enactment of this title, the
appropriate Federal regulators shall jointly prescribe regulations or
guidelines that prohibit any types of incentive-based payment
arrangement, or any feature of any such arrangement, that the
regulators determine encourages inappropriate risks by covered
financial institutions--
(1) by providing an executive officer, employee, director, or
principal shareholder of the covered financial institution with
excessive compensation, fees, or benefits; or
(2) that could lead to material financial loss to the covered
financial institution.
(c) Standards.--The appropriate Federal regulators shall--
(1) ensure that any standards for compensation established
under subsections (a) or (b) are comparable to the standards
established under section of the Federal Deposit Insurance Act (12
U.S.C. 2 1831p-1) for insured depository institutions; and
(2) in establishing such standards under such subsections, take
into consideration the compensation standards described in section
39(c) of the Federal Deposit Insurance Act (12 U.S.C. 1831p- 9
1(c)).
(d) Enforcement.--The provisions of this section and the
regulations issued under this section shall be enforced under section
505 of the Gramm-Leach-Bliley Act and, for purposes of such section, a
violation of this section or such regulations shall be treated as a
violation of subtitle A of title V of such Act.
(e) Definitions.--As used in this section--
(1) the term ``appropriate Federal regulator'' means the Board
of Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Board of Directors of the Federal
Deposit Insurance Corporation, the Director of the Office of Thrift
Supervision, the National Credit Union Administration Board, the
Securities and Exchange Commission, the Federal Housing Finance
Agency; and
(2) the term ``covered financial institution'' means--
(A) a depository institution or depository institution
holding company, as such terms are defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813);
(B) a broker-dealer registered under section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o);
(C) a credit union, as described in section 19(b)(1)(A)(iv)
of the Federal Reserve Act;
(D) an investment advisor, as such term is defined in
section 202(a)(11) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-2(a)(11));
(E) the Federal National Mortgage Association;
(F) the Federal Home Loan Mortgage Corporation; and
(G) any other financial institution that the appropriate
Federal regulators, jointly, by rule, determine should be
treated as a covered financial institution for purposes of this
section.
(f) Exemption for Certain Financial Institutions.--The requirements
of this section shall not apply to covered financial institutions with
assets of less than $1,000,000,000.
SEC. 957. VOTING BY BROKERS.
Section 6(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78f(b)) is amended--
(1) in paragraph (9)--
(A) in subparagraph (A), by redesignating clauses (i)
through (v) as subclauses (I) through (V), respectively, and
adjusting the margins accordingly;
(B) by redesignating subparagraphs (A) through (D) as
clauses (i) through (iv), respectively, and adjusting the
margins accordingly;
(C) by inserting ``(A)'' after ``(9)''; and
(D) in the matter immediately following clause (iv), as so
redesignated, by striking ``As used'' and inserting the
following:
``(B) As used''.
(2) by adding at the end the following:
``(10)(A) The rules of the exchange prohibit any member that is
not the beneficial owner of a security registered under section 12
from granting a proxy to vote the security in connection with a
shareholder vote described in subparagraph (B), unless the
beneficial owner of the security has instructed the member to vote
the proxy in accordance with the voting instructions of the
beneficial owner.
``(B) A shareholder vote described in this subparagraph is a
shareholder vote with respect to the election of a member of the
board of directors of an issuer, executive compensation, or any
other significant matter, as determined by the Commission, by rule,
and does not include a vote with respect to the uncontested
election of a member of the board of directors of any investment
company registered under the Investment Company Act of 1940 (15
U.S.C. 80b-1 et seq.).
``(C) Nothing in this paragraph shall be construed to prohibit
a national securities exchange from prohibiting a member that is
not the beneficial owner of a security registered under section 12
from granting a proxy to vote the security in connection with a
shareholder vote not described in subparagraph (A).''.
Subtitle F--Improvements to the Management of the Securities and
Exchange Commission
SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SUPERVISORY
CONTROLS.
(a) Annual Reports and Certification.--Not later than 90 days after
the end of each fiscal year, the Commission shall submit a report to
the Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives on
the conduct by the Commission of examinations of registered entities,
enforcement investigations, and review of corporate financial
securities filings.
(b) Contents of Reports.--Each report under subsection (a) shall
contain--
(1) an assessment, as of the end of the most recent fiscal
year, of the effectiveness of--
(A) the internal supervisory controls of the Commission;
and
(B) the procedures of the Commission applicable to the
staff of the Commission who perform examinations of registered
entities, enforcement investigations, and reviews of corporate
financial securities filings;
(2) a certification that the Commission has adequate internal
supervisory controls to carry out the duties of the Commission
described in paragraph (1)(B); and
(3) a summary by the Comptroller General of the United States
of the review carried out under subsection (d).
(c) Certification.--
(1) Signature.--The certification under subsection (b)(2) shall
be signed by the Director of the Division of Enforcement, the
Director of the Division of Corporation Finance, and the Director
of the Office of Compliance Inspections and Examinations (or the
head of any successor division or office).
(2) Content of certification.--Each individual described in
paragraph (1) shall certify that the individual--
(A) is directly responsible for establishing and
maintaining the internal supervisory controls of the Division
or Office of which the individual is the head;
(B) is knowledgeable about the internal supervisory
controls of the Division or Office of which the individual is
the head;
(C) has evaluated the effectiveness of the internal
supervisory controls during the 90-day period ending on the
final day of the fiscal year to which the report relates; and
(D) has disclosed to the Commission any significant
deficiencies in the design or operation of internal supervisory
controls that could adversely affect the ability of the
Division or Office to consistently conduct inspections, or
investigations, or reviews of filings with professional
competence and integrity.
(d) New Director or Acting Director.--Notwithstanding subsection
(a), if the Director of the Division of Enforcement, the Director of
the Division of Corporate Finance, or the Director of the Office of
Compliance Inspections and Examinations has served as Director of the
Division or Office for less than 90 days on the date on which a report
is required to be submitted under subsection (a), the Commission may
submit the report on the date on which the Director has served as
Director for 90 days. If there is no Director of the Division of
Enforcement, the Division of Corporate Finance, or the Office of
Compliance Inspections and Examinations, on the date on which a report
is required to be submitted under subsection (a), the Acting Director
of the Division or Office may make the certification required under
subsection (c).
(e) Review by the Comptroller General.--
(1) Report.--The Comptroller General of the United States shall
submit to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House of
Representatives a report that contains a review of the adequacy and
effectiveness of the internal supervisory control structure and
procedures described in subsection (b)(1), not less frequently than
once every 3 years, at a time to coincide with the publication of
the reports of the Commission under this section.
(2) Authority to hire experts.--The Comptroller General of the
United States may hire independent consultants with specialized
expertise in any area relevant to the duties of the Comptroller
General described in this section, in order to assist the
Comptroller General in carrying out such duties.
SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGEMENT.
(a) Triennial Report Required.--Once every 3 years, the Comptroller
General of the United States shall submit a report to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives on the quality of
personnel management by the Commission.
(b) Contents of Report.--Each report under subsection (a) shall
include--
(1) an evaluation of--
(A) the effectiveness of supervisors in using the skills,
talents, and motivation of the employees of the Commission to
achieve the goals of the Commission;
(B) the criteria for promoting employees of the Commission
to supervisory positions;
(C) the fairness of the application of the promotion
criteria to the decisions of the Commission;
(D) the competence of the professional staff of the
Commission;
(E) the efficiency of communication between the units of
the Commission regarding the work of the Commission (including
communication between divisions and between subunits of a
division) and the efforts by the Commission to promote such
communication;
(F) the turnover within subunits of the Commission,
including the consideration of supervisors whose subordinates
have an unusually high rate of turnover;
(G) whether there are excessive numbers of low-level, mid-
level, or senior-level managers;
(H) any initiatives of the Commission that increase the
competence of the staff of the Commission;
(I) the actions taken by the Commission regarding employees
of the Commission who have failed to perform their duties and
circumstances under which the Commission has issued to
employees a notice of termination; and
(J) such other factors relating to the management of the
Commission as the Comptroller General determines are
appropriate;
(2) an evaluation of any improvements made with respect to the
areas described in paragraph (1) since the date of submission of
the previous report; and
(3) recommendations for how the Commission can use the human
resources of the Commission more effectively and efficiently to
carry out the mission of the Commission.
(c) Consultation.--In preparing the report under subsection (a),
the Comptroller General shall consult with current employees of the
Commission, retired employees and other former employees of the
Commission, the Inspector General of the Commission, persons that have
business before the Commission, any union representing the employees of
the Commission, private management consultants, academics, and any
other source that the Comptroller General deems appropriate.
(d) Report by Commission.--Not later than 90 days after the date on
which the Comptroller General submits each report under subsection (a),
the Commission shall submit to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services of
the House of Representatives a report describing the actions taken by
the Commission in response to the recommendations contained in the
report under subsection (a).
(e) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall reimburse
the Government Accountability Office for the full cost of making
the reports under this section, as billed therefor by the
Comptroller General.
(2) Crediting and use of reimbursements.--Such reimbursements
shall--
(A) be credited to the appropriation account ``Salaries and
Expenses, Government Accountability Office'' current when the
payment is received; and
(B) remain available until expended.
(f) Authority to Hire Experts.--The Comptroller General of the
United States may hire independent consultants with specialized
expertise in any area relevant to the duties of the Comptroller General
described in this section, in order to assist the Comptroller General
in carrying out such duties.
SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT.
(a) Reports of Commission.--
(1) Annual reports required.--Not later than 6 months after the
end of each fiscal year, the Commission shall publish and submit to
Congress a report that--
(A) describes the responsibility of the management of the
Commission for establishing and maintaining an adequate
internal control structure and procedures for financial
reporting; and
(B) contains an assessment of the effectiveness of the
internal control structure and procedures for financial
reporting of the Commission during that fiscal year.
(2) Attestation.--The reports required under paragraph (1)
shall be attested to by the Chairman and chief financial officer of
the Commission.
(b) Report by Comptroller General.--
(1) Report required.--Not later than 6 months after the end of
the first fiscal year after the date of enactment of this Act, the
Comptroller General of the United States shall submit a report to
Congress that assesses--
(A) the effectiveness of the internal control structure and
procedures of the Commission for financial reporting; and
(B) the assessment of the Commission under subsection
(a)(1)(B).
(2) Attestation.--The Comptroller General shall attest to, and
report on, the assessment made by the Commission under subsection
(a).
(c) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall reimburse
the Government Accountability Office for the full cost of making
the reports under subsection (b), as billed therefor by the
Comptroller General.
(2) Crediting and use of reimbursements.--Such reimbursements
shall--
(A) be credited to the appropriation account ``Salaries and
Expenses, Government Accountability Office'' current when the
payment is received; and
(B) remain available until expended.
SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURITIES ASSOCIATIONS.
(a) Report Required.--Not later than 2 years after the date of
enactment of this Act, and every 3 years thereafter, the Comptroller
General of the United States shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report that includes an
evaluation of the oversight by the Commission of national securities
associations registered under section 15A of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-3) with respect to--
(1) the governance of such national securities associations,
including the identification and management of conflicts of
interest by such national securities associations, together with an
analysis of the impact of any conflicts of interest on the
regulatory enforcement or rulemaking by such national securities
associations;
(2) the examinations carried out by the national securities
associations, including the expertise of the examiners;
(3) the executive compensation practices of such national
securities associations;
(4) the arbitration services provided by the national
securities associations;
(5) the review performed by national securities associations of
advertising by the members of the national securities associations;
(6) the cooperation with and assistance to State securities
administrators by the national securities associations to promote
investor protection;
(7) how the funding of national securities associations is used
to support the mission of the national securities associations,
including--
(A) the methods of funding;
(B) the sufficiency of funds;
(C) how funds are invested by the national securities
association pending use; and
(D) the impact of the methods, sufficiency, and investment
of funds on regulatory enforcement by the national securities
associations;
(8) the policies regarding the employment of former employees
of national securities associations by regulated entities;
(9) the ongoing effectiveness of the rules of the national
securities associations in achieving the goals of the rules;
(10) the transparency of governance and activities of the
national securities associations; and
(11) any other issue that has an impact, as determined by the
Comptroller General, on the effectiveness of such national
securities associations in performing their mission and in dealing
fairly with investors and members;
(b) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall reimburse
the Government Accountability Office for the full cost of making
the reports under subsection (a), as billed therefor by the
Comptroller General.
(2) Crediting and use of reimbursements.--Such reimbursements
shall--
(A) be credited to the appropriation account ``Salaries and
Expenses, Government Accountability Office'' current when the
payment is received; and
(B) remain available until expended.
SEC. 965. COMPLIANCE EXAMINERS.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
amended by adding at the end the following:
``(h) Examiners.--
``(1) Division of trading and markets.--The Division of Trading
and Markets of the Commission, or any successor organizational
unit, shall have a staff of examiners who shall--
``(A) perform compliance inspections and examinations of
entities under the jurisdiction of that Division; and
``(B) report to the Director of that Division.
``(2) Division of investment management.--The Division of
Investment Management of the Commission, or any successor
organizational unit, shall have a staff of examiners who shall--
``(A) perform compliance inspections and examinations of
entities under the jurisdiction of that Division; and
``(B) report to the Director of that Division.''.
SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE COMMISSION.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 4C (15 U.S.C. 78d-3) the following:
``SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL.
``(a) Suggestion Submissions by Commission Employees.--
``(1) Hotline established.--The Inspector General of the
Commission shall establish and maintain a telephone hotline or
other electronic means for the receipt of--
``(A) suggestions by employees of the Commission for
improvements in the work efficiency, effectiveness, and
productivity, and the use of the resources, of the Commission;
and
``(B) allegations by employees of the Commission of waste,
abuse, misconduct, or mismanagement within the Commission.
``(2) Confidentiality.--The Inspector General shall maintain as
confidential--
``(A) the identity of any individual who provides
information by the means established under paragraph (1),
unless the individual requests otherwise, in writing; and
``(B) at the request of any such individual, any specific
information provided by the individual.
``(b) Consideration of Reports.--The Inspector General shall
consider any suggestions or allegations received by the means
established under subsection (a)(1), and shall recommend appropriate
action in relation to such suggestions or allegations.
``(c) Recognition.--The Inspector General may recognize any
employee who makes a suggestion under subsection (a)(1) (or by other
means) that would or does--
``(1) increase the work efficiency, effectiveness, or
productivity of the Commission; or
``(2) reduce waste, abuse, misconduct, or mismanagement within
the Commission.
``(d) Report.--The Inspector General of the Commission shall submit
to Congress an annual report containing a description of--
``(1) the nature, number, and potential benefits of any
suggestions received under subsection (a);
``(2) the nature, number, and seriousness of any allegations
received under subsection (a);
``(3) any recommendations made or actions taken by the
Inspector General in response to substantiated allegations received
under subsection (a); and
``(4) any action the Commission has taken in response to
suggestions or allegations received under subsection (a).
``(e) Funding.--The activities of the Inspector General under this
subsection shall be funded by the Securities and Exchange Commission
Investor Protection Fund established under section 21F.''.
SEC. 967. COMMISSION ORGANIZATIONAL STUDY AND REFORM.
(a) Study Required.--
(1) In general.--Not later than the end of the 90-day period
beginning on the date of the enactment of this subtitle, the
Securities and Exchange Commission (hereinafter in this section
referred to as the ``SEC'') shall hire an independent consultant of
high caliber and with expertise in organizational restructuring and
the operations of capital markets to examine the internal
operations, structure, funding, and the need for comprehensive
reform of the SEC, as well as the SEC's relationship with and the
reliance on self-regulatory organizations and other entities
relevant to the regulation of securities and the protection of
securities investors that are under the SEC's oversight.
(2) Specific areas for study.--The study required under
paragraph (1) shall, at a minimum, include the study of--
(A) the possible elimination of unnecessary or redundant
units at the SEC;
(B) improving communications between SEC offices and
divisions;
(C) the need to put in place a clear chain-of-command
structure, particularly for enforcement examinations and
compliance inspections;
(D) the effect of high-frequency trading and other
technological advances on the market and what the SEC requires
to monitor the effect of such trading and advances on the
market;
(E) the SEC's hiring authorities, workplace policies, and
personal practices, including--
(i) whether there is a need to further streamline
hiring authorities for those who are not lawyers,
accountants, compliance examiners, or economists;
(ii) whether there is a need for further pay reforms;
(iii) the diversity of skill sets of SEC employees and
whether the present skill set diversity efficiently and
effectively fosters the SEC's mission of investor
protection; and
(iv) the application of civil service laws by the SEC;
(F) whether the SEC's oversight and reliance on self-
regulatory organizations promotes efficient and effective
governance for the securities markets; and
(G) whether adjusting the SEC's reliance on self-regulatory
organizations is necessary to promote more efficient and
effective governance for the securities markets.
(b) Consultant Report.--Not later than the end of the 150-day
period after being retained, the independent consultant hired pursuant
to subsection (a)(1) shall issue a report to the SEC and the Congress
containing--
(1) a detailed description of any findings and conclusions made
while carrying out the study required under subsection (a)(1); and
(2) recommendations for legislative, regulatory, or
administrative action that the consultant determines appropriate to
enable the SEC and other entities on which the consultant reports
to perform their statutorily or otherwise mandated missions.
(c) SEC Report.--Not later than the end of the 6-month period
beginning on the date the consultant issues the report under subsection
(b), and every 6-months thereafter during the 2-year period following
the date on which the consultant issues such report, the SEC shall
issue a report to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate describing the SEC's implementation of the
regulatory and administrative recommendations contained in the
consultant's report.
SEC. 968. STUDY ON SEC REVOLVING DOOR.
(a) Government Accountability Office Study.--The Comptroller
General of the United States shall conduct a study that will--
(1) review the number of employees who leave the Securities and
Exchange Commission to work for financial institutions regulated by
such Commission;
(2) determine how many employees who leave the Securities and
Exchange Commission worked on cases that involved financial
institutions regulated by such Commission;
(3) review the length of time employees work for the Securities
and Exchange Commission before leaving to be employed by financial
institutions regulated by such Commission;
(4) review existing internal controls and make recommendations
on strengthening such controls to ensure that employees of the
Securities and Exchange Commission who are later employed by
financial institutions did not assist such institutions in
violating any rules or regulations of the Commission during the
course of their employment with such Commission;
(5) determine if greater post-employment restrictions are
necessary to prevent employees of the Securities and Exchange
Commission from being employed by financial institutions after
employment with such Commission;
(6) determine if the volume of employees of the Securities and
Exchange Commission who are later employed by financial
institutions has led to inefficiencies in enforcement;
(7) determine if employees of the Securities and Exchange
Commission who are later employed by financial institutions
assisted such institutions in circumventing Federal rules and
regulations while employed by such Commission;
(8) review any information that may address the volume of
employees of the Securities and Exchange Commission who are later
employed by financial institutions, and make recommendations to
Congress; and
(9) review other additional issues as may be raised during the
course of the study conducted under this subsection.
(b) Report.--Not later than 1 year after the date of the enactment
of this subtitle, the Comptroller General of the United States shall
submit to the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing, and Urban
Affairs of the Senate a report on the results of the study required by
subsection (a).
Subtitle G--Strengthening Corporate Governance
SEC. 971. PROXY ACCESS.
(a) Proxy Access.--Section 14(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78n(a)) is amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end the following:
``(2) The rules and regulations prescribed by the Commission under
paragraph (1) may include--
``(A) a requirement that a solicitation of proxy, consent, or
authorization by (or on behalf of) an issuer include a nominee
submitted by a shareholder to serve on the board of directors of
the issuer; and
``(B) a requirement that an issuer follow a certain procedure
in relation to a solicitation described in subparagraph (A).''.
(b) Regulations.--The Commission may issue rules permitting the use
by a shareholder of proxy solicitation materials supplied by an issuer
of securities for the purpose of nominating individuals to membership
on the board of directors of the issuer, under such terms and
conditions as the Commission determines are in the interests of
shareholders and for the protection of investors.
(c) Exemptions.--The Commission may, by rule or order, exempt an
issuer or class of issuers from the requirement made by this section or
an amendment made by this section. In determining whether to make an
exemption under this subsection, the Commission shall take into
account, among other considerations, whether the requirement in the
amendment made by subsection (a) disproportionately burdens small
issuers.
SEC. 972. DISCLOSURES REGARDING CHAIRMAN AND CEO STRUCTURES.
The Securities Exchange Act of 1934 (15 U.S. C. 78a et seq.) is
amended by inserting after section 14A, as added by this title, the
following:
``SEC. 14B. CORPORATE GOVERNANCE.
``Not later than 180 days after the date of enactment of this
subsection, the Commission shall issue rules that require an issuer to
disclose in the annual proxy sent to investors the reasons why the
issuer has chosen--
``(1) the same person to serve as chairman of the board of
directors and chief executive officer (or in equivalent positions);
or
``(2) different individuals to serve as chairman of the board
of directors and chief executive officer (or in equivalent
positions of the issuer).''.
Subtitle H--Municipal Securities
SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND CHANGES TO THE
BOARD OF THE MSRB.
(a) Registration of Municipal Securities Dealers and Municipal
Advisors.--Section 15B(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-4(a)) is amended--
(1) in paragraph (1)--
(A) by inserting ``(A)'' after ``(1)''; and
(B) by adding at the end the following:
``(B) It shall be unlawful for a municipal advisor to
provide advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial products
or the issuance of municipal securities, or to undertake a
solicitation of a municipal entity or obligated person, unless
the municipal advisor is registered in accordance with this
subsection.'';
(2) in paragraph (2), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term appears;
(3) in paragraph (3), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term appears;
(4) in paragraph (4), by striking ``dealer, or municipal
securities dealer or class of brokers, dealers, or municipal
securities dealers'' and inserting ``dealer, municipal securities
dealer, or municipal advisor, or class of brokers, dealers,
municipal securities dealers, or municipal advisors''; and
(5) by adding at the end the following:
``(5) No municipal advisor shall make use of the mails or any
means or instrumentality of interstate commerce to provide advice
to or on behalf of a municipal entity or obligated person with
respect to municipal financial products, the issuance of municipal
securities, or to undertake a solicitation of a municipal entity or
obligated person, in connection with which such municipal advisor
engages in any fraudulent, deceptive, or manipulative act or
practice.''.
(b) Municipal Securities Rulemaking Board.--Section 15B(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4(b)) is amended--
(1) in paragraph (1)--
(A) in the first sentence, by striking ``Not later than''
and all that follows through ``appointed by the Commission''
and inserting ``The Municipal Securities Rulemaking Board shall
be composed of 15 members, or such other number of members as
specified by rules of the Board pursuant to paragraph
(2)(B),'';
(B) by striking the second sentence and inserting the
following: ``The members of the Board shall serve as members
for a term of 3 years or for such other terms as specified by
rules of the Board pursuant to paragraph (2)(B), and shall
consist of (A) 8 individuals who are independent of any
municipal securities broker, municipal securities dealer, or
municipal advisor, at least 1 of whom shall be representative
of institutional or retail investors in municipal securities,
at least 1 of whom shall be representative of municipal
entities, and at least 1 of whom shall be a member of the
public with knowledge of or experience in the municipal
industry (which members are hereinafter referred to as `public
representatives'); and (B) 7 individuals who are associated
with a broker, dealer, municipal securities dealer, or
municipal advisor, including at least 1 individual who is
associated with and representative of brokers, dealers, or
municipal securities dealers that are not banks or subsidiaries
or departments or divisions of banks (which members are
hereinafter referred to as `broker-dealer representatives'), at
least 1 individual who is associated with and representative of
municipal securities dealers which are banks or subsidiaries or
departments or divisions of banks (which members are
hereinafter referred to as `bank representatives'), and at
least 1 individual who is associated with a municipal advisor
(which members are hereinafter referred to as `advisor
representatives' and, together with the broker-dealer
representatives and the bank representatives, are referred to
as `regulated representatives'). Each member of the board shall
be knowledgeable of matters related to the municipal securities
markets.''; and
(C) in the third sentence, by striking ``initial'';
(2) in paragraph (2)--
(A) in the matter preceding subparagraph (A)--
(i) by inserting before the period at the end of the
first sentence the following: ``and advice provided to or
on behalf of municipal entities or obligated persons by
brokers, dealers, municipal securities dealers, and
municipal advisors with respect to municipal financial
products, the issuance of municipal securities, and
solicitations of municipal entities or obligated persons
undertaken by brokers, dealers, municipal securities
dealers, and municipal advisors''; and
(ii) by striking the second sentence;
(B) in subparagraph (A)--
(i) in the matter preceding clause (i)--
(I) by inserting ``, and no broker, dealer,
municipal securities dealer, or municipal advisor shall
provide advice to or on behalf of a municipal entity or
obligated person with respect to municipal financial
products or the issuance of municipal securities,''
after ``sale of, any municipal security''; and
(II) by inserting ``and municipal entities or
obligated persons'' after ``protection of investors'';
(ii) in clause (i), by striking ``municipal securities
brokers and municipal securities dealers'' each place that
term appears and inserting ``municipal securities brokers,
municipal securities dealers, and municipal advisors'';
(iii) in clause (ii), by adding ``and'' at the end;
(iv) in clause (iii), by striking ``; and'' and
inserting a period; and
(v) by striking clause (iv);
(C) by amending subparagraph (B) to read as follows:
``(B) establish fair procedures for the nomination and election
of members of the Board and assure fair representation in such
nominations and elections of public representatives, broker dealer
representatives, bank representatives, and advisor representatives.
Such rules--
``(i) shall provide that the number of public
representatives of the Board shall at all times exceed the
total number of regulated representatives and that the
membership shall at all times be as evenly divided in number as
possible between public representatives and regulated
representatives;
``(ii) shall specify the length or lengths of terms members
shall serve;
``(iii) may increase the number of members which shall
constitute the whole Board, provided that such number is an odd
number; and
``(iv) shall establish requirements regarding the
independence of public representatives.''.
(D) in subparagraph (C)--
(i) by inserting ``and municipal financial products''
after ``municipal securities'' the first two times that
term appears;
(ii) by inserting ``, municipal entities, obligated
persons,'' before ``and the public interest'';
(iii) by striking ``between'' and inserting ``among'';
(iv) by striking ``issuers, municipal securities
brokers, or municipal securities dealers, to fix'' and
inserting ``municipal entities, obligated persons,
municipal securities brokers, municipal securities dealers,
or municipal advisors, to fix''; and
(v) by striking ``brokers or municipal securities
dealers, to regulate'' and inserting ``brokers, municipal
securities dealers, or municipal advisors, to regulate'';
(E) in subparagraph (D)--
(i) by inserting ``and advice concerning municipal
financial products'' after ``transactions in municipal
securities'';
(ii) by striking ``That no'' and inserting ``that no'';
(iii) by inserting ``municipal advisor,'' before ``or
person associated''; and
(iv) by striking ``a municipal securities broker or
municipal securities dealer may be compelled'' and
inserting ``a municipal securities broker, municipal
securities dealer, or municipal advisor may be compelled'';
(F) in subparagraph (E)--
(i) by striking ``municipal securities brokers and
municipal securities dealers'' and inserting ``municipal
securities brokers, municipal securities dealers, and
municipal advisors''; and
(ii) by striking ``municipal securities broker or
municipal securities dealer'' and inserting ``municipal
securities broker, municipal securities dealer, or
municipal advisor'';
(G) in subparagraph (G), by striking ``municipal securities
brokers and municipal securities dealers'' and inserting
``municipal securities brokers, municipal securities dealers,
and municipal advisors'';
(H) in subparagraph (J)--
(i) by striking ``municipal securities broker and each
municipal securities dealer'' and inserting ``municipal
securities broker, municipal securities dealer, and
municipal advisor''; and
(ii) by striking the period at the end of the second
sentence and inserting ``, which may include charges for
failure to submit to the Board, or to any information
system operated by the Board, within the prescribed
timeframes, any items of information or documents required
to be submitted under any rule issued by the Board.'';
(I) in subparagraph (K)--
(i) by inserting ``broker, dealer, or'' before
``municipal securities dealer'' each place that term
appears; and
(ii) by striking ``municipal securities investment
portfolio'' and inserting ``related account of a broker,
dealer, or municipal securities dealer''; and
(J) by adding at the end the following:
``(L) with respect to municipal advisors--
``(i) prescribe means reasonably designed to prevent
acts, practices, and courses of business as are not
consistent with a municipal advisor's fiduciary duty to its
clients;
``(ii) provide continuing education requirements for
municipal advisors;
``(iii) provide professional standards; and
``(iv) not impose a regulatory burden on small
municipal advisors that is not necessary or appropriate in
the public interest and for the protection of investors,
municipal entities, and obligated persons, provided that
there is robust protection of investors against fraud.'';
(3) by redesignating paragraph (3) as paragraph (7); and
(4) by inserting after paragraph (2) the following:
``(3) The Board, in conjunction with or on behalf of any
Federal financial regulator or self-regulatory organization, may--
``(A) establish information systems; and
``(B) assess such reasonable fees and charges for the
submission of information to, or the receipt of information
from, such systems from any persons which systems may be
developed for the purposes of serving as a repository of
information from municipal market participants or otherwise in
furtherance of the purposes of the Board, a Federal financial
regulator, or a self-regulatory organization, except that the
Board--
``(i) may not charge a fee to municipal entities or
obligated persons to submit documents or other information
to the Board or charge a fee to any person to obtain,
directly from the Internet site of the Board, documents or
information submitted by municipal entities, obligated
persons, brokers, dealers, municipal securities dealers, or
municipal advisors, including documents submitted under the
rules of the Board or the Commission; and
``(ii) shall not be prohibited from charging
commercially reasonable fees for automated subscription-
based feeds or similar services, or for charging for other
data or document-based services customized upon request of
any person, made available to commercial enterprises,
municipal securities market professionals, or the general
public, whether delivered through the Internet or any other
means, that contain all or part of the documents or
information, subject to approval of the fees by the
Commission under section 19(b).
``(4) The Board may provide guidance and assistance in the
enforcement of, and examination for, compliance with the rules of
the Board to the Commission, a registered securities association
under section 15A, or any other appropriate regulatory agency, as
applicable.
``(5) The Board, the Commission, and a registered securities
association under section 15A, or the designees of the Board, the
Commission, or such association, shall meet not less frequently
than 2 times a year--
``(A) to describe the work of the Board, the Commission,
and the registered securities association involving the
regulation of municipal securities; and
``(B) to share information about--
``(i) the interpretation of the Board, the Commission,
and the registered securities association of Board rules;
and
``(ii) examination and enforcement of compliance with
Board rules.''.
(c) Discipline of Brokers, Dealers, Municipal Securities Dealers
and Municipal Advisors; Fiduciary Duty of Municipal Advisors.--Section
15B(c) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-4(c)) is
amended--
(1) in paragraph (1), by inserting ``, and no broker, dealer,
municipal securities dealer, or municipal advisor shall make use of
the mails or any means or instrumentality of interstate commerce to
provide advice to or on behalf of a municipal entity or obligated
person with respect to municipal financial products, the issuance
of municipal securities, or to undertake a solicitation of a
municipal entity or obligated person,'' after ``any municipal
security'';
(2) by adding at the end of paragraph (1) the following: ``A
municipal advisor and any person associated with such municipal
advisor shall be deemed to have a fiduciary duty to any municipal
entity for whom such municipal advisor acts as a municipal advisor,
and no municipal advisor may engage in any act, practice, or course
of business which is not consistent with a municipal advisor's
fiduciary duty or that is in contravention of any rule of the
Board.''.
(3) in paragraph (2), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term appears;
(4) in paragraph (3)--
(A) by inserting ``or municipal entities or obligated
person'' after ``protection of investors'' each place that term
appears; and
(B) by inserting ``or municipal advisor'' after ``municipal
securities dealer'' each place that term appears;
(5) in paragraph (4), by inserting ``or municipal advisor''
after ``municipal securities dealer or obligated person'' each
place that term appears;
(6) in paragraph (6)(B), by inserting ``or municipal entities
or obligated person'' after ``protection of investors'';
(7) in paragraph (7)--
(A) in subparagraph (A)--
(i) in clause (i), by striking ``; and'' and inserting
a semicolon;
(ii) in clause (ii), by striking the period and
inserting ``; and''; and
(iii) by adding at the end the following:
``(iii) the Commission, or its designee, in the case of
municipal advisors.''.
(B) in subparagraph (B), by inserting ``or municipal
entities or obligated person'' after ``protection of
investors''; and
(8) by adding at the end the following:
``(9)(A) Fines collected by the Commission for violations of
the rules of the Board shall be equally divided between the
Commission and the Board.
``(B) Fines collected by a registered securities association
under section 15A(7) with respect to violations of the rules of the
Board shall be accounted for by such registered securities
association separately from other fines collected under section
15A(7) and shall be allocated between such registered securities
association and the Board, and such allocation shall require the
registered securities association to pay to the Board \1/3\ of all
fines collected by the registered securities association reasonably
allocable to violations of the rules of the Board, or such other
portion of such fines as may be directed by the Commission upon
agreement between the registered securities association and the
Board.''.
(d) Issuance of Municipal Securities.--Section 15B(d)(2) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4(d)) is amended--
(1) by striking ``through a municipal securities broker or
municipal securities dealer or otherwise'' and inserting ``through
a municipal securities broker, municipal securities dealer,
municipal advisor, or otherwise''; and
(2) by inserting ``or municipal advisors'' before ``to
furnish''.
(e) Definitions.--Section 15B of the Securities Exchange Act of
1934 (15 U.S.C. 78o-4) is amended by adding at the end the following:
``(e) Definitions.--For purposes of this section--
``(1) the term `Board' means the Municipal Securities
Rulemaking Board established under subsection (b)(1);
``(2) the term `guaranteed investment contract' includes any
investment that has specified withdrawal or reinvestment provisions
and a specifically negotiated or bid interest rate, and also
includes any agreement to supply investments on 2 or more future
dates, such as a forward supply contract;
``(3) the term `investment strategies' includes plans or
programs for the investment of the proceeds of municipal securities
that are not municipal derivatives, guaranteed investment
contracts, and the recommendation of and brokerage of municipal
escrow investments;
``(4) the term `municipal advisor'--
``(A) means a person (who is not a municipal entity or an
employee of a municipal entity) that--
``(i) provides advice to or on behalf of a municipal
entity or obligated person with respect to municipal
financial products or the issuance of municipal securities,
including advice with respect to the structure, timing,
terms, and other similar matters concerning such financial
products or issues; or
``(ii) undertakes a solicitation of a municipal entity;
``(B) includes financial advisors, guaranteed investment
contract brokers, third-party marketers, placement agents,
solicitors, finders, and swap advisors, if such persons are
described in any of clauses (i) through (iii) of subparagraph
(A); and
``(C) does not include a broker, dealer, or municipal
securities dealer serving as an underwriter (as defined in
section 2(a)(11) of the Securities Act of 1933) (15 U.S.C.
77b(a)(11)), any investment adviser registered under the
Investment Advisers Act of 1940, or persons associated with
such investment advisers who are providing investment advice,
any commodity trading advisor registered under the Commodity
Exchange Act or persons associated with a commodity trading
advisor who are providing advice related to swaps, attorneys
offering legal advice or providing services that are of a
traditional legal nature, or engineers providing engineering
advice;
``(5) the term `municipal financial product' means municipal
derivatives, guaranteed investment contracts, and investment
strategies;
``(6) the term `rules of the Board' means the rules proposed
and adopted by the Board under subsection (b)(2);
``(7) the term `person associated with a municipal advisor' or
`associated person of an advisor' means--
``(A) any partner, officer, director, or branch manager of
such municipal advisor (or any person occupying a similar
status or performing similar functions);
``(B) any other employee of such municipal advisor who is
engaged in the management, direction, supervision, or
performance of any activities relating to the provision of
advice to or on behalf of a municipal entity or obligated
person with respect to municipal financial products or the
issuance of municipal securities; and
``(C) any person directly or indirectly controlling,
controlled by, or under common control with such municipal
advisor;
``(8) the term `municipal entity' means any State, political
subdivision of a State, or municipal corporate instrumentality of a
State, including--
``(A) any agency, authority, or instrumentality of the
State, political subdivision, or municipal corporate
instrumentality;
``(B) any plan, program, or pool of assets sponsored or
established by the State, political subdivision, or municipal
corporate instrumentality or any agency, authority, or
instrumentality thereof; and
``(C) any other issuer of municipal securities;
``(9) the term `solicitation of a municipal entity or obligated
person' means a direct or indirect communication with a municipal
entity or obligated person made by a person, for direct or indirect
compensation, on behalf of a broker, dealer, municipal securities
dealer, municipal advisor, or investment adviser (as defined in
section 202 of the Investment Advisers Act of 1940) that does not
control, is not controlled by, or is not under common control with
the person undertaking such solicitation for the purpose of
obtaining or retaining an engagement by a municipal entity or
obligated person of a broker, dealer, municipal securities dealer,
or municipal advisor for or in connection with municipal financial
products, the issuance of municipal securities, or of an investment
adviser to provide investment advisory services to or on behalf of
a municipal entity; and
``(10) the term `obligated person' means any person, including
an issuer of municipal securities, who is either generally or
through an enterprise, fund, or account of such person, committed
by contract or other arrangement to support the payment of all or
part of the obligations on the municipal securities to be sold in
an offering of municipal securities.''.
(f) Registered Securities Association.--Section 15A(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-3(b)) is amended by
adding at the end the following:
``(15) The rules of the association provide that the
association shall--
``(A) request guidance from the Municipal Securities
Rulemaking Board in interpretation of the rules of the
Municipal Securities Rulemaking Board; and
``(B) provide information to the Municipal Securities
Rulemaking Board about the enforcement actions and examinations
of the association under section 15B(b)(2)(E), so that the
Municipal Securities Rulemaking Board may--
``(i) assist in such enforcement actions and
examinations; and
``(ii) evaluate the ongoing effectiveness of the rules
of the Board.''.
(g) Registration and Regulation of Brokers and Dealers.--Section 15
of the Securities Exchange Act of 1934 is amended--
(1) in subsection (b)(4), by inserting ``municipal advisor,''
after ``municipal securities dealer'' each place that term appears;
and
(2) in subsection (c), by inserting ``broker, dealer, or''
before ``municipal securities dealer'' each place that term
appears.
(h) Accounts and Records, Reports, Examinations of Exchanges,
Members, and Others.--Section 17(a)(1) of the Securities Exchange Act
of 1934 is amended by inserting ``municipal advisor,'' after
``municipal securities dealer''.
(i) Effective Date.--This section, and the amendments made by this
section, shall take effect on October 1, 2010.
SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF INCREASED
DISCLOSURE TO INVESTORS.
(a) Study.--The Comptroller General of the United States shall
conduct a study and review of the disclosure required to be made by
issuers of municipal securities.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States shall--
(1) broadly describe--
(A) the size of the municipal securities markets and the
issuers and investors; and
(B) the disclosures provided by issuers to investors;
(2) compare the amount, frequency, and quality of disclosures
that issuers of municipal securities are required by law to provide
for the benefit of municipal securities holders, including the
amount of and frequency of disclosures actually provided by issuers
of municipal securities, with the amount of and frequency of
disclosures that issuers of corporate securities provide for the
benefit of corporate securities holders, taking into account the
differences between issuers of municipal securities and issuers of
corporate securities;
(3) evaluate the costs and benefits to various types of issuers
of municipal securities of requiring issuers of municipal bonds to
provide additional financial disclosures for the benefit of
investors;
(4) evaluate the potential benefit to investors from additional
financial disclosures by issuers of municipal bonds; and
(5) make recommendations relating to disclosure requirements
for municipal issuers, including the advisability of the repeal or
retention of section 15B(d) of the Securities Exchange Act of 1934
(15 U.S.C. 78o-4(d)) (commonly known as the ``Tower Amendment'').
(c) Report.--Not later than 24 months after the date of enactment
of this Act, the Comptroller General of the United States shall submit
a report to Congress on the results of the study conducted under
subsection (a), including recommendations for how to improve disclosure
by issuers of municipal securities.
SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE MUNICIPAL
SECURITIES MARKETS.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the municipal securities markets.
(b) Report.--Not later than 18 months after the date of enactment
of this Act, the Comptroller General of the United States shall submit
a report to the Committee on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services of the House of
Representatives, with copies to the Special Committee on Aging of the
Senate and the Commission, on the results of the study conducted under
subsection (a), including--
(1) an analysis of the mechanisms for trading, quality of trade
executions, market transparency, trade reporting, price discovery,
settlement clearing, and credit enhancements;
(2) the needs of the markets and investors and the impact of
recent innovations;
(3) recommendations for how to improve the transparency,
efficiency, fairness, and liquidity of trading in the municipal
securities markets, including with reference to items listed in
paragraph (1); and
(4) potential uses of derivatives in the municipal securities
markets.
(c) Responses.--Not later than 180 days after receipt of the report
required under subsection (b), the Commission shall submit a response
to the Committee on Banking, Housing, and Urban Affairs of the Senate,
and the Committee on Financial Services of the House of
Representatives, with a copy to the Special Committee on Aging of the
Senate, stating the actions the Commission has taken in response to the
recommendations contained in such report.
SEC. 978. FUNDING FOR GOVERNMENTAL ACCOUNTING STANDARDS BOARD.
(a) Amendment to the Securities Act of 1933.--Section 19 of the
Securities Act of 1933 (15 U.S.C. 77s), as amended by section 912, is
further amended by adding at the end the following:
``(g) Funding for the GASB.--
``(1) In general.--The Commission may, subject to the
limitations imposed by section 15B of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-4), require a national securities
association registered under the Securities Exchange Act of 1934 to
establish--
``(A) a reasonable annual accounting support fee to
adequately fund the annual budget of the Governmental
Accounting Standards Board (referred to in this subsection as
the `GASB'); and
``(B) rules and procedures, in consultation with the
principal organizations representing State governors,
legislators, local elected officials, and State and local
finance officers, to provide for the equitable allocation,
assessment, and collection of the accounting support fee
established under subparagraph (A) from the members of the
association, and the remittance of all such accounting support
fees to the Financial Accounting Foundation.
``(2) Annual budget.--For purposes of this subsection, the
annual budget of the GASB is the annual budget reviewed and
approved according to the internal procedures of the Financial
Accounting Foundation.
``(3) Use of funds.--Any fees or funds collected under this
subsection shall be used to support the efforts of the GASB to
establish standards of financial accounting and reporting
recognized as generally accepted accounting principles applicable
to State and local governments of the United States.
``(4) Limitation on fee.--The annual accounting support fees
collected under this subsection for a fiscal year shall not exceed
the recoverable annual budgeted expenses of the GASB (which may
include operating expenses, capital, and accrued items).
``(5) Rules of construction.--
``(A) Fees not public monies.--Accounting support fees
collected under this subsection and other receipts of the GASB
shall not be considered public monies of the United States.
``(B) Limitation on authority of the commission.--Nothing
in this subsection shall be construed to--
``(i) provide the Commission or any national securities
association direct or indirect oversight of the budget or
technical agenda of the GASB; or
``(ii) affect the setting of generally accepted
accounting principles by the GASB.
``(C) Noninterference with states.--Nothing in this
subsection shall be construed to impair or limit the authority
of a State or local government to establish accounting and
financial reporting standards.''.
(b) Study of Funding for Governmental Accounting Standards Board.--
(1) Study.--The Comptroller General of the United States shall
conduct a study that evaluates--
(A) the role and importance of the Governmental Accounting
Standards Board in the municipal securities markets; and
(B) the manner and the level at which the Governmental
Accounting Standards Board has been funded.
(2) Consultation.--In conducting the study required under
paragraph (1), the Comptroller General shall consult with the
principal organizations representing State governors, legislators,
local elected officials, and State and local finance officers.
(3) Report.--Not later than 180 days after the date of
enactment of this Act, the Comptroller General shall submit to the
Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives
a report on the study required under paragraph (1).
SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES.
(a) In General.--There shall be in the Commission an Office of
Municipal Securities, which shall--
(1) administer the rules of the Commission with respect to the
practices of municipal securities brokers and dealers, municipal
securities advisors, municipal securities investors, and municipal
securities issuers; and
(2) coordinate with the Municipal Securities Rulemaking Board
for rulemaking and enforcement actions as required by law.
(b) Director of the Office.--The head of the Office of Municipal
Securities shall be the Director, who shall report to the Chairman.
(c) Staffing.--
(1) In general.--The Office of Municipal Securities shall be
staffed sufficiently to carry out the requirements of this section.
(2) Requirement.--The staff of the Office of Municipal
Securities shall include individuals with knowledge of and
expertise in municipal finance.
Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters
SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION WITH FOREIGN
AUTHORITIES.
(a) Definition.--Section 2(a) of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7201(a)) is amended by adding at the end the following:
``(17) Foreign auditor oversight authority.--The term `foreign
auditor oversight authority' means any governmental body or other
entity empowered by a foreign government to conduct inspections of
public accounting firms or otherwise to administer or enforce laws
related to the regulation of public accounting firms.''.
(b) Availability to Share Information.--Section 105(b)(5) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)) is amended by adding
at the end the following:
``(C) Availability to foreign oversight authorities.--
Without the loss of its status as confidential and privileged
in the hands of the Board, all information referred to in
subparagraph (A) that relates to a public accounting firm that
a foreign government has empowered a foreign auditor oversight
authority to inspect or otherwise enforce laws with respect to,
may, at the discretion of the Board, be made available to the
foreign auditor oversight authority, if--
``(i) the Board finds that it is necessary to
accomplish the purposes of this Act or to protect
investors;
``(ii) the foreign auditor oversight authority
provides--
``(I) such assurances of confidentiality as the
Board may request;
``(II) a description of the applicable information
systems and controls of the foreign auditor oversight
authority; and
``(III) a description of the laws and regulations
of the foreign government of the foreign auditor
oversight authority that are relevant to information
access; and
``(iii) the Board determines that it is appropriate to
share such information.''.
(c) Conforming Amendment.--Section 105(b)(5)(A) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is amended by striking
``subparagraph (B)'' and inserting ``subparagraphs (B) and (C)''.
SEC. 982. OVERSIGHT OF BROKERS AND DEALERS.
(a) Definitions.--
(1) Definitions amended.--Title I of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7201 et seq.) is amended by adding at the end the
following new section:
``SEC. 110. DEFINITIONS.
``For the purposes of this title, the following definitions shall
apply:
``(1) Audit.--The term `audit' means an examination of the
financial statements, reports, documents, procedures, controls, or
notices of any issuer, broker, or dealer by an independent public
accounting firm in accordance with the rules of the Board or the
Commission, for the purpose of expressing an opinion on the
financial statements or providing an audit report.
``(2) Audit report.--The term `audit report' means a document,
report, notice, or other record--
``(A) prepared following an audit performed for purposes of
compliance by an issuer, broker, or dealer with the
requirements of the securities laws; and
``(B) in which a public accounting firm either--
``(i) sets forth the opinion of that firm regarding a
financial statement, report, notice, or other document,
procedures, or controls; or
``(ii) asserts that no such opinion can be expressed.
``(3) Broker.--The term `broker' means a broker (as such term
is defined in section 3(a)(4) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(4))) that is required to file a balance
sheet, income statement, or other financial statement under section
17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), where such
balance sheet, income statement, or financial statement is required
to be certified by a registered public accounting firm.
``(4) Dealer.--The term `dealer' means a dealer (as such term
is defined in section 3(a)(5) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(5))) that is required to file a balance
sheet, income statement, or other financial statement under section
17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)), where such
balance sheet, income statement, or financial statement is required
to be certified by a registered public accounting firm.
``(5) Professional standards.--The term `professional
standards' means--
``(A) accounting principles that are--
``(i) established by the standard setting body
described in section 19(b) of the Securities Act of 1933,
as amended by this Act, or prescribed by the Commission
under section 19(a) of that Act (15 U.S.C. 17a(s)) or
section 13(b) of the Securities Exchange Act of 1934 (15
U.S.C. 78a(m)); and
``(ii) relevant to audit reports for particular
issuers, brokers, or dealers, or dealt with in the quality
control system of a particular registered public accounting
firm; and
``(B) auditing standards, standards for attestation
engagements, quality control policies and procedures, ethical
and competency standards, and independence standards (including
rules implementing title II) that the Board or the Commission
determines--
``(i) relate to the preparation or issuance of audit
reports for issuers, brokers, or dealers; and
``(ii) are established or adopted by the Board under
section 103(a), or are promulgated as rules of the
Commission.
``(6) Self-regulatory organization.--The term `self-regulatory
organization' has the same meaning as in section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).''.
(2) Conforming amendment.--Section 2(a) of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7201(a)) is amended in the matter preceding
paragraph (1), by striking ``In this'' and inserting ``Except as
otherwise specifically provided in this Act, in this''.
(b) Establishment and Administration of the Public Company
Accounting Oversight Board.--Section 101 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7211) is amended--
(1) by striking ``issuers'' each place that term appears and
inserting ``issuers, brokers, and dealers''; and
(2) in subsection (a)--
(A) by striking ``public companies'' and inserting
``companies''; and
(B) by striking ``for companies the securities of which are
sold to, and held by and for, public investors''.
(c) Registration With the Board.--Section 102 of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7212) is amended--
(1) in subsection (a)--
(A) by striking ``Beginning 180'' and all that follows
through ``101(d), it'' and inserting ``It''; and
(B) by striking ``issuer'' and inserting ``issuer, broker,
or dealer'';
(2) in subsection (b)--
(A) in paragraph (2)(A), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''; and
(B) by striking ``issuer'' each place that term appears and
inserting ``issuer, broker, or dealer''.
(d) Auditing and Independence.--Section 103(a) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7213(a)) is amended--
(1) in paragraph (1), by striking ``and such ethics standards''
and inserting ``such ethics standards, and such independence
standards'';
(2) in paragraph (2)(A)(iii), by striking ``describe in each
audit report'' and inserting ``in each audit report for an issuer,
describe''; and
(3) in paragraph (2)(B)(i), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''.
(e) Inspections of Registered Public Accounting Firms.--
(1) Amendments.--Section 104(a) of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7214(a)) is amended--
(A) by striking ``The Board shall'' and inserting the
following:
``(1) Inspections generally.--The Board shall''; and
(B) by adding at the end the following:
``(2) Inspections of audit reports for brokers and dealers.--
``(A) The Board may, by rule, conduct and require a program
of inspection in accordance with paragraph (1), on a basis to
be determined by the Board, of registered public accounting
firms that provide one or more audit reports for a broker or
dealer. The Board, in establishing such a program, may allow
for differentiation among classes of brokers and dealers, as
appropriate.
``(B) If the Board determines to establish a program of
inspection pursuant to subparagraph (A), the Board shall
consider in establishing any inspection schedules whether
differing schedules would be appropriate with respect to
registered public accounting firms that issue audit reports
only for one or more brokers or dealers that do not receive,
handle, or hold customer securities or cash or are not a member
of the Securities Investor Protection Corporation.
``(C) Any rules of the Board pursuant to this paragraph
shall be subject to prior approval by the Commission pursuant
to section 107(b) before the rules become effective, including
an opportunity for public notice and comment.
``(D) Notwithstanding anything to the contrary in section
102 of this Act, a public accounting firm shall not be required
to register with the Board if the public accounting firm is
exempt from the inspection program which may be established by
the Board under subparagraph (A).''.
(2) Conforming amendment.--Section 17(e)(1)(A) of the
Securities Exchange Act of 1934 (15 U.S.C. 78q(e)(1)(A)) is amended
by striking ``registered public accounting firm'' and inserting
``independent public accounting firm, or by a registered public
accounting firm if the firm is required to be registered under the
Sarbanes-Oxley Act of 2002,''.
(f) Investigations and Disciplinary Proceedings.--Section
105(c)(7)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(c)(7)(B)) is amended--
(1) in the subparagraph heading, by inserting ``, broker, or
dealer'' after ``issuer'';
(2) by striking ``any issuer'' each place that term appears and
inserting ``any issuer, broker, or dealer''; and
(3) by striking ``an issuer under this subsection'' and
inserting ``a registered public accounting firm under this
subsection''.
(g) Foreign Public Accounting Firms.--Section 106(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216(a)) is amended--
(1) in paragraph (1), by striking ``issuer'' and inserting
``issuer, broker, or dealer''; and
(2) in paragraph (2), by striking ``issuers'' and inserting
``issuers, brokers, or dealers''.
(h) Funding.--Section 109 of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7219) is amended--
(1) in subsection (c)(2), by striking ``subsection (i)'' and
inserting ``subsection (j)'';
(2) in subsection (d)--
(A) in paragraph (2), by striking ``allowing for
differentiation among classes of issuers, as appropriate'' and
inserting ``and among brokers and dealers, in accordance with
subsection (h), and allowing for differentiation among classes
of issuers, brokers and dealers, as appropriate''; and
(B) by adding at the end the following:
``(3) Brokers and dealers.--The Board shall begin the
allocation, assessment, and collection of fees under paragraph (2)
with respect to brokers and dealers with the payment of support
fees to fund the first full fiscal year beginning after the date of
enactment of the Investor Protection and Securities Reform Act of
2010.'';
(3) by redesignating subsections (h), (i), and (j) as
subsections (i), (j), and (k), respectively; and
(4) by inserting after subsection (g) the following:
``(h) Allocation of Accounting Support Fees Among Brokers and
Dealers.--
``(1) Obligation to pay.--Each broker or dealer shall pay to
the Board the annual accounting support fee allocated to such
broker or dealer under this section.
``(2) Allocation.--Any amount due from a broker or dealer (or
from a particular class of brokers and dealers) under this section
shall be allocated among brokers and dealers and payable by the
broker or dealer (or the brokers and dealers in the particular
class, as applicable).
``(3) Proportionality.--The amount due from a broker or dealer
shall be in proportion to the net capital of the broker or dealer
(before or after any adjustments), compared to the total net
capital of all brokers and dealers (before or after any
adjustments), in accordance with rules issued by the Board.''.
(i) Referral of Investigations to a Self-regulatory Organization.--
Section 105(b)(4)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(b)(4)(B)) is amended--
(1) by redesignating clauses (ii) and (iii) as clauses (iii)
and (iv), respectively; and
(2) by inserting after clause (i) the following:
``(ii) to a self-regulatory organization, in the case
of an investigation that concerns an audit report for a
broker or dealer that is under the jurisdiction of such
self-regulatory organization;''.
(j) Use of Documents Related to an Inspection or Investigation.--
Section 105(b)(5)(B)(ii) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(b)(5)(B)(ii)) is amended--
(1) in subclause (III), by striking ``and'' at the end;
(2) in subclause (IV), by striking the comma and inserting ``;
and''; and
(3) by inserting after subclause (IV) the following:
``(V) a self-regulatory organization, with respect
to an audit report for a broker or dealer that is under
the jurisdiction of such self-regulatory
organization,''.
SEC. 983. PORTFOLIO MARGINING.
(a) Advances.--Section 9(a)(1) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78fff3(a)(1)) is amended by inserting
``or options on commodity futures contracts'' after ``claim for
securities''.
(b) Definitions.--Section 16 of the Securities Investor Protection
Act of 1970 (15 U.S.C. 78lll) is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) Customer.--
``(A) In general.--The term `customer' of a debtor means
any person (including any person with whom the debtor deals as
principal or agent) who has a claim on account of securities
received, acquired, or held by the debtor in the ordinary
course of its business as a broker or dealer from or for the
securities accounts of such person for safekeeping, with a view
to sale, to cover consummated sales, pursuant to purchases, as
collateral, security, or for purposes of effecting transfer.
``(B) Included persons.--The term `customer' includes--
``(i) any person who has deposited cash with the debtor
for the purpose of purchasing securities;
``(ii) any person who has a claim against the debtor
for cash, securities, futures contracts, or options on
futures contracts received, acquired, or held in a
portfolio margining account carried as a securities account
pursuant to a portfolio margining program approved by the
Commission; and
``(iii) any person who has a claim against the debtor
arising out of sales or conversions of such securities.
``(C) Excluded persons.--The term `customer' does not
include any person, to the extent that--
``(i) the claim of such person arises out of
transactions with a foreign subsidiary of a member of SIPC;
or
``(ii) such person has a claim for cash or securities
which by contract, agreement, or understanding, or by
operation of law, is part of the capital of the debtor, or
is subordinated to the claims of any or all creditors of
the debtor, notwithstanding that some ground exists for
declaring such contract, agreement, or understanding void
or voidable in a suit between the claimant and the
debtor.'';
(2) in paragraph (4)--
(A) in subparagraph (C), by striking ``and'' at the end;
(B) by redesignating subparagraph (D) as subparagraph (E);
and
(C) by inserting after subparagraph (C) the following:
``(D) in the case of a portfolio margining account of a
customer that is carried as a securities account pursuant to a
portfolio margining program approved by the Commission, a
futures contract or an option on a futures contract received,
acquired, or held by or for the account of a debtor from or for
such portfolio margining account, and the proceeds thereof;
and'';
(3) in paragraph (9), in the matter following subparagraph (L),
by inserting after ``Such term'' the following: ``includes revenues
earned by a broker or dealer in connection with a transaction in
the portfolio margining account of a customer carried as securities
accounts pursuant to a portfolio margining program approved by the
Commission. Such term''; and
(4) in paragraph (11)--
(A) in subparagraph (A)--
(i) by striking ``filing date, all'' and all that
follows through the end of the subparagraph and inserting
the following: ``filing date--
``(i) all securities positions of such customer (other
than customer name securities reclaimed by such customer);
and
``(ii) all positions in futures contracts and options
on futures contracts held in a portfolio margining account
carried as a securities account pursuant to a portfolio
margining program approved by the Commission, including all
property collateralizing such positions, to the extent that
such property is not otherwise included herein; minus'';
and
(B) in the matter following subparagraph (C), by striking
``In determining'' and inserting the following: ``A claim for a
commodity futures contract received, acquired, or held in a
portfolio margining account pursuant to a portfolio margining
program approved by the Commission or a claim for a security
futures contract, shall be deemed to be a claim with respect to
such contract as of the filing date, and such claim shall be
treated as a claim for cash. In determining''.
SEC. 984. LOAN OR BORROWING OF SECURITIES.
(a) Rulemaking Authority.--Section 10 of the Securities Exchange
Act of 1934 (15 U.S.C. 78j) is amended by adding at the end the
following:
``(c)(1) To effect, accept, or facilitate a transaction
involving the loan or borrowing of securities in contravention of
such rules and regulations as the Commission may prescribe as
necessary or appropriate in the public interest or for the
protection of investors.
``(2) Nothing in paragraph (1) may be construed to limit the
authority of the appropriate Federal banking agency (as defined in
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q))), the National Credit Union Administration, or any other
Federal department or agency having a responsibility under Federal
law to prescribe rules or regulations restricting transactions
involving the loan or borrowing of securities in order to protect
the safety and soundness of a financial institution or to protect
the financial system from systemic risk.''.
(b) Rulemaking Required.--Not later than 2 years after the date of
enactment of this Act, the Commission shall promulgate rules that are
designed to increase the transparency of information available to
brokers, dealers, and investors, with respect to the loan or borrowing
of securities.
SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURITIES LAWS.
(a) Securities Act of 1933.--The Securities Act of 1933 (15 U.S.C.
77a et seq.) is amended--
(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking
``individual;'' and inserting ``individual,'';
(2) in section 18 (15 U.S.C. 77r)--
(A) in subsection (b)(1)(C), by striking ``is a security''
and inserting ``a security''; and
(B) in subsection (c)(2)(B)(i), by striking ``State, or''
and inserting ``State or'';
(3) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by
striking ``in paragraph (1) of (3)'' and inserting ``in paragraph
(1) or (3)''; and
(4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z-2(c)(1)(B)(ii)),
by striking ``business entity;'' and inserting ``business
entity,''.
(b) Securities Exchange Act of 1934.--The Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.) is amended--
(1) in section 2 (15 U.S.C. 78b), by striking ``affected'' and
inserting ``effected'';
(2) in section 3 (15 U.S.C. 78c)--
(A) in subsection (a)(55)(A), by striking ``section
3(a)(12) of the Securities Exchange Act of 1934'' and inserting
``section 3(a)(12) of this title''; and
(B) in subsection (g), by striking ``company, account
person, or entity'' and inserting ``company, account, person,
or entity'';
(3) in section 10A(i)(1)(B) (15 U.S.C. 78j-1(i)(1)(B))--
(A) in the subparagraph heading, by striking ``minimus''
and inserting ``minimis''; and
(B) in clause (i), by striking ``nonaudit'' and inserting
``non-audit'';
(4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking
``earning statement'' and inserting ``earnings statement'';
(5) in section 15 (15 U.S.C. 78o)--
(A) in subsection (b)(1)--
(i) in subparagraph (B), by striking ``The order
granting'' and all that follows through ``from such
membership.''; and
(ii) in the undesignated matter immediately following
subparagraph (B), by inserting after the first sentence the
following: ``The order granting registration shall not be
effective until such broker or dealer has become a member
of a registered securities association, or until such
broker or dealer has become a member of a national
securities exchange, if such broker or dealer effects
transactions solely on that exchange, unless the Commission
has exempted such broker or dealer, by rule or order, from
such membership.'';
(6) in section 15C(a)(2) (15 U.S.C. 78o-5(a)(2))--
(A) by redesignating clauses (i) and (ii) as subparagraphs
(A) and (B), respectively, and adjusting the subparagraph
margins accordingly;
(B) in subparagraph (B), as so redesignated, by striking
``The order granting'' and all that follows through ``from such
membership.''; and
(C) in the matter following subparagraph (B), as so
redesignated, by inserting after the first sentence the
following: ``The order granting registration shall not be
effective until such government securities broker or government
securities dealer has become a member of a national securities
exchange registered under section 6 of this title, or a
securities association registered under section 15A of this
title, unless the Commission has exempted such government
securities broker or government securities dealer, by rule or
order, from such membership.'';
(7) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by
striking ``15A(k) gives'' and inserting ``15A(k), give''; and
(8) in section 21C(c)(2) (15 U.S.C. 78u-3(c)(2)), by striking
``paragraph (1) subsection'' and inserting ``Paragraph (1)''.
(c) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.) is amended--
(1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking
``section 2 of such Act'' and inserting ``section 2(a) of such
Act''; and
(2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by striking
``, in the'' and inserting ``in the''.
(d) Investment Company Act of 1940.--The Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(19) (15 U.S.C. 80a-2(a)(19)), in the matter
following subparagraph (B)(vii)--
(A) by striking ``clause (vi)'' each place that term
appears and inserting ``clause (vii)''; and
(B) in each of subparagraphs (A)(vi) and (B)(vi), by adding
``and'' at the end of subclause (III);
(2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by adding
``or'' after the semicolon at the end;
(3) in section 12(d)(1)(J) (15 U.S.C. 80a-12(d)(1)(J)), by
striking ``any provision of this subsection'' and inserting ``any
provision of this paragraph'';
(4) in section 17(f) (15 U.S.C. 80a-17(f))--
(A) in paragraph (4), by striking ``No such member'' and
inserting ``No member of a national securities exchange''; and
(B) in paragraph (6), by striking ``company may serve'' and
inserting ``company, may serve''; and
(5) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a-
60(a)(3)(B)(iii))--
(A) by striking ``paragraph (1) of section 205'' and
inserting ``section 205(a)(1)''; and
(B) by striking ``clause (A) or (B) of that section'' and
inserting ``paragraph (1) or (2) of section 205(b)''.
(e) Investment Advisers Act of 1940.--The Investment Advisers Act
of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
(1) in section 203 (15 U.S.C. 80b-3)--
(A) in subsection (c)(1)(A), by striking ``principal
business office and'' and inserting ``principal office,
principal place of business, and''; and
(B) in subsection (k)(4)(B), in the matter following clause
(ii), by striking ``principal place of business'' and inserting
``principal office or place of business'';
(2) in section 206(3) (15 U.S.C. 80b-6(3)), by adding ``or''
after the semicolon at the end;
(3) in section 213(a) (15 U.S.C. 80b-13(a)), by striking
``principal place of business'' and inserting ``principal office or
place of business''; and
(4) in section 222 (15 U.S.C. 80b-18a), by striking ``principal
place of business'' each place that term appears and inserting
``principal office and place of business''.
SEC. 986. CONFORMING AMENDMENTS RELATING TO REPEAL OF THE PUBLIC
UTILITY HOLDING COMPANY ACT OF 1935.
(a) Securities Exchange Act of 1934.--The Securities Exchange Act
of 1934 (15 U.S.C. 78 et seq.) is amended--
(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by striking
``the Public Utility Holding Company Act of 1935 (15 U.S.C. 79a et
seq.),'';
(2) in section 12(k) (15 U.S.C. 78l(k)), by amending paragraph
(7) to read as follows:
``(7) Definition.--For purposes of this subsection, the term
`emergency' means--
``(A) a major market disturbance characterized by or
constituting--
``(i) sudden and excessive fluctuations of securities
prices generally, or a substantial threat thereof, that
threaten fair and orderly markets; or
``(ii) a substantial disruption of the safe or
efficient operation of the national system for clearance
and settlement of transactions in securities, or a
substantial threat thereof; or
``(B) a major disturbance that substantially disrupts, or
threatens to substantially disrupt--
``(i) the functioning of securities markets, investment
companies, or any other significant portion or segment of
the securities markets; or
``(ii) the transmission or processing of securities
transactions.''; and
(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by striking
``section 18(c) of the Public Utility Holding Company Act of
1935,''.
(b) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.) is amended--
(1) in section 303 (15 U.S.C. 77ccc), by striking paragraph
(17) and inserting the following:
``(17) The terms `Securities Act of 1933' and `Securities
Exchange Act of 1934' shall be deemed to refer, respectively, to
such Acts, as amended, whether amended prior to or after the
enactment of this title.'';
(2) in section 308 (15 U.S.C. 77hhh), by striking ``Securities
Act of 1933, the Securities Exchange Act of 1934, or the Public
Utility Holding Company Act of 1935'' each place that term appears
and inserting ``Securities Act of 1933 or the Securities Exchange
Act of 1934'';
(3) in section 310 (15 U.S.C. 77jjj), by striking subsection
(c);
(4) in section 311 (15 U.S.C. 77kkk), by striking subsection
(c);
(5) in section 323(b) (15 U.S.C. 77www(b)), by striking
``Securities Act of 1933, or the Securities Exchange Act of 1934,
or the Public Utility Holding Company Act of 1935'' and inserting
``Securities Act of 1933 or the Securities Exchange Act of 1934'';
and
(6) in section 326 (15 U.S.C. 77zzz), by striking ``Securities
Act of 1933, or the Securities Exchange Act of 1934, or the Public
Utility Holding Company Act of 1935,'' and inserting ``Securities
Act of 1933 or the Securities Exchange Act of 1934''.
(c) Investment Company Act of 1940.--The Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(44) (15 U.S.C. 80a-2(a)(44)), by striking
```Public Utility Holding Company Act of 1935','';
(2) in section 3(c) (15 U.S.C. 80a-3(c)), by striking paragraph
(8) and inserting the following:
``(8) [Repealed]'';
(3) in section 38(b) (15 U.S.C. 80a-37(b)), by striking ``the
Public Utility Holding Company Act of 1935,''; and
(4) in section 50 (15 U.S.C. 80a-49), by striking ``the Public
Utility Holding Company Act of 1935,''.
(d) Investment Advisers Act of 1940.--Section 202(a)(21) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(21)) is amended by
striking ```Public Utility Holding Company Act of 1935',''.
SEC. 987. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL
LOSSES TO THE DEPOSIT INSURANCE FUND FOR PURPOSES OF INSPECTOR
GENERAL REVIEWS.
(a) In General.--Section 38(k) of the Federal Deposit Insurance Act
(U.S.C. 1831o(k)) is amended--
(1) in paragraph (2), by striking subparagraph (B) and
inserting the following:
``(B) Material loss defined.--The term `material loss'
means any estimated loss in excess of--
``(i) $200,000,000, if the loss occurs during the
period beginning on January 1, 2010, and ending on December
31, 2011;
``(ii) $150,000,000, if the loss occurs during the
period beginning on January 1, 2012, and ending on December
31, 2013; and
``(iii) $50,000,000, if the loss occurs on or after
January 1, 2014, provided that if the inspector general of
a Federal banking agency certifies to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives that the number of projected failures of
depository institutions that would require material loss
reviews for the following 12 months will be greater than 30
and would hinder the effectiveness of its oversight
functions, then the definition of `material loss' shall be
$75,000,000 for a duration of 1 year from the date of the
certification.'';
(2) in paragraph (4)(A) by striking ``the report'' and
inserting ``any report on losses required under this subsection,'';
(3) by striking paragraph (6);
(4) by redesignating paragraph (5) as paragraph (6); and
(5) by inserting after paragraph (4) the following:
``(5) Losses that are not material.--
``(A) Semiannual report.--For the 6-month period ending on
March 31, 2010, and each 6-month period thereafter, the
Inspector General of each Federal banking agency shall--
``(i) identify losses that the Inspector General
estimates have been incurred by the Deposit Insurance Fund
during that 6-month period, with respect to the insured
depository institutions supervised by the Federal banking
agency;
``(ii) for each loss incurred by the Deposit Insurance
Fund that is not a material loss, determine--
``(I) the grounds identified by the Federal banking
agency or State bank supervisor for appointing the
Corporation as receiver under section 11(c)(5); and
``(II) whether any unusual circumstances exist that
might warrant an in-depth review of the loss; and
``(iii) prepare and submit a written report to the
appropriate Federal banking agency and to Congress on the
results of any determination by the Inspector General,
including--
``(I) an identification of any loss that warrants
an in-depth review, together with the reasons why such
review is warranted, or, if the Inspector General
determines that no review is warranted, an explanation
of such determination; and
``(II) for each loss identified under subclause (I)
that warrants an in-depth review, the date by which
such review, and a report on such review prepared in a
manner consistent with reports under paragraph (1)(A),
will be completed and submitted to the Federal banking
agency and Congress.
``(B) Deadline for semiannual report.--The Inspector
General of each Federal banking agency shall--
``(i) submit each report required under paragraph (A)
expeditiously, and not later than 90 days after the end of
the 6-month period covered by the report; and
``(ii) provide a copy of the report required under
paragraph (A) to any Member of Congress, upon request.''.
(b) Technical and Conforming Amendment.--The heading for subsection
(k) of section 38 of the Federal Deposit Insurance Act (U.S.C.
1831o(k)) is amended to read as follows:
``(k) Reviews Required When Deposit Insurance Fund Incurs Losses.--
''.
SEC. 988. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL
LOSSES TO THE NATIONAL CREDIT UNION SHARE INSURANCE FUND FOR
PURPOSES OF INSPECTOR GENERAL REVIEWS.
(a) In General.--Section 216(j) of the Federal Credit Union Act (12
U.S.C. 1790d(j)) is amended to read as follows:
``(j) Reviews Required When Share Insurance Fund Experiences
Losses.--
``(1) In general.--If the Fund incurs a material loss with
respect to an insured credit union, the Inspector General of the
Board shall--
``(A) submit to the Board a written report reviewing the
supervision of the credit union by the Administration
(including the implementation of this section by the
Administration), which shall include--
``(i) a description of the reasons why the problems of
the credit union resulted in a material loss to the Fund;
and
``(ii) recommendations for preventing any such loss in
the future; and
``(B) submit a copy of the report under subparagraph (A)
to--
``(i) the Comptroller General of the United States;
``(ii) the Corporation;
``(iii) in the case of a report relating to a State
credit union, the appropriate State supervisor; and
``(iv) to any Member of Congress, upon request.
``(2) Material loss defined.--For purposes of determining
whether the Fund has incurred a material loss with respect to an
insured credit union, a loss is material if it exceeds the sum of--
``(A) $25,000,000; and
``(B) an amount equal to 10 percent of the total assets of
the credit union on the date on which the Board initiated
assistance under section 208 or was appointed liquidating
agent.
``(3) Public disclosure required.--
``(A) In general.--The Board shall disclose a report under
this subsection, upon request under section 552 of title 5,
United States Code, without excising--
``(i) any portion under section 552(b)(5) of title 5,
United States Code; or
``(ii) any information about the insured credit union
(other than trade secrets) under section 552(b)(8) of title
5, United States Code.
``(B) Rule of construction.--Subparagraph (A) may not be
construed as requiring the agency to disclose the name of any
customer of the insured credit union (other than an
institution-affiliated party), or information from which the
identity of such customer could reasonably be ascertained.
``(4) Losses that are not material.--
``(A) Semiannual report.--For the 6-month period ending on
March 31, 2010, and each 6-month period thereafter, the
Inspector General of the Board shall--
``(i) identify any losses that the Inspector General
estimates were incurred by the Fund during such 6-month
period, with respect to insured credit unions;
``(ii) for each loss to the Fund that is not a material
loss, determine--
``(I) the grounds identified by the Board or the
State official having jurisdiction over a State credit
union for appointing the Board as the liquidating agent
for any Federal or State credit union; and
``(II) whether any unusual circumstances exist that
might warrant an in-depth review of the loss; and
``(iii) prepare and submit a written report to the
Board and to Congress on the results of the determinations
of the Inspector General that includes--
``(I) an identification of any loss that warrants
an in-depth review, and the reasons such review is
warranted, or if the Inspector General determines that
no review is warranted, an explanation of such
determination; and
``(II) for each loss identified in subclause (I)
that warrants an in-depth review, the date by which
such review, and a report on the review prepared in a
manner consistent with reports under paragraph (1)(A),
will be completed.
``(B) Deadline for semiannual report.--The Inspector
General of the Board shall--
``(i) submit each report required under subparagraph
(A) expeditiously, and not later than 90 days after the end
of the 6-month period covered by the report; and
``(ii) provide a copy of the report required under
subparagraph (A) to any Member of Congress, upon request.
``(5) GAO review.--The Comptroller General of the United States
shall, under such conditions as the Comptroller General determines
to be appropriate--
``(A) review each report made under paragraph (1),
including the extent to which the Inspector General of the
Board complied with the requirements under section 8L of the
Inspector General Act of 1978 (5 U.S.C. App.) with respect to
each such report; and
``(B) recommend improvements to the supervision of insured
credit unions (including improvements relating to the
implementation of this section).''.
SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON PROPRIETARY
TRADING.
(a) Definitions.--In this section--
(1) the term ``covered entity'' means--
(A) an insured depository institution, an affiliate of an
insured depository institution, a bank holding company, a
financial holding company, or a subsidiary of a bank holding
company or a financial holding company, as those terms are
defined in the Bank Holding Company Act of 1956 (12 U.S.C. 1841
et seq.); and
(B) any other entity, as the Comptroller General of the
United States may determine; and
(2) the term ``proprietary trading'' means the act of a covered
entity investing as a principal in securities, commodities,
derivatives, hedge funds, private equity firms, or such other
financial products or entities as the Comptroller General may
determine.
(b) Study.--
(1) In general.--The Comptroller General of the United States
shall conduct a study regarding the risks and conflicts associated
with proprietary trading by and within covered entities, including
an evaluation of--
(A) whether proprietary trading presents a material
systemic risk to the stability of the United States financial
system, and if so, the costs and benefits of options for
mitigating such systemic risk;
(B) whether proprietary trading presents material risks to
the safety and soundness of the covered entities that engage in
such activities, and if so, the costs and benefits of options
for mitigating such risks;
(C) whether proprietary trading presents material conflicts
of interest between covered entities that engage in proprietary
trading and the clients of the institutions who use the firm to
execute trades or who rely on the firm to manage assets, and if
so, the costs and benefits of options for mitigating such
conflicts of interest;
(D) whether adequate disclosure regarding the risks and
conflicts of proprietary trading is provided to the depositors,
trading and asset management clients, and investors of covered
entities that engage in proprietary trading, and if not, the
costs and benefits of options for the improvement of such
disclosure; and
(E) whether the banking, securities, and commodities
regulators of institutions that engage in proprietary trading
have in place adequate systems and controls to monitor and
contain any risks and conflicts of interest related to
proprietary trading, and if not, the costs and benefits of
options for the improvement of such systems and controls.
(2) Considerations.--In carrying out the study required under
paragraph (1), the Comptroller General shall consider--
(A) current practice relating to proprietary trading;
(B) the advisability of a complete ban on proprietary
trading;
(C) limitations on the scope of activities that covered
entities may engage in with respect to proprietary trading;
(D) the advisability of additional capital requirements for
covered entities that engage in proprietary trading;
(E) enhanced restrictions on transactions between
affiliates related to proprietary trading;
(F) enhanced accounting disclosures relating to proprietary
trading;
(G) enhanced public disclosure relating to proprietary
trading; and
(H) any other options the Comptroller General deems
appropriate.
(c) Report to Congress.--Not later than 15 months after the date of
enactment of this Act, the Comptroller General shall submit a report to
Congress on the results of the study conducted under subsection (b).
(d) Access by Comptroller General.--For purposes of conducting the
study required under subsection (b), the Comptroller General shall have
access, upon request, to any information, data, schedules, books,
accounts, financial records, reports, files, electronic communications,
or other papers, things, or property belonging to or in use by a
covered entity that engages in proprietary trading, and to the
officers, directors, employees, independent public accountants,
financial advisors, staff, and agents and representatives of a covered
entity (as related to the activities of the agent or representative on
behalf of the covered entity), at such reasonable times as the
Comptroller General may request. The Comptroller General may make and
retain copies of books, records, accounts, and other records, as the
Comptroller General deems appropriate.
(e) Confidentiality of Reports.--
(1) In general.--Except as provided in paragraph (2), the
Comptroller General may not disclose information regarding--
(A) any proprietary trading activity of a covered entity,
unless such information is disclosed at a level of generality
that does not reveal the investment or trading position or
strategy of the covered entity for any specific security,
commodity, derivative, or other investment or financial
product; or
(B) any individual interviewed by the Comptroller General
for purposes of the study under subsection (b), unless such
information is disclosed at a level of generality that does not
reveal--
(i) the name of or identifying details relating to such
individual; or
(ii) in the case of an individual who is an employee of
a third party that provides professional services to a
covered entity believed to be engaged in proprietary
trading, the name of or any identifying details relating to
such third party.
(2) Exceptions.--The Comptroller General may disclose the
information described in paragraph (1)--
(A) to a department, agency, or official of the Federal
Government, for official use, upon request;
(B) to a committee of Congress, upon request; and
(C) to a court, upon an order of such court.
SEC. 989A. SENIOR INVESTOR PROTECTIONS.
(a) Definitions.--As used in this section--
(1) the term ``eligible entity'' means--
(A) a securities commission (or any agency or office
performing like functions) of a State that the Office
determines has adopted rules on the appropriate use of
designations in the offer or sale of securities or the
provision of investment advice that meet or exceed the minimum
requirements of the NASAA Model Rule on the Use of Senior-
Specific Certifications and Professional Designations (or any
successor thereto);
(B) the insurance commission (or any agency or office
performing like functions) of any State that the Office
determines has--
(i) adopted rules on the appropriate use of
designations in the sale of insurance products that, to the
extent practicable, conform to the minimum requirements of
the National Association of Insurance Commissioners Model
Regulation on the Use of Senior-Specific Certifications and
Professional Designations in the Sale of Life Insurance and
Annuities (or any successor thereto); and
(ii) adopted rules with respect to fiduciary or
suitability requirements in the sale of annuities that meet
or exceed the minimum requirements established by the
Suitability in Annuity Transactions Model Regulation of the
National Association of Insurance Commissioners (or any
successor thereto); or
(C) a consumer protection agency of any State, if--
(i) the securities commission (or any agency or office
performing like functions) of the State is eligible under
subparagraph (A); or
(ii) the insurance commission (or any agency or office
performing like functions) of the State is eligible under
subparagraph (B);
(2) the term ``financial product'' means a security, an
insurance product (including an insurance product that pays a
return, whether fixed or variable), a bank product, and a loan
product;
(3) the term ``misleading designation''--
(A) means a certification, professional designation, or
other purported credential that indicates or implies that a
salesperson or adviser has special certification or training in
advising or servicing seniors; and
(B) does not include a certification, professional
designation, license, or other credential that--
(i) was issued by or obtained from an academic
institution having regional accreditation;
(ii) meets the standards for certifications and
professional designations outlined by the NASAA Model Rule
on the Use of Senior-Specific Certifications and
Professional Designations (or any successor thereto) or by
the Model Regulations on the Use of Senior-Specific
Certifications and Professional Designations in the Sale of
Life Insurance and Annuities, adopted by the National
Association of Insurance Commissioners (or any successor
thereto); or
(iii) was issued by or obtained from a State;
(4) the term ``misleading or fraudulent marketing'' means the
use of a misleading designation by a person that sells to or
advises a senior in connection with the sale of a financial
product;
(5) the term ``NASAA'' means the North American Securities
Administrators Association;
(6) the term ``Office'' means the Office of Financial Literacy
of the Bureau;
(7) the term ``senior'' means any individual who has attained
the age of 62 years or older; and
(8) the term ``State'' has the same meaning as in section 3 of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)).
(b) Grants to States for Enhanced Protection of Seniors From Being
Misled by False Designations.--The Office shall establish a program
under which the Office may make grants to States or eligible entities--
(1) to hire staff to identify, investigate, and prosecute
(through civil, administrative, or criminal enforcement actions)
cases involving misleading or fraudulent marketing;
(2) to fund technology, equipment, and training for regulators,
prosecutors, and law enforcement officers, in order to identify
salespersons and advisers who target seniors through the use of
misleading designations;
(3) to fund technology, equipment, and training for prosecutors
to increase the successful prosecution of salespersons and advisers
who target seniors with the use of misleading designations;
(4) to provide educational materials and training to regulators
on the appropriateness of the use of designations by salespersons
and advisers in connection with the sale and marketing of financial
products;
(5) to provide educational materials and training to seniors to
increase awareness and understanding of misleading or fraudulent
marketing;
(6) to develop comprehensive plans to combat misleading or
fraudulent marketing of financial products to seniors; and
(7) to enhance provisions of State law to provide protection
for seniors against misleading or fraudulent marketing.
(c) Applications.--A State or eligible entity desiring a grant
under this section shall submit an application to the Office, in such
form and in such a manner as the Office may determine, that includes--
(1) a proposal for activities to protect seniors from
misleading or fraudulent marketing that are proposed to be funded
using a grant under this section, including--
(A) an identification of the scope of the problem of
misleading or fraudulent marketing in the State;
(B) a description of how the proposed activities would--
(i) protect seniors from misleading or fraudulent
marketing in the sale of financial products, including by
proactively identifying victims of misleading and
fraudulent marketing who are seniors;
(ii) assist in the investigation and prosecution of
those using misleading or fraudulent marketing; and
(iii) discourage and reduce cases of misleading or
fraudulent marketing; and
(C) a description of how the proposed activities would be
coordinated with other State efforts; and
(2) any other information, as the Office determines is
appropriate.
(d) Performance Objectives and Reporting Requirements.--The Office
may establish such performance objectives and reporting requirements
for States and eligible entities receiving a grant under this section
as the Office determines are necessary to carry out and assess the
effectiveness of the program under this section.
(e) Maximum Amount.--The amount of a grant under this section may
not exceed--
(1) $500,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that has
adopted rules--
(A) on the appropriate use of designations in the offer or
sale of securities or investment advice that meet or exceed the
minimum requirements of the NASAA Model Rule on the Use of
Senior-Specific Certifications and Professional Designations
(or any successor thereto);
(B) on the appropriate use of designations in the sale of
insurance products that, to the extent practicable, conform to
the minimum requirements of the National Association of
Insurance Commissioners Model Regulation on the Use of Senior-
Specific Certifications and Professional Designations in the
Sale of Life Insurance and Annuities (or any successor
thereto); and
(C) with respect to fiduciary or suitability requirements
in the sale of annuities that meet or exceed the minimum
requirements established by the Suitability in Annuity
Transactions Model Regulation of the National Association of
Insurance Commissioners (or any successor thereto); and
(2) $100,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that has
adopted--
(A) rules on the appropriate use of designations in the
offer or sale of securities or investment advice that meet or
exceed the minimum requirements of the NASAA Model Rule on the
Use of Senior-Specific Certifications and Professional
Designations (or any successor thereto); or
(B) rules--
(i) on the appropriate use of designations in the sale
of insurance products that, to the extent practicable,
conform to the minimum requirements of the National
Association of Insurance Commissioners Model Regulation on
the Use of Senior-Specific Certifications and Professional
Designations in the Sale of Life Insurance and Annuities
(or any successor thereto); and
(ii) with respect to fiduciary or suitability
requirements in the sale of annuities that meet or exceed
the minimum requirements established by the Suitability in
Annuity Transactions Model Regulation of the National
Association of Insurance Commissioners (or any successor
thereto).
(f) Subgrants.--A State or eligible entity that receives a grant
under this section may make a subgrant, as the State or eligible entity
determines is necessary to carry out the activities funded using a
grant under this section.
(g) Reapplication.--A State or eligible entity that receives a
grant under this section may reapply for a grant under this section,
notwithstanding the limitations on grant amounts under subsection (e).
(h) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, $8,000,000 for each of fiscal
years 2011 through 2015.
SEC. 989B. DESIGNATED FEDERAL ENTITY INSPECTORS GENERAL INDEPENDENCE.
Section 8G of the Inspector General Act of 1978 (5 U.S.C. App.) is
amended--
(1) in subsection (a)(4)--
(A) in the matter preceding subparagraph (A), by inserting
``the board or commission of the designated Federal entity, or
in the event the designated Federal entity does not have a
board or commission,'' after ``means'';
(B) in subparagraph (A), by striking ``and'' after the
semicolon; and
(C) by adding after subparagraph (B) the following:
``(C) with respect to the Federal Labor Relations
Authority, such term means the members of the Authority
(described under section 7104 of title 5, United States Code);
``(D) with respect to the National Archives and Records
Administration, such term means the Archivist of the United
States;
``(E) with respect to the National Credit Union
Administration, such term means the National Credit Union
Administration Board (described under section 102 of the
Federal Credit Union Act (12 U.S.C. 1752a);
``(F) with respect to the National Endowment of the Arts,
such term means the National Council on the Arts;
``(G) with respect to the National Endowment for the
Humanities, such term means the National Council on the
Humanities; and
``(H) with respect to the Peace Corps, such term means the
Director of the Peace Corps;''; and
(2) in subsection (h), by inserting ``if the designated Federal
entity is not a board or commission, include'' after ``designated
Federal entities and''.
SEC. 989C. STRENGTHENING INSPECTOR GENERAL ACCOUNTABILITY.
Section 5(a) of the Inspector General Act of 1978 (5 U.S.C. App.)
is amended--
(1) in paragraph (12), by striking ``and'' after the semicolon;
(2) in paragraph (13), by striking the period and inserting a
semicolon; and
(3) by adding at the end the following:
``(14)(A) an appendix containing the results of any peer review
conducted by another Office of Inspector General during the
reporting period; or
``(B) if no peer review was conducted within that reporting
period, a statement identifying the date of the last peer review
conducted by another Office of Inspector General;
``(15) a list of any outstanding recommendations from any peer
review conducted by another Office of Inspector General that have
not been fully implemented, including a statement describing the
status of the implementation and why implementation is not
complete; and
``(16) a list of any peer reviews conducted by the Inspector
General of another Office of the Inspector General during the
reporting period, including a list of any outstanding
recommendations made from any previous peer review (including any
peer review conducted before the reporting period) that remain
outstanding or have not been fully implemented.''.
SEC. 989D. REMOVAL OF INSPECTORS GENERAL OF DESIGNATED FEDERAL
ENTITIES.
Section 8G(e) of the Inspector General Act of 1978 (5 U.S.C. App.)
is amended--
(1) by redesignating the sentences following ``(e)'' as
paragraph (2); and
(2) by striking ``(e)'' and inserting the following:
``(e)(1) In the case of a designated Federal entity for which a
board or commission is the head of the designated Federal entity, a
removal under this subsection may only be made upon the written
concurrence of a \2/3\ majority of the board or commission.''.
SEC. 989E. ADDITIONAL OVERSIGHT OF FINANCIAL REGULATORY SYSTEM.
(a) Council of Inspectors General on Financial Oversight.--
(1) Establishment and membership.--There is established a
Council of Inspectors General on Financial Oversight (in this
section referred to as the ``Council of Inspectors General'')
chaired by the Inspector General of the Department of the Treasury
and composed of the inspectors general of the following:
(A) The Board of Governors of the Federal Reserve System.
(B) The Commodity Futures Trading Commission.
(C) The Department of Housing and Urban Development.
(D) The Department of the Treasury.
(E) The Federal Deposit Insurance Corporation.
(F) The Federal Housing Finance Agency.
(G) The National Credit Union Administration.
(H) The Securities and Exchange Commission.
(I) The Troubled Asset Relief Program (until the
termination of the authority of the Special Inspector General
for such program under section 121(k) of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5231(k))).
(2) Duties.--
(A) Meetings.--The Council of Inspectors General shall meet
not less than once each quarter, or more frequently if the
chair considers it appropriate, to facilitate the sharing of
information among inspectors general and to discuss the ongoing
work of each inspector general who is a member of the Council
of Inspectors General, with a focus on concerns that may apply
to the broader financial sector and ways to improve financial
oversight.
(B) Annual report.--Each year the Council of Inspectors
General shall submit to the Council and to Congress a report
including--
(i) for each inspector general who is a member of the
Council of Inspectors General, a section within the
exclusive editorial control of such inspector general that
highlights the concerns and recommendations of such
inspector general in such inspector general's ongoing and
completed work, with a focus on issues that may apply to
the broader financial sector; and
(ii) a summary of the general observations of the
Council of Inspectors General based on the views expressed
by each inspector general as required by clause (i), with a
focus on measures that should be taken to improve financial
oversight.
(3) Working groups to evaluate council.--
(A) Convening a working group.--The Council of Inspectors
General may, by majority vote, convene a Council of Inspectors
General Working Group to evaluate the effectiveness and
internal operations of the Council.
(B) Personnel and resources.--The inspectors general who
are members of the Council of Inspectors General may detail
staff and resources to a Council of Inspectors General Working
Group established under this paragraph to enable it to carry
out its duties.
(C) Reports.--A Council of Inspectors General Working Group
established under this paragraph shall submit regular reports
to the Council and to Congress on its evaluations pursuant to
this paragraph.
(b) Response to Report by Council.--The Council shall respond to
the concerns raised in the report of the Council of Inspectors General
under subsection (a)(2)(B) for such year.
SEC. 989F. GAO STUDY OF PERSON TO PERSON LENDING.
(a) Study.--
(1) In general.--The Comptroller General of the United States
shall conduct a study of person to person lending to determine the
optimal Federal regulatory structure.
(2) Consultation.--In conducting the study required under
paragraph (1), the Comptroller General shall consult with Federal
banking agencies, the Commission, consumer groups, outside experts,
and the person to person lending industry.
(3) Content of study.--The study required under paragraph (1)
shall include an examination of--
(A) the regulatory structure as it exists on the date of
enactment of this Act, as determined by the Commission, with
particular attention to--
(i) the application of the Securities Act of 1933 to
person to person lending platforms;
(ii) the posting of consumer loan information on the
EDGAR database of the Commission; and
(iii) the treatment of privately held person to person
lending platforms as public companies;
(B) the State and other Federal regulators responsible for
the oversight and regulation of person to person lending
markets;
(C) any Federal, State, or local government or private
studies of person to person lending completed or in progress on
the date of enactment of this Act;
(D) consumer privacy and data protections, minimum credit
standards, anti-money laundering and risk management in the
regulatory structure as it exists on the date of enactment of
this Act, and whether additional or alternative safeguards are
needed; and
(E) the uses of person to person lending.
(b) Report.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall submit a
report on the study required under subsection (a) to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives.
(2) Content of report.--The report required under paragraph (1)
shall include alternative regulatory options, including--
(A) the involvement of other Federal agencies; and
(B) alternative approaches by the Commission and
recommendations on whether the alternative approaches are
effective.
SEC. 989G. EXEMPTION FOR NONACCELERATED FILERS.
(a) Exemption.--Section 404 of the Sarbanes-Oxley Act of 2002 is
amended by adding at the end the following:
``(c) Exemption for Smaller Issuers.--Subsection (b) shall not
apply with respect to any audit report prepared for an issuer that is
neither a `large accelerated filer' nor an `accelerated filer' as those
terms are defined in Rule 12b-2 of the Commission (17 C.F.R. 240.12b-
2).''.
(b) Study.--The Securities and Exchange Commission shall conduct a
study to determine how the Commission could reduce the burden of
complying with section 404(b) of the Sarbanes-Oxley Act of 2002 for
companies whose market capitalization is between $75,000,000 and
$250,000,000 for the relevant reporting period while maintaining
investor protections for such companies. The study shall also consider
whether any such methods of reducing the compliance burden or a
complete exemption for such companies from compliance with such section
would encourage companies to list on exchanges in the United States in
their initial public offerings. Not later than 9 months after the date
of the enactment of this subtitle, the Commission shall transmit a
report of such study to Congress.
SEC. 989H. CORRECTIVE RESPONSES BY HEADS OF CERTAIN ESTABLISHMENTS TO
DEFICIENCIES IDENTIFIED BY INSPECTORS GENERAL.
The Chairman of the Board of Governors of the Federal Reserve
System, the Chairman of the Commodity Futures Trading Commission, the
Chairman of the National Credit Union Administration, the Director of
the Pension Benefit Guaranty Corporation, and the Chairman of the
Securities and Exchange Commission shall each--
(1) take action to address deficiencies identified by a report
or investigation of the Inspector General of the establishment
concerned; or
(2) certify to both Houses of Congress that no action is
necessary or appropriate in connection with a deficiency described
in paragraph (1).
SEC. 989I. GAO STUDY REGARDING EXEMPTION FOR SMALLER ISSUERS.
(a) Study Regarding Exemption for Smaller Issuers.--The Comptroller
General of the United States shall carry out a study on the impact of
the amendments made by this Act to section 404(b) of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7262(b)), which shall include an analysis of--
(1) whether issuers that are exempt from such section 404(b)
have fewer or more restatements of published accounting statements
than issuers that are required to comply with such section 404(b);
(2) the cost of capital for issuers that are exempt from such
section 404(b) compared to the cost of capital for issuers that are
required to comply with such section 404(b);
(3) whether there is any difference in the confidence of
investors in the integrity of financial statements of issuers that
comply with such section 404(b) and issuers that are exempt from
compliance with such section 404(b);
(4) whether issuers that do not receive the attestation for
internal controls required under such section 404(b) should be
required to disclose the lack of such attestation to investors; and
(5) the costs and benefits to issuers that are exempt from such
section 404(b) that voluntarily have obtained the attestation of an
independent auditor.
(b) Report.--Not later than 3 years after the date of enactment of
this Act, the Comptroller General shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on the
results of the study required under subsection (a).
SEC. 989J. FURTHER PROMOTING THE ADOPTION OF THE NAIC MODEL REGULATIONS
THAT ENHANCE PROTECTION OF SENIORS AND OTHER CONSUMERS.
(a) In General.--The Commission shall treat as exempt securities
described under section 3(a)(8) of the Securities Act of 1933 (15
U.S.C. 77c(a)(8)) any insurance or endowment policy or annuity contract
or optional annuity contract--
(1) the value of which does not vary according to the
performance of a separate account;
(2) that--
(A) satisfies standard nonforfeiture laws or similar
requirements of the applicable State at the time of issue; or
(B) in the absence of applicable standard nonforfeiture
laws or requirements, satisfies the Model Standard
Nonforfeiture Law for Life Insurance or Model Standard
Nonforfeiture Law for Individual Deferred Annuities, or any
successor model law, as published by the National Association
of Insurance Commissioners; and
(3) that is issued--
(A) on and after June 16, 2013, in a State, or issued by an
insurance company that is domiciled in a State, that--
(i) adopts rules that govern suitability requirements
in the sale of an insurance or endowment policy or annuity
contract or optional annuity contract, which shall
substantially meet or exceed the minimum requirements
established by the Suitability in Annuity Transactions
Model Regulation adopted by the National Association of
Insurance Commissioners in March 2010; and
(ii) adopts rules that substantially meet or exceed the
minimum requirements of any successor modifications to the
model regulations described in subparagraph (A) within 5
years of the adoption by the Association of any further
successors thereto; or
(B) by an insurance company that adopts and implements
practices on a nationwide basis for the sale of any insurance
or endowment policy or annuity contract or optional annuity
contract that meet or exceed the minimum requirements
established by the National Association of Insurance
Commissioners Suitability in Annuity Transactions Model
Regulation (Model 275), and any successor thereto, and is
therefore subject to examination by the State of domicile of
the insurance company, or by any other State where the
insurance company conducts sales of such products, for the
purpose of monitoring compliance under this section.
(b) Rule of Construction.--Nothing in this section shall be
construed to affect whether any insurance or endowment policy or
annuity contract or optional annuity contract that is not described in
this section is or is not an exempt security under section 3(a)(8) of
the Securities Act of 1933 (15 U.S.C. 77c(a)(8)).
Subtitle J--Securities and Exchange Commission Match Funding
SEC. 991. SECURITIES AND EXCHANGE COMMISSION MATCH FUNDING.
(a) Match Funding Authority.--
(1) Amendments.--Section 31 of the Securities Exchange Act of
1934 (15 U.S.C. 78ee) is amended--
(A) by striking subsection (a) and inserting the following:
``(a) Recovery of Costs of Annual Appropriation.--The Commission
shall, in accordance with this section, collect transaction fees and
assessments that are designed to recover the costs to the Government of
the annual appropriation to the Commission by Congress.'';
(B) in subsection (e)(2), by striking ``September 30'' and
inserting ``September 25'';
(C) in subsection (g), by striking ``April 30 of the fiscal
year preceding the fiscal year to which such rate applies'' and
inserting ``30 days after the date on which an Act making a
regular appropriation to the Commission for such fiscal year is
enacted'';
(D) by striking subsection (j) and inserting the following:
``(j) Adjustments to Fee Rates.--
``(1) Annual adjustment.--Subject to subsections (i)(1)(B) and
(k), for each fiscal year, the Commission shall by order adjust
each of the rates applicable under subsections (b) and (c) for such
fiscal year to a uniform adjusted rate that, when applied to the
baseline estimate of the aggregate dollar amount of sales for such
fiscal year, is reasonably likely to produce aggregate fee
collections under this section (including assessments collected
under subsection (d) of this section) that are equal to the regular
appropriation to the Commission by Congress for such fiscal year.
``(2) Mid-year adjustment.--Subject to subsections (i)(1)(B)
and (k), for each fiscal year, the Commission shall determine, by
March 1 of such fiscal year, whether, based on the actual aggregate
dollar volume of sales during the first 5 months of such fiscal
year, the baseline estimate of the aggregate dollar volume of sales
used under paragraph (1) for such fiscal year is reasonably likely
to be 10 percent (or more) greater or less than the actual
aggregate dollar volume of sales for such fiscal year. If the
Commission so determines, the Commission shall by order, no later
than March 1, adjust each of the rates applicable under subsections
(b) and (c) for such fiscal year to a uniform adjusted rate that,
when applied to the revised estimate of the aggregate dollar amount
of sales for the remainder of such fiscal year, is reasonably
likely to produce aggregate fee collections under this section
(including fees collected during such five-month period and
assessments collected under subsection (d) of this section) that
are equal to the regular appropriation to the Commission by
Congress for such fiscal year. In making such revised estimate, the
Commission shall, after consultation with the Congressional Budget
Office and the Office of Management and Budget, use the same
methodology required by subsection (l).
``(3) Review.--In exercising its authority under this
subsection, the Commission shall not be required to comply with the
provisions of section 553 of title 5, United States Code. An
adjusted rate prescribed under paragraph (1) or (2) and published
under subsection (g) shall not be subject to judicial review.
``(4) Effective date.--
``(A) Annual adjustment.--Subject to subsections (i)(1)(B)
and (k), an adjusted rate prescribed under paragraph (1) shall
take effect on the later of--
``(i) the first day of the fiscal year to which such
rate applies; or
``(ii) 60 days after the date on which an Act making a
regular appropriation to the Commission for such fiscal
year is enacted.
``(B) Mid-year adjustment.--An adjusted rate prescribed
under paragraph (2) shall take effect on April 1 of the fiscal
year to which such rate applies.'';
(E) in subsection (k), by striking ``30 days'' and
inserting ``60 days''; and
(F) in subsection (l), by striking ``Definitions.--'' and
all that follows through ``sales.--The baseline'' and inserting
``Baseline Estimate of the Aggregate Dollar Amount of Sales.--
The baseline''.
(2) Effective date.--The amendments made by this subsection
shall take effect on the later of--
(A) October 1, 2011; or
(B) the date of enactment of an Act making a regular
appropriation to the Commission for fiscal year 2012.
(b) Amendments to Registration Fee Provisions.--
(1) Section 6(b) of the securities act of 1933.--Section 6(b)
of the Securities Act of 1933 (15 U.S.C. 77f(b)) is amended--
(A) by striking ``offsetting'' each place that term appears
and inserting ``fee'';
(B) by striking paragraphs (1), (3), (4), (6), (8), and
(9);
(C) by redesignating paragraph (2) as paragraph (1);
(D) by redesignating paragraph (5) as paragraph (2);
(E) by redesignating paragraph (7) as paragraph (3);
(F) by redesignating paragraph (10) as paragraph (5);
(G) by redesignating paragraph (11) as paragraph (6);
(H) in paragraph (1), as so redesignated, by striking
``paragraph (5) or (6).'' and inserting ``paragraph (2).'';
(I) in paragraph (2), as so redesignated--
(i) by striking ``of the fiscal years 2003 through
2011'' and inserting ``fiscal year''; and
(ii) by striking ``paragraph (2)'' and inserting
``paragraph (1)'';
(J) by inserting after paragraph (3), as so redesignated,
the following:
``(4) Review and effective date.--In exercising its authority
under this subsection, the Commission shall not be required to
comply with the provisions of section 553 of title 5, United States
Code. An adjusted rate prescribed under paragraph (2) and published
under paragraph (5) shall not be subject to judicial review. An
adjusted rate prescribed under paragraph (2) shall take effect on
the first day of the fiscal year to which such rate applies.'';
(K) in paragraph (5), as redesignated, by striking ``April
30'' and inserting ``August 31'';
(L) in paragraph (6), as so redesignated--
(i) by striking ``of the fiscal years 2002 through
2011'' and inserting ``fiscal year''; and
(ii) by inserting at the end of the table in
subparagraph (A) the following:
``2012
$425,000,000
2013
$455,000,000
2014
$485,000,000
2015
$515,000,000
2016
$550,000,000
2017
$585,000,000
2018
$620,000,000
2019
$660,000,000
2020
$705,000,000
2021 and each fiscal year thereafter
An amount that is equal to the target fee collection amount for the
prior fiscal year, adjusted by the rate of inflation.''.
(2) Section 13(e) of the securities exchange act of 1934.--
Section 13(e) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(e)) is amended--
(A) in paragraph (3), by striking ``paragraphs (5) and
(6)'' and inserting ``paragraph (4)'';
(B) by striking paragraphs (4), (5), and (6);
(C) by inserting after paragraph (3) the following:
``(4) Annual adjustment.--For each fiscal year, the Commission
shall by order adjust the rate required by paragraph (3) for such
fiscal year to a rate that is equal to the rate (expressed in
dollars per million) that is applicable under section 6(b) of the
Securities Act of 1933 for such fiscal year.
``(5) Fee collections.--Fees collected pursuant to this
subsection for fiscal year 2012 and each fiscal year thereafter
shall be deposited and credited as general revenue of the Treasury
and shall not be available for obligation.
``(6) Effective date; publication.--In exercising its authority
under this subsection, the Commission shall not be required to
comply with the provisions of section 553 of title 5, United States
Code. An adjusted rate prescribed under paragraph (4) shall be
published and take effect in accordance with section 6(b) of the
Securities Act of 1933 (15 U.S.C. 77f(b)).''; and
(D) by striking paragraphs (8), (9), and (10).
(3) Section 14(g) of the securities exchange act of 1934.--
Section 14(g) of the Securities Exchange Act of 1934 (15 U.S.C.
78n(g)) is amended--
(A) in paragraph (1), by striking ``paragraphs (5) and
(6)'' each time that term appears and inserting ``paragraph
(4)'';
(B) in paragraph (3), by striking ``paragraphs (5) and
(6)'' and inserting ``paragraph (4)'';
(C) by striking paragraphs (4), (5), and (6);
(D) by inserting after paragraph (3) the following:
``(4) Annual adjustment.--For each fiscal year, the Commission
shall by order adjust the rate required by paragraphs (1) and (3)
for such fiscal year to a rate that is equal to the rate (expressed
in dollars per million) that is applicable under section 6(b) of
the Securities Act of 1933 (15 U.S.C. 77f(b)) for such fiscal year.
``(5) Fee collection.--Fees collected pursuant to this
subsection for fiscal year 2012 and each fiscal year thereafter
shall be deposited and credited as general revenue of the Treasury
and shall not be available for obligation.
``(6) Review; effective date; publication.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title 5,
United States Code. An adjusted rate prescribed under paragraph (4)
shall be published and take effect in accordance with section 6(b)
of the Securities Act of 1933 (15 U.S.C. 77f(b)).'';
(E) by striking paragraphs (8), (9), and (10); and
(F) by redesignating paragraph (11) as paragraph (8).
(4) Effective date.--The amendments made by this subsection
shall take effect on October 1, 2011, except that for fiscal year
2012, the Commission shall publish the rate established under
section 6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)), as
amended by this Act, on August 31, 2011.
(c) Authorization of Appropriations.--Section 35 of the Securities
Exchange Act of 1934 (15 U.S.C. 78kk) is amended to read as follows:
``SEC. 35. AUTHORIZATION OF APPROPRIATIONS.
``In addition to any other funds authorized to be appropriated to
the Commission, there are authorized to be appropriated to carry out
the functions, powers, and duties of the Commission--
``(1) for fiscal year 2011, $1,300,000,000;
``(2) for fiscal year 2012, $1,500,000,000;
``(3) for fiscal year 2013, $1,750,000,000;
``(4) for fiscal year 2014, $2,000,000,000; and
``(5) for fiscal year 2015, $2,250,000,000.''.
(d) Transmittal of Budget Requests.--
(1) Amendment.--Section 31 of the Securities Exchange Act of
1934 (15 U.S.C. 78ee) is amended by adding at the end the
following:
``(m) Transmittal of Commission Budget Requests.--
``(1) Budget required.--For fiscal year 2012, and each fiscal
year thereafter, the Commission shall prepare and submit a budget
to the President. Whenever the Commission submits a budget estimate
or request to the President or the Office of Management and Budget,
the Commission shall concurrently transmit copies of the estimate
or request to the Committee on Appropriations of the Senate, the
Committee on Appropriations of the House of Representatives, the
Committee on Banking, Housing, and Urban Affairs of the Senate, and
the Committee on Financial Services of the House of
Representatives.
``(2) Submission to congress.--The President shall submit each
budget submitted under paragraph (1) to Congress, in unaltered
form, together with the annual budget for the Administration
submitted by the President.
``(3) Contents.--The Commission shall include in each budget
submitted under paragraph (1)--
``(A) an itemization of the amount of funds necessary to
carry out the functions of the Commission.
``(B) an amount to be designated as contingency funding to
be used by the Commission to address unanticipated needs; and
``(C) a designation of any activities of the Commission for
which multi-year budget authority would be suitable.''.
(2) Budget of the president.--For fiscal year 2012, and each
fiscal year thereafter, the annual budget for the Administration
submitted by the President to Congress shall reflect the amendments
made by this section.
(e) Securities and Exchange Commission Reserve Fund.--
(1) Amendment.--Section 4 of the Securities Exchange Act of
1934 (15 U.S.C. 78d), as amended by this Act, is amended by adding
at the end the following:
``(i) Securities and Exchange Commission Reserve Fund.--
``(1) Reserve fund established.--There is established in the
Treasury of the United States a separate fund, to be known as the
`Securities and Exchange Commission Reserve Fund' (referred to in
this subsection as the `Reserve Fund').
``(2) Reserve fund amounts.--
``(A) In general.--Except as provided in subparagraph (B),
any registration fees collected by the Commission under section
6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) or
section 24(f) of the Investment Company Act of 1940 (15 U.S.C.
80a-24(f)) shall be deposited into the Reserve Fund.
``(B) Limitations.--For any 1 fiscal year--
``(i) the amount deposited in the Fund may not exceed
$50,000,000; and
``(ii) the balance in the Fund may not exceed
$100,000,000.
``(C) Excess fees.--Any amounts in excess of the
limitations described in subparagraph (B) that the Commission
collects from registration fees under section 6(b) of the
Securities Act of 1933 (15 U.S.C. 77f(b)) or section 24(f) of
the Investment Company Act of 1940 (15 U.S.C. 80a-24(f)) shall
be deposited in the General Fund of the Treasury of the United
States and shall not be available for obligation by the
Commission.
``(3) Use of amounts in reserve fund.--The Commission may
obligate amounts in the Reserve Fund, not to exceed a total of
$100,000,000 in any 1 fiscal year, as the Commission determines is
necessary to carry out the functions of the Commission. Any amounts
in the reserve fund shall remain available until expended. Not
later than 10 days after the date on which the Commission obligates
amounts under this paragraph, the Commission shall notify Congress
of the date, amount, and purpose of the obligation.
``(4) Rule of construction.--Amounts collected and deposited in
the Reserve Fund shall not be construed to be Government funds or
appropriated monies and shall not be subject to apportionment for
the purpose of chapter 15 of title 31, United States Code, or under
any other authority.''.
(2) Effective date.--The amendment made by this subsection
shall take effect on October 1, 2011.
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
SEC. 1001. SHORT TITLE.
This title may be cited as the ``Consumer Financial Protection Act
of 2010''.
SEC. 1002. DEFINITIONS.
Except as otherwise provided in this title, for purposes of this
title, the following definitions shall apply:
(1) Affiliate.--The term ``affiliate'' means any person that
controls, is controlled by, or is under common control with another
person.
(2) Bureau.--The term ``Bureau'' means the Bureau of Consumer
Financial Protection.
(3) Business of insurance.--The term ``business of insurance''
means the writing of insurance or the reinsuring of risks by an
insurer, including all acts necessary to such writing or reinsuring
and the activities relating to the writing of insurance or the
reinsuring of risks conducted by persons who act as, or are,
officers, directors, agents, or employees of insurers or who are
other persons authorized to act on behalf of such persons.
(4) Consumer.--The term ``consumer'' means an individual or an
agent, trustee, or representative acting on behalf of an
individual.
(5) Consumer financial product or service.--The term ``consumer
financial product or service'' means any financial product or
service that is described in one or more categories under--
(A) paragraph (15) and is offered or provided for use by
consumers primarily for personal, family, or household
purposes; or
(B) clause (i), (iii), (ix), or (x) of paragraph (15)(A),
and is delivered, offered, or provided in connection with a
consumer financial product or service referred to in
subparagraph (A).
(6) Covered person.--The term ``covered person'' means--
(A) any person that engages in offering or providing a
consumer financial product or service; and
(B) any affiliate of a person described in subparagraph (A)
if such affiliate acts as a service provider to such person.
(7) Credit.--The term ``credit'' means the right granted by a
person to a consumer to defer payment of a debt, incur debt and
defer its payment, or purchase property or services and defer
payment for such purchase.
(8) Deposit-taking activity.--The term ``deposit-taking
activity'' means--
(A) the acceptance of deposits, maintenance of deposit
accounts, or the provision of services related to the
acceptance of deposits or the maintenance of deposit accounts;
(B) the acceptance of funds, the provision of other
services related to the acceptance of funds, or the maintenance
of member share accounts by a credit union; or
(C) the receipt of funds or the equivalent thereof, as the
Bureau may determine by rule or order, received or held by a
covered person (or an agent for a covered person) for the
purpose of facilitating a payment or transferring funds or
value of funds between a consumer and a third party.
(9) Designated transfer date.--The term ``designated transfer
date'' means the date established under section 1062.
(10) Director.--The term ``Director'' means the Director of the
Bureau.
(11) Electronic conduit services.--The term ``electronic
conduit services''--
(A) means the provision, by a person, of electronic data
transmission, routing, intermediate or transient storage, or
connections to a telecommunications system or network; and
(B) does not include a person that provides electronic
conduit services if, when providing such services, the person--
(i) selects or modifies the content of the electronic
data;
(ii) transmits, routes, stores, or provides connections
for electronic data, including financial data, in a manner
that such financial data is differentiated from other types
of data of the same form that such person transmits,
routes, or stores, or with respect to which, provides
connections; or
(iii) is a payee, payor, correspondent, or similar
party to a payment transaction with a consumer.
(12) Enumerated consumer laws.--Except as otherwise
specifically provided in section 1029, subtitle G or subtitle H,
the term ``enumerated consumer laws'' means--
(A) the Alternative Mortgage Transaction Parity Act of 1982
(12 U.S.C. 3801 et seq.);
(B) the Consumer Leasing Act of 1976 (15 U.S.C. 1667 et
seq.);
(C) the Electronic Fund Transfer Act (15 U.S.C. 1693 et
seq.), except with respect to section 920 of that Act;
(D) the Equal Credit Opportunity Act (15 U.S.C. 1691 et
seq.);
(E) the Fair Credit Billing Act (15 U.S.C. 1666 et seq.);
(F) the Fair Credit Reporting Act (15 U.S.C. 1681 et seq.),
except with respect to sections 615(e) and 628 of that Act (15
U.S.C. 1681m(e), 1681w);
(G) the Home Owners Protection Act of 1998 (12 U.S.C. 4901
et seq.);
(H) the Fair Debt Collection Practices Act (15 U.S.C. 1692
et seq.);
(I) subsections (b) through (f) of section 43 of the
Federal Deposit Insurance Act (12 U.S.C. 1831t(c)-(f));
(J) sections 502 through 509 of the Gramm-Leach-Bliley Act
(15 U.S.C. 6802-6809) except for section 505 as it applies to
section 501(b);
(K) the Home Mortgage Disclosure Act of 1975 (12 U.S.C.
2801 et seq.);
(L) the Home Ownership and Equity Protection Act of 1994
(15 U.S.C. 1601 note);
(M) the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.);
(N) the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C.
5101 et seq.);
(O) the Truth in Lending Act (15 U.S.C. 1601 et seq.);
(P) the Truth in Savings Act (12 U.S.C. 4301 et seq.);
(Q) section 626 of the Omnibus Appropriations Act, 2009
(Public Law 111-8); and
(R) the Interstate Land Sales Full Disclosure Act (15
U.S.C. 1701).
(13) Fair lending.--The term ``fair lending'' means fair,
equitable, and nondiscriminatory access to credit for consumers.
(14) Federal consumer financial law.--The term ``Federal
consumer financial law'' means the provisions of this title, the
enumerated consumer laws, the laws for which authorities are
transferred under subtitles F and H, and any rule or order
prescribed by the Bureau under this title, an enumerated consumer
law, or pursuant to the authorities transferred under subtitles F
and H. The term does not include the Federal Trade Commission Act.
(15) Financial product or service.--
(A) In general.--The term ``financial product or service''
means--
(i) extending credit and servicing loans, including
acquiring, purchasing, selling, brokering, or other
extensions of credit (other than solely extending
commercial credit to a person who originates consumer
credit transactions);
(ii) extending or brokering leases of personal or real
property that are the functional equivalent of purchase
finance arrangements, if--
(I) the lease is on a non-operating basis;
(II) the initial term of the lease is at least 90
days; and
(III) in the case of a lease involving real
property, at the inception of the initial lease, the
transaction is intended to result in ownership of the
leased property to be transferred to the lessee,
subject to standards prescribed by the Bureau;
(iii) providing real estate settlement services, except
such services excluded under subparagraph (C), or
performing appraisals of real estate or personal property;
(iv) engaging in deposit-taking activities,
transmitting or exchanging funds, or otherwise acting as a
custodian of funds or any financial instrument for use by
or on behalf of a consumer;
(v) selling, providing, or issuing stored value or
payment instruments, except that, in the case of a sale of,
or transaction to reload, stored value, only if the seller
exercises substantial control over the terms or conditions
of the stored value provided to the consumer where, for
purposes of this clause--
(I) a seller shall not be found to exercise
substantial control over the terms or conditions of the
stored value if the seller is not a party to the
contract with the consumer for the stored value
product, and another person is principally responsible
for establishing the terms or conditions of the stored
value; and
(II) advertising the nonfinancial goods or services
of the seller on the stored value card or device is not
in itself an exercise of substantial control over the
terms or conditions;
(vi) providing check cashing, check collection, or
check guaranty services;
(vii) providing payments or other financial data
processing products or services to a consumer by any
technological means, including processing or storing
financial or banking data for any payment instrument, or
through any payments systems or network used for processing
payments data, including payments made through an online
banking system or mobile telecommunications network, except
that a person shall not be deemed to be a covered person
with respect to financial data processing solely because
the person--
(I) is a merchant, retailer, or seller of any
nonfinancial good or service who engages in financial
data processing by transmitting or storing payments
data about a consumer exclusively for purpose of
initiating payments instructions by the consumer to pay
such person for the purchase of, or to complete a
commercial transaction for, such nonfinancial good or
service sold directly by such person to the consumer;
or
(II) provides access to a host server to a person
for purposes of enabling that person to establish and
maintain a website;
(viii) providing financial advisory services (other
than services relating to securities provided by a person
regulated by the Commission or a person regulated by a
State securities Commission, but only to the extent that
such person acts in a regulated capacity) to consumers on
individual financial matters or relating to proprietary
financial products or services (other than by publishing
any bona fide newspaper, news magazine, or business or
financial publication of general and regular circulation,
including publishing market data, news, or data analytics
or investment information or recommendations that are not
tailored to the individual needs of a particular consumer),
including--
(I) providing credit counseling to any consumer;
and
(II) providing services to assist a consumer with
debt management or debt settlement, modifying the terms
of any extension of credit, or avoiding foreclosure;
(ix) collecting, analyzing, maintaining, or providing
consumer report information or other account information,
including information relating to the credit history of
consumers, used or expected to be used in connection with
any decision regarding the offering or provision of a
consumer financial product or service, except to the extent
that--
(I) a person--
(aa) collects, analyzes, or maintains
information that relates solely to the transactions
between a consumer and such person;
(bb) provides the information described in item
(aa) to an affiliate of such person; or
(cc) provides information that is used or
expected to be used solely in any decision
regarding the offering or provision of a product or
service that is not a consumer financial product or
service, including a decision for employment,
government licensing, or a residential lease or
tenancy involving a consumer; and
(II) the information described in subclause (I)(aa)
is not used by such person or affiliate in connection
with any decision regarding the offering or provision
of a consumer financial product or service to the
consumer, other than credit described in section
1027(a)(2)(A);
(x) collecting debt related to any consumer financial
product or service; and
(xi) such other financial product or service as may be
defined by the Bureau, by regulation, for purposes of this
title, if the Bureau finds that such financial product or
service is--
(I) entered into or conducted as a subterfuge or
with a purpose to evade any Federal consumer financial
law; or
(II) permissible for a bank or for a financial
holding company to offer or to provide under any
provision of a Federal law or regulation applicable to
a bank or a financial holding company, and has, or
likely will have, a material impact on consumers.
(B) Rule of construction.--
(i) In general.--For purposes of subparagraph
(A)(xi)(II), and subject to clause (ii) of this
subparagraph, the following activities provided to a
covered person shall not, for purposes of this title, be
considered incidental or complementary to a financial
activity permissible for a financial holding company to
engage in under any provision of a Federal law or
regulation applicable to a financial holding company:
(I) Providing information products or services to a
covered person for identity authentication.
(II) Providing information products or services for
fraud or identify theft detection, prevention, or
investigation.
(III) Providing document retrieval or delivery
services.
(IV) Providing public records information
retrieval.
(V) Providing information products or services for
anti-money laundering activities.
(ii) Limitation.--Nothing in clause (i) may be
construed as modifying or limiting the authority of the
Bureau to exercise any--
(I) examination or enforcement powers authority
under this title with respect to a covered person or
service provider engaging in an activity described in
subparagraph (A)(ix); or
(II) powers authorized by this title to prescribe
rules, issue orders, or take other actions under any
enumerated consumer law or law for which the
authorities are transferred under subtitle F or H.
(C) Exclusions.--The term ``financial product or service''
does not include--
(i) the business of insurance; or
(ii) electronic conduit services.
(16) Foreign exchange.--The term ``foreign exchange'' means the
exchange, for compensation, of currency of the United States or of
a foreign government for currency of another government.
(17) Insured credit union.--The term ``insured credit union''
has the same meaning as in section 101 of the Federal Credit Union
Act (12 U.S.C. 1752).
(18) Payment instrument.--The term ``payment instrument'' means
a check, draft, warrant, money order, traveler's check, electronic
instrument, or other instrument, payment of funds, or monetary
value (other than currency).
(19) Person.--The term ``person'' means an individual,
partnership, company, corporation, association (incorporated or
unincorporated), trust, estate, cooperative organization, or other
entity.
(20) Person regulated by the commodity futures trading
commission.--The term ``person regulated by the Commodity Futures
Trading Commission'' means any person that is registered, or
required by statute or regulation to be registered, with the
Commodity Futures Trading Commission, but only to the extent that
the activities of such person are subject to the jurisdiction of
the Commodity Futures Trading Commission under the Commodity
Exchange Act.
(21) Person regulated by the commission.--The term ``person
regulated by the Commission'' means a person who is--
(A) a broker or dealer that is required to be registered
under the Securities Exchange Act of 1934;
(B) an investment adviser that is registered under the
Investment Advisers Act of 1940;
(C) an investment company that is required to be registered
under the Investment Company Act of 1940, and any company that
has elected to be regulated as a business development company
under that Act;
(D) a national securities exchange that is required to be
registered under the Securities Exchange Act of 1934;
(E) a transfer agent that is required to be registered
under the Securities Exchange Act of 1934;
(F) a clearing corporation that is required to be
registered under the Securities Exchange Act of 1934;
(G) any self-regulatory organization that is required to be
registered with the Commission;
(H) any nationally recognized statistical rating
organization that is required to be registered with the
Commission;
(I) any securities information processor that is required
to be registered with the Commission;
(J) any municipal securities dealer that is required to be
registered with the Commission;
(K) any other person that is required to be registered with
the Commission under the Securities Exchange Act of 1934; and
(L) any employee, agent, or contractor acting on behalf of,
registered with, or providing services to, any person described
in any of subparagraphs (A) through (K), but only to the extent
that any person described in any of subparagraphs (A) through
(K), or the employee, agent, or contractor of such person, acts
in a regulated capacity.
(22) Person regulated by a state insurance regulator.--The term
``person regulated by a State insurance regulator'' means any
person that is engaged in the business of insurance and subject to
regulation by any State insurance regulator, but only to the extent
that such person acts in such capacity.
(23) Person that performs income tax preparation activities for
consumers.--The term ``person that performs income tax preparation
activities for consumers'' means--
(A) any tax return preparer (as defined in section
7701(a)(36) of the Internal Revenue Code of 1986), regardless
of whether compensated, but only to the extent that the person
acts in such capacity;
(B) any person regulated by the Secretary under section 330
of title 31, United States Code, but only to the extent that
the person acts in such capacity; and
(C) any authorized IRS e-file Providers (as defined for
purposes of section 7216 of the Internal Revenue Code of 1986),
but only to the extent that the person acts in such capacity.
(24) Prudential regulator.--The term ``prudential regulator''
means--
(A) in the case of an insured depository institution or
depository institution holding company (as defined in section 3
of the Federal Deposit Insurance Act), or subsidiary of such
institution or company, the appropriate Federal banking agency,
as that term is defined in section 3 of the Federal Deposit
Insurance Act; and
(B) in the case of an insured credit union, the National
Credit Union Administration.
(25) Related person.--The term ``related person''--
(A) shall apply only with respect to a covered person that
is not a bank holding company (as that term is defined in
section 2 of the Bank Holding Company Act of 1956), credit
union, or depository institution;
(B) shall be deemed to mean a covered person for all
purposes of any provision of Federal consumer financial law;
and
(C) means--
(i) any director, officer, or employee charged with
managerial responsibility for, or controlling shareholder
of, or agent for, such covered person;
(ii) any shareholder, consultant, joint venture
partner, or other person, as determined by the Bureau (by
rule or on a case-by-case basis) who materially
participates in the conduct of the affairs of such covered
person; and
(iii) any independent contractor (including any
attorney, appraiser, or accountant) who knowingly or
recklessly participates in any--
(I) violation of any provision of law or
regulation; or
(II) breach of a fiduciary duty.
(26) Service provider.--
(A) In general.--The term ``service provider'' means any
person that provides a material service to a covered person in
connection with the offering or provision by such covered
person of a consumer financial product or service, including a
person that--
(i) participates in designing, operating, or
maintaining the consumer financial product or service; or
(ii) processes transactions relating to the consumer
financial product or service (other than unknowingly or
incidentally transmitting or processing financial data in a
manner that such data is undifferentiated from other types
of data of the same form as the person transmits or
processes).
(B) Exceptions.--The term ``service provider'' does not
include a person solely by virtue of such person offering or
providing to a covered person--
(i) a support service of a type provided to businesses
generally or a similar ministerial service; or
(ii) time or space for an advertisement for a consumer
financial product or service through print, newspaper, or
electronic media.
(C) Rule of construction.--A person that is a service
provider shall be deemed to be a covered person to the extent
that such person engages in the offering or provision of its
own consumer financial product or service.
(27) State.--The term ``State'' means any State, territory, or
possession of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern
Mariana Islands, Guam, American Samoa, or the United States Virgin
Islands or any federally recognized Indian tribe, as defined by the
Secretary of the Interior under section 104(a) of the Federally
Recognized Indian Tribe List Act of 1994 (25 U.S.C. 479a-1(a)).
(28) Stored value.--
(A) In general.--The term ``stored value'' means funds or
monetary value represented in any electronic format, whether or
not specially encrypted, and stored or capable of storage on
electronic media in such a way as to be retrievable and
transferred electronically, and includes a prepaid debit card
or product, or any other similar product, regardless of whether
the amount of the funds or monetary value may be increased or
reloaded.
(B) Exclusion.--Notwithstanding subparagraph (A), the term
``stored value'' does not include a special purpose card or
certificate, which shall be defined for purposes of this
paragraph as funds or monetary value represented in any
electronic format, whether or not specially encrypted, that
is--
(i) issued by a merchant, retailer, or other seller of
nonfinancial goods or services;
(ii) redeemable only for transactions with the
merchant, retailer, or seller of nonfinancial goods or
services or with an affiliate of such person, which
affiliate itself is a merchant, retailer, or seller of
nonfinancial goods or services;
(iii) issued in a specified amount that, except in the
case of a card or product used solely for telephone
services, may not be increased or reloaded;
(iv) purchased on a prepaid basis in exchange for
payment; and
(v) honored upon presentation to such merchant,
retailer, or seller of nonfinancial goods or services or an
affiliate of such person, which affiliate itself is a
merchant, retailer, or seller of nonfinancial goods or
services, only for any nonfinancial goods or services.
(29) Transmitting or exchanging funds.--The term ``transmitting
or exchanging funds'' means receiving currency, monetary value, or
payment instruments from a consumer for the purpose of exchanging
or transmitting the same by any means, including transmission by
wire, facsimile, electronic transfer, courier, the Internet, or
through bill payment services or through other businesses that
facilitate third-party transfers within the United States or to or
from the United States.
Subtitle A--Bureau of Consumer Financial Protection
SEC. 1011. ESTABLISHMENT OF THE BUREAU OF CONSUMER FINANCIAL
PROTECTION.
(a) Bureau Established.--There is established in the Federal
Reserve System, an independent bureau to be known as the ``Bureau of
Consumer Financial Protection'', which shall regulate the offering and
provision of consumer financial products or services under the Federal
consumer financial laws. The Bureau shall be considered an Executive
agency, as defined in section 105 of title 5, United States Code.
Except as otherwise provided expressly by law, all Federal laws dealing
with public or Federal contracts, property, works, officers, employees,
budgets, or funds, including the provisions of chapters 5 and 7 of
title 5, shall apply to the exercise of the powers of the Bureau.
(b) Director and Deputy Director.--
(1) In general.--There is established the position of the
Director, who shall serve as the head of the Bureau.
(2) Appointment.--Subject to paragraph (3), the Director shall
be appointed by the President, by and with the advice and consent
of the Senate.
(3) Qualification.--The President shall nominate the Director
from among individuals who are citizens of the United States.
(4) Compensation.--The Director shall be compensated at the
rate prescribed for level II of the Executive Schedule under
section 5313 of title 5, United States Code.
(5) Deputy director.--There is established the position of
Deputy Director, who shall--
(A) be appointed by the Director; and
(B) serve as acting Director in the absence or
unavailability of the Director.
(c) Term.--
(1) In general.--The Director shall serve for a term of 5
years.
(2) Expiration of term.--An individual may serve as Director
after the expiration of the term for which appointed, until a
successor has been appointed and qualified.
(3) Removal for cause.--The President may remove the Director
for inefficiency, neglect of duty, or malfeasance in office.
(d) Service Restriction.--No Director or Deputy Director may hold
any office, position, or employment in any Federal reserve bank,
Federal home loan bank, covered person, or service provider during the
period of service of such person as Director or Deputy Director.
(e) Offices.--The principal office of the Bureau shall be in the
District of Columbia. The Director may establish regional offices of
the Bureau, including in cities in which the Federal reserve banks, or
branches of such banks, are located, in order to carry out the
responsibilities assigned to the Bureau under the Federal consumer
financial laws.
SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS.
(a) Powers of the Bureau.--The Bureau is authorized to establish
the general policies of the Bureau with respect to all executive and
administrative functions, including--
(1) the establishment of rules for conducting the general
business of the Bureau, in a manner not inconsistent with this
title;
(2) to bind the Bureau and enter into contracts;
(3) directing the establishment and maintenance of divisions or
other offices within the Bureau, in order to carry out the
responsibilities under the Federal consumer financial laws, and to
satisfy the requirements of other applicable law;
(4) to coordinate and oversee the operation of all
administrative, enforcement, and research activities of the Bureau;
(5) to adopt and use a seal;
(6) to determine the character of and the necessity for the
obligations and expenditures of the Bureau;
(7) the appointment and supervision of personnel employed by
the Bureau;
(8) the distribution of business among personnel appointed and
supervised by the Director and among administrative units of the
Bureau;
(9) the use and expenditure of funds;
(10) implementing the Federal consumer financial laws through
rules, orders, guidance, interpretations, statements of policy,
examinations, and enforcement actions; and
(11) performing such other functions as may be authorized or
required by law.
(b) Delegation of Authority.--The Director of the Bureau may
delegate to any duly authorized employee, representative, or agent any
power vested in the Bureau by law.
(c) Autonomy of the Bureau.--
(1) Coordination with the board of governors.--Notwithstanding
any other provision of law applicable to the supervision or
examination of persons with respect to Federal consumer financial
laws, the Board of Governors may delegate to the Bureau the
authorities to examine persons subject to the jurisdiction of the
Board of Governors for compliance with the Federal consumer
financial laws.
(2) Autonomy.--Notwithstanding the authorities granted to the
Board of Governors under the Federal Reserve Act, the Board of
Governors may not--
(A) intervene in any matter or proceeding before the
Director, including examinations or enforcement actions, unless
otherwise specifically provided by law;
(B) appoint, direct, or remove any officer or employee of
the Bureau; or
(C) merge or consolidate the Bureau, or any of the
functions or responsibilities of the Bureau, with any division
or office of the Board of Governors or the Federal reserve
banks.
(3) Rules and orders.--No rule or order of the Bureau shall be
subject to approval or review by the Board of Governors. The Board
of Governors may not delay or prevent the issuance of any rule or
order of the Bureau.
(4) Recommendations and testimony.--No officer or agency of the
United States shall have any authority to require the Director or
any other officer of the Bureau to submit legislative
recommendations, or testimony or comments on legislation, to any
officer or agency of the United States for approval, comments, or
review prior to the submission of such recommendations, testimony,
or comments to the Congress, if such recommendations, testimony, or
comments to the Congress include a statement indicating that the
views expressed therein are those of the Director or such officer,
and do not necessarily reflect the views of the Board of Governors
or the President.
(5) Clarification of autonomy of the bureau in legal
proceedings.--The Bureau shall not be liable under any provision of
law for any action or inaction of the Board of Governors, and the
Board of Governors shall not be liable under any provision of law
for any action or inaction of the Bureau.
SEC. 1013. ADMINISTRATION.
(a) Personnel.--
(1) Appointment.--
(A) In general.--The Director may fix the number of, and
appoint and direct, all employees of the Bureau, in accordance
with the applicable provisions of title 5, United States Code.
(B) Employees of the bureau.--The Director is authorized to
employ attorneys, compliance examiners, compliance supervision
analysts, economists, statisticians, and other employees as may
be deemed necessary to conduct the business of the Bureau.
Unless otherwise provided expressly by law, any individual
appointed under this section shall be an employee as defined in
section 2105 of title 5, United States Code, and subject to the
provisions of such title and other laws generally applicable to
the employees of an Executive agency.
(C) Waiver authority.--
(i) In general.--In making any appointment under
subparagraph (A), the Director may waive the requirements
of chapter 33 of title 5, United States Code, and the
regulations implementing such chapter, to the extent
necessary to appoint employees on terms and conditions that
are consistent with those set forth in section 11(1) of the
Federal Reserve Act (12 U.S.C. 248(1)), while providing
for--
(I) fair, credible, and transparent methods of
establishing qualification requirements for,
recruitment for, and appointments to positions;
(II) fair and open competition and equitable
treatment in the consideration and selection of
individuals to positions;
(III) fair, credible, and transparent methods of
assigning, reassigning, detailing, transferring, and
promoting employees.
(ii) Veterans preferences.--In implementing this
subparagraph, the Director shall comply with the provisions
of section 2302(b)(11), regarding veterans' preference
requirements, in a manner consistent with that in which
such provisions are applied under chapter 33 of title 5,
United States Code. The authority under this subparagraph
to waive the requirements of that chapter 33 shall expire 5
years after the date of enactment of this Act.
(2) Compensation.--Notwithstanding any otherwise applicable
provision of title 5, United States Code, concerning compensation,
including the provisions of chapter 51 and chapter 53, the
following provisions shall apply with respect to employees of the
Bureau:
(A) The rates of basic pay for all employees of the Bureau
may be set and adjusted by the Director.
(B) The Director shall at all times provide compensation
(including benefits) to each class of employees that, at a
minimum, are comparable to the compensation and benefits then
being provided by the Board of Governors for the corresponding
class of employees.
(C) All such employees shall be compensated (including
benefits) on terms and conditions that are consistent with the
terms and conditions set forth in section 11(l) of the Federal
Reserve Act (12 U.S.C. 248(l)).
(3) Bureau participation in federal reserve system retirement
plan and federal reserve system thrift plan.--
(A) Employee election.--Employees appointed to the Bureau
may elect to participate in either--
(i) both the Federal Reserve System Retirement Plan and
the Federal Reserve System Thrift Plan, under the same
terms on which such participation is offered to employees
of the Board of Governors who participate in such plans and
under the terms and conditions specified under section
1064(i)(1)(C); or
(ii) the Civil Service Retirement System under chapter
83 of title 5, United States Code, or the Federal Employees
Retirement System under chapter 84 of title 5, United
States Code, if previously covered under one of those
Federal employee retirement systems.
(B) Election period.--Bureau employees shall make an
election under this paragraph not later than 1 year after the
date of appointment by, or transfer under subtitle F to, the
Bureau. Participation in, and benefit accruals under, any other
retirement plan established or maintained by the Federal
Government shall end not later than the date on which
participation in, and benefit accruals under, the Federal
Reserve System Retirement Plan and Federal Reserve System
Thrift Plan begin.
(C) Employer contribution.--The Bureau shall pay an
employer contribution to the Federal Reserve System Retirement
Plan, in the amount established as an employer contribution
under the Federal Employees Retirement System, as established
under chapter 84 of title 5, United States Code, for each
Bureau employee who elects to participate in the Federal
Reserve System Retirement Plan. The Bureau shall pay an
employer contribution to the Federal Reserve System Thrift Plan
for each Bureau employee who elects to participate in such
plan, as required under the terms of such plan.
(D) Controlled group status.--The Bureau is the same
employer as the Federal Reserve System (as comprised of the
Board of Governors and each of the 12 Federal reserve banks
prior to the date of enactment of this Act) for purposes of
subsections (b), (c), (m), and (o) of section 414 of the
Internal Revenue Code of 1986, (26 U.S.C. 414).
(4) Labor-management relations.--Chapter 71 of title 5, United
States Code, shall apply to the Bureau and the employees of the
Bureau.
(5) Agency ombudsman.--
(A) Establishment required.--Not later than 180 days after
the designated transfer date, the Bureau shall appoint an
ombudsman.
(B) Duties of ombudsman.--The ombudsman appointed in
accordance with subparagraph (A) shall--
(i) act as a liaison between the Bureau and any
affected person with respect to any problem that such party
may have in dealing with the Bureau, resulting from the
regulatory activities of the Bureau; and
(ii) assure that safeguards exist to encourage
complainants to come forward and preserve confidentiality.
(b) Specific Functional Units.--
(1) Research.--The Director shall establish a unit whose
functions shall include researching, analyzing, and reporting on--
(A) developments in markets for consumer financial products
or services, including market areas of alternative consumer
financial products or services with high growth rates and areas
of risk to consumers;
(B) access to fair and affordable credit for traditionally
underserved communities;
(C) consumer awareness, understanding, and use of
disclosures and communications regarding consumer financial
products or services;
(D) consumer awareness and understanding of costs, risks,
and benefits of consumer financial products or services;
(E) consumer behavior with respect to consumer financial
products or services, including performance on mortgage loans;
and
(F) experiences of traditionally underserved consumers,
including un-banked and under-banked consumers.
(2) Community affairs.--The Director shall establish a unit
whose functions shall include providing information, guidance, and
technical assistance regarding the offering and provision of
consumer financial products or services to traditionally
underserved consumers and communities.
(3) Collecting and tracking complaints.--
(A) In general.--The Director shall establish a unit whose
functions shall include establishing a single, toll-free
telephone number, a website, and a database or utilizing an
existing database to facilitate the centralized collection of,
monitoring of, and response to consumer complaints regarding
consumer financial products or services. The Director shall
coordinate with the Federal Trade Commission or other Federal
agencies to route complaints to such agencies, where
appropriate.
(B) Routing calls to states.--To the extent practicable,
State agencies may receive appropriate complaints from the
systems established under subparagraph (A), if--
(i) the State agency system has the functional capacity
to receive calls or electronic reports routed by the Bureau
systems;
(ii) the State agency has satisfied any conditions of
participation in the system that the Bureau may establish,
including treatment of personally identifiable information
and sharing of information on complaint resolution or
related compliance procedures and resources; and
(iii) participation by the State agency includes
measures necessary to provide for protection of personally
identifiable information that conform to the standards for
protection of the confidentiality of personally
identifiable information and for data integrity and
security that apply to the Federal agencies described in
subparagraph (D).
(C) Reports to the congress.--The Director shall present an
annual report to Congress not later than March 31 of each year
on the complaints received by the Bureau in the prior year
regarding consumer financial products and services. Such report
shall include information and analysis about complaint numbers,
complaint types, and, where applicable, information about
resolution of complaints.
(D) Data sharing required.--To facilitate preparation of
the reports required under subparagraph (C), supervision and
enforcement activities, and monitoring of the market for
consumer financial products and services, the Bureau shall
share consumer complaint information with prudential
regulators, the Federal Trade Commission, other Federal
agencies, and State agencies, subject to the standards
applicable to Federal agencies for protection of the
confidentiality of personally identifiable information and for
data security and integrity. The prudential regulators, the
Federal Trade Commission, and other Federal agencies shall
share data relating to consumer complaints regarding consumer
financial products and services with the Bureau, subject to the
standards applicable to Federal agencies for protection of
confidentiality of personally identifiable information and for
data security and integrity.
(c) Office of Fair Lending and Equal Opportunity.--
(1) Establishment.--The Director shall establish within the
Bureau the Office of Fair Lending and Equal Opportunity.
(2) Functions.--The Office of Fair Lending and Equal
Opportunity shall have such powers and duties as the Director may
delegate to the Office, including--
(A) providing oversight and enforcement of Federal laws
intended to ensure the fair, equitable, and nondiscriminatory
access to credit for both individuals and communities that are
enforced by the Bureau, including the Equal Credit Opportunity
Act and the Home Mortgage Disclosure Act;
(B) coordinating fair lending efforts of the Bureau with
other Federal agencies and State regulators, as appropriate, to
promote consistent, efficient, and effective enforcement of
Federal fair lending laws;
(C) working with private industry, fair lending, civil
rights, consumer and community advocates on the promotion of
fair lending compliance and education; and
(D) providing annual reports to Congress on the efforts of
the Bureau to fulfill its fair lending mandate.
(3) Administration of office.--There is established the
position of Assistant Director of the Bureau for Fair Lending and
Equal Opportunity, who--
(A) shall be appointed by the Director; and
(B) shall carry out such duties as the Director may
delegate to such Assistant Director.
(d) Office of Financial Education.--
(1) Establishment.--The Director shall establish an Office of
Financial Education, which shall be responsible for developing and
implementing initiatives intended to educate and empower consumers
to make better informed financial decisions.
(2) Other duties.--The Office of Financial Education shall
develop and implement a strategy to improve the financial literacy
of consumers that includes measurable goals and objectives, in
consultation with the Financial Literacy and Education Commission,
consistent with the National Strategy for Financial Literacy,
through activities including providing opportunities for consumers
to access--
(A) financial counseling, including community-based
financial counseling, where practicable;
(B) information to assist with the evaluation of credit
products and the understanding of credit histories and scores;
(C) savings, borrowing, and other services found at
mainstream financial institutions;
(D) activities intended to--
(i) prepare the consumer for educational expenses and
the submission of financial aid applications, and other
major purchases;
(ii) reduce debt; and
(iii) improve the financial situation of the consumer;
(E) assistance in developing long-term savings strategies;
and
(F) wealth building and financial services during the
preparation process to claim earned income tax credits and
Federal benefits.
(3) Coordination.--The Office of Financial Education shall
coordinate with other units within the Bureau in carrying out its
functions, including--
(A) working with the Community Affairs Office to implement
the strategy to improve financial literacy of consumers; and
(B) working with the research unit established by the
Director to conduct research related to consumer financial
education and counseling.
(4) Report.--Not later than 24 months after the designated
transfer date, and annually thereafter, the Director shall submit a
report on its financial literacy activities and strategy to improve
financial literacy of consumers to--
(A) the Committee on Banking, Housing, and Urban Affairs of
the Senate; and
(B) the Committee on Financial Services of the House of
Representatives.
(5) Membership in financial literacy and education
commission.--Section 513(c)(1) of the Financial Literacy and
Education Improvement Act (20 U.S.C. 9702(c)(1)) is amended--
(A) in subparagraph (B), by striking ``and'' at the end;
(B) by redesignating subparagraph (C) as subparagraph (D);
and
(C) by inserting after subparagraph (B) the following new
subparagraph:
``(C) the Director of the Bureau of Consumer Financial
Protection; and''.
(6) Conforming amendment.--Section 513(d) of the Financial
Literacy and Education Improvement Act (20 U.S.C. 9702(d)) is
amended by adding at the end the following: ``The Director of the
Bureau of Consumer Financial Protection shall serve as the Vice
Chairman.''.
(7) Study and report on financial literacy program.--
(A) In general.--The Comptroller General of the United
States shall conduct a study to identify--
(i) the feasibility of certification of persons
providing the programs or performing the activities
described in paragraph (2), including recognizing
outstanding programs, and developing guidelines and
resources for community-based practitioners, including--
(I) a potential certification process and standards
for certification;
(II) appropriate certifying entities;
(III) resources required for funding such a
process; and
(IV) a cost-benefit analysis of such certification;
(ii) technological resources intended to collect,
analyze, evaluate, or promote financial literacy and
counseling programs;
(iii) effective methods, tools, and strategies intended
to educate and empower consumers about personal finance
management; and
(iv) recommendations intended to encourage the
development of programs that effectively improve financial
education outcomes and empower consumers to make better
informed financial decisions based on findings.
(B) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United
States shall submit a report on the results of the study
conducted under this paragraph to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives.
(e) Office of Service Member Affairs.--
(1) In general.--The Director shall establish an Office of
Service Member Affairs, which shall be responsible for developing
and implementing initiatives for service members and their families
intended to--
(A) educate and empower service members and their families
to make better informed decisions regarding consumer financial
products and services;
(B) coordinate with the unit of the Bureau established
under subsection (b)(3), in order to monitor complaints by
service members and their families and responses to those
complaints by the Bureau or other appropriate Federal or State
agency; and
(C) coordinate efforts among Federal and State agencies, as
appropriate, regarding consumer protection measures relating to
consumer financial products and services offered to, or used
by, service members and their families.
(2) Coordination.--
(A) Regional services.--The Director is authorized to
assign employees of the Bureau as may be deemed necessary to
conduct the business of the Office of Service Member Affairs,
including by establishing and maintaining the functions of the
Office in regional offices of the Bureau located near military
bases, military treatment facilities, or other similar military
facilities.
(B) Agreements.--The Director is authorized to enter into
memoranda of understanding and similar agreements with the
Department of Defense, including any branch or agency as
authorized by the department, in order to carry out the
business of the Office of Service Member Affairs.
(3) Definition.--As used in this subsection, the term ``service
member'' means any member of the United States Armed Forces and any
member of the National Guard or Reserves.
(f) Timing.--The Office of Fair Lending and Equal Opportunity, the
Office of Financial Education, and the Office of Service Member Affairs
shall each be established not later than 1 year after the designated
transfer date.
(g) Office of Financial Protection for Older Americans.--
(1) Establishment.--Before the end of the 180-day period
beginning on the designated transfer date, the Director shall
establish the Office of Financial Protection for Older Americans,
the functions of which shall include activities designed to
facilitate the financial literacy of individuals who have attained
the age of 62 years or more (in this subsection, referred to as
``seniors'') on protection from unfair, deceptive, and abusive
practices and on current and future financial choices, including
through the dissemination of materials to seniors on such topics.
(2) Assistant director.--The Office of Financial Protection for
Older Americans (in this subsection referred to as the ``Office'')
shall be headed by an assistant director.
(3) Duties.--The Office shall--
(A) develop goals for programs that provide seniors
financial literacy and counseling, including programs that--
(i) help seniors recognize warning signs of unfair,
deceptive, or abusive practices, protect themselves from
such practices;
(ii) provide one-on-one financial counseling on issues
including long-term savings and later-life economic
security; and
(iii) provide personal consumer credit advocacy to
respond to consumer problems caused by unfair, deceptive,
or abusive practices;
(B) monitor certifications or designations of financial
advisors who advise seniors and alert the Commission and State
regulators of certifications or designations that are
identified as unfair, deceptive, or abusive;
(C) not later than 18 months after the date of the
establishment of the Office, submit to Congress and the
Commission any legislative and regulatory recommendations on
the best practices for--
(i) disseminating information regarding the legitimacy
of certifications of financial advisers who advise seniors;
(ii) methods in which a senior can identify the
financial advisor most appropriate for the senior's needs;
and
(iii) methods in which a senior can verify a financial
advisor's credentials;
(D) conduct research to identify best practices and
effective methods, tools, technology and strategies to educate
and counsel seniors about personal finance management with a
focus on--
(i) protecting themselves from unfair, deceptive, and
abusive practices;
(ii) long-term savings; and
(iii) planning for retirement and long-term care;
(E) coordinate consumer protection efforts of seniors with
other Federal agencies and State regulators, as appropriate, to
promote consistent, effective, and efficient enforcement; and
(F) work with community organizations, non-profit
organizations, and other entities that are involved with
educating or assisting seniors (including the National
Education and Resource Center on Women and Retirement
Planning).
SEC. 1014. CONSUMER ADVISORY BOARD.
(a) Establishment Required.--The Director shall establish a
Consumer Advisory Board to advise and consult with the Bureau in the
exercise of its functions under the Federal consumer financial laws,
and to provide information on emerging practices in the consumer
financial products or services industry, including regional trends,
concerns, and other relevant information.
(b) Membership.--In appointing the members of the Consumer Advisory
Board, the Director shall seek to assemble experts in consumer
protection, financial services, community development, fair lending and
civil rights, and consumer financial products or services and
representatives of depository institutions that primarily serve
underserved communities, and representatives of communities that have
been significantly impacted by higher-priced mortgage loans, and seek
representation of the interests of covered persons and consumers,
without regard to party affiliation. Not fewer than 6 members shall be
appointed upon the recommendation of the regional Federal Reserve Bank
Presidents, on a rotating basis.
(c) Meetings.--The Consumer Advisory Board shall meet from time to
time at the call of the Director, but, at a minimum, shall meet at
least twice in each year.
(d) Compensation and Travel Expenses.--Members of the Consumer
Advisory Board who are not full-time employees of the United States
shall--
(1) be entitled to receive compensation at a rate fixed by the
Director while attending meetings of the Consumer Advisory Board,
including travel time; and
(2) be allowed travel expenses, including transportation and
subsistence, while away from their homes or regular places of
business.
SEC. 1015. COORDINATION.
The Bureau shall coordinate with the Commission, the Commodity
Futures Trading Commission, the Federal Trade Commission, and other
Federal agencies and State regulators, as appropriate, to promote
consistent regulatory treatment of consumer financial and investment
products and services.
SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CONGRESS.
(a) Appearances Before Congress.--The Director of the Bureau shall
appear before the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services and the Committee on
Energy and Commerce of the House of Representatives at semi-annual
hearings regarding the reports required under subsection (b).
(b) Reports Required.--The Bureau shall, concurrent with each semi-
annual hearing referred to in subsection (a), prepare and submit to the
President and to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services and the Committee
on Energy and Commerce of the House of Representatives, a report,
beginning with the session following the designated transfer date. The
Bureau may also submit such report to the Committee on Commerce,
Science, and Transportation of the Senate.
(c) Contents.--The reports required by subsection (b) shall
include--
(1) a discussion of the significant problems faced by consumers
in shopping for or obtaining consumer financial products or
services;
(2) a justification of the budget request of the previous year;
(3) a list of the significant rules and orders adopted by the
Bureau, as well as other significant initiatives conducted by the
Bureau, during the preceding year and the plan of the Bureau for
rules, orders, or other initiatives to be undertaken during the
upcoming period;
(4) an analysis of complaints about consumer financial products
or services that the Bureau has received and collected in its
central database on complaints during the preceding year;
(5) a list, with a brief statement of the issues, of the public
supervisory and enforcement actions to which the Bureau was a party
during the preceding year;
(6) the actions taken regarding rules, orders, and supervisory
actions with respect to covered persons which are not credit unions
or depository institutions;
(7) an assessment of significant actions by State attorneys
general or State regulators relating to Federal consumer financial
law;
(8) an analysis of the efforts of the Bureau to fulfill the
fair lending mission of the Bureau; and
(9) an analysis of the efforts of the Bureau to increase
workforce and contracting diversity consistent with the procedures
established by the Office of Minority and Women Inclusion.
SEC. 1017. FUNDING; PENALTIES AND FINES.
(a) Transfer of Funds From Board Of Governors.--
(1) In general.--Each year (or quarter of such year), beginning
on the designated transfer date, and each quarter thereafter, the
Board of Governors shall transfer to the Bureau from the combined
earnings of the Federal Reserve System, the amount determined by
the Director to be reasonably necessary to carry out the
authorities of the Bureau under Federal consumer financial law,
taking into account such other sums made available to the Bureau
from the preceding year (or quarter of such year).
(2) Funding cap.--
(A) In general.--Notwithstanding paragraph (1), and in
accordance with this paragraph, the amount that shall be
transferred to the Bureau in each fiscal year shall not exceed
a fixed percentage of the total operating expenses of the
Federal Reserve System, as reported in the Annual Report, 2009,
of the Board of Governors, equal to--
(i) 10 percent of such expenses in fiscal year 2011;
(ii) 11 percent of such expenses in fiscal year 2012;
and
(iii) 12 percent of such expenses in fiscal year 2013,
and in each year thereafter.
(B) Adjustment of amount.--The dollar amount referred to in
subparagraph (A)(iii) shall be adjusted annually, using the
percent increase, if any, in the employment cost index for
total compensation for State and local government workers
published by the Federal Government, or the successor index
thereto, for the 12-month period ending on September 30 of the
year preceding the transfer.
(C) Reviewability.--Notwithstanding any other provision in
this title, the funds derived from the Federal Reserve System
pursuant to this subsection shall not be subject to review by
the Committees on Appropriations of the House of
Representatives and the Senate.
(3) Transition period.--Beginning on the date of enactment of
this Act and until the designated transfer date, the Board of
Governors shall transfer to the Bureau the amount estimated by the
Secretary needed to carry out the authorities granted to the Bureau
under Federal consumer financial law, from the date of enactment of
this Act until the designated transfer date.
(4) Budget and financial management.--
(A) Financial operating plans and forecasts.--The Director
shall provide to the Director of the Office of Management and
Budget copies of the financial operating plans and forecasts of
the Director, as prepared by the Director in the ordinary
course of the operations of the Bureau, and copies of the
quarterly reports of the financial condition and results of
operations of the Bureau, as prepared by the Director in the
ordinary course of the operations of the Bureau.
(B) Financial statements.--The Bureau shall prepare
annually a statement of--
(i) assets and liabilities and surplus or deficit;
(ii) income and expenses; and
(iii) sources and application of funds.
(C) Financial management systems.--The Bureau shall
implement and maintain financial management systems that comply
substantially with Federal financial management systems
requirements and applicable Federal accounting standards.
(D) Assertion of internal controls.--The Director shall
provide to the Comptroller General of the United States an
assertion as to the effectiveness of the internal controls that
apply to financial reporting by the Bureau, using the standards
established in section 3512(c) of title 31, United States Code.
(E) Rule of construction.--This subsection may not be
construed as implying any obligation on the part of the
Director to consult with or obtain the consent or approval of
the Director of the Office of Management and Budget with
respect to any report, plan, forecast, or other information
referred to in subparagraph (A) or any jurisdiction or
oversight over the affairs or operations of the Bureau.
(F) Financial statements.--The financial statements of the
Bureau shall not be consolidated with the financial statements
of either the Board of Governors or the Federal Reserve System.
(5) Audit of the bureau.--
(A) In general.--The Comptroller General shall annually
audit the financial transactions of the Bureau in accordance
with the United States generally accepted government auditing
standards, as may be prescribed by the Comptroller General of
the United States. The audit shall be conducted at the place or
places where accounts of the Bureau are normally kept. The
representatives of the Government Accountability Office shall
have access to the personnel and to all books, accounts,
documents, papers, records (including electronic records),
reports, files, and all other papers, automated data, things,
or property belonging to or under the control of or used or
employed by the Bureau pertaining to its financial transactions
and necessary to facilitate the audit, and such representatives
shall be afforded full facilities for verifying transactions
with the balances or securities held by depositories, fiscal
agents, and custodians. All such books, accounts, documents,
records, reports, files, papers, and property of the Bureau
shall remain in possession and custody of the Bureau. The
Comptroller General may obtain and duplicate any such books,
accounts, documents, records, working papers, automated data
and files, or other information relevant to such audit without
cost to the Comptroller General, and the right of access of the
Comptroller General to such information shall be enforceable
pursuant to section 716(c) of title 31, United States Code.
(B) Report.--The Comptroller General shall submit to the
Congress a report of each annual audit conducted under this
subsection. The report to the Congress shall set forth the
scope of the audit and shall include the statement of assets
and liabilities and surplus or deficit, the statement of income
and expenses, the statement of sources and application of
funds, and such comments and information as may be deemed
necessary to inform Congress of the financial operations and
condition of the Bureau, together with such recommendations
with respect thereto as the Comptroller General may deem
advisable. A copy of each report shall be furnished to the
President and to the Bureau at the time submitted to the
Congress.
(C) Assistance and costs.--For the purpose of conducting an
audit under this subsection, the Comptroller General may, in
the discretion of the Comptroller General, employ by contract,
without regard to section 3709 of the Revised Statutes of the
United States (41 U.S.C. 5), professional services of firms and
organizations of certified public accountants for temporary
periods or for special purposes. Upon the request of the
Comptroller General, the Director of the Bureau shall transfer
to the Government Accountability Office from funds available,
the amount requested by the Comptroller General to cover the
full costs of any audit and report conducted by the Comptroller
General. The Comptroller General shall credit funds transferred
to the account established for salaries and expenses of the
Government Accountability Office, and such amount shall be
available upon receipt and without fiscal year limitation to
cover the full costs of the audit and report.
(b) Consumer Financial Protection Fund.--
(1) Separate fund in federal reserve established.--There is
established in the Federal Reserve a separate fund, to be known as
the ``Bureau of Consumer Financial Protection Fund'' (referred to
in this section as the ``Bureau Fund''). The Bureau Fund shall be
maintained and established at a Federal reserve bank, in accordance
with such requirements as the Board of Governors may impose.
(2) Fund receipts.--All amounts transferred to the Bureau under
subsection (a) shall be deposited into the Bureau Fund.
(3) Investment authority.--
(A) Amounts in bureau fund may be invested.--The Bureau may
request the Board of Governors to direct the investment of the
portion of the Bureau Fund that is not, in the judgment of the
Bureau, required to meet the current needs of the Bureau.
(B) Eligible investments.--Investments authorized by this
paragraph shall be made in obligations of the United States or
obligations that are guaranteed as to principal and interest by
the United States, with maturities suitable to the needs of the
Bureau Fund, as determined by the Bureau.
(C) Interest and proceeds credited.--The interest on, and
the proceeds from the sale or redemption of, any obligations
held in the Bureau Fund shall be credited to the Bureau Fund.
(c) Use of Funds.--
(1) In general.--Funds obtained by, transferred to, or credited
to the Bureau Fund shall be immediately available to the Bureau and
under the control of the Director, and shall remain available until
expended, to pay the expenses of the Bureau in carrying out its
duties and responsibilities. The compensation of the Director and
other employees of the Bureau and all other expenses thereof may be
paid from, obtained by, transferred to, or credited to the Bureau
Fund under this section.
(2) Funds that are not government funds.--Funds obtained by or
transferred to the Bureau Fund shall not be construed to be
Government funds or appropriated monies.
(3) Amounts not subject to apportionment.--Notwithstanding any
other provision of law, amounts in the Bureau Fund and in the Civil
Penalty Fund established under subsection (d) shall not be subject
to apportionment for purposes of chapter 15 of title 31, United
States Code, or under any other authority.
(d) Penalties and Fines.--
(1) Establishment of victims relief fund.--There is established
in the Federal Reserve a separate fund, to be known as the
``Consumer Financial Civil Penalty Fund'' (referred to in this
section as the ``Civil Penalty Fund''). The Civil Penalty Fund
shall be maintained and established at a Federal reserve bank, in
accordance with such requirements as the Board of Governors may
impose. If the Bureau obtains a civil penalty against any person in
any judicial or administrative action under Federal consumer
financial laws, the Bureau shall deposit into the Civil Penalty
Fund, the amount of the penalty collected.
(2) Payment to victims.--Amounts in the Civil Penalty Fund
shall be available to the Bureau, without fiscal year limitation,
for payments to the victims of activities for which civil penalties
have been imposed under the Federal consumer financial laws. To the
extent that such victims cannot be located or such payments are
otherwise not practicable, the Bureau may use such funds for the
purpose of consumer education and financial literacy programs.
(e) Authorization of Appropriations; Annual Report.--
(1) Determination regarding need for appropriated funds.--
(A) In general.--The Director is authorized to determine
that sums available to the Bureau under this section will not
be sufficient to carry out the authorities of the Bureau under
Federal consumer financial law for the upcoming year.
(B) Report required.--When making a determination under
subparagraph (A), the Director shall prepare a report regarding
the funding of the Bureau, including the assets and liabilities
of the Bureau, and the extent to which the funding needs of the
Bureau are anticipated to exceed the level of the amount set
forth in subsection (a)(2). The Director shall submit the
report to the President and to the Committee on Appropriations
of the Senate and the Committee on Appropriations of the House
of Representatives.
(2) Authorization of appropriations.--If the Director makes the
determination and submits the report pursuant to paragraph (1),
there are hereby authorized to be appropriated to the Bureau, for
the purposes of carrying out the authorities granted in Federal
consumer financial law, $200,000,000 for each of fiscal years 2010,
2011, 2012, 2013, and 2014.
(3) Apportionment.--Notwithstanding any other provision of law,
the amounts in paragraph (2) shall be subject to apportionment
under section 1517 of title 31, United States Code, and
restrictions that generally apply to the use of appropriated funds
in title 31, United States Code, and other laws.
(4) Annual report.--The Director shall prepare and submit a
report, on an annual basis, to the Committee on Appropriations of
the Senate and the Committee on Appropriations of the House of
Representatives regarding the financial operating plans and
forecasts of the Director, the financial condition and results of
operations of the Bureau, and the sources and application of funds
of the Bureau, including any funds appropriated in accordance with
this subsection.
SEC. 1018. EFFECTIVE DATE.
This subtitle shall become effective on the date of enactment of
this Act.
Subtitle B--General Powers of the Bureau
SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS.
(a) Purpose.--The Bureau shall seek to implement and, where
applicable, enforce Federal consumer financial law consistently for the
purpose of ensuring that all consumers have access to markets for
consumer financial products and services and that markets for consumer
financial products and services are fair, transparent, and competitive.
(b) Objectives.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law for the purposes of
ensuring that, with respect to consumer financial products and
services--
(1) consumers are provided with timely and understandable
information to make responsible decisions about financial
transactions;
(2) consumers are protected from unfair, deceptive, or abusive
acts and practices and from discrimination;
(3) outdated, unnecessary, or unduly burdensome regulations are
regularly identified and addressed in order to reduce unwarranted
regulatory burdens;
(4) Federal consumer financial law is enforced consistently,
without regard to the status of a person as a depository
institution, in order to promote fair competition; and
(5) markets for consumer financial products and services
operate transparently and efficiently to facilitate access and
innovation.
(c) Functions.--The primary functions of the Bureau are--
(1) conducting financial education programs;
(2) collecting, investigating, and responding to consumer
complaints;
(3) collecting, researching, monitoring, and publishing
information relevant to the functioning of markets for consumer
financial products and services to identify risks to consumers and
the proper functioning of such markets;
(4) subject to sections 1024 through 1026, supervising covered
persons for compliance with Federal consumer financial law, and
taking appropriate enforcement action to address violations of
Federal consumer financial law;
(5) issuing rules, orders, and guidance implementing Federal
consumer financial law; and
(6) performing such support activities as may be necessary or
useful to facilitate the other functions of the Bureau.
SEC. 1022. RULEMAKING AUTHORITY.
(a) In General.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law to administer,
enforce, and otherwise implement the provisions of Federal consumer
financial law.
(b) Rulemaking, Orders, and Guidance.--
(1) General authority.--The Director may prescribe rules and
issue orders and guidance, as may be necessary or appropriate to
enable the Bureau to administer and carry out the purposes and
objectives of the Federal consumer financial laws, and to prevent
evasions thereof.
(2) Standards for rulemaking.--In prescribing a rule under the
Federal consumer financial laws--
(A) the Bureau shall consider--
(i) the potential benefits and costs to consumers and
covered persons, including the potential reduction of
access by consumers to consumer financial products or
services resulting from such rule; and
(ii) the impact of proposed rules on covered persons,
as described in section 1026, and the impact on consumers
in rural areas;
(B) the Bureau shall consult with the appropriate
prudential regulators or other Federal agencies prior to
proposing a rule and during the comment process regarding
consistency with prudential, market, or systemic objectives
administered by such agencies; and
(C) if, during the consultation process described in
subparagraph (B), a prudential regulator provides the Bureau
with a written objection to the proposed rule of the Bureau or
a portion thereof, the Bureau shall include in the adopting
release a description of the objection and the basis for the
Bureau decision, if any, regarding such objection, except that
nothing in this clause shall be construed as altering or
limiting the procedures under section 1023 that may apply to
any rule prescribed by the Bureau.
(3) Exemptions.--
(A) In general.--The Bureau, by rule, may conditionally or
unconditionally exempt any class of covered persons, service
providers, or consumer financial products or services, from any
provision of this title, or from any rule issued under this
title, as the Bureau determines necessary or appropriate to
carry out the purposes and objectives of this title, taking
into consideration the factors in subparagraph (B).
(B) Factors.--In issuing an exemption, as permitted under
subparagraph (A), the Bureau shall, as appropriate, take into
consideration--
(i) the total assets of the class of covered persons;
(ii) the volume of transactions involving consumer
financial products or services in which the class of
covered persons engages; and
(iii) existing provisions of law which are applicable
to the consumer financial product or service and the extent
to which such provisions provide consumers with adequate
protections.
(4) Exclusive rulemaking authority.--
(A) In general.--Notwithstanding any other provisions of
Federal law and except as provided in section 1061(b)(5), to
the extent that a provision of Federal consumer financial law
authorizes the Bureau and another Federal agency to issue
regulations under that provision of law for purposes of
assuring compliance with Federal consumer financial law and any
regulations thereunder, the Bureau shall have the exclusive
authority to prescribe rules subject to those provisions of
law.
(B) Deference.--Notwithstanding any power granted to any
Federal agency or to the Council under this title, and subject
to section 1061(b)(5)(E), the deference that a court affords to
the Bureau with respect to a determination by the Bureau
regarding the meaning or interpretation of any provision of a
Federal consumer financial law shall be applied as if the
Bureau were the only agency authorized to apply, enforce,
interpret, or administer the provisions of such Federal
consumer financial law.
(c) Monitoring.--
(1) In general.--In order to support its rulemaking and other
functions, the Bureau shall monitor for risks to consumers in the
offering or provision of consumer financial products or services,
including developments in markets for such products or services.
(2) Considerations.--In allocating its resources to perform the
monitoring required by this section, the Bureau may consider, among
other factors--
(A) likely risks and costs to consumers associated with
buying or using a type of consumer financial product or
service;
(B) understanding by consumers of the risks of a type of
consumer financial product or service;
(C) the legal protections applicable to the offering or
provision of a consumer financial product or service, including
the extent to which the law is likely to adequately protect
consumers;
(D) rates of growth in the offering or provision of a
consumer financial product or service;
(E) the extent, if any, to which the risks of a consumer
financial product or service may disproportionately affect
traditionally underserved consumers; or
(F) the types, number, and other pertinent characteristics
of covered persons that offer or provide the consumer financial
product or service.
(3) Significant findings.--
(A) In general.--The Bureau shall publish not fewer than 1
report of significant findings of its monitoring required by
this subsection in each calendar year, beginning with the first
calendar year that begins at least 1 year after the designated
transfer date.
(B) Confidential information.--The Bureau may make public
such information obtained by the Bureau under this section as
is in the public interest, through aggregated reports or other
appropriate formats designed to protect confidential
information in accordance with paragraphs (4), (6), (8), and
(9).
(4) Collection of information.--
(A) In general.--In conducting any monitoring or assessment
required by this section, the Bureau shall have the authority
to gather information from time to time regarding the
organization, business conduct, markets, and activities of
covered persons and service providers.
(B) Methodology.--In order to gather information described
in subparagraph (A), the Bureau may--
(i) gather and compile information from a variety of
sources, including examination reports concerning covered
persons or service providers, consumer complaints,
voluntary surveys and voluntary interviews of consumers,
surveys and interviews with covered persons and service
providers, and review of available databases; and
(ii) require covered persons and service providers
participating in consumer financial services markets to
file with the Bureau, under oath or otherwise, in such form
and within such reasonable period of time as the Bureau may
prescribe by rule or order, annual or special reports, or
answers in writing to specific questions, furnishing
information described in paragraph (4), as necessary for
the Bureau to fulfill the monitoring, assessment, and
reporting responsibilities imposed by Congress.
(C) Limitation.--The Bureau may not use its authorities
under this paragraph to obtain records from covered persons and
service providers participating in consumer financial services
markets for purposes of gathering or analyzing the personally
identifiable financial information of consumers.
(5) Limited information gathering.--In order to assess whether
a nondepository is a covered person, as defined in section 1002,
the Bureau may require such nondepository to file with the Bureau,
under oath or otherwise, in such form and within such reasonable
period of time as the Bureau may prescribe by rule or order, annual
or special reports, or answers in writing to specific questions.
(6) Confidentiality rules.--
(A) Rulemaking.--The Bureau shall prescribe rules regarding
the confidential treatment of information obtained from persons
in connection with the exercise of its authorities under
Federal consumer financial law.
(B) Access by the bureau to reports of other regulators.--
(i) Examination and financial condition reports.--Upon
providing reasonable assurances of confidentiality, the
Bureau shall have access to any report of examination or
financial condition made by a prudential regulator or other
Federal agency having jurisdiction over a covered person or
service provider, and to all revisions made to any such
report.
(ii) Provision of other reports to the bureau.--In
addition to the reports described in clause (i), a
prudential regulator or other Federal agency having
jurisdiction over a covered person or service provider may,
in its discretion, furnish to the Bureau any other report
or other confidential supervisory information concerning
any insured depository institution, credit union, or other
entity examined by such agency under authority of any
provision of Federal law.
(C) Access by other regulators to reports of the bureau.--
(i) Examination reports.--Upon providing reasonable
assurances of confidentiality, a prudential regulator, a
State regulator, or any other Federal agency having
jurisdiction over a covered person or service provider
shall have access to any report of examination made by the
Bureau with respect to such person, and to all revisions
made to any such report.
(ii) Provision of other reports to other regulators.--
In addition to the reports described in clause (i), the
Bureau may, in its discretion, furnish to a prudential
regulator or other agency having jurisdiction over a
covered person or service provider any other report or
other confidential supervisory information concerning such
person examined by the Bureau under the authority of any
other provision of Federal law.
(7) Registration.--
(A) In general.--The Bureau may prescribe rules regarding
registration requirements applicable to a covered person, other
than an insured depository institution, insured credit union,
or related person.
(B) Registration information.--Subject to rules prescribed
by the Bureau, the Bureau may publicly disclose registration
information to facilitate the ability of consumers to identify
covered persons that are registered with the Bureau.
(C) Consultation with state agencies.--In developing and
implementing registration requirements under this paragraph,
the Bureau shall consult with State agencies regarding
requirements or systems (including coordinated or combined
systems for registration), where appropriate.
(8) Privacy considerations.--In collecting information from any
person, publicly releasing information held by the Bureau, or
requiring covered persons to publicly report information, the
Bureau shall take steps to ensure that proprietary, personal, or
confidential consumer information that is protected from public
disclosure under section 552(b) or 552a of title 5, United States
Code, or any other provision of law, is not made public under this
title.
(9) Consumer privacy.--
(A) In general.--The Bureau may not obtain from a covered
person or service provider any personally identifiable
financial information about a consumer from the financial
records of the covered person or service provider, except--
(i) if the financial records are reasonably described
in a request by the Bureau and the consumer provides
written permission for the disclosure of such information
by the covered person or service provider to the Bureau; or
(ii) as may be specifically permitted or required under
other applicable provisions of law and in accordance with
the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401
et seq.).
(B) Treatment of covered person or service provider.--With
respect to the application of any provision of the Right to
Financial Privacy Act of 1978, to a disclosure by a covered
person or service provider subject to this subsection, the
covered person or service provider shall be treated as if it
were a ``financial institution'', as defined in section 1101 of
that Act (12 U.S.C. 3401).
(d) Assessment of Significant Rules.--
(1) In general.--The Bureau shall conduct an assessment of each
significant rule or order adopted by the Bureau under Federal
consumer financial law. The assessment shall address, among other
relevant factors, the effectiveness of the rule or order in meeting
the purposes and objectives of this title and the specific goals
stated by the Bureau. The assessment shall reflect available
evidence and any data that the Bureau reasonably may collect.
(2) Reports.--The Bureau shall publish a report of its
assessment under this subsection not later than 5 years after the
effective date of the subject rule or order.
(3) Public comment required.--Before publishing a report of its
assessment, the Bureau shall invite public comment on
recommendations for modifying, expanding, or eliminating the newly
adopted significant rule or order.
SEC. 1023. REVIEW OF BUREAU REGULATIONS.
(a) Review of Bureau Regulations.--On the petition of a member
agency of the Council, the Council may set aside a final regulation
prescribed by the Bureau, or any provision thereof, if the Council
decides, in accordance with subsection (c), that the regulation or
provision would put the safety and soundness of the United States
banking system or the stability of the financial system of the United
States at risk.
(b) Petition.--
(1) Procedure.--An agency represented by a member of the
Council may petition the Council, in writing, and in accordance
with rules prescribed pursuant to subsection (f), to stay the
effectiveness of, or set aside, a regulation if the member agency
filing the petition--
(A) has in good faith attempted to work with the Bureau to
resolve concerns regarding the effect of the rule on the safety
and soundness of the United States banking system or the
stability of the financial system of the United States; and
(B) files the petition with the Council not later than 10
days after the date on which the regulation has been published
in the Federal Register.
(2) Publication.--Any petition filed with the Council under
this section shall be published in the Federal Register and
transmitted contemporaneously with filing to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives.
(c) Stays and Set Asides.--
(1) Stay.--
(A) In general.--Upon the request of any member agency, the
Chairperson of the Council may stay the effectiveness of a
regulation for the purpose of allowing appropriate
consideration of the petition by the Council.
(B) Expiration.--A stay issued under this paragraph shall
expire on the earlier of--
(i) 90 days after the date of filing of the petition
under subsection (b); or
(ii) the date on which the Council makes a decision
under paragraph (3).
(2) No adverse inference.--After the expiration of any stay
imposed under this section, no inference shall be drawn regarding
the validity or enforceability of a regulation which was the
subject of the petition.
(3) Vote.--
(A) In general.--The decision to issue a stay of, or set
aside, any regulation under this section shall be made only
with the affirmative vote in accordance with subparagraph (B)
of \2/3\ of the members of the Council then serving.
(B) Authorization to vote.--A member of the Council may
vote to stay the effectiveness of, or set aside, a final
regulation prescribed by the Bureau only if the agency or
department represented by that member has--
(i) considered any relevant information provided by the
agency submitting the petition and by the Bureau; and
(ii) made an official determination, at a public
meeting where applicable, that the regulation which is the
subject of the petition would put the safety and soundness
of the United States banking system or the stability of the
financial system of the United States at risk.
(4) Decisions to set aside.--
(A) Effect of decision.--A decision by the Council to set
aside a regulation prescribed by the Bureau, or provision
thereof, shall render such regulation, or provision thereof,
unenforceable.
(B) Timely action required.--The Council may not issue a
decision to set aside a regulation, or provision thereof, which
is the subject of a petition under this section after the
expiration of the later of--
(i) 45 days following the date of filing of the
petition, unless a stay is issued under paragraph (1); or
(ii) the expiration of a stay issued by the Council
under this section.
(C) Separate authority.--The issuance of a stay under this
section does not affect the authority of the Council to set
aside a regulation.
(5) Dismissal due to inaction.--A petition under this section
shall be deemed dismissed if the Council has not issued a decision
to set aside a regulation, or provision thereof, within the period
for timely action under paragraph (4)(B).
(6) Publication of decision.--Any decision under this
subsection to issue a stay of, or set aside, a regulation or
provision thereof shall be published by the Council in the Federal
Register as soon as practicable after the decision is made, with an
explanation of the reasons for the decision.
(7) Rulemaking procedures inapplicable.--The notice and comment
procedures under section 553 of title 5, United States Code, shall
not apply to any decision under this section of the Council to
issue a stay of, or set aside, a regulation.
(8) Judicial review of decisions by the council.--A decision by
the Council to set aside a regulation prescribed by the Bureau, or
provision thereof, shall be subject to review under chapter 7 of
title 5, United States Code.
(d) Application of Other Law.--Nothing in this section shall be
construed as altering, limiting, or restricting the application of any
other provision of law, except as otherwise specifically provided in
this section, including chapter 5 and chapter 7 of title 5, United
States Code, to a regulation which is the subject of a petition filed
under this section.
(e) Savings Clause.--Nothing in this section shall be construed as
limiting or restricting the Bureau from engaging in a rulemaking in
accordance with applicable law.
(f) Implementing Rules.--The Council shall prescribe procedural
rules to implement this section.
SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED PERSONS.
(a) Scope of Coverage.--
(1) Applicability.--Notwithstanding any other provision of this
title, and except as provided in paragraph (3), this section shall
apply to any covered person who--
(A) offers or provides origination, brokerage, or servicing
of loans secured by real estate for use by consumers primarily
for personal, family, or household purposes, or loan
modification or foreclosure relief services in connection with
such loans;
(B) is a larger participant of a market for other consumer
financial products or services, as defined by rule in
accordance with paragraph (2);
(C) the Bureau has reasonable cause to determine, by order,
after notice to the covered person and a reasonable opportunity
for such covered person to respond, based on complaints
collected through the system under section 1013(b)(3) or
information from other sources, that such covered person is
engaging, or has engaged, in conduct that poses risks to
consumers with regard to the offering or provision of consumer
financial products or services;
(D) offers or provides to a consumer any private education
loan, as defined in section 140 of the Truth in Lending Act (15
U.S.C. 1650), notwithstanding section 1027(a)(2)(A) and subject
to section 1027(a)(2)(C); or
(E) offers or provides to a consumer a payday loan.
(2) Rulemaking to define covered persons subject to this
section.--The Bureau shall consult with the Federal Trade
Commission prior to issuing a rule, in accordance with paragraph
(1)(B), to define covered persons subject to this section. The
Bureau shall issue its initial rule not later than 1 year after the
designated transfer date.
(3) Rules of construction.--
(A) Certain persons excluded.--This section shall not apply
to persons described in section 1025(a) or 1026(a).
(B) Activity levels.--For purposes of computing activity
levels under paragraph (1) or rules issued thereunder,
activities of affiliated companies (other than insured
depository institutions or insured credit unions) shall be
aggregated.
(b) Supervision.--
(1) In general.--The Bureau shall require reports and conduct
examinations on a periodic basis of persons described in subsection
(a)(1) for purposes of--
(A) assessing compliance with the requirements of Federal
consumer financial law;
(B) obtaining information about the activities and
compliance systems or procedures of such person; and
(C) detecting and assessing risks to consumers and to
markets for consumer financial products and services.
(2) Risk-based supervision program.--The Bureau shall exercise
its authority under paragraph (1) in a manner designed to ensure
that such exercise, with respect to persons described in subsection
(a)(1), is based on the assessment by the Bureau of the risks posed
to consumers in the relevant product markets and geographic
markets, and taking into consideration, as applicable--
(A) the asset size of the covered person;
(B) the volume of transactions involving consumer financial
products or services in which the covered person engages;
(C) the risks to consumers created by the provision of such
consumer financial products or services;
(D) the extent to which such institutions are subject to
oversight by State authorities for consumer protection; and
(E) any other factors that the Bureau determines to be
relevant to a class of covered persons.
(3) Coordination.--To minimize regulatory burden, the Bureau
shall coordinate its supervisory activities with the supervisory
activities conducted by prudential regulators and the State bank
regulatory authorities, including establishing their respective
schedules for examining persons described in subsection (a)(1) and
requirements regarding reports to be submitted by such persons.
(4) Use of existing reports.--The Bureau shall, to the fullest
extent possible, use--
(A) reports pertaining to persons described in subsection
(a)(1) that have been provided or required to have been
provided to a Federal or State agency; and
(B) information that has been reported publicly.
(5) Preservation of authority.--Nothing in this title may be
construed as limiting the authority of the Director to require
reports from persons described in subsection (a)(1), as permitted
under paragraph (1), regarding information owned or under the
control of such person, regardless of whether such information is
maintained, stored, or processed by another person.
(6) Reports of tax law noncompliance.--The Bureau shall provide
the Commissioner of Internal Revenue with any report of examination
or related information identifying possible tax law noncompliance.
(7) Registration, recordkeeping and other requirements for
certain persons.--
(A) In general.--The Bureau shall prescribe rules to
facilitate supervision of persons described in subsection
(a)(1) and assessment and detection of risks to consumers.
(B) Recordkeeping.--The Bureau may require a person
described in subsection (a)(1), to generate, provide, or retain
records for the purposes of facilitating supervision of such
persons and assessing and detecting risks to consumers.
(C) Requirements concerning obligations.--The Bureau may
prescribe rules regarding a person described in subsection
(a)(1), to ensure that such persons are legitimate entities and
are able to perform their obligations to consumers. Such
requirements may include background checks for principals,
officers, directors, or key personnel and bonding or other
appropriate financial requirements.
(D) Consultation with state agencies.--In developing and
implementing requirements under this paragraph, the Bureau
shall consult with State agencies regarding requirements or
systems (including coordinated or combined systems for
registration), where appropriate.
(c) Enforcement Authority.--
(1) The bureau to have enforcement authority.--Except as
provided in paragraph (3) and section 1061, with respect to any
person described in subsection (a)(1), to the extent that Federal
law authorizes the Bureau and another Federal agency to enforce
Federal consumer financial law, the Bureau shall have exclusive
authority to enforce that Federal consumer financial law.
(2) Referral.--Any Federal agency authorized to enforce a
Federal consumer financial law described in paragraph (1) may
recommend in writing to the Bureau that the Bureau initiate an
enforcement proceeding, as the Bureau is authorized by that Federal
law or by this title.
(3) Coordination with the federal trade commission.--
(A) In general.--The Bureau and the Federal Trade
Commission shall negotiate an agreement for coordinating with
respect to enforcement actions by each agency regarding the
offering or provision of consumer financial products or
services by any covered person that is described in subsection
(a)(1), or service providers thereto. The agreement shall
include procedures for notice to the other agency, where
feasible, prior to initiating a civil action to enforce any
Federal law regarding the offering or provision of consumer
financial products or services.
(B) Civil actions.--Whenever a civil action has been filed
by, or on behalf of, the Bureau or the Federal Trade Commission
for any violation of any provision of Federal law described in
subparagraph (A), or any regulation prescribed under such
provision of law--
(i) the other agency may not, during the pendency of
that action, institute a civil action under such provision
of law against any defendant named in the complaint in such
pending action for any violation alleged in the complaint;
and
(ii) the Bureau or the Federal Trade Commission may
intervene as a party in any such action brought by the
other agency, and, upon intervening--
(I) be heard on all matters arising in such
enforcement action; and
(II) file petitions for appeal in such actions.
(C) Agreement terms.--The terms of any agreement negotiated
under subparagraph (A) may modify or supersede the provisions
of subparagraph (B).
(D) Deadline.--The agencies shall reach the agreement
required under subparagraph (A) not later than 6 months after
the designated transfer date.
(d) Exclusive Rulemaking and Examination Authority.--
Notwithstanding any other provision of Federal law and except as
provided in section 1061, to the extent that Federal law authorizes the
Bureau and another Federal agency to issue regulations or guidance,
conduct examinations, or require reports from a person described in
subsection (a)(1) under such law for purposes of assuring compliance
with Federal consumer financial law and any regulations thereunder, the
Bureau shall have the exclusive authority to prescribe rules, issue
guidance, conduct examinations, require reports, or issue exemptions
with regard to a person described in subsection (a)(1), subject to
those provisions of law.
(e) Service Providers.--A service provider to a person described in
subsection (a)(1) shall be subject to the authority of the Bureau under
this section, to the same extent as if such service provider were
engaged in a service relationship with a bank, and the Bureau were an
appropriate Federal banking agency under section 7(c) of the Bank
Service Company Act (12 U.S.C. 1867(c)). In conducting any examination
or requiring any report from a service provider subject to this
subsection, the Bureau shall coordinate with the appropriate prudential
regulator, as applicable.
(f) Preservation of Farm Credit Administration Authority.--No
provision of this title may be construed as modifying, limiting, or
otherwise affecting the authority of the Farm Credit Administration.
SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS ASSOCIATIONS, AND
CREDIT UNIONS.
(a) Scope of Coverage.--This section shall apply to any covered
person that is--
(1) an insured depository institution with total assets of more
than $10,000,000,000 and any affiliate thereof; or
(2) an insured credit union with total assets of more than
$10,000,000,000 and any affiliate thereof.
(b) Supervision.--
(1) In general.--The Bureau shall have exclusive authority to
require reports and conduct examinations on a periodic basis of
persons described in subsection (a) for purposes of--
(A) assessing compliance with the requirements of Federal
consumer financial laws;
(B) obtaining information about the activities subject to
such laws and the associated compliance systems or procedures
of such persons; and
(C) detecting and assessing associated risks to consumers
and to markets for consumer financial products and services.
(2) Coordination.--To minimize regulatory burden, the Bureau
shall coordinate its supervisory activities with the supervisory
activities conducted by prudential regulators and the State bank
regulatory authorities, including consultation regarding their
respective schedules for examining such persons described in
subsection (a) and requirements regarding reports to be submitted
by such persons.
(3) Use of existing reports.--The Bureau shall, to the fullest
extent possible, use--
(A) reports pertaining to a person described in subsection
(a) that have been provided or required to have been provided
to a Federal or State agency; and
(B) information that has been reported publicly.
(4) Preservation of authority.--Nothing in this title may be
construed as limiting the authority of the Director to require
reports from a person described in subsection (a), as permitted
under paragraph (1), regarding information owned or under the
control of such person, regardless of whether such information is
maintained, stored, or processed by another person.
(5) Reports of tax law noncompliance.--The Bureau shall provide
the Commissioner of Internal Revenue with any report of examination
or related information identifying possible tax law noncompliance.
(c) Primary Enforcement Authority.--
(1) The bureau to have primary enforcement authority.--To the
extent that the Bureau and another Federal agency are authorized to
enforce a Federal consumer financial law, the Bureau shall have
primary authority to enforce that Federal consumer financial law
with respect to any person described in subsection (a).
(2) Referral.--Any Federal agency, other than the Federal Trade
Commission, that is authorized to enforce a Federal consumer
financial law may recommend, in writing, to the Bureau that the
Bureau initiate an enforcement proceeding with respect to a person
described in subsection (a), as the Bureau is authorized to do by
that Federal consumer financial law.
(3) Backup enforcement authority of other federal agency.--If
the Bureau does not, before the end of the 120-day period beginning
on the date on which the Bureau receives a recommendation under
paragraph (2), initiate an enforcement proceeding, the other agency
referred to in paragraph (2) may initiate an enforcement
proceeding, including performing follow up supervisory and support
functions incidental thereto, to assure compliance with such
proceeding.
(d) Service Providers.--A service provider to a person described in
subsection (a) shall be subject to the authority of the Bureau under
this section, to the same extent as if the Bureau were an appropriate
Federal banking agency under section 7(c) of the Bank Service Company
Act 12 U.S.C. 1867(c). In conducting any examination or requiring any
report from a service provider subject to this subsection, the Bureau
shall coordinate with the appropriate prudential regulator.
(e) Simultaneous and Coordinated Supervisory Action.--
(1) Examinations.--A prudential regulator and the Bureau shall,
with respect to each insured depository institution, insured credit
union, or other covered person described in subsection (a) that is
supervised by the prudential regulator and the Bureau,
respectively--
(A) coordinate the scheduling of examinations of the
insured depository institution, insured credit union, or other
covered person described in subsection (a);
(B) conduct simultaneous examinations of each insured
depository institution or insured credit union, unless such
institution requests examinations to be conducted separately;
(C) share each draft report of examination with the other
agency and permit the receiving agency a reasonable opportunity
(which shall not be less than a period of 30 days after the
date of receipt) to comment on the draft report before such
report is made final; and
(D) prior to issuing a final report of examination or
taking supervisory action, take into consideration concerns, if
any, raised in the comments made by the other agency.
(2) Coordination with state bank supervisors.--The Bureau shall
pursue arrangements and agreements with State bank supervisors to
coordinate examinations, consistent with paragraph (1).
(3) Avoidance of conflict in supervision.--
(A) Request.--If the proposed supervisory determinations of
the Bureau and a prudential regulator (in this section referred
to collectively as the ``agencies'') are conflicting, an
insured depository institution, insured credit union, or other
covered person described in subsection (a) may request the
agencies to coordinate and present a joint statement of
coordinated supervisory action.
(B) Joint statement.--The agencies shall provide a joint
statement under subparagraph (A), not later than 30 days after
the date of receipt of the request of the insured depository
institution, credit union, or covered person described in
subsection (a).
(4) Appeals to governing panel.--
(A) In general.--If the agencies do not resolve the
conflict or issue a joint statement required by subparagraph
(B), or if either of the agencies takes or attempts to take any
supervisory action relating to the request for the joint
statement without the consent of the other agency, an insured
depository institution, insured credit union, or other covered
person described in subsection (a) may institute an appeal to a
governing panel, as provided in this subsection, not later than
30 days after the expiration of the period during which a joint
statement is required to be filed under paragraph (3)(B).
(B) Composition of governing panel.--The governing panel
for an appeal under this paragraph shall be composed of--
(i) a representative from the Bureau and a
representative of the prudential regulator, both of whom--
(I) have not participated in the material
supervisory determinations under appeal; and
(II) do not directly or indirectly report to the
person who participated materially in the supervisory
determinations under appeal; and
(ii) one individual representative, to be determined on
a rotating basis, from among the Board of Governors, the
Corporation, the National Credit Union Administration, and
the Office of the Comptroller of the Currency, other than
any agency involved in the subject dispute.
(C) Conduct of appeal.--In an appeal under this paragraph--
(i) the insured depository institution, insured credit
union, or other covered person described in subsection
(a)--
(I) shall include in its appeal all the facts and
legal arguments pertaining to the matter; and
(II) may, through counsel, employees, or
representatives, appear before the governing panel in
person or by telephone; and
(ii) the governing panel--
(I) may request the insured depository institution,
insured credit union, or other covered person described
in subsection (a), the Bureau, or the prudential
regulator to produce additional information relevant to
the appeal; and
(II) by a majority vote of its members, shall
provide a final determination, in writing, not later
than 30 days after the date of filing of an
informationally complete appeal, or such longer period
as the panel and the insured depository institution,
insured credit union, or other covered person described
in subsection (a) may jointly agree.
(D) Public availability of determinations.--A governing
panel shall publish all information contained in a
determination by the governing panel, with appropriate
redactions of information that would be subject to an exemption
from disclosure under section 552 of title 5, United States
Code.
(E) Prohibition against retaliation.--The Bureau and the
prudential regulators shall prescribe rules to provide
safeguards from retaliation against the insured depository
institution, insured credit union, or other covered person
described in subsection (a) instituting an appeal under this
paragraph, as well as their officers and employees.
(F) Limitation.--The process provided in this paragraph
shall not apply to a determination by a prudential regulator to
appoint a conservator or receiver for an insured depository
institution or a liquidating agent for an insured credit union,
as the case may be, or a decision to take action pursuant to
section 38 of the Federal Deposit Insurance Act (12 U.S.C.
1831o) or section 212 of the Federal Credit Union Act (112
U.S.C. 1790a), as applicable.
(G) Effect on other authority.--Nothing in this section
shall modify or limit the authority of the Bureau to interpret,
or take enforcement action under, any Federal consumer
financial law, or the authority of a prudential regulator to
interpret or take enforcement action under any other provision
of Federal law for safety and soundness purposes.
SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND CREDIT UNIONS.
(a) Scope of Coverage.--This section shall apply to any covered
person that is--
(1) an insured depository institution with total assets of
$10,000,000,000 or less; or
(2) an insured credit union with total assets of
$10,000,000,000 or less.
(b) Reports.--The Director may require reports from a person
described in subsection (a), as necessary to support the role of the
Bureau in implementing Federal consumer financial law, to support its
examination activities under subsection (c), and to assess and detect
risks to consumers and consumer financial markets.
(1) Use of existing reports.--The Bureau shall, to the fullest
extent possible, use--
(A) reports pertaining to a person described in subsection
(a) that have been provided or required to have been provided
to a Federal or State agency; and
(B) information that has been reported publicly.
(2) Preservation of authority.--Nothing in this subsection may
be construed as limiting the authority of the Director from
requiring from a person described in subsection (a), as permitted
under paragraph (1), information owned or under the control of such
person, regardless of whether such information is maintained,
stored, or processed by another person.
(3) Reports of tax law noncompliance.--The Bureau shall provide
the Commissioner of Internal Revenue with any report of examination
or related information identifying possible tax law noncompliance.
(c) Examinations.--
(1) In general.--The Bureau may, at its discretion, include
examiners on a sampling basis of the examinations performed by the
prudential regulator to assess compliance with the requirements of
Federal consumer financial law of persons described in subsection
(a).
(2) Agency coordination.--The prudential regulator shall--
(A) provide all reports, records, and documentation related
to the examination process for any institution included in the
sample referred to in paragraph (1) to the Bureau on a timely
and continual basis;
(B) involve such Bureau examiner in the entire examination
process for such person; and
(C) consider input of the Bureau concerning the scope of an
examination, conduct of the examination, the contents of the
examination report, the designation of matters requiring
attention, and examination ratings.
(d) Enforcement.--
(1) In general.--Except for requiring reports under subsection
(b), the prudential regulator is authorized to enforce the
requirements of Federal consumer financial laws and, with respect
to a covered person described in subsection (a), shall have
exclusive authority (relative to the Bureau) to enforce such laws .
(2) Coordination with prudential regulator.--
(A) Referral.--When the Bureau has reason to believe that a
person described in subsection (a) has engaged in a material
violation of a Federal consumer financial law, the Bureau shall
notify the prudential regulator in writing and recommend
appropriate action to respond.
(B) Response.--Upon receiving a recommendation under
subparagraph (A), the prudential regulator shall provide a
written response to the Bureau not later than 60 days
thereafter.
(e) Service Providers.--A service provider to a substantial number
of persons described in subsection (a) shall be subject to the
authority of the Bureau under section 1025 to the same extent as if the
Bureau were an appropriate Federal bank agency under section 7(c) of
the Bank Service Company Act (12 U.S.C. 1867(c)). When conducting any
examination or requiring any report from a service provider subject to
this subsection, the Bureau shall coordinate with the appropriate
prudential regulator.
SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU; PRESERVATION OF
AUTHORITIES.
(a) Exclusion for Merchants, Retailers, and Other Sellers of
Nonfinancial Goods or Services.--
(1) Sale or brokerage of nonfinancial good or service.--The
Bureau may not exercise any rulemaking, supervisory, enforcement or
other authority under this title with respect to a person who is a
merchant, retailer, or seller of any nonfinancial good or service
and is engaged in the sale or brokerage of such nonfinancial good
or service, except to the extent that such person is engaged in
offering or providing any consumer financial product or service, or
is otherwise subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or H.
(2) Offering or provision of certain consumer financial
products or services in connection with the sale or brokerage of
nonfinancial good or service.--
(A) In general.--Except as provided in subparagraph (B),
and subject to subparagraph (C), the Bureau may not exercise
any rulemaking, supervisory, enforcement, or other authority
under this title with respect to a merchant, retailer, or
seller of nonfinancial goods or services, but only to the
extent that such person--
(i) extends credit directly to a consumer, in a case in
which the good or service being provided is not itself a
consumer financial product or service (other than credit
described in this subparagraph), exclusively for the
purpose of enabling that consumer to purchase such
nonfinancial good or service directly from the merchant,
retailer, or seller;
(ii) directly, or through an agreement with another
person, collects debt arising from credit extended as
described in clause (i); or
(iii) sells or conveys debt described in clause (i)
that is delinquent or otherwise in default.
(B) Applicability.--Subparagraph (A) does not apply to any
credit transaction or collection of debt, other than as
described in subparagraph (C)(i), arising from a transaction
described in subparagraph (A)--
(i) in which the merchant, retailer, or seller of
nonfinancial goods or services assigns, sells or otherwise
conveys to another person such debt owed by the consumer
(except for a sale of debt that is delinquent or otherwise
in default, as described in subparagraph (A)(iii));
(ii) in which the credit extended significantly exceeds
the market value of the nonfinancial good or service
provided, or the Bureau otherwise finds that the sale of
the nonfinancial good or service is done as a subterfuge,
so as to evade or circumvent the provisions of this title;
or
(iii) in which the merchant, retailer, or seller of
nonfinancial goods or services regularly extends credit and
the credit is subject to a finance charge.
(C) Limitations.--
(i) In general.--Notwithstanding subparagraph (B),
subparagraph (A) shall apply with respect to a merchant,
retailer, or seller of nonfinancial goods or services that
is not engaged significantly in offering or providing
consumer financial products or services.
(ii) Exception.--Subparagraph (A) and clause (i) of
this subparagraph do not apply to any merchant, retailer,
or seller of nonfinancial goods or services--
(I) if such merchant, retailer, or seller of
nonfinancial goods or services is engaged in a
transaction described in subparagraph (B)(i) or
(B)(ii); or
(II) to the extent that such merchant, retailer, or
seller is subject to any enumerated consumer law or any
law for which authorities are transferred under
subtitle F or H, but the Bureau may exercise such
authority only with respect to that law.
(D) Rules.--
(i) Authority of other agencies.--No provision of this
title shall be construed as modifying, limiting, or
superseding the supervisory or enforcement authority of the
Federal Trade Commission or any other agency (other than
the Bureau) with respect to credit extended, or the
collection of debt arising from such extension, directly by
a merchant or retailer to a consumer exclusively for the
purpose of enabling that consumer to purchase nonfinancial
goods or services directly from the merchant or retailer.
(ii) Small businesses.--A merchant, retailer, or seller
of nonfinancial goods or services that would otherwise be
subject to the authority of the Bureau solely by virtue of
the application of subparagraph (B)(iii) shall be deemed
not to be engaged significantly in offering or providing
consumer financial products or services under subparagraph
(C)(i), if such person--
(I) only extends credit for the sale of
nonfinancial goods or services, as described in
subparagraph (A)(i);
(II) retains such credit on its own accounts
(except to sell or convey such debt that is delinquent
or otherwise in default); and
(III) meets the relevant industry size threshold to
be a small business concern, based on annual receipts,
pursuant to section 3 of the Small Business Act (15
U.S.C. 632) and the implementing rules thereunder.
(iii) Initial year.--A merchant, retailer, or seller of
nonfinancial goods or services shall be deemed to meet the
relevant industry size threshold described in clause
(ii)(III) during the first year of operations of that
business concern if, during that year, the receipts of that
business concern reasonably are expected to meet that size
threshold.
(iv) Other standards for small business.--With respect
to a merchant, retailer, or seller of nonfinancial goods or
services that is a classified on a basis other than annual
receipts for the purposes of section 3 of the Small
Business Act (15 U.S.C. 632) and the implementing rules
thereunder, such merchant, retailer, or seller shall be
deemed to meet the relevant industry size threshold
described in clause (ii)(III) if such merchant, retailer,
or seller meets the relevant industry size threshold to be
a small business concern based on the number of employees,
or other such applicable measure, established under that
Act.
(E) Exception from state enforcement.--To the extent that
the Bureau may not exercise authority under this subsection
with respect to a merchant, retailer, or seller of nonfinancial
goods or services, no action by a State attorney general or
State regulator with respect to a claim made under this title
may be brought under subsection 1042(a), with respect to an
activity described in any of clauses (i) through (iii) of
subparagraph (A) by such merchant, retailer, or seller of
nonfinancial goods or services.
(b) Exclusion for Real Estate Brokerage Activities.--
(1) Real estate brokerage activities excluded.--Without
limiting subsection (a), and except as permitted in paragraph (2),
the Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority under this title with respect to a
person that is licensed or registered as a real estate broker or
real estate agent, in accordance with State law, to the extent that
such person--
(A) acts as a real estate agent or broker for a buyer,
seller, lessor, or lessee of real property;
(B) brings together parties interested in the sale,
purchase, lease, rental, or exchange of real property;
(C) negotiates, on behalf of any party, any portion of a
contract relating to the sale, purchase, lease, rental, or
exchange of real property (other than in connection with the
provision of financing with respect to any such transaction);
or
(D) offers to engage in any activity, or act in any
capacity, described in subparagraph (A), (B), or (C).
(2) Description of activities.--The Bureau may exercise
rulemaking, supervisory, enforcement, or other authority under this
title with respect to a person described in paragraph (1) when such
person is--
(A) engaged in an activity of offering or providing any
consumer financial product or service, except that the Bureau
may exercise such authority only with respect to that activity;
or
(B) otherwise subject to any enumerated consumer law or any
law for which authorities are transferred under subtitle F or
H, but the Bureau may exercise such authority only with respect
to that law.
(c) Exclusion for Manufactured Home Retailers and Modular Home
Retailers.--
(1) In general.--The Director may not exercise any rulemaking,
supervisory, enforcement, or other authority over a person to the
extent that--
(A) such person is not described in paragraph (2); and
(B) such person--
(i) acts as an agent or broker for a buyer or seller of
a manufactured home or a modular home;
(ii) facilitates the purchase by a consumer of a
manufactured home or modular home, by negotiating the
purchase price or terms of the sales contract (other than
providing financing with respect to such transaction); or
(iii) offers to engage in any activity described in
clause (i) or (ii).
(2) Description of activities.--A person is described in this
paragraph to the extent that such person is engaged in the offering
or provision of any consumer financial product or service or is
otherwise subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or H.
(3) Definitions.--For purposes of this subsection, the
following definitions shall apply:
(A) Manufactured home.--The term ``manufactured home'' has
the same meaning as in section 603 of the National Manufactured
Housing Construction and Safety Standards Act of 1974 (42
U.S.C. 5402).
(B) Modular home.--The term ``modular home'' means a house
built in a factory in 2 or more modules that meet the State or
local building codes where the house will be located, and where
such modules are transported to the building site, installed on
foundations, and completed.
(d) Exclusion for Accountants and Tax Preparers.--
(1) In general.--Except as permitted in paragraph (2), the
Bureau may not exercise any rulemaking, supervisory, enforcement,
or other authority over--
(A) any person that is a certified public accountant,
permitted to practice as a certified public accounting firm, or
certified or licensed for such purpose by a State, or any
individual who is employed by or holds an ownership interest
with respect to a person described in this subparagraph, when
such person is performing or offering to perform--
(i) customary and usual accounting activities,
including the provision of accounting, tax, advisory, or
other services that are subject to the regulatory authority
of a State board of accountancy or a Federal authority; or
(ii) other services that are incidental to such
customary and usual accounting activities, to the extent
that such incidental services are not offered or provided--
(I) by the person separate and apart from such
customary and usual accounting activities; or
(II) to consumers who are not receiving such
customary and usual accounting activities; or
(B) any person, other than a person described in
subparagraph (A) that performs income tax preparation
activities for consumers.
(2) Description of activities.--
(A) In general.--Paragraph (1) shall not apply to any
person described in paragraph (1)(A) or (1)(B) to the extent
that such person is engaged in any activity which is not a
customary and usual accounting activity described in paragraph
(1)(A) or incidental thereto but which is the offering or
provision of any consumer financial product or service, except
to the extent that a person described in paragraph (1)(A) is
engaged in an activity which is a customary and usual
accounting activity described in paragraph (1)(A), or
incidental thereto.
(B) Not a customary and usual accounting activity.--For
purposes of this subsection, extending or brokering credit is
not a customary and usual accounting activity, or incidental
thereto.
(C) Rule of construction.--For purposes of subparagraphs
(A) and (B), a person described in paragraph (1)(A) shall not
be deemed to be extending credit, if such person is only
extending credit directly to a consumer, exclusively for the
purpose of enabling such consumer to purchase services
described in clause (i) or (ii) of paragraph (1)(A) directly
from such person, and such credit is--
(i) not subject to a finance charge; and
(ii) not payable by written agreement in more than 4
installments.
(D) Other limitations.--Paragraph (1) does not apply to any
person described in paragraph (1)(A) or (1)(B) that is
otherwise subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or H.
(e) Exclusion for Practice of Law.--
(1) In general.--Except as provided under paragraph (2), the
Bureau may not exercise any supervisory or enforcement authority
with respect to an activity engaged in by an attorney as part of
the practice of law under the laws of a State in which the attorney
is licensed to practice law.
(2) Rule of construction.--Paragraph (1) shall not be
construed so as to limit the exercise by the Bureau of any
supervisory, enforcement, or other authority regarding the offering
or provision of a consumer financial product or service described
in any subparagraph of section 1002(5)--
(A) that is not offered or provided as part of, or
incidental to, the practice of law, occurring exclusively
within the scope of the attorney-client relationship; or
(B) that is otherwise offered or provided by the attorney
in question with respect to any consumer who is not receiving
legal advice or services from the attorney in connection with
such financial product or service.
(3) Existing authority.--Paragraph (1) shall not be construed
so as to limit the authority of the Bureau with respect to any
attorney, to the extent that such attorney is otherwise subject to
any of the enumerated consumer laws or the authorities transferred
under subtitle F or H.
(f) Exclusion for Persons Regulated by a State Insurance
Regulator.--
(1) In general.--No provision of this title shall be construed
as altering, amending, or affecting the authority of any State
insurance regulator to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by a State insurance regulator. Except as provided in
paragraph (2), the Bureau shall have no authority to exercise any
power to enforce this title with respect to a person regulated by a
State insurance regulator.
(2) Description of activities.--Paragraph (1) does not apply to
any person described in such paragraph to the extent that such
person is engaged in the offering or provision of any consumer
financial product or service or is otherwise subject to any
enumerated consumer law or any law for which authorities are
transferred under subtitle F or H.
(3) State insurance authority under gramm-leach-bliley.--
Notwithstanding paragraph (2), the Bureau shall not exercise any
authorities that are granted a State insurance authority under
section 505(a)(6) of the Gramm-Leach-Bliley Act with respect to a
person regulated by a State insurance authority.
(g) Exclusion for Employee Benefit and Compensation Plans and
Certain Other Arrangements Under the Internal Revenue Code of 1986.--
(1) Preservation of authority of other agencies.--No provision
of this title shall be construed as altering, amending, or
affecting the authority of the Secretary of the Treasury, the
Secretary of Labor, or the Commissioner of Internal Revenue to
adopt regulations, initiate enforcement proceedings, or take any
actions with respect to any specified plan or arrangement.
(2) Activities not constituting the offering or provision of
any consumer financial product or service.--For purposes of this
title, a person shall not be treated as having engaged in the
offering or provision of any consumer financial product or service
solely because such person is--
(A) a specified plan or arrangement;
(B) engaged in the activity of establishing or maintaining,
for the benefit of employees of such person (or for members of
an employee organization), any specified plan or arrangement;
or
(C) engaged in the activity of establishing or maintaining
a qualified tuition program under section 529(b)(1) of the
Internal Revenue Code of 1986 offered by a State or other
prepaid tuition program offered by a State.
(3) Limitation on bureau authority.--
(A) In general.--Except as provided under subparagraphs (B)
and (C), the Bureau may not exercise any rulemaking or
enforcement authority with respect to products or services that
relate to any specified plan or arrangement.
(B) Bureau action pursuant to agency request.--
(i) Agency request.--The Secretary and the Secretary of
Labor may jointly issue a written request to the Bureau
regarding implementation of appropriate consumer protection
standards under this title with respect to the provision of
services relating to any specified plan or arrangement.
(ii) Agency response.--In response to a request by the
Bureau, the Secretary and the Secretary of Labor shall
jointly issue a written response, not later than 90 days
after receipt of such request, to grant or deny the request
of the Bureau regarding implementation of appropriate
consumer protection standards under this title with respect
to the provision of services relating to any specified plan
or arrangement.
(iii) Scope of bureau action.--Subject to a request or
response pursuant to clause (i) or clause (ii) by the
agencies made under this subparagraph, the Bureau may
exercise rulemaking authority, and may act to enforce a
rule prescribed pursuant to such request or response, in
accordance with the provisions of this title. A request or
response made by the Secretary and the Secretary of Labor
under this subparagraph shall describe the basis for, and
scope of, appropriate consumer protection standards to be
implemented under this title with respect to the provision
of services relating to any specified plan or arrangement.
(C) Description of products or services.--To the extent
that a person engaged in providing products or services
relating to any specified plan or arrangement is subject to any
enumerated consumer law or any law for which authorities are
transferred under subtitle F or H, subparagraph (A) shall not
apply with respect to that law.
(4) Specified plan or arrangement.--For purposes of this
subsection, the term ``specified plan or arrangement'' means any
plan, account, or arrangement described in section 220, 223,
401(a), 403(a), 403(b), 408, 408A, 529, or 530 of the Internal
Revenue Code of 1986, or any employee benefit or compensation plan
or arrangement, including a plan that is subject to title I of the
Employee Retirement Income Security Act of 1974, or any prepaid
tuition program offered by a State.
(h) Persons Regulated by a State Securities Commission.--
(1) In general.--No provision of this title shall be construed
as altering, amending, or affecting the authority of any securities
commission (or any agency or office performing like functions) of
any State to adopt rules, initiate enforcement proceedings, or take
any other action with respect to a person regulated by any
securities commission (or any agency or office performing like
functions) of any State. Except as permitted in paragraph (2) and
subsection (f), the Bureau shall have no authority to exercise any
power to enforce this title with respect to a person regulated by
any securities commission (or any agency or office performing like
functions) of any State, but only to the extent that the person
acts in such regulated capacity.
(2) Description of activities.--Paragraph (1) shall not apply
to any person to the extent such person is engaged in the offering
or provision of any consumer financial product or service, or is
otherwise subject to any enumerated consumer law or any law for
which authorities are transferred under subtitle F or H.
(i) Exclusion for Persons Regulated by the Commission.--
(1) In general.--No provision of this title may be construed as
altering, amending, or affecting the authority of the Commission to
adopt rules, initiate enforcement proceedings, or take any other
action with respect to a person regulated by the Commission. The
Bureau shall have no authority to exercise any power to enforce
this title with respect to a person regulated by the Commission.
(2) Consultation and coordination.--Notwithstanding paragraph
(1), the Commission shall consult and coordinate, where feasible,
with the Bureau with respect to any rule (including any advance
notice of proposed rulemaking) regarding an investment product or
service that is the same type of product as, or that competes
directly with, a consumer financial product or service that is
subject to the jurisdiction of the Bureau under this title or under
any other law. In carrying out this paragraph, the agencies shall
negotiate an agreement to establish procedures for such
coordination, including procedures for providing advance notice to
the Bureau when the Commission is initiating a rulemaking.
(j) Exclusion for Persons Regulated by the Commodity Futures
Trading Commission.--
(1) In general.--No provision of this title shall be construed
as altering, amending, or affecting the authority of the Commodity
Futures Trading Commission to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by the Commodity Futures Trading Commission. The Bureau
shall have no authority to exercise any power to enforce this title
with respect to a person regulated by the Commodity Futures Trading
Commission.
(2) Consultation and coordination.--Notwithstanding paragraph
(1), the Commodity Futures Trading Commission shall consult and
coordinate with the Bureau with respect to any rule (including any
advance notice of proposed rulemaking) regarding a product or
service that is the same type of product as, or that competes
directly with, a consumer financial product or service that is
subject to the jurisdiction of the Bureau under this title or under
any other law.
(k) Exclusion for Persons Regulated by the Farm Credit
Administration.--
(1) In general.--No provision of this title shall be construed
as altering, amending, or affecting the authority of the Farm
Credit Administration to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by the Farm Credit Administration. The Bureau shall have
no authority to exercise any power to enforce this title with
respect to a person regulated by the Farm Credit Administration.
(2) Definition.--For purposes of this subsection, the term
``person regulated by the Farm Credit Administration'' means any
Farm Credit System institution that is chartered and subject to the
provisions of the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.).
(l) Exclusion for Activities Relating to Charitable
Contributions.--
(1) In general.--The Director and the Bureau may not exercise
any rulemaking, supervisory, enforcement, or other authority,
including authority to order penalties, over any activities related
to the solicitation or making of voluntary contributions to a tax-
exempt organization as recognized by the Internal Revenue Service,
by any agent, volunteer, or representative of such organizations to
the extent the organization, agent, volunteer, or representative
thereof is soliciting or providing advice, information, education,
or instruction to any donor or potential donor relating to a
contribution to the organization.
(2) Limitation.--The exclusion in paragraph (1) does not apply
to other activities not described in paragraph (1) that are the
offering or provision of any consumer financial product or service,
or are otherwise subject to any enumerated consumer law or any law
for which authorities are transferred under subtitle F or H.
(m) Insurance.--The Bureau may not define as a financial product or
service, by regulation or otherwise, engaging in the business of
insurance.
(n) Limited Authority of the Bureau.--Notwithstanding subsections
(a) through (h) and (l), a person subject to or described in one or
more of such provisions--
(1) may be a service provider; and
(2) may be subject to requests from, or requirements imposed
by, the Bureau regarding information in order to carry out the
responsibilities and functions of the Bureau and in accordance with
section 1022, 1052, or 1053.
(o) No Authority To Impose Usury Limit.--No provision of this title
shall be construed as conferring authority on the Bureau to establish a
usury limit applicable to an extension of credit offered or made by a
covered person to a consumer, unless explicitly authorized by law.
(p) Attorney General.--No provision of this title, including
section 1024(c)(1), shall affect the authorities of the Attorney
General under otherwise applicable provisions of law.
(q) Secretary of the Treasury.--No provision of this title shall
affect the authorities of the Secretary, including with respect to
prescribing rules, initiating enforcement proceedings, or taking other
actions with respect to a person that performs income tax preparation
activities for consumers.
(r) Deposit Insurance and Share Insurance.--Nothing in this title
shall affect the authority of the Corporation under the Federal Deposit
Insurance Act or the National Credit Union Administration Board under
the Federal Credit Union Act as to matters related to deposit insurance
and share insurance, respectively.
(s) Fair Housing Act.--No provision of this title shall be
construed as affecting any authority arising under the Fair Housing
Act.
SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.
(a) Study and Report.--The Bureau shall conduct a study of, and
shall provide a report to Congress concerning, the use of agreements
providing for arbitration of any future dispute between covered persons
and consumers in connection with the offering or providing of consumer
financial products or services.
(b) Further Authority.--The Bureau, by regulation, may prohibit or
impose conditions or limitations on the use of an agreement between a
covered person and a consumer for a consumer financial product or
service providing for arbitration of any future dispute between the
parties, if the Bureau finds that such a prohibition or imposition of
conditions or limitations is in the public interest and for the
protection of consumers. The findings in such rule shall be consistent
with the study conducted under subsection (a).
(c) Limitation.--The authority described in subsection (b) may not
be construed to prohibit or restrict a consumer from entering into a
voluntary arbitration agreement with a covered person after a dispute
has arisen.
(d) Effective Date.--Notwithstanding any other provision of law,
any regulation prescribed by the Bureau under subsection (b) shall
apply, consistent with the terms of the regulation, to any agreement
between a consumer and a covered person entered into after the end of
the 180-day period beginning on the effective date of the regulation,
as established by the Bureau.
SEC. 1029. EXCLUSION FOR AUTO DEALERS.
(a) Sale, Servicing, and Leasing of Motor Vehicles Excluded.--
Except as permitted in subsection (b), the Bureau may not exercise any
rulemaking, supervisory, enforcement or any other authority, including
any authority to order assessments, over a motor vehicle dealer that is
predominantly engaged in the sale and servicing of motor vehicles, the
leasing and servicing of motor vehicles, or both.
(b) Certain Functions Excepted.--Subsection (a) shall not apply to
any person, to the extent that such person--
(1) provides consumers with any services related to residential
or commercial mortgages or self-financing transactions involving
real property;
(2) operates a line of business--
(A) that involves the extension of retail credit or retail
leases involving motor vehicles; and
(B) in which--
(i) the extension of retail credit or retail leases are
provided directly to consumers; and
(ii) the contract governing such extension of retail
credit or retail leases is not routinely assigned to an
unaffiliated third party finance or leasing source; or
(3) offers or provides a consumer financial product or service
not involving or related to the sale, financing, leasing, rental,
repair, refurbishment, maintenance, or other servicing of motor
vehicles, motor vehicle parts, or any related or ancillary product
or service.
(c) Preservation of Authorities of Other Agencies.--Except as
provided in subsections (b) and (d), nothing in this title, including
subtitle F, shall be construed as modifying, limiting, or superseding
the operation of any provision of Federal law, or otherwise affecting
the authority of the Board of Governors, the Federal Trade Commission,
or any other Federal agency, with respect to a person described in
subsection (a).
(d) Federal Trade Commission Authority.--Notwithstanding section 18
of the Federal Trade Commission Act, the Federal Trade Commission is
authorized to prescribe rules under sections 5 and 18(a)(1)(B) of the
Federal Trade Commission Act. in accordance with section 553 of title
5, United States Code, with respect to a person described in subsection
(a).
(e) Coordination With Office Of Service Member Affairs.--The Board
of Governors and the Federal Trade Commission shall coordinate with the
Office of Service Member Affairs, to ensure that--
(1) service members and their families are educated and
empowered to make better informed decisions regarding consumer
financial products and services offered by motor vehicle dealers,
with a focus on motor vehicle dealers in the proximity of military
installations; and
(2) complaints by service members and their families concerning
such motor vehicle dealers are effectively monitored and responded
to, and where appropriate, enforcement action is pursued by the
authorized agencies.
(f) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Motor vehicle.--The term ``motor vehicle'' means--
(A) any self-propelled vehicle designed for transporting
persons or property on a street, highway, or other road;
(B) recreational boats and marine equipment;
(C) motorcycles;
(D) motor homes, recreational vehicle trailers, and slide-
in campers, as those terms are defined in sections 571.3 and
575.103 (d) of title 49, Code of Federal Regulations, or any
successor thereto; and
(E) other vehicles that are titled and sold through
dealers.
(2) Motor vehicle dealer.--The term ``motor vehicle dealer''
means any person or resident in the United States, or any territory
of the United States, who--
(A) is licensed by a State, a territory of the United
States, or the District of Columbia to engage in the sale of
motor vehicles; and
(B) takes title to, holds an ownership in, or takes
physical custody of motor vehicles.
SEC. 1029A. EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date, except that sections 1022, 1024, and 1025(e) shall become
effective on the date of enactment of this Act.
Subtitle C--Specific Bureau Authorities
SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR PRACTICES.
(a) In General.--The Bureau may take any action authorized under
subtitle E to prevent a covered person or service provider from
committing or engaging in an unfair, deceptive, or abusive act or
practice under Federal law in connection with any transaction with a
consumer for a consumer financial product or service, or the offering
of a consumer financial product or service.
(b) Rulemaking.--The Bureau may prescribe rules applicable to a
covered person or service provider identifying as unlawful unfair,
deceptive, or abusive acts or practices in connection with any
transaction with a consumer for a consumer financial product or
service, or the offering of a consumer financial product or service.
Rules under this section may include requirements for the purpose of
preventing such acts or practices.
(c) Unfairness.--
(1) In general.--The Bureau shall have no authority under this
section to declare an act or practice in connection with a
transaction with a consumer for a consumer financial product or
service, or the offering of a consumer financial product or
service, to be unlawful on the grounds that such act or practice is
unfair, unless the Bureau has a reasonable basis to conclude that--
(A) the act or practice causes or is likely to cause
substantial injury to consumers which is not reasonably
avoidable by consumers; and
(B) such substantial injury is not outweighed by
countervailing benefits to consumers or to competition.
(2) Consideration of public policies.--In determining whether
an act or practice is unfair, the Bureau may consider established
public policies as evidence to be considered with all other
evidence. Such public policy considerations may not serve as a
primary basis for such determination.
(d) Abusive.--The Bureau shall have no authority under this section
to declare an act or practice abusive in connection with the provision
of a consumer financial product or service, unless the act or
practice--
(1) materially interferes with the ability of a consumer to
understand a term or condition of a consumer financial product or
service; or
(2) takes unreasonable advantage of--
(A) a lack of understanding on the part of the consumer of
the material risks, costs, or conditions of the product or
service;
(B) the inability of the consumer to protect the interests
of the consumer in selecting or using a consumer financial
product or service; or
(C) the reasonable reliance by the consumer on a covered
person to act in the interests of the consumer.
(e) Consultation.--In prescribing rules under this section, the
Bureau shall consult with the Federal banking agencies, or other
Federal agencies, as appropriate, concerning the consistency of the
proposed rule with prudential, market, or systemic objectives
administered by such agencies.
(f) Consideration of Seasonal Income.--The rules of the Bureau
under this section shall provide, with respect to an extension of
credit secured by residential real estate or a dwelling, if documented
income of the borrower, including income from a small business, is a
repayment source for an extension of credit secured by residential real
estate or a dwelling, the creditor may consider the seasonality and
irregularity of such income in the underwriting of and scheduling of
payments for such credit.
SEC. 1032. DISCLOSURES.
(a) In General.--The Bureau may prescribe rules to ensure that the
features of any consumer financial product or service, both initially
and over the term of the product or service, are fully, accurately, and
effectively disclosed to consumers in a manner that permits consumers
to understand the costs, benefits, and risks associated with the
product or service, in light of the facts and circumstances.
(b) Model Disclosures.--
(1) In general.--Any final rule prescribed by the Bureau under
this section requiring disclosures may include a model form that
may be used at the option of the covered person for provision of
the required disclosures.
(2) Format.--A model form issued pursuant to paragraph (1)
shall contain a clear and conspicuous disclosure that, at a
minimum--
(A) uses plain language comprehensible to consumers;
(B) contains a clear format and design, such as an easily
readable type font; and
(C) succinctly explains the information that must be
communicated to the consumer.
(3) Consumer testing.--Any model form issued pursuant to this
subsection shall be validated through consumer testing.
(c) Basis for Rulemaking.--In prescribing rules under this section,
the Bureau shall consider available evidence about consumer awareness,
understanding of, and responses to disclosures or communications about
the risks, costs, and benefits of consumer financial products or
services.
(d) Safe Harbor.--Any covered person that uses a model form
included with a rule issued under this section shall be deemed to be in
compliance with the disclosure requirements of this section with
respect to such model form.
(e) Trial Disclosure Programs.--
(1) In general.--The Bureau may permit a covered person to
conduct a trial program that is limited in time and scope, subject
to specified standards and procedures, for the purpose of providing
trial disclosures to consumers that are designed to improve upon
any model form issued pursuant to subsection (b)(1), or any other
model form issued to implement an enumerated statute, as
applicable.
(2) Safe harbor.--The standards and procedures issued by the
Bureau shall be designed to encourage covered persons to conduct
trial disclosure programs. For the purposes of administering this
subsection, the Bureau may establish a limited period during which
a covered person conducting a trial disclosure program shall be
deemed to be in compliance with, or may be exempted from, a
requirement of a rule or an enumerated consumer law.
(3) Public disclosure.--The rules of the Bureau shall provide
for public disclosure of trial disclosure programs, which public
disclosure may be limited, to the extent necessary to encourage
covered persons to conduct effective trials.
(f) Combined Mortgage Loan Disclosure.--Not later than 1 year after
the designated transfer date, the Bureau shall propose for public
comment rules and model disclosures that combine the disclosures
required under the Truth in Lending Act and sections 4 and 5 of the
Real Estate Settlement Procedures Act of 1974, into a single,
integrated disclosure for mortgage loan transactions covered by those
laws, unless the Bureau determines that any proposal issued by the
Board of Governors and the Secretary of Housing and Urban Development
carries out the same purpose.
SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION.
(a) In General.--Subject to rules prescribed by the Bureau, a
covered person shall make available to a consumer, upon request,
information in the control or possession of the covered person
concerning the consumer financial product or service that the consumer
obtained from such covered person, including information relating to
any transaction, series of transactions, or to the account including
costs, charges and usage data. The information shall be made available
in an electronic form usable by consumers.
(b) Exceptions.--A covered person may not be required by this
section to make available to the consumer--
(1) any confidential commercial information, including an
algorithm used to derive credit scores or other risk scores or
predictors;
(2) any information collected by the covered person for the
purpose of preventing fraud or money laundering, or detecting, or
making any report regarding other unlawful or potentially unlawful
conduct;
(3) any information required to be kept confidential by any
other provision of law; or
(4) any information that the covered person cannot retrieve in
the ordinary course of its business with respect to that
information.
(c) No Duty To Maintain Records.--Nothing in this section shall be
construed to impose any duty on a covered person to maintain or keep
any information about a consumer.
(d) Standardized Formats for Data.--The Bureau, by rule, shall
prescribe standards applicable to covered persons to promote the
development and use of standardized formats for information, including
through the use of machine readable files, to be made available to
consumers under this section.
(e) Consultation.--The Bureau shall, when prescribing any rule
under this section, consult with the Federal banking agencies and the
Federal Trade Commission to ensure, to the extent appropriate, that the
rules--
(1) impose substantively similar requirements on covered
persons;
(2) take into account conditions under which covered persons do
business both in the United States and in other countries; and
(3) do not require or promote the use of any particular
technology in order to develop systems for compliance.
SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND INQUIRIES.
(a) Timely Regulator Response to Consumers.--The Bureau shall
establish, in consultation with the appropriate Federal regulatory
agencies, reasonable procedures to provide a timely response to
consumers, in writing where appropriate, to complaints against, or
inquiries concerning, a covered person, including--
(1) steps that have been taken by the regulator in response to
the complaint or inquiry of the consumer;
(2) any responses received by the regulator from the covered
person; and
(3) any follow-up actions or planned follow-up actions by the
regulator in response to the complaint or inquiry of the consumer.
(b) Timely Response to Regulator by Covered Person.--A covered
person subject to supervision and primary enforcement by the Bureau
pursuant to section 1025 shall provide a timely response, in writing
where appropriate, to the Bureau, the prudential regulators, and any
other agency having jurisdiction over such covered person concerning a
consumer complaint or inquiry, including--
(1) steps that have been taken by the covered person to respond
to the complaint or inquiry of the consumer;
(2) responses received by the covered person from the consumer;
and
(3) follow-up actions or planned follow-up actions by the
covered person to respond to the complaint or inquiry of the
consumer.
(c) Provision of Information to Consumers.--
(1) In general.--A covered person subject to supervision and
primary enforcement by the Bureau pursuant to section 1025 shall,
in a timely manner, comply with a consumer request for information
in the control or possession of such covered person concerning the
consumer financial product or service that the consumer obtained
from such covered person, including supporting written
documentation, concerning the account of the consumer.
(2) Exceptions.--A covered person subject to supervision and
primary enforcement by the Bureau pursuant to section 1025, a
prudential regulator, and any other agency having jurisdiction over
a covered person subject to supervision and primary enforcement by
the Bureau pursuant to section 1025 may not be required by this
section to make available to the consumer--
(A) any confidential commercial information, including an
algorithm used to derive credit scores or other risk scores or
predictors;
(B) any information collected by the covered person for the
purpose of preventing fraud or money laundering, or detecting
or making any report regarding other unlawful or potentially
unlawful conduct;
(C) any information required to be kept confidential by any
other provision of law; or
(D) any nonpublic or confidential information, including
confidential supervisory information.
(d) Agreements With Other Agencies.--The Bureau shall enter into a
memorandum of understanding with any affected Federal regulatory agency
regarding procedures by which any covered person, and the prudential
regulators, and any other agency having jurisdiction over a covered
person, including the Secretary of the Department of Housing and Urban
Development and the Secretary of Education, shall comply with this
section.
SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN.
(a) Establishment.--The Secretary, in consultation with the
Director, shall designate a Private Education Loan Ombudsman (in this
section referred to as the ``Ombudsman'') within the Bureau, to provide
timely assistance to borrowers of private education loans.
(b) Public Information.--The Secretary and the Director shall
disseminate information about the availability and functions of the
Ombudsman to borrowers and potential borrowers, as well as institutions
of higher education, lenders, guaranty agencies, loan servicers, and
other participants in private education student loan programs.
(c) Functions of Ombudsman.--The Ombudsman designated under this
subsection shall--
(1) in accordance with regulations of the Director, receive,
review, and attempt to resolve informally complaints from borrowers
of loans described in subsection (a), including, as appropriate,
attempts to resolve such complaints in collaboration with the
Department of Education and with institutions of higher education,
lenders, guaranty agencies, loan servicers, and other participants
in private education loan programs;
(2) not later than 90 days after the designated transfer date,
establish a memorandum of understanding with the student loan
ombudsman established under section 141(f) of the Higher Education
Act of 1965 (20 U.S.C. 1018(f)), to ensure coordination in
providing assistance to and serving borrowers seeking to resolve
complaints related to their private education or Federal student
loans;
(3) compile and analyze data on borrower complaints regarding
private education loans; and
(4) make appropriate recommendations to the Director, the
Secretary, the Secretary of Education, the Committee on Banking,
Housing, and Urban Affairs and the Committee on Health, Education,
Labor, and Pensions of the Senate and the Committee on Financial
Services and the Committee on Education and Labor of the House of
Representatives.
(d) Annual Reports.--
(1) In general.--The Ombudsman shall prepare an annual report
that describes the activities, and evaluates the effectiveness of
the Ombudsman during the preceding year.
(2) Submission.--The report required by paragraph (1) shall be
submitted on the same date annually to the Secretary, the Secretary
of Education, the Committee on Banking, Housing, and Urban Affairs
and the Committee on Health, Education, Labor, and Pensions of the
Senate and the Committee on Financial Services and the Committee on
Education and Labor of the House of Representatives.
(e) Definitions.--For purposes of this section, the terms ``private
education loan'' and ``institution of higher education'' have the same
meanings as in section 140 of the Truth in Lending Act (15 U.S.C.
1650).
SEC. 1036. PROHIBITED ACTS.
(a) In General.--It shall be unlawful for--
(1) any covered person or service provider--
(A) to offer or provide to a consumer any financial product
or service not in conformity with Federal consumer financial
law, or otherwise commit any act or omission in violation of a
Federal consumer financial law; or
(B) to engage in any unfair, deceptive, or abusive act or
practice;
(2) any covered person or service provider to fail or refuse,
as required by Federal consumer financial law, or any rule or order
issued by the Bureau thereunder--
(A) to permit access to or copying of records;
(B) to establish or maintain records; or
(C) to make reports or provide information to the Bureau;
or
(3) any person to knowingly or recklessly provide substantial
assistance to a covered person or service provider in violation of
the provisions of section 1031, or any rule or order issued
thereunder, and notwithstanding any provision of this title, the
provider of such substantial assistance shall be deemed to be in
violation of that section to the same extent as the person to whom
such assistance is provided.
(b) Exception.--No person shall be held to have violated subsection
(a)(1) solely by virtue of providing or selling time or space to a
covered person or service provider placing an advertisement.
SEC. 1037. EFFECTIVE DATE.
This subtitle shall take effect on the designated transfer date.
Subtitle D--Preservation of State Law
SEC. 1041. RELATION TO STATE LAW.
(a) In General.--
(1) Rule of construction.--This title, other than sections 1044
through 1048, may not be construed as annulling, altering, or
affecting, or exempting any person subject to the provisions of
this title from complying with, the statutes, regulations, orders,
or interpretations in effect in any State, except to the extent
that any such provision of law is inconsistent with the provisions
of this title, and then only to the extent of the inconsistency.
(2) Greater protection under state law.--For purposes of this
subsection, a statute, regulation, order, or interpretation in
effect in any State is not inconsistent with the provisions of this
title if the protection that such statute, regulation, order, or
interpretation affords to consumers is greater than the protection
provided under this title. A determination regarding whether a
statute, regulation, order, or interpretation in effect in any
State is inconsistent with the provisions of this title may be made
by the Bureau on its own motion or in response to a nonfrivolous
petition initiated by any interested person.
(b) Relation to Other Provisions of Enumerated Consumer Laws That
Relate to State Law.--No provision of this title, except as provided in
section 1083, shall be construed as modifying, limiting, or superseding
the operation of any provision of an enumerated consumer law that
relates to the application of a law in effect in any State with respect
to such Federal law.
(c) Additional Consumer Protection Regulations in Response to State
Action.--
(1) Notice of proposed rule required.--The Bureau shall issue a
notice of proposed rulemaking whenever a majority of the States has
enacted a resolution in support of the establishment or
modification of a consumer protection regulation by the Bureau.
(2) Bureau considerations required for issuance of final
regulation.--Before prescribing a final regulation based upon a
notice issued pursuant to paragraph (1), the Bureau shall take into
account whether--
(A) the proposed regulation would afford greater protection
to consumers than any existing regulation;
(B) the intended benefits of the proposed regulation for
consumers would outweigh any increased costs or inconveniences
for consumers, and would not discriminate unfairly against any
category or class of consumers; and
(C) a Federal banking agency has advised that the proposed
regulation is likely to present an unacceptable safety and
soundness risk to insured depository institutions.
(3) Explanation of considerations.--The Bureau--
(A) shall include a discussion of the considerations
required in paragraph (2) in the Federal Register notice of a
final regulation prescribed pursuant to this subsection; and
(B) whenever the Bureau determines not to prescribe a final
regulation, shall publish an explanation of such determination
in the Federal Register, and provide a copy of such explanation
to each State that enacted a resolution in support of the
proposed regulation, the Committee on Banking, Housing, and
Urban Affairs of the Senate, and the Committee on Financial
Services of the House of Representatives.
(4) Reservation of authority.--No provision of this subsection
shall be construed as limiting or restricting the authority of the
Bureau to enhance consumer protection standards established
pursuant to this title in response to its own motion or in response
to a request by any other interested person.
(5) Rule of construction.--No provision of this subsection
shall be construed as exempting the Bureau from complying with
subchapter II of chapter 5 of title 5, United States Code.
(6) Definition.--For purposes of this subsection, the term
``consumer protection regulation'' means a regulation that the
Bureau is authorized to prescribe under the Federal consumer
financial laws.
SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF STATES.
(a) In General.--
(1) Action by state.--Except as provided in paragraph (2), the
attorney general (or the equivalent thereof) of any State may bring
a civil action in the name of such State in any district court of
the United States in that State or in State court that is located
in that State and that has jurisdiction over the defendant, to
enforce provisions of this title or regulations issued under this
title, and to secure remedies under provisions of this title or
remedies otherwise provided under other law. A State regulator may
bring a civil action or other appropriate proceeding to enforce the
provisions of this title or regulations issued under this title
with respect to any entity that is State-chartered, incorporated,
licensed, or otherwise authorized to do business under State law
(except as provided in paragraph (2)), and to secure remedies under
provisions of this title or remedies otherwise provided under other
provisions of law with respect to such an entity.
(2) Action by state against national bank or federal savings
association to enforce rules.--
(A) In general.--Except as permitted under subparagraph
(B), the attorney general (or equivalent thereof) of any State
may not bring a civil action in the name of such State against
a national bank or Federal savings association to enforce a
provision of this title.
(B) Enforcement of rules permitted.--The attorney general
(or the equivalent thereof) of any State may bring a civil
action in the name of such State against a national bank or
Federal savings association in any district court of the United
States in the State or in State court that is located in that
State and that has jurisdiction over the defendant to enforce a
regulation prescribed by the Bureau under a provision of this
title and to secure remedies under provisions of this title or
remedies otherwise provided under other law.
(3) Rule of construction.--No provision of this title shall be
construed as modifying, limiting, or superseding the operation of
any provision of an enumerated consumer law that relates to the
authority of a State attorney general or State regulator to enforce
such Federal law.
(b) Consultation Required.--
(1) Notice.--
(A) In general.--Before initiating any action in a court or
other administrative or regulatory proceeding against any
covered person as authorized by subsection (a) to enforce any
provision of this title, including any regulation prescribed by
the Bureau under this title, a State attorney general or State
regulator shall timely provide a copy of the complete complaint
to be filed and written notice describing such action or
proceeding to the Bureau and the prudential regulator, if any,
or the designee thereof.
(B) Emergency action.--If prior notice is not practicable,
the State attorney general or State regulator shall provide a
copy of the complete complaint and the notice to the Bureau and
the prudential regulator, if any, immediately upon instituting
the action or proceeding.
(C) Contents of notice.--The notification required under
this paragraph shall, at a minimum, describe--
(i) the identity of the parties;
(ii) the alleged facts underlying the proceeding; and
(iii) whether there may be a need to coordinate the
prosecution of the proceeding so as not to interfere with
any action, including any rulemaking, undertaken by the
Bureau, a prudential regulator, or another Federal agency.
(2) Bureau response.--In any action described in paragraph (1),
the Bureau may--
(A) intervene in the action as a party;
(B) upon intervening--
(i) remove the action to the appropriate United States
district court, if the action was not originally brought
there; and
(ii) be heard on all matters arising in the action; and
(C) appeal any order or judgment, to the same extent as any
other party in the proceeding may.
(c) Regulations.--The Bureau shall prescribe regulations to
implement the requirements of this section and, from time to time,
provide guidance in order to further coordinate actions with the State
attorneys general and other regulators.
(d) Preservation of State Authority.--
(1) State claims.--No provision of this section shall be
construed as altering, limiting, or affecting the authority of a
State attorney general or any other regulatory or enforcement
agency or authority to bring an action or other regulatory
proceeding arising solely under the law in effect in that State.
(2) State securities regulators.--No provision of this title
shall be construed as altering, limiting, or affecting the
authority of a State securities commission (or any agency or office
performing like functions) under State law to adopt rules, initiate
enforcement proceedings, or take any other action with respect to a
person regulated by such commission or authority.
(3) State insurance regulators.--No provision of this title
shall be construed as altering, limiting, or affecting the
authority of a State insurance commission or State insurance
regulator under State law to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by such commission or regulator.
SEC. 1043. PRESERVATION OF EXISTING CONTRACTS.
This title, and regulations, orders, guidance, and interpretations
prescribed, issued, or established by the Bureau, shall not be
construed to alter or affect the applicability of any regulation,
order, guidance, or interpretation prescribed, issued, and established
by the Comptroller of the Currency or the Director of the Office of
Thrift Supervision regarding the applicability of State law under
Federal banking law to any contract entered into on or before the date
of enactment of this Act, by national banks, Federal savings
associations, or subsidiaries thereof that are regulated and supervised
by the Comptroller of the Currency or the Director of the Office of
Thrift Supervision, respectively.
SEC. 1044. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND
SUBSIDIARIES CLARIFIED.
(a) In General.--Chapter one of title LXII of the Revised Statutes
of the United States (12 U.S.C. 21 et seq.) is amended by inserting
after section 5136B the following new section:
``SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND
SUBSIDIARIES CLARIFIED.
``(a) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) National bank.--The term `national bank' includes--
``(A) any bank organized under the laws of the United
States; and
``(B) any Federal branch established in accordance with the
International Banking Act of 1978.
``(2) State consumer financial laws.--The term `State consumer
financial law' means a State law that does not directly or
indirectly discriminate against national banks and that directly
and specifically regulates the manner, content, or terms and
conditions of any financial transaction (as may be authorized for
national banks to engage in), or any account related thereto, with
respect to a consumer.
``(3) Other definitions.--The terms `affiliate', `subsidiary',
`includes', and `including' have the same meanings as in section 3
of the Federal Deposit Insurance Act.
``(b) Preemption Standard.--
``(1) In general.--State consumer financial laws are preempted,
only if--
``(A) application of a State consumer financial law would
have a discriminatory effect on national banks, in comparison
with the effect of the law on a bank chartered by that State;
``(B) in accordance with the legal standard for preemption
in the decision of the Supreme Court of the United States in
Barnett Bank of Marion County, N. A. v. Nelson, Florida
Insurance Commissioner, et al., 517 U.S. 25 (1996), the State
consumer financial law prevents or significantly interferes
with the exercise by the national bank of its powers; and any
preemption determination under this subparagraph may be made by
a court, or by regulation or order of the Comptroller of the
Currency on a case-by-case basis, in accordance with applicable
law; or
``(C) the State consumer financial law is preempted by a
provision of Federal law other than this title.
``(2) Savings clause.--This title and section 24 of the Federal
Reserve Act (12 U.S.C. 371) do not preempt, annul, or affect the
applicability of any State law to any subsidiary or affiliate of a
national bank (other than a subsidiary or affiliate that is
chartered as a national bank).
``(3) Case-by-case basis.--
``(A) Definition.--As used in this section the term `case-
by-case basis' refers to a determination pursuant to this
section made by the Comptroller concerning the impact of a
particular State consumer financial law on any national bank
that is subject to that law, or the law of any other State with
substantively equivalent terms.
``(B) Consultation.--When making a determination on a case-
by-case basis that a State consumer financial law of another
State has substantively equivalent terms as one that the
Comptroller is preempting, the Comptroller shall first consult
with the Bureau of Consumer Financial Protection and shall take
the views of the Bureau into account when making the
determination.
``(4) Rule of construction.--This title does not occupy the
field in any area of State law.
``(5) Standards of review.--
``(A) Preemption.--A court reviewing any determinations
made by the Comptroller regarding preemption of a State law by
this title or section 24 of the Federal Reserve Act (12 U.S.C.
371) shall assess the validity of such determinations,
depending upon the thoroughness evident in the consideration of
the agency, the validity of the reasoning of the agency, the
consistency with other valid determinations made by the agency,
and other factors which the court finds persuasive and relevant
to its decision.
``(B) Savings clause.--Except as provided in subparagraph
(A), nothing in this section shall affect the deference that a
court may afford to the Comptroller in making determinations
regarding the meaning or interpretation of title LXII of the
Revised Statutes of the United States or other Federal laws.
``(6) Comptroller determination not delegable.--Any regulation,
order, or determination made by the Comptroller of the Currency
under paragraph (1)(B) shall be made by the Comptroller, and shall
not be delegable to another officer or employee of the Comptroller
of the Currency.
``(c) Substantial Evidence.--No regulation or order of the
Comptroller of the Currency prescribed under subsection (b)(1)(B),
shall be interpreted or applied so as to invalidate, or otherwise
declare inapplicable to a national bank, the provision of the State
consumer financial law, unless substantial evidence, made on the record
of the proceeding, supports the specific finding regarding the
preemption of such provision in accordance with the legal standard of
the decision of the Supreme Court of the United States in Barnett Bank
of Marion County, N.A. v. Nelson, Florida Insurance Commissioner, et
al., 517 U.S. 25 (1996).
``(d) Periodic Review of Preemption Determinations.--
``(1) In general.--The Comptroller of the Currency shall
periodically conduct a review, through notice and public comment,
of each determination that a provision of Federal law preempts a
State consumer financial law. The agency shall conduct such review
within the 5-year period after prescribing or otherwise issuing
such determination, and at least once during each 5-year period
thereafter. After conducting the review of, and inspecting the
comments made on, the determination, the agency shall publish a
notice in the Federal Register announcing the decision to continue
or rescind the determination or a proposal to amend the
determination. Any such notice of a proposal to amend a
determination and the subsequent resolution of such proposal shall
comply with the procedures set forth in subsections (a) and (b) of
section 5244 of the Revised Statutes of the United States (12
U.S.C. 43 (a), (b)).
``(2) Reports to congress.--At the time of issuing a review
conducted under paragraph (1), the Comptroller of the Currency
shall submit a report regarding such review to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate. The
report submitted to the respective committees shall address whether
the agency intends to continue, rescind, or propose to amend any
determination that a provision of Federal law preempts a State
consumer financial law, and the reasons therefor.
``(e) Application of State Consumer Financial Law to Subsidiaries
and Affiliates.--Notwithstanding any provision of this title or section
24 of Federal Reserve Act (12 U.S.C. 371), a State consumer financial
law shall apply to a subsidiary or affiliate of a national bank (other
than a subsidiary or affiliate that is chartered as a national bank) to
the same extent that the State consumer financial law applies to any
person, corporation, or other entity subject to such State law.
``(f) Preservation of Powers Related to Charging Interest.--No
provision of this title shall be construed as altering or otherwise
affecting the authority conferred by section 5197 of the Revised
Statutes of the United States (12 U.S.C. 85) for the charging of
interest by a national bank at the rate allowed by the laws of the
State, territory, or district where the bank is located, including with
respect to the meaning of `interest' under such provision.
``(g) Transparency of OCC Preemption Determinations.--The
Comptroller of the Currency shall publish and update no less frequently
than quarterly, a list of preemption determinations by the Comptroller
of the Currency then in effect that identifies the activities and
practices covered by each determination and the requirements and
constraints determined to be preempted.''.
(b) Clerical Amendment.--The table of sections for chapter one of
title LXII of the Revised Statutes of the United States is amended by
inserting after the item relating to section 5136B the following new
item:
``Sec. 5136C. State law preemption standards for national banks and
subsidiaries clarified.''.
SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY INSTITUTION
SUBSIDIARIES.
Section 5136C of the Revised Statutes of the United States (as
added by this subtitle) is amended by adding at the end the following:
``(h) Clarification of Law Applicable to Nondepository Institution
Subsidiaries and Affiliates of National Banks.--
``(1) Definitions.--For purposes of this subsection, the terms
`depository institution', `subsidiary', and `affiliate' have the
same meanings as in section 3 of the Federal Deposit Insurance Act.
``(2) Rule of construction.--No provision of this title or
section 24 of the Federal Reserve Act (12 U.S.C. 371) shall be
construed as preempting, annulling, or affecting the applicability
of State law to any subsidiary, affiliate, or agent of a national
bank (other than a subsidiary, affiliate, or agent that is
chartered as a national bank).''.
SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS AND SUBSIDIARIES CLARIFIED.
(a) In General.--The Home Owners' Loan Act (12 U.S.C. 1461 et seq.)
is amended by inserting after section 5 the following new section:
``SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS CLARIFIED.
``(a) In General.--Any determination by a court or by the Director
or any successor officer or agency regarding the relation of State law
to a provision of this Act or any regulation or order prescribed under
this Act shall be made in accordance with the laws and legal standards
applicable to national banks regarding the preemption of State law.
``(b) Principles of Conflict Preemption Applicable.--
Notwithstanding the authorities granted under sections 4 and 5, this
Act does not occupy the field in any area of State law.''.
(b) Clerical Amendment.--The table of sections for the Home Owners'
Loan Act (12 U.S.C. 1461 et seq.) is amended by striking the item
relating to section 6 and inserting the following new item:
``Sec. 6. State law preemption standards for Federal savings
associations and subsidiaries clarified.''.
SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS AND SAVINGS
ASSOCIATIONS.
(a) National Banks.--Section 5136C of the Revised Statutes of the
United States (as added by this subtitle) is amended by adding at the
end the following:
``(i) Visitorial Powers.--
``(1) In general.--In accordance with the decision of the
Supreme Court of the United States in Cuomo v. Clearing House
Assn., L. L. C. (129 S. Ct. 2710 (2009)), no provision of this
title which relates to visitorial powers or otherwise limits or
restricts the visitorial authority to which any national bank is
subject shall be construed as limiting or restricting the authority
of any attorney general (or other chief law enforcement officer) of
any State to bring an action against a national bank in a court of
appropriate jurisdiction to enforce an applicable law and to seek
relief as authorized by such law.
``(j) Enforcement Actions.--The ability of the Comptroller of the
Currency to bring an enforcement action under this title or section 5
of the Federal Trade Commission Act does not preclude any private party
from enforcing rights granted under Federal or State law in the
courts.''.
(b) Savings Associations.--Section 6 of the Home Owners' Loan Act
(as added by this title) is amended by adding at the end the following:
``(c) Visitorial Powers.--The provisions of sections 5136C(i) of
the Revised Statutes of the United States shall apply to Federal
savings associations, and any subsidiary thereof, to the same extent
and in the same manner as if such savings associations, or subsidiaries
thereof, were national banks or subsidiaries of national banks,
respectively.''
``(d) Enforcement Actions.--The ability of the Comptroller of the
Currency to bring an enforcement action under this Act or section 5 of
the Federal Trade Commission Act does not preclude any private party
from enforcing rights granted under Federal or State law in the
courts.''.
SEC. 1048. EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date.
Subtitle E--Enforcement Powers
SEC. 1051. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) Bureau investigation.--The term ``Bureau investigation''
means any inquiry conducted by a Bureau investigator for the
purpose of ascertaining whether any person is or has been engaged
in any conduct that is a violation, as defined in this section.
(2) Bureau investigator.--The term ``Bureau investigator''
means any attorney or investigator employed by the Bureau who is
charged with the duty of enforcing or carrying into effect any
Federal consumer financial law.
(3) Custodian.--The term ``custodian'' means the custodian or
any deputy custodian designated by the Bureau.
(4) Documentary material.--The term ``documentary material''
includes the original or any copy of any book, document, record,
report, memorandum, paper, communication, tabulation, chart, logs,
electronic files, or other data or data compilations stored in any
medium.
(5) Violation.--The term ``violation'' means any act or
omission that, if proved, would constitute a violation of any
provision of Federal consumer financial law.
SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY.
(a) Joint Investigations.--
(1) In general.--The Bureau or, where appropriate, a Bureau
investigator, may engage in joint investigations and requests for
information, as authorized under this title.
(2) Fair lending.--The authority under paragraph (1) includes
matters relating to fair lending, and where appropriate, joint
investigations with, and requests for information from, the
Secretary of Housing and Urban Development, the Attorney General of
the United States, or both.
(b) Subpoenas.--
(1) In general.--The Bureau or a Bureau investigator may issue
subpoenas for the attendance and testimony of witnesses and the
production of relevant papers, books, documents, or other material
in connection with hearings under this title.
(2) Failure to obey.--In the case of contumacy or refusal to
obey a subpoena issued pursuant to this paragraph and served upon
any person, the district court of the United States for any
district in which such person is found, resides, or transacts
business, upon application by the Bureau or a Bureau investigator
and after notice to such person, may issue an order requiring such
person to appear and give testimony or to appear and produce
documents or other material.
(3) Contempt.--Any failure to obey an order of the court under
this subsection may be punished by the court as a contempt thereof.
(c) Demands.--
(1) In general.--Whenever the Bureau has reason to believe that
any person may be in possession, custody, or control of any
documentary material or tangible things, or may have any
information, relevant to a violation, the Bureau may, before the
institution of any proceedings under the Federal consumer financial
law, issue in writing, and cause to be served upon such person, a
civil investigative demand requiring such person to--
(A) produce such documentary material for inspection and
copying or reproduction in the form or medium requested by the
Bureau;
(B) submit such tangible things;
(C) file written reports or answers to questions;
(D) give oral testimony concerning documentary material,
tangible things, or other information; or
(E) furnish any combination of such material, answers, or
testimony.
(2) Requirements.--Each civil investigative demand shall state
the nature of the conduct constituting the alleged violation which
is under investigation and the provision of law applicable to such
violation.
(3) Production of documents.--Each civil investigative demand
for the production of documentary material shall--
(A) describe each class of documentary material to be
produced under the demand with such definiteness and certainty
as to permit such material to be fairly identified;
(B) prescribe a return date or dates which will provide a
reasonable period of time within which the material so demanded
may be assembled and made available for inspection and copying
or reproduction; and
(C) identify the custodian to whom such material shall be
made available.
(4) Production of things.--Each civil investigative demand for
the submission of tangible things shall--
(A) describe each class of tangible things to be submitted
under the demand with such definiteness and certainty as to
permit such things to be fairly identified;
(B) prescribe a return date or dates which will provide a
reasonable period of time within which the things so demanded
may be assembled and submitted; and
(C) identify the custodian to whom such things shall be
submitted.
(5) Demand for written reports or answers.--Each civil
investigative demand for written reports or answers to questions
shall--
(A) propound with definiteness and certainty the reports to
be produced or the questions to be answered;
(B) prescribe a date or dates at which time written reports
or answers to questions shall be submitted; and
(C) identify the custodian to whom such reports or answers
shall be submitted.
(6) Oral testimony.--Each civil investigative demand for the
giving of oral testimony shall--
(A) prescribe a date, time, and place at which oral
testimony shall be commenced; and
(B) identify a Bureau investigator who shall conduct the
investigation and the custodian to whom the transcript of such
investigation shall be submitted.
(7) Service.--Any civil investigative demand issued, and any
enforcement petition filed, under this section may be served--
(A) by any Bureau investigator at any place within the
territorial jurisdiction of any court of the United States; and
(B) upon any person who is not found within the territorial
jurisdiction of any court of the United States--
(i) in such manner as the Federal Rules of Civil
Procedure prescribe for service in a foreign nation; and
(ii) to the extent that the courts of the United States
have authority to assert jurisdiction over such person,
consistent with due process, the United States District
Court for the District of Columbia shall have the same
jurisdiction to take any action respecting compliance with
this section by such person that such district court would
have if such person were personally within the jurisdiction
of such district court.
(8) Method of service.--Service of any civil investigative
demand or any enforcement petition filed under this section may be
made upon a person, including any legal entity, by--
(A) delivering a duly executed copy of such demand or
petition to the individual or to any partner, executive
officer, managing agent, or general agent of such person, or to
any agent of such person authorized by appointment or by law to
receive service of process on behalf of such person;
(B) delivering a duly executed copy of such demand or
petition to the principal office or place of business of the
person to be served; or
(C) depositing a duly executed copy in the United States
mails, by registered or certified mail, return receipt
requested, duly addressed to such person at the principal
office or place of business of such person.
(9) Proof of service.--
(A) In general.--A verified return by the individual
serving any civil investigative demand or any enforcement
petition filed under this section setting forth the manner of
such service shall be proof of such service.
(B) Return receipts.--In the case of service by registered
or certified mail, such return shall be accompanied by the
return post office receipt of delivery of such demand or
enforcement petition.
(10) Production of documentary material.--The production of
documentary material in response to a civil investigative demand
shall be made under a sworn certificate, in such form as the demand
designates, by the person, if a natural person, to whom the demand
is directed or, if not a natural person, by any person having
knowledge of the facts and circumstances relating to such
production, to the effect that all of the documentary material
required by the demand and in the possession, custody, or control
of the person to whom the demand is directed has been produced and
made available to the custodian.
(11) Submission of tangible things.--The submission of tangible
things in response to a civil investigative demand shall be made
under a sworn certificate, in such form as the demand designates,
by the person to whom the demand is directed or, if not a natural
person, by any person having knowledge of the facts and
circumstances relating to such production, to the effect that all
of the tangible things required by the demand and in the
possession, custody, or control of the person to whom the demand is
directed have been submitted to the custodian.
(12) Separate answers.--Each reporting requirement or question
in a civil investigative demand shall be answered separately and
fully in writing under oath, unless it is objected to, in which
event the reasons for the objection shall be stated in lieu of an
answer, and it shall be submitted under a sworn certificate, in
such form as the demand designates, by the person, if a natural
person, to whom the demand is directed or, if not a natural person,
by any person responsible for answering each reporting requirement
or question, to the effect that all information required by the
demand and in the possession, custody, control, or knowledge of the
person to whom the demand is directed has been submitted.
(13) Testimony.--
(A) In general.--
(i) Oath and recordation.--The examination of any
person pursuant to a demand for oral testimony served under
this subsection shall be taken before an officer authorized
to administer oaths and affirmations by the laws of the
United States or of the place at which the examination is
held. The officer before whom oral testimony is to be taken
shall put the witness on oath or affirmation and shall
personally, or by any individual acting under the direction
of and in the presence of the officer, record the testimony
of the witness.
(ii) Transcription.--The testimony shall be taken
stenographically and transcribed.
(iii) Transmission to custodian.--After the testimony
is fully transcribed, the officer investigator before whom
the testimony is taken shall promptly transmit a copy of
the transcript of the testimony to the custodian.
(B) Parties present.--Any Bureau investigator before whom
oral testimony is to be taken shall exclude from the place
where the testimony is to be taken all other persons, except
the person giving the testimony, the attorney for that person,
the officer before whom the testimony is to be taken, an
investigator or representative of an agency with which the
Bureau is engaged in a joint investigation, and any
stenographer taking such testimony.
(C) Location.--The oral testimony of any person taken
pursuant to a civil investigative demand shall be taken in the
judicial district of the United States in which such person
resides, is found, or transacts business, or in such other
place as may be agreed upon by the Bureau investigator before
whom the oral testimony of such person is to be taken and such
person.
(D) Attorney representation.--
(i) In general.--Any person compelled to appear under a
civil investigative demand for oral testimony pursuant to
this section may be accompanied, represented, and advised
by an attorney.
(ii) Authority.--The attorney may advise a person
described in clause (i), in confidence, either upon the
request of such person or upon the initiative of the
attorney, with respect to any question asked of such
person.
(iii) Objections.--A person described in clause (i), or
the attorney for that person, may object on the record to
any question, in whole or in part, and such person shall
briefly state for the record the reason for the objection.
An objection may properly be made, received, and entered
upon the record when it is claimed that such person is
entitled to refuse to answer the question on grounds of any
constitutional or other legal right or privilege, including
the privilege against self-incrimination, but such person
shall not otherwise object to or refuse to answer any
question, and such person or attorney shall not otherwise
interrupt the oral examination.
(iv) Refusal to answer.--If a person described in
clause (i) refuses to answer any question--
(I) the Bureau may petition the district court of
the United States pursuant to this section for an order
compelling such person to answer such question; and
(II) if the refusal is on grounds of the privilege
against self-incrimination, the testimony of such
person may be compelled in accordance with the
provisions of section 6004 of title 18, United States
Code.
(E) Transcripts.--For purposes of this subsection--
(i) after the testimony of any witness is fully
transcribed, the Bureau investigator shall afford the
witness (who may be accompanied by an attorney) a
reasonable opportunity to examine the transcript;
(ii) the transcript shall be read to or by the witness,
unless such examination and reading are waived by the
witness;
(iii) any changes in form or substance which the
witness desires to make shall be entered and identified
upon the transcript by the Bureau investigator, with a
statement of the reasons given by the witness for making
such changes;
(iv) the transcript shall be signed by the witness,
unless the witness in writing waives the signing, is ill,
cannot be found, or refuses to sign; and
(v) if the transcript is not signed by the witness
during the 30-day period following the date on which the
witness is first afforded a reasonable opportunity to
examine the transcript, the Bureau investigator shall sign
the transcript and state on the record the fact of the
waiver, illness, absence of the witness, or the refusal to
sign, together with any reasons given for the failure to
sign.
(F) Certification by investigator.--The Bureau investigator
shall certify on the transcript that the witness was duly sworn
by him or her and that the transcript is a true record of the
testimony given by the witness, and the Bureau investigator
shall promptly deliver the transcript or send it by registered
or certified mail to the custodian.
(G) Copy of transcript.--The Bureau investigator shall
furnish a copy of the transcript (upon payment of reasonable
charges for the transcript) to the witness only, except that
the Bureau may for good cause limit such witness to inspection
of the official transcript of his testimony.
(H) Witness fees.--Any witness appearing for the taking of
oral testimony pursuant to a civil investigative demand shall
be entitled to the same fees and mileage which are paid to
witnesses in the district courts of the United States.
(d) Confidential Treatment of Demand Material.--
(1) In general.--Documentary materials and tangible things
received as a result of a civil investigative demand shall be
subject to requirements and procedures regarding confidentiality,
in accordance with rules established by the Bureau.
(2) Disclosure to congress.--No rule established by the Bureau
regarding the confidentiality of materials submitted to, or
otherwise obtained by, the Bureau shall be intended to prevent
disclosure to either House of Congress or to an appropriate
committee of the Congress, except that the Bureau is permitted to
adopt rules allowing prior notice to any party that owns or
otherwise provided the material to the Bureau and had designated
such material as confidential.
(e) Petition for Enforcement.--
(1) In general.--Whenever any person fails to comply with any
civil investigative demand duly served upon him under this section,
or whenever satisfactory copying or reproduction of material
requested pursuant to the demand cannot be accomplished and such
person refuses to surrender such material, the Bureau, through such
officers or attorneys as it may designate, may file, in the
district court of the United States for any judicial district in
which such person resides, is found, or transacts business, and
serve upon such person, a petition for an order of such court for
the enforcement of this section.
(2) Service of process.--All process of any court to which
application may be made as provided in this subsection may be
served in any judicial district.
(f) Petition for Order Modifying or Setting Aside Demand.--
(1) In general.--Not later than 20 days after the service of
any civil investigative demand upon any person under subsection
(b), or at any time before the return date specified in the demand,
whichever period is shorter, or within such period exceeding 20
days after service or in excess of such return date as may be
prescribed in writing, subsequent to service, by any Bureau
investigator named in the demand, such person may file with the
Bureau a petition for an order by the Bureau modifying or setting
aside the demand.
(2) Compliance during pendency.--The time permitted for
compliance with the demand in whole or in part, as determined
proper and ordered by the Bureau, shall not run during the pendency
of a petition under paragraph (1) at the Bureau, except that such
person shall comply with any portions of the demand not sought to
be modified or set aside.
(3) Specific grounds.--A petition under paragraph (1) shall
specify each ground upon which the petitioner relies in seeking
relief, and may be based upon any failure of the demand to comply
with the provisions of this section, or upon any constitutional or
other legal right or privilege of such person.
(g) Custodial Control.--At any time during which any custodian is
in custody or control of any documentary material, tangible things,
reports, answers to questions, or transcripts of oral testimony given
by any person in compliance with any civil investigative demand, such
person may file, in the district court of the United States for the
judicial district within which the office of such custodian is
situated, and serve upon such custodian, a petition for an order of
such court requiring the performance by such custodian of any duty
imposed upon him by this section or rule promulgated by the Bureau.
(h) Jurisdiction of Court.--
(1) In general.--Whenever any petition is filed in any district
court of the United States under this section, such court shall
have jurisdiction to hear and determine the matter so presented,
and to enter such order or orders as may be required to carry out
the provisions of this section.
(2) Appeal.--Any final order entered as described in paragraph
(1) shall be subject to appeal pursuant to section 1291 of title
28, United States Code.
SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS.
(a) In General.--The Bureau is authorized to conduct hearings and
adjudication proceedings with respect to any person in the manner
prescribed by chapter 5 of title 5, United States Code in order to
ensure or enforce compliance with--
(1) the provisions of this title, including any rules
prescribed by the Bureau under this title; and
(2) any other Federal law that the Bureau is authorized to
enforce, including an enumerated consumer law, and any regulations
or order prescribed thereunder, unless such Federal law
specifically limits the Bureau from conducting a hearing or
adjudication proceeding and only to the extent of such limitation.
(b) Special Rules for Cease-and-desist Proceedings.--
(1) Orders authorized.--
(A) In general.--If, in the opinion of the Bureau, any
covered person or service provider is engaging or has engaged
in an activity that violates a law, rule, or any condition
imposed in writing on the person by the Bureau, the Bureau may,
subject to sections 1024, 1025, and 1026, issue and serve upon
the covered person or service provider a notice of charges in
respect thereof.
(B) Content of notice.--The notice under subparagraph (A)
shall contain a statement of the facts constituting the alleged
violation or violations, and shall fix a time and place at
which a hearing will be held to determine whether an order to
cease and desist should issue against the covered person or
service provider, such hearing to be held not earlier than 30
days nor later than 60 days after the date of service of such
notice, unless an earlier or a later date is set by the Bureau,
at the request of any party so served.
(C) Consent.--Unless the party or parties served under
subparagraph (B) appear at the hearing personally or by a duly
authorized representative, such person shall be deemed to have
consented to the issuance of the cease-and-desist order.
(D) Procedure.--In the event of consent under subparagraph
(C), or if, upon the record, made at any such hearing, the
Bureau finds that any violation specified in the notice of
charges has been established, the Bureau may issue and serve
upon the covered person or service provider an order to cease
and desist from the violation or practice. Such order may, by
provisions which may be mandatory or otherwise, require the
covered person or service provider to cease and desist from the
subject activity, and to take affirmative action to correct the
conditions resulting from any such violation.
(2) Effectiveness of order.--A cease-and-desist order shall
become effective at the expiration of 30 days after the date of
service of an order under paragraph (1) upon the covered person or
service provider concerned (except in the case of a cease-and-
desist order issued upon consent, which shall become effective at
the time specified therein), and shall remain effective and
enforceable as provided therein, except to such extent as the order
is stayed, modified, terminated, or set aside by action of the
Bureau or a reviewing court.
(3) Decision and appeal.--Any hearing provided for in this
subsection shall be held in the Federal judicial district or in the
territory in which the residence or principal office or place of
business of the person is located unless the person consents to
another place, and shall be conducted in accordance with the
provisions of chapter 5 of title 5 of the United States Code. After
such hearing, and within 90 days after the Bureau has notified the
parties that the case has been submitted to the Bureau for final
decision, the Bureau shall render its decision (which shall include
findings of fact upon which its decision is predicated) and shall
issue and serve upon each party to the proceeding an order or
orders consistent with the provisions of this section. Judicial
review of any such order shall be exclusively as provided in this
subsection. Unless a petition for review is timely filed in a court
of appeals of the United States, as provided in paragraph (4), and
thereafter until the record in the proceeding has been filed as
provided in paragraph (4), the Bureau may at any time, upon such
notice and in such manner as the Bureau shall determine proper,
modify, terminate, or set aside any such order. Upon filing of the
record as provided, the Bureau may modify, terminate, or set aside
any such order with permission of the court.
(4) Appeal to court of appeals.--Any party to any proceeding
under this subsection may obtain a review of any order served
pursuant to this subsection (other than an order issued with the
consent of the person concerned) by the filing in the court of
appeals of the United States for the circuit in which the principal
office of the covered person is located, or in the United States
Court of Appeals for the District of Columbia Circuit, within 30
days after the date of service of such order, a written petition
praying that the order of the Bureau be modified, terminated, or
set aside. A copy of such petition shall be forthwith transmitted
by the clerk of the court to the Bureau, and thereupon the Bureau
shall file in the court the record in the proceeding, as provided
in section 2112 of title 28 of the United States Code. Upon the
filing of such petition, such court shall have jurisdiction, which
upon the filing of the record shall except as provided in the last
sentence of paragraph (3) be exclusive, to affirm, modify,
terminate, or set aside, in whole or in part, the order of the
Bureau. Review of such proceedings shall be had as provided in
chapter 7 of title 5 of the United States Code. The judgment and
decree of the court shall be final, except that the same shall be
subject to review by the Supreme Court of the United States, upon
certiorari, as provided in section 1254 of title 28 of the United
States Code.
(5) No stay.--The commencement of proceedings for judicial
review under paragraph (4) shall not, unless specifically ordered
by the court, operate as a stay of any order issued by the Bureau.
(c) Special Rules for Temporary Cease-and-desist Proceedings.--
(1) In general.--Whenever the Bureau determines that the
violation specified in the notice of charges served upon a person,
including a service provider, pursuant to subsection (b), or the
continuation thereof, is likely to cause the person to be insolvent
or otherwise prejudice the interests of consumers before the
completion of the proceedings conducted pursuant to subsection (b),
the Bureau may issue a temporary order requiring the person to
cease and desist from any such violation or practice and to take
affirmative action to prevent or remedy such insolvency or other
condition pending completion of such proceedings. Such order may
include any requirement authorized under this subtitle. Such order
shall become effective upon service upon the person and, unless set
aside, limited, or suspended by a court in proceedings authorized
by paragraph (2), shall remain effective and enforceable pending
the completion of the administrative proceedings pursuant to such
notice and until such time as the Bureau shall dismiss the charges
specified in such notice, or if a cease-and-desist order is issued
against the person, until the effective date of such order.
(2) Appeal.--Not later than 10 days after the covered person or
service provider concerned has been served with a temporary cease-
and-desist order, the person may apply to the United States
district court for the judicial district in which the residence or
principal office or place of business of the person is located, or
the United States District Court for the District of Columbia, for
an injunction setting aside, limiting, or suspending the
enforcement, operation, or effectiveness of such order pending the
completion of the administrative proceedings pursuant to the notice
of charges served upon the person under subsection (b), and such
court shall have jurisdiction to issue such injunction.
(3) Incomplete or inaccurate records.--
(A) Temporary order.--If a notice of charges served under
subsection (b) specifies, on the basis of particular facts and
circumstances, that the books and records of a covered person
or service provider are so incomplete or inaccurate that the
Bureau is unable to determine the financial condition of that
person or the details or purpose of any transaction or
transactions that may have a material effect on the financial
condition of that person, the Bureau may issue a temporary
order requiring--
(i) the cessation of any activity or practice which
gave rise, whether in whole or in part, to the incomplete
or inaccurate state of the books or records; or
(ii) affirmative action to restore such books or
records to a complete and accurate state, until the
completion of the proceedings under subsection (b)(1).
(B) Effective period.--Any temporary order issued under
subparagraph (A)--
(i) shall become effective upon service; and
(ii) unless set aside, limited, or suspended by a court
in proceedings under paragraph (2), shall remain in effect
and enforceable until the earlier of--
(I) the completion of the proceeding initiated
under subsection (b) in connection with the notice of
charges; or
(II) the date the Bureau determines, by examination
or otherwise, that the books and records of the covered
person or service provider are accurate and reflect the
financial condition thereof.
(d) Special Rules for Enforcement of Orders.--
(1) In general.--The Bureau may in its discretion apply to the
United States district court within the jurisdiction of which the
principal office or place of business of the person is located, for
the enforcement of any effective and outstanding notice or order
issued under this section, and such court shall have jurisdiction
and power to order and require compliance herewith.
(2) Exception.--Except as otherwise provided in this
subsection, no court shall have jurisdiction to affect by
injunction or otherwise the issuance or enforcement of any notice
or order or to review, modify, suspend, terminate, or set aside any
such notice or order.
(e) Rules.--The Bureau shall prescribe rules establishing such
procedures as may be necessary to carry out this section.
SEC. 1054. LITIGATION AUTHORITY.
(a) In General.--If any person violates a Federal consumer
financial law, the Bureau may, subject to sections 1024, 1025, and
1026, commence a civil action against such person to impose a civil
penalty or to seek all appropriate legal and equitable relief including
a permanent or temporary injunction as permitted by law.
(b) Representation.--The Bureau may act in its own name and through
its own attorneys in enforcing any provision of this title, rules
thereunder, or any other law or regulation, or in any action, suit, or
proceeding to which the Bureau is a party.
(c) Compromise of Actions.--The Bureau may compromise or settle any
action if such compromise is approved by the court.
(d) Notice to the Attorney General.--
(1) In general.--When commencing a civil action under Federal
consumer financial law, or any rule thereunder, the Bureau shall
notify the Attorney General and, with respect to a civil action
against an insured depository institution or insured credit union,
the appropriate prudential regulator.
(2) Notice and coordination.--
(A) Notice of other actions.--In addition to any notice
required under paragraph (1), the Bureau shall notify the
Attorney General concerning any action, suit, or proceeding to
which the Bureau is a party, except an action, suit, or
proceeding that involves the offering or provision of consumer
financial products or services.
(B) Coordination.--In order to avoid conflicts and promote
consistency regarding litigation of matters under Federal law,
the Attorney General and the Bureau shall consult regarding the
coordination of investigations and proceedings, including by
negotiating an agreement for coordination by not later than 180
days after the designated transfer date. The agreement under
this subparagraph shall include provisions to ensure that
parallel investigations and proceedings involving the Federal
consumer financial laws are conducted in a manner that avoids
conflicts and does not impede the ability of the Attorney
General to prosecute violations of Federal criminal laws.
(C) Rule of construction.--Nothing in this paragraph shall
be construed to limit the authority of the Bureau under this
title, including the authority to interpret Federal consumer
financial law.
(e) Appearance Before the Supreme Court.--The Bureau may represent
itself in its own name before the Supreme Court of the United States,
provided that the Bureau makes a written request to the Attorney
General within the 10-day period which begins on the date of entry of
the judgment which would permit any party to file a petition for writ
of certiorari, and the Attorney General concurs with such request or
fails to take action within 60 days of the request of the Bureau.
(f) Forum.--Any civil action brought under this title may be
brought in a United States district court or in any court of competent
jurisdiction of a state in a district in which the defendant is located
or resides or is doing business, and such court shall have jurisdiction
to enjoin such person and to require compliance with any Federal
consumer financial law.
(g) Time for Bringing Action.--
(1) In general.--Except as otherwise permitted by law or
equity, no action may be brought under this title more than 3 years
after the date of discovery of the violation to which an action
relates.
(2) Limitations under other federal laws.--
(A) In general.--An action arising under this title does
not include claims arising solely under enumerated consumer
laws.
(B) Bureau authority.--In any action arising solely under
an enumerated consumer law, the Bureau may commence, defend, or
intervene in the action in accordance with the requirements of
that provision of law, as applicable.
(C) Transferred authority.--In any action arising solely
under laws for which authorities were transferred under
subtitles F and H, the Bureau may commence, defend, or
intervene in the action in accordance with the requirements of
that provision of law, as applicable.
SEC. 1055. RELIEF AVAILABLE.
(a) Administrative Proceedings or Court Actions.--
(1) Jurisdiction.--The court (or the Bureau, as the case may
be) in an action or adjudication proceeding brought under Federal
consumer financial law, shall have jurisdiction to grant any
appropriate legal or equitable relief with respect to a violation
of Federal consumer financial law, including a violation of a rule
or order prescribed under a Federal consumer financial law.
(2) Relief.--Relief under this section may include, without
limitation--
(A) rescission or reformation of contracts;
(B) refund of moneys or return of real property;
(C) restitution;
(D) disgorgement or compensation for unjust enrichment;
(E) payment of damages or other monetary relief;
(F) public notification regarding the violation, including
the costs of notification;
(G) limits on the activities or functions of the person;
and
(H) civil money penalties, as set forth more fully in
subsection (c).
(3) No exemplary or punitive damages.--Nothing in this
subsection shall be construed as authorizing the imposition of
exemplary or punitive damages.
(b) Recovery of Costs.--In any action brought by the Bureau, a
State attorney general, or any State regulator to enforce any Federal
consumer financial law, the Bureau, the State attorney general, or the
State regulator may recover its costs in connection with prosecuting
such action if the Bureau, the State attorney general, or the State
regulator is the prevailing party in the action.
(c) Civil Money Penalty in Court and Administrative Actions.--
(1) In general.--Any person that violates, through any act or
omission, any provision of Federal consumer financial law shall
forfeit and pay a civil penalty pursuant to this subsection.
(2) Penalty amounts.--
(A) First tier.--For any violation of a law, rule, or final
order or condition imposed in writing by the Bureau, a civil
penalty may not exceed $5,000 for each day during which such
violation or failure to pay continues.
(B) Second tier.--Notwithstanding paragraph (A), for any
person that recklessly engages in a violation of a Federal
consumer financial law, a civil penalty may not exceed $25,000
for each day during which such violation continues.
(C) Third tier.--Notwithstanding subparagraphs (A) and (B),
for any person that knowingly violates a Federal consumer
financial law, a civil penalty may not exceed $1,000,000 for
each day during which such violation continues.
(3) Mitigating factors.--In determining the amount of any
penalty assessed under paragraph (2), the Bureau or the court shall
take into account the appropriateness of the penalty with respect
to--
(A) the size of financial resources and good faith of the
person charged;
(B) the gravity of the violation or failure to pay;
(C) the severity of the risks to or losses of the consumer,
which may take into account the number of products or services
sold or provided;
(D) the history of previous violations; and
(E) such other matters as justice may require.
(4) Authority to modify or remit penalty.--The Bureau may
compromise, modify, or remit any penalty which may be assessed or
had already been assessed under paragraph (2). The amount of such
penalty, when finally determined, shall be exclusive of any sums
owed by the person to the United States in connection with the
costs of the proceeding, and may be deducted from any sums owing by
the United States to the person charged.
(5) Notice and hearing.--No civil penalty may be assessed under
this subsection with respect to a violation of any Federal consumer
financial law, unless--
(A) the Bureau gives notice and an opportunity for a
hearing to the person accused of the violation; or
(B) the appropriate court has ordered such assessment and
entered judgment in favor of the Bureau.
SEC. 1056. REFERRALS FOR CRIMINAL PROCEEDINGS.
If the Bureau obtains evidence that any person, domestic or
foreign, has engaged in conduct that may constitute a violation of
Federal criminal law, the Bureau shall transmit such evidence to the
Attorney General of the United States, who may institute criminal
proceedings under appropriate law. Nothing in this section affects any
other authority of the Bureau to disclose information.
SEC. 1057. EMPLOYEE PROTECTION.
(a) In General.--No covered person or service provider shall
terminate or in any other way discriminate against, or cause to be
terminated or discriminated against, any covered employee or any
authorized representative of covered employees by reason of the fact
that such employee or representative, whether at the initiative of the
employee or in the ordinary course of the duties of the employee (or
any person acting pursuant to a request of the employee), has--
(1) provided, caused to be provided, or is about to provide or
cause to be provided, information to the employer, the Bureau, or
any other State, local, or Federal, government authority or law
enforcement agency relating to any violation of, or any act or
omission that the employee reasonably believes to be a violation
of, any provision of this title or any other provision of law that
is subject to the jurisdiction of the Bureau, or any rule, order,
standard, or prohibition prescribed by the Bureau;
(2) testified or will testify in any proceeding resulting from
the administration or enforcement of any provision of this title or
any other provision of law that is subject to the jurisdiction of
the Bureau, or any rule, order, standard, or prohibition prescribed
by the Bureau;
(3) filed, instituted, or caused to be filed or instituted any
proceeding under any Federal consumer financial law; or
(4) objected to, or refused to participate in, any activity,
policy, practice, or assigned task that the employee (or other such
person) reasonably believed to be in violation of any law, rule,
order, standard, or prohibition, subject to the jurisdiction of, or
enforceable by, the Bureau.
(b) Definition of Covered Employee.--For the purposes of this
section, the term ``covered employee'' means any individual performing
tasks related to the offering or provision of a consumer financial
product or service.
(c) Procedures and Timetables.--
(1) Complaint.--
(A) In general.--A person who believes that he or she has
been discharged or otherwise discriminated against by any
person in violation of subsection (a) may, not later than 180
days after the date on which such alleged violation occurs,
file (or have any person file on his or her behalf) a complaint
with the Secretary of Labor alleging such discharge or
discrimination and identifying the person responsible for such
act.
(B) Actions of secretary of labor.--Upon receipt of such a
complaint, the Secretary of Labor shall notify, in writing, the
person named in the complaint who is alleged to have committed
the violation, of--
(i) the filing of the complaint;
(ii) the allegations contained in the complaint;
(iii) the substance of evidence supporting the
complaint; and
(iv) opportunities that will be afforded to such person
under paragraph (2).
(2) Investigation by secretary of labor.--
(A) In general.--Not later than 60 days after the date of
receipt of a complaint filed under paragraph (1), and after
affording the complainant and the person named in the complaint
who is alleged to have committed the violation that is the
basis for the complaint an opportunity to submit to the
Secretary of Labor a written response to the complaint and an
opportunity to meet with a representative of the Secretary of
Labor to present statements from witnesses, the Secretary of
Labor shall--
(i) initiate an investigation and determine whether
there is reasonable cause to believe that the complaint has
merit; and
(ii) notify the complainant and the person alleged to
have committed the violation of subsection (a), in writing,
of such determination.
(B) Notice of relief available.--If the Secretary of Labor
concludes that there is reasonable cause to believe that a
violation of subsection (a) has occurred, the Secretary of
Labor shall, together with the notice under subparagraph
(A)(ii), issue a preliminary order providing the relief
prescribed by paragraph (4)(B).
(C) Request for hearing.--Not later than 30 days after the
date of receipt of notification of a determination of the
Secretary of Labor under this paragraph, either the person
alleged to have committed the violation or the complainant may
file objections to the findings or preliminary order, or both,
and request a hearing on the record. The filing of such
objections shall not operate to stay any reinstatement remedy
contained in the preliminary order. Any such hearing shall be
conducted expeditiously, and if a hearing is not requested in
such 30-day period, the preliminary order shall be deemed a
final order that is not subject to judicial review.
(3) Grounds for determination of complaints.--
(A) In general.--The Secretary of Labor shall dismiss a
complaint filed under this subsection, and shall not conduct an
investigation otherwise required under paragraph (2), unless
the complainant makes a prima facie showing that any behavior
described in paragraphs (1) through (4) of subsection (a) was a
contributing factor in the unfavorable personnel action alleged
in the complaint.
(B) Rebuttal evidence.--Notwithstanding a finding by the
Secretary of Labor that the complainant has made the showing
required under subparagraph (A), no investigation otherwise
required under paragraph (2) shall be conducted, if the
employer demonstrates, by clear and convincing evidence, that
the employer would have taken the same unfavorable personnel
action in the absence of that behavior.
(C) Evidentiary standards.--The Secretary of Labor may
determine that a violation of subsection (a) has occurred only
if the complainant demonstrates that any behavior described in
paragraphs (1) through (4) of subsection (a) was a contributing
factor in the unfavorable personnel action alleged in the
complaint. Relief may not be ordered under subparagraph (A) if
the employer demonstrates by clear and convincing evidence that
the employer would have taken the same unfavorable personnel
action in the absence of that behavior.
(4) Issuance of final orders; review procedures.--
(A) Timing.--Not later than 120 days after the date of
conclusion of any hearing under paragraph (2), the Secretary of
Labor shall issue a final order providing the relief prescribed
by this paragraph or denying the complaint. At any time before
issuance of a final order, a proceeding under this subsection
may be terminated on the basis of a settlement agreement
entered into by the Secretary of Labor, the complainant, and
the person alleged to have committed the violation.
(B) Penalties.--
(i) Order of secretary of labor.--If, in response to a
complaint filed under paragraph (1), the Secretary of Labor
determines that a violation of subsection (a) has occurred,
the Secretary of Labor shall order the person who committed
such violation--
(I) to take affirmative action to abate the
violation;
(II) to reinstate the complainant to his or her
former position, together with compensation (including
back pay) and restore the terms, conditions, and
privileges associated with his or her employment; and
(III) to provide compensatory damages to the
complainant.
(ii) Penalty.--If an order is issued under clause (i),
the Secretary of Labor, at the request of the complainant,
shall assess against the person against whom the order is
issued, a sum equal to the aggregate amount of all costs
and expenses (including attorney fees and expert witness
fees) reasonably incurred, as determined by the Secretary
of Labor, by the complainant for, or in connection with,
the bringing of the complaint upon which the order was
issued.
(C) Penalty for frivolous claims.--If the Secretary of
Labor finds that a complaint under paragraph (1) is frivolous
or has been brought in bad faith, the Secretary of Labor may
award to the prevailing employer a reasonable attorney fee, not
exceeding $1,000, to be paid by the complainant.
(D) De novo review.--
(i) Failure of the secretary to act.--If the Secretary
of Labor has not issued a final order within 210 days after
the date of filing of a complaint under this subsection, or
within 90 days after the date of receipt of a written
determination, the complainant may bring an action at law
or equity for de novo review in the appropriate district
court of the United States having jurisdiction, which shall
have jurisdiction over such an action without regard to the
amount in controversy, and which action shall, at the
request of either party to such action, be tried by the
court with a jury.
(ii) Procedures.--A proceeding under clause (i) shall
be governed by the same legal burdens of proof specified in
paragraph (3). The court shall have jurisdiction to grant
all relief necessary to make the employee whole, including
injunctive relief and compensatory damages, including--
(I) reinstatement with the same seniority status
that the employee would have had, but for the discharge
or discrimination;
(II) the amount of back pay, with interest; and
(III) compensation for any special damages
sustained as a result of the discharge or
discrimination, including litigation costs, expert
witness fees, and reasonable attorney fees.
(E) Other appeals.--Unless the complainant brings an action
under subparagraph (D), any person adversely affected or
aggrieved by a final order issued under subparagraph (A) may
file a petition for review of the order in the United States
Court of Appeals for the circuit in which the violation with
respect to which the order was issued, allegedly occurred or
the circuit in which the complainant resided on the date of
such violation, not later than 60 days after the date of the
issuance of the final order of the Secretary of Labor under
subparagraph (A). Review shall conform to chapter 7 of title 5,
United States Code. The commencement of proceedings under this
subparagraph shall not, unless ordered by the court, operate as
a stay of the order. An order of the Secretary of Labor with
respect to which review could have been obtained under this
subparagraph shall not be subject to judicial review in any
criminal or other civil proceeding.
(5) Failure to comply with order.--
(A) Actions by the secretary.--If any person has failed to
comply with a final order issued under paragraph (4), the
Secretary of Labor may file a civil action in the United States
district court for the district in which the violation was
found to have occurred, or in the United States district court
for the District of Columbia, to enforce such order. In actions
brought under this paragraph, the district courts shall have
jurisdiction to grant all appropriate relief including
injunctive relief and compensatory damages.
(B) Civil actions to compel compliance.--A person on whose
behalf an order was issued under paragraph (4) may commence a
civil action against the person to whom such order was issued
to require compliance with such order. The appropriate United
States district court shall have jurisdiction, without regard
to the amount in controversy or the citizenship of the parties,
to enforce such order.
(C) Award of costs authorized.--The court, in issuing any
final order under this paragraph, may award costs of litigation
(including reasonable attorney and expert witness fees) to any
party, whenever the court determines such award is appropriate.
(D) Mandamus proceedings.--Any nondiscretionary duty
imposed by this section shall be enforceable in a mandamus
proceeding brought under section 1361 of title 28, United
States Code.
(d) Unenforceability of Certain Agreements.--
(1) No waiver of rights and remedies.--Except as provided under
paragraph (3), and notwithstanding any other provision of law, the
rights and remedies provided for in this section may not be waived
by any agreement, policy, form, or condition of employment,
including by any predispute arbitration agreement.
(2) No predispute arbitration agreements.--Except as provided
under paragraph (3), and notwithstanding any other provision of
law, no predispute arbitration agreement shall be valid or
enforceable to the extent that it requires arbitration of a dispute
arising under this section.
(3) Exception.--Notwithstanding paragraphs (1) and (2), an
arbitration provision in a collective bargaining agreement shall be
enforceable as to disputes arising under subsection (a)(4), unless
the Bureau determines, by rule, that such provision is inconsistent
with the purposes of this title.
SEC. 1058. EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date.
Subtitle F--Transfer of Functions and Personnel; Transitional
Provisions
SEC. 1061. TRANSFER OF CONSUMER FINANCIAL PROTECTION FUNCTIONS.
(a) Defined Terms.--For purposes of this subtitle--
(1) the term ``consumer financial protection functions''
means--
(A) all authority to prescribe rules or issue orders or
guidelines pursuant to any Federal consumer financial law,
including performing appropriate functions to promulgate and
review such rules, orders, and guidelines; and
(B) the examination authority described in subsection
(c)(1), with respect to a person described in subsection
1025(a); and
(2) the terms ``transferor agency'' and ``transferor agencies''
mean, respectively--
(A) the Board of Governors (and any Federal reserve bank,
as the context requires), the Federal Deposit Insurance
Corporation, the Federal Trade Commission, the National Credit
Union Administration, the Office of the Comptroller of the
Currency, the Office of Thrift Supervision, and the Department
of Housing and Urban Development, and the heads of those
agencies; and
(B) the agencies listed in subparagraph (A), collectively.
(b) In General.--Except as provided in subsection (c), consumer
financial protection functions are transferred as follows:
(1) Board of governors.--
(A) Transfer of functions.--All consumer financial
protection functions of the Board of Governors are transferred
to the Bureau.
(B) Board of governors authority.--The Bureau shall have
all powers and duties that were vested in the Board of
Governors, relating to consumer financial protection functions,
on the day before the designated transfer date.
(2) Comptroller of the currency.--
(A) Transfer of functions.--All consumer financial
protection functions of the Comptroller of the Currency are
transferred to the Bureau.
(B) Comptroller authority.--The Bureau shall have all
powers and duties that were vested in the Comptroller of the
Currency, relating to consumer financial protection functions,
on the day before the designated transfer date.
(3) Director of the office of thrift supervision.--
(A) Transfer of functions.--All consumer financial
protection functions of the Director of the Office of Thrift
Supervision are transferred to the Bureau.
(B) Director authority.--The Bureau shall have all powers
and duties that were vested in the Director of the Office of
Thrift Supervision, relating to consumer financial protection
functions, on the day before the designated transfer date.
(4) Federal deposit insurance corporation.--
(A) Transfer of functions.--All consumer financial
protection functions of the Federal Deposit Insurance
Corporation are transferred to the Bureau.
(B) Corporation authority.--The Bureau shall have all
powers and duties that were vested in the Federal Deposit
Insurance Corporation, relating to consumer financial
protection functions, on the day before the designated transfer
date.
(5) Federal trade commission.--
(A) Transfer of functions.--The authority of the Federal
Trade Commission under an enumerated consumer law to prescribe
rules, issue guidelines, or conduct a study or issue a report
mandated under such law shall be transferred to the Bureau on
the designated transfer date. Nothing in this title shall be
construed to require a mandatory transfer of any employee of
the Federal Trade Commission.
(B) Bureau authority.--
(i) In general.--The Bureau shall have all powers and
duties under the enumerated consumer laws to prescribe
rules, issue guidelines, or to conduct studies or issue
reports mandated by such laws, that were vested in the
Federal Trade Commission on the day before the designated
transfer date.
(ii) Federal trade commission act.--Subject to subtitle
B, the Bureau may enforce a rule prescribed under the
Federal Trade Commission Act by the Federal Trade
Commission with respect to an unfair or deceptive act or
practice to the extent that such rule applies to a covered
person or service provider with respect to the offering or
provision of a consumer financial product or service as if
it were a rule prescribed under section 1031 of this title.
(C) Authority of the federal trade commission.--
(i) In general.--No provision of this title shall be
construed as modifying, limiting, or otherwise affecting
the authority of the Federal Trade Commission (including
its authority with respect to affiliates described in
section 1025(a)(1)) under the Federal Trade Commission Act
or any other law, other than the authority under an
enumerated consumer law to prescribe rules, issue official
guidelines, or conduct a study or issue a report mandated
under such law.
(ii) Commission authority relating to rules prescribed
by the bureau.--Subject to subtitle B, the Federal Trade
Commission shall have authority to enforce under the
Federal Trade Commission Act (15 U.S.C. 41 et seq.) a rule
prescribed by the Bureau under this title with respect to a
covered person subject to the jurisdiction of the Federal
Trade Commission under that Act, and a violation of such a
rule by such a person shall be treated as a violation of a
rule issued under section 18 of that Act (15 U.S.C. 57a)
with respect to unfair or deceptive acts or practices.
(D) Coordination.--To avoid duplication of or conflict
between rules prescribed by the Bureau under section 1031 of
this title and the Federal Trade Commission under section
18(a)(1)(B) of the Federal Trade Commission Act that apply to a
covered person or service provider with respect to the offering
or provision of consumer financial products or services, the
agencies shall negotiate an agreement with respect to
rulemaking by each agency, including consultation with the
other agency prior to proposing a rule and during the comment
period.
(E) Deference.--No provision of this title shall be
construed as altering, limiting, expanding, or otherwise
affecting the deference that a court affords to the--
(i) Federal Trade Commission in making determinations
regarding the meaning or interpretation of any provision of
the Federal Trade Commission Act, or of any other Federal
law for which the Commission has authority to prescribe
rules; or
(ii) Bureau in making determinations regarding the
meaning or interpretation of any provision of a Federal
consumer financial law (other than any law described in
clause (i)).
(6) National credit union administration.--
(A) Transfer of functions.--All consumer financial
protection functions of the National Credit Union
Administration are transferred to the Bureau.
(B) National credit union administration authority.--The
Bureau shall have all powers and duties that were vested in the
National Credit Union Administration, relating to consumer
financial protection functions, on the day before the
designated transfer date.
(7) Department of housing and urban development.--
(A) Transfer of functions.--All consumer protection
functions of the Secretary of the Department of Housing and
Urban Development relating to the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et seq.), the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C.
5102 et seq.), and the Interstate Land Sales Full Disclosure
Act (15 U.S.C. 1701 et seq.) are transferred to the Bureau.
(B) Authority of the department of housing and urban
development.--The Bureau shall have all powers and duties that
were vested in the Secretary of the Department of Housing and
Urban Development relating to the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et seq.), the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C.
5101 et seq.), and the Interstate Land Sales Full Disclosure
Act (15 U.S.C. 1701 et seq.), on the day before the designated
transfer date.
(c) Authorities of the Prudential Regulators.--
(1) Examination.--A transferor agency that is a prudential
regulator shall have--
(A) authority to require reports from and conduct
examinations for compliance with Federal consumer financial
laws with respect to a person described in section 1025(a),
that is incidental to the backup and enforcement procedures
provided to the regulator under section 1025(c); and
(B) exclusive authority (relative to the Bureau) to require
reports from and conduct examinations for compliance with
Federal consumer financial laws with respect to a person
described in section 1026(a), except as provided to the Bureau
under subsections (b) and (c) of section 1026.
(2) Enforcement.--
(A) Limitation.--The authority of a transferor agency that
is a prudential regulator to enforce compliance with Federal
consumer financial laws with respect to a person described in
section 1025(a), shall be limited to the backup and enforcement
procedures in described in section 1025(c).
(B) Exclusive authority.--A transferor agency that is a
prudential regulator shall have exclusive authority (relative
to the Bureau) to enforce compliance with Federal consumer
financial laws with respect to a person described in section
1026(a), except as provided to the Bureau under subsections (b)
and (c) of section 1026.
(C) Statutory enforcement.--For purposes of carrying out
the authorities under, and subject to the limitations of,
subtitle B, each prudential regulator may enforce compliance
with the requirements imposed under this title, and any rule or
order prescribed by the Bureau under this title, under--
(i) the Federal Credit Union Act (12 U.S.C. 1751 et
seq.), by the National Credit Union Administration Board
with respect to any covered person or service provider that
is an insured credit union, or service provider thereto, or
any affiliate of an insured credit union, who is subject to
the jurisdiction of the Board under that Act; and
(ii) section 8 of the Federal Deposit Insurance Act (12
U.S.C. 1818), by the appropriate Federal banking agency, as
defined in section 3(q) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(q)), with respect to a covered person
or service provider that is a person described in section
3(q) of that Act and who is subject to the jurisdiction of
that agency, as set forth in sections 3(q) and 8 of the
Federal Deposit Insurance Act; or
(iii) the Bank Service Company Act (12 U.S.C. 1861 et
seq.).
(d) Effective Date.--Subsections (b) and (c) shall become effective
on the designated transfer date.
SEC. 1062. DESIGNATED TRANSFER DATE.
(a) In General.--Not later than 60 days after the date of enactment
of this Act, the Secretary shall--
(1) in consultation with the Chairman of the Board of
Governors, the Chairperson of the Corporation, the Chairman of the
Federal Trade Commission, the Chairman of the National Credit Union
Administration Board, the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, the Secretary of the
Department of Housing and Urban Development, and the Director of
the Office of Management and Budget, designate a single calendar
date for the transfer of functions to the Bureau under section
1061; and
(2) publish notice of that designated date in the Federal
Register.
(b) Changing Designation.--The Secretary--
(1) may, in consultation with the Chairman of the Board of
Governors, the Chairperson of the Federal Deposit Insurance
Corporation, the Chairman of the Federal Trade Commission, the
Chairman of the National Credit Union Administration Board, the
Comptroller of the Currency, the Director of the Office of Thrift
Supervision, the Secretary of the Department of Housing and Urban
Development, and the Director of the Office of Management and
Budget, change the date designated under subsection (a); and
(2) shall publish notice of any changed designated date in the
Federal Register.
(c) Permissible Dates.--
(1) In general.--Except as provided in paragraph (2), any date
designated under this section shall be not earlier than 180 days,
nor later than 12 months, after the date of enactment of this Act.
(2) Extension of time.--The Secretary may designate a date that
is later than 12 months after the date of enactment of this Act if
the Secretary transmits to appropriate committees of Congress--
(A) a written determination that orderly implementation of
this title is not feasible before the date that is 12 months
after the date of enactment of this Act;
(B) an explanation of why an extension is necessary for the
orderly implementation of this title; and
(C) a description of the steps that will be taken to effect
an orderly and timely implementation of this title within the
extended time period.
(3) Extension limited.--In no case may any date designated
under this section be later than 18 months after the date of
enactment of this Act.
SEC. 1063. SAVINGS PROVISIONS.
(a) Board of Governors.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(1) does not affect the validity of any right, duty,
or obligation of the United States, the Board of Governors (or any
Federal reserve bank), or any other person that--
(A) arises under any provision of law relating to any
consumer financial protection function of the Board of
Governors transferred to the Bureau by this title; and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Board of Governors
(or any Federal reserve bank) before the designated transfer date
with respect to any consumer financial protection function of the
Board of Governors (or any Federal reserve bank) transferred to the
Bureau by this title, except that the Bureau, subject to sections
1024, 1025, and 1026, shall be substituted for the Board of
Governors (or Federal reserve bank) as a party to any such
proceeding as of the designated transfer date.
(b) Federal Deposit Insurance Corporation.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(4) does not affect the validity of any right, duty,
or obligation of the United States, the Federal Deposit Insurance
Corporation, the Board of Directors of that Corporation, or any
other person, that--
(A) arises under any provision of law relating to any
consumer financial protection function of the Federal Deposit
Insurance Corporation transferred to the Bureau by this title;
and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Federal Deposit
Insurance Corporation (or the Board of Directors of that
Corporation) before the designated transfer date with respect to
any consumer financial protection function of the Federal Deposit
Insurance Corporation transferred to the Bureau by this title,
except that the Bureau, subject to sections 1024, 1025, and 1026,
shall be substituted for the Federal Deposit Insurance Corporation
(or Board of Directors) as a party to any such proceeding as of the
designated transfer date.
(c) Federal Trade Commission.--Section 1061(b)(5) does not affect
the validity of any right, duty, or obligation of the United States,
the Federal Trade Commission, or any other person, that--
(1) arises under any provision of law relating to any consumer
financial protection function of the Federal Trade Commission
transferred to the Bureau by this title; and
(2) existed on the day before the designated transfer date.
(d) National Credit Union Administration.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(6) does not affect the validity of any right, duty,
or obligation of the United States, the National Credit Union
Administration, the National Credit Union Administration Board, or
any other person, that--
(A) arises under any provision of law relating to any
consumer financial protection function of the National Credit
Union Administration transferred to the Bureau by this title;
and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the National Credit
Union Administration (or the National Credit Union Administration
Board) before the designated transfer date with respect to any
consumer financial protection function of the National Credit Union
Administration transferred to the Bureau by this title, except that
the Bureau, subject to sections 1024, 1025, and 1026, shall be
substituted for the National Credit Union Administration (or
National Credit Union Administration Board) as a party to any such
proceeding as of the designated transfer date.
(e) Office of the Comptroller of the Currency.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(2) does not affect the validity of any right, duty,
or obligation of the United States, the Comptroller of the
Currency, the Office of the Comptroller of the Currency, or any
other person, that--
(A) arises under any provision of law relating to any
consumer financial protection function of the Comptroller of
the Currency transferred to the Bureau by this title; and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Comptroller of the
Currency (or the Office of the Comptroller of the Currency) with
respect to any consumer financial protection function of the
Comptroller of the Currency transferred to the Bureau by this title
before the designated transfer date, except that the Bureau,
subject to sections 1024, 1025, and 1026, shall be substituted for
the Comptroller of the Currency (or the Office of the Comptroller
of the Currency) as a party to any such proceeding as of the
designated transfer date.
(f) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(3) does not affect the validity of any right, duty,
or obligation of the United States, the Director of the Office of
Thrift Supervision, the Office of Thrift Supervision, or any other
person, that--
(A) arises under any provision of law relating to any
consumer financial protection function of the Director of the
Office of Thrift Supervision transferred to the Bureau by this
title; and
(B) that existed on the day before the designated transfer
date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Director of the
Office of Thrift Supervision (or the Office of Thrift Supervision)
with respect to any consumer financial protection function of the
Director of the Office of Thrift Supervision transferred to the
Bureau by this title before the designated transfer date, except
that the Bureau, subject to sections 1024, 1025, and 1026, shall be
substituted for the Director (or the Office of Thrift Supervision)
as a party to any such proceeding as of the designated transfer
date.
(g) Department of Housing and Urban Development.--
(1) Existing rights, duties, and obligations not affected.--
Section 1061(b)(7) shall not affect the validity of any right,
duty, or obligation of the United States, the Secretary of the
Department of Housing and Urban Development (or the Department of
Housing and Urban Development), or any other person, that--
(A) arises under any provision of law relating to any
function of the Secretary of the Department of Housing and
Urban Development with respect to the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2601 et seq.), the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C.
5102 et seq.), or the Interstate Land Sales Full Disclosure Act
(15 U.S.C. 1701 et seq) transferred to the Bureau by this
title; and
(B) existed on the day before the designated transfer date.
(2) Continuation of suits.--This title shall not abate any
proceeding commenced by or against the Secretary of the Department
of Housing and Urban Development (or the Department of Housing and
Urban Development) with respect to any consumer financial
protection function of the Secretary of the Department of Housing
and Urban Development transferred to the Bureau by this title
before the designated transfer date, except that the Bureau,
subject to sections 1024, 1025, and 1026, shall be substituted for
the Secretary of the Department of Housing and Urban Development
(or the Department of Housing and Urban Development) as a party to
any such proceeding as of the designated transfer date.
(h) Continuation of Existing Orders, Rulings, Determinations,
Agreements, and Resolutions.--
(1) In general.--Except as provided in paragraph (2) and under
subsection (i), all orders, resolutions, determinations,
agreements, and rulings that have been issued, made, prescribed, or
allowed to become effective by any transferor agency or by a court
of competent jurisdiction, in the performance of consumer financial
protection functions that are transferred by this title and that
are in effect on the day before the designated transfer date, shall
continue in effect, and shall continue to be enforceable by the
appropriate transferor agency, according to the terms of those
orders, resolutions, determinations, agreements, and rulings, and
shall not be enforceable by or against the Bureau.
(2) Exception for orders applicable to persons described in
section 1025(a).--All orders, resolutions, determinations,
agreements, and rulings that have been issued, made, prescribed, or
allowed to become effective by any transferor agency or by a court
of competent jurisdiction, in the performance of consumer financial
protection functions that are transferred by this title and that
are in effect on the day before the designated transfer date with
respect to any person described in section 1025(a), shall continue
in effect, according to the terms of those orders, resolutions,
determinations, agreements, and rulings, and shall be enforceable
by or against the Bureau or transferor agency.
(i) Identification of Rules and Orders Continued.--Not later than
the designated transfer date, the Bureau--
(1) shall, after consultation with the head of each transferor
agency, identify the rules and orders that will be enforced by the
Bureau; and
(2) shall publish a list of such rules and orders in the
Federal Register.
(j) Status of Rules Proposed or Not Yet Effective.--
(1) Proposed rules.--Any proposed rule of a transferor agency
which that agency, in performing consumer financial protection
functions transferred by this title, has proposed before the
designated transfer date, but has not been published as a final
rule before that date, shall be deemed to be a proposed rule of the
Bureau.
(2) Rules not yet effective.--Any interim or final rule of a
transferor agency which that agency, in performing consumer
financial protection functions transferred by this title, has
published before the designated transfer date, but which has not
become effective before that date, shall become effective as a rule
of the Bureau according to its terms.
SEC. 1064. TRANSFER OF CERTAIN PERSONNEL.
(a) In General.--
(1) Certain federal reserve system employees transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Board of Governors shall--
(i) jointly determine the number of employees of the
Board of Governors necessary to perform or support the
consumer financial protection functions of the Board of
Governors that are transferred to the Bureau by this title;
and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Board of Governors
for transfer to the Bureau, in a manner that the Bureau and
the Board of Governors, in their sole discretion, determine
equitable.
(B) Identified employees transferred.--All employees of the
Board of Governors identified under subparagraph (A)(ii) shall
be transferred to the Bureau for employment.
(C) Federal reserve bank employees.--Employees of any
Federal reserve bank who are performing consumer financial
protection functions on behalf of the Board of Governors shall
be treated as employees of the Board of Governors for purposes
of subparagraphs (A) and (B).
(2) Certain fdic employees transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Board of Directors of the Federal Deposit Insurance Corporation
shall--
(i) jointly determine the number of employees of that
Corporation necessary to perform or support the consumer
financial protection functions of the Corporation that are
transferred to the Bureau by this title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Corporation for
transfer to the Bureau, in a manner that the Bureau and the
Board of Directors of the Corporation, in their sole
discretion, determine equitable.
(B) Identified employees transferred.--All employees of the
Corporation identified under subparagraph (A)(ii) shall be
transferred to the Bureau for employment.
(3) Certain ncua employees transferred.--
(A) Identifying employees for transfer.--The Bureau and the
National Credit Union Administration Board shall--
(i) jointly determine the number of employees of the
National Credit Union Administration necessary to perform
or support the consumer financial protection functions of
the National Credit Union Administration that are
transferred to the Bureau by this title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the National Credit
Union Administration for transfer to the Bureau, in a
manner that the Bureau and the National Credit Union
Administration Board, in their sole discretion, determine
equitable.
(B) Identified employees transferred.--All employees of the
National Credit Union Administration identified under
subparagraph (A)(ii) shall be transferred to the Bureau for
employment.
(4) Certain office of the comptroller of the currency employees
transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Comptroller of the Currency shall--
(i) jointly determine the number of employees of the
Office of the Comptroller of the Currency necessary to
perform or support the consumer financial protection
functions of the Office of the Comptroller of the Currency
that are transferred to the Bureau by this title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Office of the
Comptroller of the Currency for transfer to the Bureau, in
a manner that the Bureau and the Office of the Comptroller
of the Currency, in their sole discretion, determine
equitable.
(B) Identified employees transferred.--All employees of the
Office of the Comptroller of the Currency identified under
subparagraph (A)(ii) shall be transferred to the Bureau for
employment.
(5) Certain office of thrift supervision employees
transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Director of the Office of Thrift Supervision shall--
(i) jointly determine the number of employees of the
Office of Thrift Supervision necessary to perform or
support the consumer financial protection functions of the
Office of Thrift Supervision that are transferred to the
Bureau by this title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Office of Thrift
Supervision for transfer to the Bureau, in a manner that
the Bureau and the Office of Thrift Supervision, in their
sole discretion, determine equitable.
(B) Identified employees transferred.--All employees of the
Office of Thrift Supervision identified under subparagraph
(A)(ii) shall be transferred to the Bureau for employment.
(6) Certain employees of department of housing and urban
development transferred.--
(A) Identifying employees for transfer.--The Bureau and the
Secretary of the Department of Housing and Urban Development
shall--
(i) jointly determine the number of employees of the
Department of Housing and Urban Development necessary to
perform or support the consumer protection functions of the
Department that are transferred to the Bureau by this
title; and
(ii) consistent with the number determined under clause
(i), jointly identify employees of the Department of
Housing and Urban Development for transfer to the Bureau in
a manner that the Bureau and the Secretary of the
Department of Housing and Urban Development, in their sole
discretion, deem equitable.
(B) Identified employees transferred.--All employees of the
Department of Housing and Urban Development identified under
subparagraph (A)(ii) shall be transferred to the Bureau for
employment.
(7) Consumer education, financial literacy, consumer
complaints, and research functions.--The Bureau and each of the
transferor agencies (except the Federal Trade Commission) shall
jointly determine the number of employees and the types and grades
of employees necessary to perform the functions of the Bureau under
subtitle A, including consumer education, financial literacy,
policy analysis, responses to consumer complaints and inquiries,
research, and similar functions. All employees jointly identified
under this paragraph shall be transferred to the Bureau for
employment.
(8) Authority of the president to resolve disputes.--
(A) Action authorized.--In the event that the Bureau and a
transferor agency are unable to reach an agreement under
paragraphs (1) through (7) by the designated transfer date, the
President, or the designee thereof, may issue an order or
directive to the transferor agency to effect the transfer of
personnel and property under this subtitle.
(B) Transmittal to congress required.--If an order or
directive is issued under subparagraph (A), the President shall
transmit a copy of the written determination made with respect
to such order or directive, including an explanation for the
need for the order or directive, to the Committee on Banking,
Housing, and Urban Affairs and the Committee on Appropriations
of the Senate and the Committee on Financial Services and the
Committee on Appropriations of the House of Representatives.
(C) Sunset.--The authority provided in this paragraph shall
terminate 3 years after the designated transfer date.
(9) Appointment authority for excepted service and senior
executive service transferred.--
(A) In general.--In the case of an employee occupying a
position in the excepted service or the Senior Executive
Service, any appointment authority established pursuant to law
or regulations of the Office of Personnel Management for
filling such positions shall be transferred, subject to
subparagraph (B).
(B) Declining transfers allowed.--An agency or entity may
decline to make a transfer of authority under subparagraph (A)
(and the employees appointed pursuant thereto) to the extent
that such authority relates to positions excepted from the
competitive service because of their confidential, policy-
making, policy-determining, or policy-advocating character, and
non-career positions in the Senior Executive Service (within
the meaning of section 3132(a)(7) of title 5, United States
Code).
(b) Timing of Transfers and Position Assignments.--Each employee to
be transferred under this section shall--
(1) be transferred not later than 90 days after the designated
transfer date; and
(2) receive notice of a position assignment not later than 120
days after the effective date of his or her transfer.
(c) Transfer of Function.--
(1) In general.--Notwithstanding any other provision of law,
the transfer of employees shall be deemed a transfer of functions
for the purpose of section 3503 of title 5, United States Code.
(2) Priority of this title.--If any provisions of this title
conflict with any protection provided to transferred employees
under section 3503 of title 5, United States Code, the provisions
of this title shall control.
(d) Equal Status and Tenure Positions.--
(1) Employees transferred from the federal reserve system,
fdic, hud, ncua, occ, and ots.--Each employee transferred to the
Bureau from the Board of Governors, a Federal reserve bank, the
Federal Deposit Insurance Corporation, the Department of Housing
and Urban Development, the National Credit Union Administration,
the Office of the Comptroller of the Currency, or the Office of
Thrift Supervision shall be placed in a position at the Bureau with
the same status and tenure as that employee held on the day before
the designated transfer date.
(2) Employees transferred from the federal reserve system.--For
purposes of determining the status and position placement of a
transferred employee, any period of service with the Board of
Governors or a Federal reserve bank shall be credited as a period
of service with a Federal agency.
(e) Additional Certification Requirements Limited.--Examiners
transferred to the Bureau are not subject to any additional
certification requirements before being placed in a comparable examiner
position at the Bureau examining the same types of institutions as they
examined before they were transferred.
(f) Personnel Actions Limited.--
(1) 2-year protection.--Except as provided in paragraph (2),
each transferred employee holding a permanent position on the day
before the designated transfer date may not, during the 2-year
period beginning on the designated transfer date, be involuntarily
separated, or involuntarily reassigned outside his or her locality
pay area.
(2) Exceptions.--Paragraph (1) does not limit the right of the
Bureau--
(A) to separate an employee for cause or for unacceptable
performance;
(B) to terminate an appointment to a position excepted from
the competitive service because of its confidential policy-
making, policy-determining, or policy-advocating character; or
(C) to reassign a supervisory employee outside of his or
her locality pay area when the Bureau determines that the
reassignment is necessary for the efficient operation of the
Bureau.
(g) Pay.--
(1) 2-year protection.--
(A) In general.--Except as provided in paragraph (2), each
transferred employee shall, during the 2-year period beginning
on the designated transfer date, receive pay at a rate equal to
not less than the basic rate of pay (including any geographic
differential) that the employee received during the pay period
immediately preceding the date of transfer.
(B) Limitation.--Notwithstanding subparagraph (A), if the
employee was receiving a higher rate of basic pay on a
temporary basis (because of a temporary assignment, temporary
promotion, or other temporary action) immediately before the
date of transfer, the Bureau may reduce the rate of basic pay
on the date on which the rate would have been reduced but for
the transfer, and the protected rate for the remainder of the
2-year period shall be the reduced rate that would have
applied, but for the transfer.
(2) Exceptions.--Paragraph (1) does not limit the right of the
Bureau to reduce the rate of basic pay of a transferred employee--
(A) for cause;
(B) for unacceptable performance; or
(C) with the consent of the employee.
(3) Protection only while employed.--Paragraph (1) applies to a
transferred employee only while that employee remains employed by
the Bureau.
(4) Pay increases permitted.--Paragraph (1) does not limit the
authority of the Bureau to increase the pay of a transferred
employee.
(h) Reorganization.--
(1) Between 1st and 3rd year.--
(A) In general.--If the Bureau determines, during the 2-
year period beginning 1 year after the designated transfer
date, that a reorganization of the staff of the Bureau is
required--
(i) that reorganization shall be deemed a ``substantial
reorganization'' for purposes of affording affected
employees retirement under section 8336(d)(2) or
8414(b)(1)(B) of title 5, United States Code;
(ii) before the reorganization occurs, all employees in
the same locality pay area as defined by the Office of
Personnel Management shall be placed in a uniform position
classification system; and
(iii) any resulting reduction in force shall be
governed by the provisions of chapter 35 of title 5, United
States Code, except that the Bureau shall--
(I) establish competitive areas (as that term is
defined in regulations issued by the Office of
Personnel Management) to include at a minimum all
employees in the same locality pay area as defined by
the Office of Personnel Management;
(II) establish competitive levels (as that term is
defined in regulations issued by the Office of
Personnel Management) without regard to whether the
particular employees have been appointed to positions
in the competitive service or the excepted service; and
(III) afford employees appointed to positions in
the excepted service (other than to a position excepted
from the competitive service because of its
confidential policy-making, policy-determining, or
policy-advocating character) the same assignment rights
to positions within the Bureau as employees appointed
to positions in the competitive service.
(B) Service credit for reductions in force.--For purposes
of this paragraph, periods of service with a Federal home loan
bank, a joint office of the Federal home loan banks, the Board
of Governors, a Federal reserve bank, the Federal Deposit
Insurance Corporation, or the National Credit Union
Administration shall be credited as periods of service with a
Federal agency.
(2) After 3rd year.--
(A) In general.--If the Bureau determines, at any time
after the 3-year period beginning on the designated transfer
date, that a reorganization of the staff of the Bureau is
required, any resulting reduction in force shall be governed by
the provisions of chapter 35 of title 5, United States Code,
except that the Bureau shall establish competitive levels (as
that term is defined in regulations issued by the Office of
Personnel Management) without regard to types of appointment
held by particular employees transferred under this section.
(B) Service credit for reductions in force.--For purposes
of this paragraph, periods of service with a Federal home loan
bank, a joint office of the Federal home loan banks, the Board
of Governors, a Federal reserve bank, the Federal Deposit
Insurance Corporation, or the National Credit Union
Administration shall be credited as periods of service with a
Federal agency.
(i) Benefits.--
(1) Retirement benefits for transferred employees.--
(A) In general.--
(i) Continuation of existing retirement plan.--Unless
an election is made under clause (iii) or subparagraph (B),
each employee transferred pursuant to this subtitle shall
remain enrolled in the existing retirement plan of that
employee as of the date of transfer, through any period of
continuous employment with the Bureau.
(ii) Employer contribution.--The Bureau shall pay any
employer contributions to the existing retirement plan of
each transferred employee, as required under that plan.
(iii) Option to elect into the federal reserve system
retirement plan and federal reserve system thrift plan.--
Any employee transferred pursuant to this subtitle may,
during the 1-year period beginning 6 months after the
designated transfer date, elect to end their participation
and benefit accruals under their existing retirement plan
or plans and elect to participate in both the Federal
Reserve System Retirement Plan and the Federal Reserve
System Thrift Plan, through any period of continuous
employment with the Bureau, under the same terms as are
applicable to Federal Reserve System transferred employees,
as provided in subparagraph (C). An election of coverage by
the Federal Reserve System Retirement Plan and the Federal
Reserve System Thrift Plan shall begin on the day following
the end of the 18-month period beginning on the designated
transfer date, and benefit accruals under the existing
retirement plan of the transferred employee shall end on
the last day of the 18-month period beginning on the
designated transfer date If an employee elects to
participate in the Federal Reserve System Retirement Plan
and the Federal Reserve System Thrift Plan, all of the
service of the employee that was creditable under their
existing retirement plan shall be transferred to the
Federal Reserve System Retirement Plan on the day following
the end of the 18-month period beginning on the designated
transfer date.
(iv) Bureau contribution.--The Bureau shall pay an
employer contribution to the Federal Reserve System
Retirement Plan, in the amount established as an employer
contribution under the Federal Employees Retirement System,
as established under chapter 84 of title 5, United States
Code, for each Bureau employee who elects to participate in
the Federal Reserve System Retirement Plan under this
subparagraph. The Bureau shall pay an employer contribution
to the Federal Reserve System Thrift Plan for each Bureau
employee who elects to participate in such plan, as
required under the terms of the Federal Reserve System
Thrift Plan.
(v) Additional funding.--The Bureau shall transfer to
the Federal Reserve System Retirement Plan an amount
determined by the Board of Governors, in consultation with
the Bureau, to be necessary to reimburse the Federal
Reserve System Retirement Plan for the costs to such plan
of providing benefits to employees electing coverage under
the Federal Reserve System Retirement Plan under
subparagraph (iii), and who were transferred to the Bureau
from outside of the Federal Reserve System.
(vi) Option to elect into thrift plan created by the
bureau.--If the Bureau chooses to establish a thrift plan,
the employees transferred pursuant to this subtitle shall
have the option to elect, under such terms and conditions
as the Bureau may establish, coverage under such a thrift
plan established by the Bureau. Transferred employees may
not remain in the thrift plan of the agency from which the
employee transferred under this subtitle, if the employee
elects to participate in a thrift plan established by the
Bureau.
(B) Option for employees transferred from federal reserve
system to be subject to the federal employee retirement
program.--
(i) Election.--Any Federal Reserve System transferred
employee who was enrolled in the Federal Reserve System
Retirement Plan on the day before the date of his or her
transfer to the Bureau may, during the 1-year period
beginning 6 months after the designated transfer date,
elect to be subject to the Federal Employee Retirement
Program.
(ii) Effective date of coverage.--An election of
coverage by the Federal Employee Retirement Program under
this subparagraph shall begin on the day following the end
of the 18-month period beginning on the designated transfer
date, and benefit accruals under the existing retirement
plan of the Federal Reserve System transferred employee
shall end on the last day of the 18-month period beginning
on the designated transfer date.
(C) Bureau participation in federal reserve system
retirement plan.--
(i) Benefits provided.--Federal Reserve System
employees transferred pursuant to this subtitle shall
continue to be eligible to participate in the Federal
Reserve System Retirement Plan and Federal Reserve System
Thrift Plan through any period of continuous employment
with the Bureau, unless the employee makes an election
under subparagraph (A)(vi) or (B). The retirement benefits,
formulas, and features offered to the Federal Reserve
System transferred employees shall be the same as those
offered to employees of the Board of Governors who
participate in the Federal Reserve System Retirement Plan
and the Federal Reserve System Thrift Plan, as amended from
time to time.
(ii) Limitation.--The Bureau shall not have
responsibility or authority--
(I) to amend an existing retirement plan (including
the Federal Reserve System Retirement Plan or Federal
Reserve System Thrift Plan);
(II) for administering an existing retirement plan
(including the Federal Reserve System Retirement Plan
or Federal Reserve System Thrift Plan); or
(III) for ensuring the plans comply with applicable
laws, fiduciary rules, and related responsibilities.
(iii) Tax qualified status.--Notwithstanding any other
provision of law, providing benefits to Federal Reserve
System employees transferred to the Bureau pursuant to this
subtitle, and to employees who elect coverage pursuant to
subparagraph (A)(iii) or under section 1013(a)(2)(B), shall
not cause any existing retirement plan (including the
Federal Reserve System Retirement Plan and the Federal
Reserve System Thrift Plan) to lose its tax-qualified
status under sections 401(a) and 501(a) of the Internal
Revenue Code of 1986.
(iv) Bureau contribution.--The Bureau shall pay any
employer contributions to the existing retirement plan
(including the Federal Reserve System Retirement Plan and
the Federal Reserve System Thrift Plan) for each Federal
Reserve System transferred employee participating in those
plans, as required under the plan, after the designated
transfer date.
(v) Controlled group status.--The Bureau is the same
employer as the Federal Reserve System (as comprised of the
Board of Governors and each of the 12 Federal reserve banks
prior to the date of enactment of this Act) for purposes of
subsections (b), (c), (m), and (o) of section 414 of the
Internal Revenue Code of 1986 (26 U.S.C. 414).
(D) Definitions.--For purposes of this paragraph--
(i) the term ``existing retirement plan'' means, with
respect to an employee transferred pursuant to this
subtitle, the retirement plan (including the Financial
Institutions Retirement Fund) and any associated thrift
savings plan, of the agency from which the employee was
transferred under this subtitle, in which the employee was
enrolled on the day before the date on which the employee
was transferred;
(ii) the term ``Federal Employee Retirement Program''
means either the Civil Service Retirement System
established under chapter 83 of title 5, United States
Code, or the Federal Employees Retirement System
established under chapter 84 of title 5, United States
Code, depending upon the service history of the individual;
(iii) the term ``Federal Reserve System transferred
employee'' means a transferred employee who is an employee
of the Board of Governors or a Federal reserve bank on the
day before the designated transfer date, and who is
transferred to the Bureau on the designated transfer date
pursuant to this subtitle;
(iv) the term ``Federal Reserve System Retirement
Plan'' means the Retirement Plan for Employees of the
Federal Reserve System; and
(v) the term ``Federal Reserve System Thrift Plan''
means the Thrift Plan for Employees of the Federal Reserve
System.
(2) Benefits other than retirement benefits for transferred
employees.--
(A) During 1st year.--
(i) Existing plans continue.--Each employee transferred
pursuant to this subtitle may, for 1 year after the
designated transfer date, retain membership in any other
employee benefit program of the agency or bank from which
the employee transferred, including a medical, dental,
vision, long term care, or life insurance program, to which
the employee belonged on the day before the designated
transfer date.
(ii) Employer contribution.--The Bureau shall reimburse
the agency or bank from which an employee was transferred
for any cost incurred by that agency or bank in continuing
to extend coverage in the benefit program to the employee,
as required under that program or negotiated agreements.
(B) Medical, dental, vision, or life insurance after first
year.--If, at the end of the 1-year period beginning on the
designated transfer date, the Bureau has not established its
own, or arranged for participation in another entity's,
medical, dental, vision, or life insurance program, an employee
transferred pursuant to this subtitle who was a member of such
a program at the agency or Federal reserve bank from which the
employee transferred may, before the coverage of that employee
ends under subparagraph (A)(i), elect to enroll, without regard
to any regularly scheduled open season, in--
(i) the enhanced dental benefits program established
under chapter 89A of title 5, United States Code;
(ii) the enhanced vision benefits established under
chapter 89B of title 5, United States Code;
(iii) the Federal Employees Group Life Insurance
Program established under chapter 87 of title 5, United
States Code, without regard to any requirement of
insurability; and
(iv) the Federal Employees Health Benefits Program
established under chapter 89 of title 5, United States
Code.
(C) Long term care insurance after 1st year.--If, at the
end of the 1-year period beginning on the designated transfer
date, the Bureau has not established its own, or arranged for
participation in another entity's, long term care insurance
program, an employee transferred pursuant to this subtitle who
was a member of such a program at the agency or Federal reserve
bank from which the employee transferred may, before the
coverage of that employee ends under subparagraph (A)(i), elect
to apply for coverage under the Federal Long Term Care
Insurance Program established under chapter 90 of title 5,
United States Code, under the underwriting requirements
applicable to a new active workforce member (as defined in part
875 of title 5, Code of Federal Regulations).
(D) Employee contribution.--An individual enrolled in the
Federal Employees Health Benefits program shall pay any
employee contribution required by the plan.
(E) Additional funding.--The Bureau shall transfer to the
Federal Employees Health Benefits Fund established under
section 8909 of title 5, United States Code, an amount
determined by the Director of the Office of Personnel
Management, after consultation with the Bureau and the Office
of Management and Budget, to be necessary to reimburse the Fund
for the cost to the Fund of providing benefits under this
paragraph.
(F) Credit for time enrolled in other plans.--For employees
transferred under this title, enrollment in a health benefits
plan administered by a transferor agency or a Federal reserve
bank, as the case may be, immediately before enrollment in a
health benefits plan under chapter 89 of title 5, United States
Code, shall be considered as enrollment in a health benefits
plan under that chapter for purposes of section 8905(b)(1)(A)
of title 5, United States Code.
(G) Special provisions to ensure continuation of life
insurance benefits.--
(i) In general.--An annuitant (as defined in section
8901(3) of title 5, United States Code) who is enrolled in
a life insurance plan administered by a transferor agency
on the day before the designated transfer date shall be
eligible for coverage by a life insurance plan under
sections 8706(b), 8714a, 8714b, and 8714c of title 5,
United States Code, or in a life insurance plan established
by the Bureau, without regard to any regularly scheduled
open season and requirement of insurability.
(ii) Employee contribution.--An individual enrolled in
a life insurance plan under this subparagraph shall pay any
employee contribution required by the plan.
(iii) Additional funding.--The Bureau shall transfer to
the Employees' Life Insurance Fund established under
section 8714 of title 5, United States Code, an amount
determined by the Director of the Office of Personnel
Management, after consultation with the Bureau and the
Office of Management and Budget, to be necessary to
reimburse the Fund for the cost to the Fund of providing
benefits under this subparagraph not otherwise paid for by
the employee under clause (ii).
(iv) Credit for time enrolled in other plans.--For
employees transferred under this title, enrollment in a
life insurance plan administered by a transferor agency
immediately before enrollment in a life insurance plan
under chapter 87 of title 5, United States Code, shall be
considered as enrollment in a life insurance plan under
that chapter for purposes of section 8706(b)(1)(A) of title
5, United States Code.
(3) OPM rules.--The Office of Personnel Management shall issue
such rules as are necessary to carry out this subsection.
(j) Implementation of Uniform Pay and Classification System.--Not
later than 2 years after the designated transfer date, the Bureau shall
implement a uniform pay and classification system for all employees
transferred under this title.
(k) Equitable Treatment.--In administering the provisions of this
section, the Bureau--
(1) shall take no action that would unfairly disadvantage
transferred employees relative to each other based on their prior
employment by the Board of Governors, the Federal Deposit Insurance
Corporation, the Department of Housing and Urban Development, the
National Credit Union Administration, the Office of the Comptroller
of the Currency, the Office of Thrift Supervision, a Federal
reserve bank, a Federal home loan bank, or a joint office of the
Federal home loan banks; and
(2) may take such action as is appropriate in individual cases
so that employees transferred under this section receive equitable
treatment, with respect to the status, tenure, pay, benefits (other
than benefits under programs administered by the Office of
Personnel Management), and accrued leave or vacation time of those
employees, for prior periods of service with any Federal agency,
including the Board of Governors, the Corporation, the Department
of Housing and Urban Development, the National Credit Union
Administration, the Office of the Comptroller of the Currency, the
Office of Thrift Supervision, a Federal reserve bank, a Federal
home loan bank, or a joint office of the Federal home loan banks.
(l) Implementation.--In implementing the provisions of this
section, the Bureau shall coordinate with the Office of Personnel
Management and other entities having expertise in matters related to
employment to ensure a fair and orderly transition for affected
employees.
SEC. 1065. INCIDENTAL TRANSFERS.
(a) Incidental Transfers Authorized.--The Director of the Office of
Management and Budget, in consultation with the Secretary, shall make
such additional incidental transfers and dispositions of assets and
liabilities held, used, arising from, available, or to be made
available, in connection with the functions transferred by this title,
as the Director may determine necessary to accomplish the purposes of
this title.
(b) Sunset.--The authority provided in this section shall terminate
5 years after the date of enactment of this Act.
SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY.
(a) In General.--The Secretary is authorized to perform the
functions of the Bureau under this subtitle until the Director of the
Bureau is confirmed by the Senate in accordance with section 1011.
(b) Interim Administrative Services by the Department of the
Treasury.--The Department of the Treasury may provide administrative
services necessary to support the Bureau before the designated transfer
date.
SEC. 1067. TRANSITION OVERSIGHT.
(a) Purpose.--The purpose of this section is to ensure that the
Bureau--
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and benefits
programs.
(b) Reporting Requirement.--
(1) In general.--The Bureau shall submit an annual report to
the Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives that includes the plans described in paragraph (2).
(2) Plans.--The plans described in this paragraph are as
follows:
(A) Training and workforce development plan.--The Bureau
shall submit a training and workforce development plan that
includes, to the extent practicable--
(i) identification of skill and technical expertise
needs and actions taken to meet those requirements;
(ii) steps taken to foster innovation and creativity;
(iii) leadership development and succession planning;
and
(iv) effective use of technology by employees.
(B) Workplace flexibilities plan.--The Bureau shall submit
a workforce flexibility plan that includes, to the extent
practicable--
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and childcare assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities; or
(x) any combination of the items described in clauses
(i) through (ix).
(C) Recruitment and retention plan.--The Bureau shall
submit a recruitment and retention plan that includes, to the
extent practicable, provisions relating to--
(i) the steps necessary to target highly qualified
applicant pools with diverse backgrounds;
(ii) streamlined employment application processes;
(iii) the provision of timely notification of the
status of employment applications to applicants; and
(iv) the collection of information to measure
indicators of hiring effectiveness.
(c) Expiration.--The reporting requirement under subsection (b)
shall terminate 5 years after the date of enactment of this Act.
(d) Rule of Construction.--Nothing in this section may be construed
to affect--
(1) a collective bargaining agreement, as that term is defined
in section 7103(a)(8) of title 5, United States Code, that is in
effect on the date of enactment of this Act; or
(2) the rights of employees under chapter 71 of title 5, United
States Code.
(e) Participation in Examinations.--In order to prepare the Bureau
to conduct examinations under section 1025 upon the designated transfer
date, the Bureau and the applicable prudential regulator may agree to
include, on a sampling basis, examiners on examinations of the
compliance with Federal consumer financial law of institutions
described in section 1025(a) conducted by the prudential regulators
prior to the designated transfer date.
Subtitle G--Regulatory Improvements
SEC. 1071. SMALL BUSINESS DATA COLLECTION.
(a) In General.--The Equal Credit Opportunity Act (15 U.S.C. 1691
et seq.) is amended by inserting after section 704A the following:
``SEC. 704B. SMALL BUSINESS LOAN DATA COLLECTION.
``(a) Purpose.--The purpose of this section is to facilitate
enforcement of fair lending laws and enable communities, governmental
entities, and creditors to identify business and community development
needs and opportunities of women-owned, minority-owned, and small
businesses.
``(b) Information Gathering.--Subject to the requirements of this
section, in the case of any application to a financial institution for
credit for women-owned, minority-owned, or small business, the
financial institution shall--
``(1) inquire whether the business is a women-owned, minority-
owned, or small business, without regard to whether such
application is received in person, by mail, by telephone, by
electronic mail or other form of electronic transmission, or by any
other means, and whether or not such application is in response to
a solicitation by the financial institution; and
``(2) maintain a record of the responses to such inquiry,
separate from the application and accompanying information.
``(c) Right To Refuse.--Any applicant for credit may refuse to
provide any information requested pursuant to subsection (b) in
connection with any application for credit.
``(d) No Access by Underwriters.--
``(1) Limitation.--Where feasible, no loan underwriter or other
officer or employee of a financial institution, or any affiliate of
a financial institution, involved in making any determination
concerning an application for credit shall have access to any
information provided by the applicant pursuant to a request under
subsection (b) in connection with such application.
``(2) Limited access.--If a financial institution determines
that a loan underwriter or other officer or employee of a financial
institution, or any affiliate of a financial institution, involved
in making any determination concerning an application for credit
should have access to any information provided by the applicant
pursuant to a request under subsection (b), the financial
institution shall provide notice to the applicant of the access of
the underwriter to such information, along with notice that the
financial institution may not discriminate on the basis of such
information.
``(e) Form and Manner of Information.--
``(1) In general.--Each financial institution shall compile and
maintain, in accordance with regulations of the Bureau, a record of
the information provided by any loan applicant pursuant to a
request under subsection (b).
``(2) Itemization.--Information compiled and maintained under
paragraph (1) shall be itemized in order to clearly and
conspicuously disclose--
``(A) the number of the application and the date on which
the application was received;
``(B) the type and purpose of the loan or other credit
being applied for;
``(C) the amount of the credit or credit limit applied for,
and the amount of the credit transaction or the credit limit
approved for such applicant;
``(D) the type of action taken with respect to such
application, and the date of such action;
``(E) the census tract in which is located the principal
place of business of the women-owned, minority-owned, or small
business loan applicant;
``(F) the gross annual revenue of the business in the last
fiscal year of the women-owned, minority-owned, or small
business loan applicant preceding the date of the application;
``(G) the race, sex, and ethnicity of the principal owners
of the business; and
``(H) any additional data that the Bureau determines would
aid in fulfilling the purposes of this section.
``(3) No personally identifiable information.--In compiling and
maintaining any record of information under this section, a
financial institution may not include in such record the name,
specific address (other than the census tract required under
paragraph (1)(E)), telephone number, electronic mail address, or
any other personally identifiable information concerning any
individual who is, or is connected with, the women-owned, minority-
owned, or small business loan applicant.
``(4) Discretion to delete or modify publicly available data.--
The Bureau may, at its discretion, delete or modify data collected
under this section which is or will be available to the public, if
the Bureau determines that the deletion or modification of the data
would advance a privacy interest.
``(f) Availability of Information.--
``(1) Submission to bureau.--The data required to be compiled
and maintained under this section by any financial institution
shall be submitted annually to the Bureau.
``(2) Availability of information.--Information compiled and
maintained under this section shall be--
``(A) retained for not less than 3 years after the date of
preparation;
``(B) made available to any member of the public, upon
request, in the form required under regulations prescribed by
the Bureau;
``(C) annually made available to the public generally by
the Bureau, in such form and in such manner as is determined by
the Bureau, by regulation.
``(3) Compilation of aggregate data.--The Bureau may, at its
discretion--
``(A) compile and aggregate data collected under this
section for its own use; and
``(B) make public such compilations of aggregate data.
``(g) Bureau Action.--
``(1) In general.--The Bureau shall prescribe such rules and
issue such guidance as may be necessary to carry out, enforce, and
compile data pursuant to this section.
``(2) Exceptions.--The Bureau, by rule or order, may adopt
exceptions to any requirement of this section and may,
conditionally or unconditionally, exempt any financial institution
or class of financial institutions from the requirements of this
section, as the Bureau deems necessary or appropriate to carry out
the purposes of this section.
``(3) Guidance.--The Bureau shall issue guidance designed to
facilitate compliance with the requirements of this section,
including assisting financial institutions in working with
applicants to determine whether the applicants are women-owned,
minority-owned, or small businesses for purposes of this section.
``(h) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Financial institution.--The term `financial institution'
means any partnership, company, corporation, association
(incorporated or unincorporated), trust, estate, cooperative
organization, or other entity that engages in any financial
activity.
``(2) Small business.--The term `small business' has the same
meaning as the term `small business concern' in section 3 of the
Small Business Act (15 U.S.C. 632).
``(3) Small business loan.--The term `small business loan'
means a loan made to a small business.
``(4) Minority.--The term `minority' has the same meaning as in
section 1204(c)(3) of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989.
``(5) Minority-owned business.--The term `minority-owned
business' means a business--
``(A) more than 50 percent of the ownership or control of
which is held by 1 or more minority individuals; and
``(B) more than 50 percent of the net profit or loss of
which accrues to 1 or more minority individuals.
``(6) Women-owned business.--The term `women-owned business'
means a business--
``(A) more than 50 percent of the ownership or control of
which is held by 1 or more women; and
``(B) more than 50 percent of the net profit or loss of
which accrues to 1 or more women.''.
(b) Technical and Conforming Amendments.--Section 701(b) of the
Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is amended--
(1) in paragraph (3), by striking ``or'' at the end;
(2) in paragraph (4), by striking the period at the end and
inserting ``; or''; and
(3) by inserting after paragraph (4), the following:
``(5) to make an inquiry under section 704B, in accordance with
the requirements of that section.''.
(c) Clerical Amendment.--The table of sections for title VII of the
Consumer Credit Protection Act is amended by inserting after the item
relating to section 704A the following new item:
``704B. Small business loan data collection.''.
(d) Effective Date.--This section shall become effective on the
designated transfer date.
SEC. 1072. ASSISTANCE FOR ECONOMICALLY VULNERABLE INDIVIDUALS AND
FAMILIES.
(a) HERA Amendments.--Section 1132 of the Housing and Economic
Recovery Act of 2008 (12 U.S.C. 1701x note) is amended--
(1) in subsection (a), by inserting in each of paragraphs (1),
(2), (3), and (4) ``or economically vulnerable individuals and
families'' after ``homebuyers'' each place that term appears;
(2) in subsection (b)(1), by inserting ``or economically
vulnerable individuals and families'' after ``homebuyers'';
(3) in subsection (c)(1)--
(A) in subparagraph (A), by striking ``or'' at the end;
(B) in subparagraph (B), by striking the period at the end
and inserting ``; or''; and
(C) by adding at the end the following:
``(C) a nonprofit corporation that--
``(i) is exempt from taxation under section 501(c)(3)
of the Internal Revenue Code of 1986; and
``(ii) specializes or has expertise in working with
economically vulnerable individuals and families, but whose
primary purpose is not provision of credit counseling
services.''; and
(4) in subsection (d)(1), by striking ``not more than 5''.
(b) Applicability.--Amendments made by subsection (a) shall not
apply to programs authorized by section 1132 of the Housing and
Economic Recovery Act of 2008 (12 U.S.C. 1701x note) that are funded
with appropriations prior to fiscal year 2011.
SEC. 1073. REMITTANCE TRANSFERS.
(a) Treatment of Remittance Transfers.--The Electronic Fund
Transfer Act (15 U.S.C. 1693 et seq.) is amended--
(1) in section 902(b) (15 U.S.C. 1693(b)), by inserting ``and
remittance'' after ``electronic fund'';
(2) in section 904(c) (15 U.S.C. 1693b(c)), in the first
sentence, by inserting ``or remittance transfers'' after
``electronic fund transfers'';
(3) by redesignating sections 919, 920, 921, and 922 as
sections 920, 921, 922, and 923, respectively; and
(4) by inserting after section 918 the following:
``SEC. 919. REMITTANCE TRANSFERS.
``(a) Disclosures Required for Remittance Transfers.--
``(1) In general.--Each remittance transfer provider shall make
disclosures as required under this section and in accordance with
rules prescribed by the Board. Disclosures required under this
section shall be in addition to any other disclosures applicable
under this title.
``(2) Disclosures.--Subject to rules prescribed by the Board, a
remittance transfer provider shall provide, in writing and in a
form that the sender may keep, to each sender requesting a
remittance transfer, as applicable to the transaction--
``(A) at the time at which the sender requests a remittance
transfer to be initiated, and prior to the sender making any
payment in connection with the remittance transfer, a
disclosure describing--
``(i) the amount of currency that will be received by
the designated recipient, using the values of the currency
into which the funds will be exchanged;
``(ii) the amount of transfer and any other fees
charged by the remittance transfer provider for the
remittance transfer; and
``(iii) any exchange rate to be used by the remittance
transfer provider for the remittance transfer, to the
nearest 1/100th of a point; and
``(B) at the time at which the sender makes payment in
connection with the remittance transfer--
``(i) a receipt showing--
``(I) the information described in subparagraph
(A);
``(II) the promised date of delivery to the
designated recipient; and
``(III) the name and either the telephone number or
the address of the designated recipient, if either the
telephone number or the address of the designated
recipient is provided by the sender; and
``(ii) a statement containing--
``(I) information about the rights of the sender
under this section regarding the resolution of errors;
and
``(II) appropriate contact information for--
``(aa) the remittance transfer provider; and
``(bb) the State agency that regulates the
remittance transfer provider and the Board,
including the toll-free telephone number
established under section 1013 of the Consumer
Financial Protection Act of 2010.
``(3) Requirements relating to disclosures.--With respect to
each disclosure required to be provided under paragraph (2) a
remittance transfer provider shall--
``(A) provide an initial notice and receipt, as required by
subparagraphs (A) and (B) of paragraph (2), and an error
resolution statement, as required by subsection (d), that
clearly and conspicuously describe the information required to
be disclosed therein; and
``(B) with respect to any transaction that a sender
conducts electronically, comply with the Electronic Signatures
in Global and National Commerce Act (15 U.S.C. 7001 et seq.).
``(4) Exception for disclosures of amount received.--
``(A) In general.--Subject to the rules prescribed by the
Board, and except as provided under subparagraph (B), the
disclosures required regarding the amount of currency that will
be received by the designated recipient shall be deemed to be
accurate, so long as the disclosures provide a reasonably
accurate estimate of the foreign currency to be received. This
paragraph shall apply only to a remittance transfer provider
who is an insured depository institution, as defined in section
3 of the Federal Deposit Insurance Act (12 U.S.C. 1813), or an
insured credit union, as defined in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752), and if--
``(i) a remittance transfer is conducted through a
demand deposit, savings deposit, or other asset account
that the sender holds with such remittance transfer
provider; and
``(ii) at the time at which the sender requests the
transaction, the remittance transfer provider is unable to
know, for reasons beyond its control, the amount of
currency that will be made available to the designated
recipient.
``(B) Deadline.--The application of subparagraph (A) shall
terminate 5 years after the date of enactment of the Consumer
Financial Protection Act of 2010, unless the Board determines
that termination of such provision would negatively affect the
ability of remittance transfer providers described in
subparagraph (A) to send remittances to locations in foreign
countries, in which case, the Board may, by rule, extend the
application of subparagraph (A) to not longer than 10 years
after the date of enactment of the Consumer Financial
Protection Act of 2010.
``(5) Exemption authority.--The Board may, by rule, permit a
remittance transfer provider to satisfy the requirements of--
``(A) paragraph (2)(A) orally, if the transaction is
conducted entirely by telephone;
``(B) paragraph (2)(B), in the case of a transaction
conducted entirely by telephone, by mailing the disclosures
required under such subparagraph to the sender, not later than
1 business day after the date on which the transaction is
conducted, or by including such documents in the next periodic
statement, if the telephone transaction is conducted through a
demand deposit, savings deposit, or other asset account that
the sender holds with the remittance transfer provider;
``(C) subparagraphs (A) and (B) of paragraph (2) together
in one written disclosure, but only to the extent that the
information provided in accordance with paragraph (3)(A) is
accurate at the time at which payment is made in connection
with the subject remittance transfer; and
``(D) paragraph (2)(A), without compliance with section
101(c) of the Electronic Signatures in Global Commerce Act, if
a sender initiates the transaction electronically and the
information is displayed electronically in a manner that the
sender can keep.
``(6) Storefront and internet notices.--
``(A) In general.--
``(i) Prominent posting.--Subject to subparagraph (B),
the Board may prescribe rules to require a remittance
transfer provider to prominently post, and timely update, a
notice describing a model remittance transfer for one or
more amounts, as the Board may determine, which notice
shall show the amount of currency that will be received by
the designated recipient, using the values of the currency
into which the funds will be exchanged.
``(ii) Onsite displays.--The Board may require the
notice prescribed under this subparagraph to be displayed
in every physical storefront location owned or controlled
by the remittance transfer provider.
``(iii) Internet notices.--Subject to paragraph (3),
the Board shall prescribe rules to require a remittance
transfer provider that provides remittance transfers via
the Internet to provide a notice, comparable to a
storefront notice described in this subparagraph, located
on the home page or landing page (with respect to such
remittance transfer services) owned or controlled by the
remittance transfer provider.
``(iv) Rulemaking authority.--In prescribing rules
under this subparagraph, the Board may impose standards or
requirements regarding the provision of the storefront and
Internet notices required under this subparagraph and the
provision of the disclosures required under paragraphs (2)
and (3).
``(B) Study and analysis.--Prior to proposing rules under
subparagraph (A), the Board shall undertake appropriate studies
and analyses, which shall be consistent with section 904(a)(2),
and may include an advanced notice of proposed rulemaking, to
determine whether a storefront notice or Internet notice
facilitates the ability of a consumer--
``(i) to compare prices for remittance transfers; and
``(ii) to understand the types and amounts of any fees
or costs imposed on remittance transfers.
``(b) Foreign Language Disclosures.--The disclosures required under
this section shall be made in English and in each of the foreign
languages principally used by the remittance transfer provider, or any
of its agents, to advertise, solicit, or market, either orally or in
writing, at that office.
``(c) Regulations Regarding Transfers to Certain Nations.--If the
Board determines that a recipient nation does not legally allow, or the
method by which transactions are made in the recipient country do not
allow, a remittance transfer provider to know the amount of currency
that will be received by the designated recipient, the Board may
prescribe rules (not later than 18 months after the date of enactment
of the Consumer Financial Protection Act of 2010) addressing the issue,
which rules shall include standards for a remittance transfer provider
to provide--
``(1) a receipt that is consistent with subsections (a) and
(b); and
``(2) a reasonably accurate estimate of the foreign currency to
be received, based on the rate provided to the sender by the
remittance transfer provider at the time at which the transaction
was initiated by the sender.
``(d) Remittance Transfer Errors.--
``(1) Error resolution.--
``(A) In general.--If a remittance transfer provider
receives oral or written notice from the sender within 180 days
of the promised date of delivery that an error occurred with
respect to a remittance transfer, including the amount of
currency designated in subsection (a)(3)(A) that was to be sent
to the designated recipient of the remittance transfer, using
the values of the currency into which the funds should have
been exchanged, but was not made available to the designated
recipient in the foreign country, the remittance transfer
provider shall resolve the error pursuant to this subsection
and investigate the reason for the error.
``(B) Remedies.--Not later than 90 days after the date of
receipt of a notice from the sender pursuant to subparagraph
(A), the remittance transfer provider shall, as applicable to
the error and as designated by the sender--
``(i) refund to the sender the total amount of funds
tendered by the sender in connection with the remittance
transfer which was not properly transmitted;
``(ii) make available to the designated recipient,
without additional cost to the designated recipient or to
the sender, the amount appropriate to resolve the error;
``(iii) provide such other remedy, as determined
appropriate by rule of the Board for the protection of
senders; or
``(iv) provide written notice to the sender that there
was no error with an explanation responding to the specific
complaint of the sender.
``(2) Rules.--The Board shall establish, by rule issued not
later than 18 months after the date of enactment of the Consumer
Financial Protection Act of 2010, clear and appropriate standards
for remittance transfer providers with respect to error resolution
relating to remittance transfers, to protect senders from such
errors. Standards prescribed under this paragraph shall include
appropriate standards regarding record keeping, as required,
including documentation--
``(A) of the complaint of the sender;
``(B) that the sender provides the remittance transfer
provider with respect to the alleged error; and
``(C) of the findings of the remittance transfer provider
regarding the investigation of the alleged error that the
sender brought to their attention.
``(3) Cancellation and refund policy rules.--Not later than 18
months after the date of enactment of the Consumer Financial
Protection Act of 2010, the Board shall issue final rules regarding
appropriate remittance transfer cancellation and refund policies
for consumers.
``(e) Applicability of This Title.--
``(1) In general.--A remittance transfer that is not an
electronic fund transfer, as defined in section 903, shall not be
subject to any of the provisions of sections 905 through 913. A
remittance transfer that is an electronic fund transfer, as defined
in section 903, shall be subject to all provisions of this title,
except for section 908, that are otherwise applicable to electronic
fund transfers under this title.
``(2) Rule of construction.--Nothing in this section shall be
construed--
``(A) to affect the application to any transaction, to any
remittance provider, or to any other person of any of the
provisions of subchapter II of chapter 53 of title 31, United
States Code, section 21 of the Federal Deposit Insurance Act
(12 U.S.C. 1829b), or chapter 2 of title I of Public Law 91-508
(12 U.S.C. 1951-1959), or any regulations promulgated
thereunder; or
``(B) to cause any fund transfer that would not otherwise
be treated as such under paragraph (1) to be treated as an
electronic fund transfer, or as otherwise subject to this
title, for the purposes of any of the provisions referred to in
subparagraph (A) or any regulations promulgated thereunder.
``(f) Acts of Agents.--
``(1) In general.--A remittance transfer provider shall be
liable for any violation of this section by any agent, authorized
delegate, or person affiliated with such provider, when such agent,
authorized delegate, or affiliate acts for that remittance transfer
provider.
``(2) Obligations of remittance transfer providers.--The Board
shall prescribe rules to implement appropriate standards or
conditions of, liability of a remittance transfer provider,
including a provider who acts through an agent or authorized
delegate. An agency charged with enforcing the requirements of this
section, or rules prescribed by the Board under this section, may
consider, in any action or other proceeding against a remittance
transfer provider, the extent to which the provider had established
and maintained policies or procedures for compliance, including
policies, procedures, or other appropriate oversight measures
designed to assure compliance by an agent or authorized delegate
acting for such provider.
``(g) Definitions.--As used in this section--
``(1) the term `designated recipient' means any person located
in a foreign country and identified by the sender as the authorized
recipient of a remittance transfer to be made by a remittance
transfer provider, except that a designated recipient shall not be
deemed to be a consumer for purposes of this Act;
``(2) the term `remittance transfer'--
``(A) means the electronic (as defined in section 106(2) of
the Electronic Signatures in Global and National Commerce Act
(15 U.S.C. 7006(2))) transfer of funds requested by a sender
located in any State to a designated recipient that is
initiated by a remittance transfer provider, whether or not the
sender holds an account with the remittance transfer provider
or whether or not the remittance transfer is also an electronic
fund transfer, as defined in section 903; and
``(B) does not include a transfer described in subparagraph
(A) in an amount that is equal to or lesser than the amount of
a small-value transaction determined, by rule, to be excluded
from the requirements under section 906(a);
``(3) the term `remittance transfer provider' means any person
or financial institution that provides remittance transfers for a
consumer in the normal course of its business, whether or not the
consumer holds an account with such person or financial
institution; and
``(4) the term `sender' means a consumer who requests a
remittance provider to send a remittance transfer for the consumer
to a designated recipient.''.
(b) Automated Clearinghouse System.--
(1) Expansion of system.--The Board of Governors shall work
with the Federal reserve banks and the Department of the Treasury
to expand the use of the automated clearinghouse system and other
payment mechanisms for remittance transfers to foreign countries,
with a focus on countries that receive significant remittance
transfers from the United States, based on--
(A) the number, volume, and size of such transfers;
(B) the significance of the volume of such transfers
relative to the external financial flows of the receiving
country, including--
(i) the total amount transferred; and
(ii) the total volume of payments made by United States
Government agencies to beneficiaries and retirees living
abroad;
(C) the feasibility of such an expansion; and
(D) the ability of the Federal Reserve System to establish
payment gateways in different geographic regions and currency
zones to receive remittance transfers and route them through
the payments systems in the destination countries.
(2) Report to congress.--Not later than one calendar year after
the date of enactment of this Act, and on April 30 biennially
thereafter during the 10-year period beginning on that date of
enactment, the Board of Governors shall submit a report to the
Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives
on the status of the automated clearinghouse system and its
progress in complying with the requirements of this subsection. The
report shall include an analysis of adoption rates of International
ACH Transactions rules and formats, the efficacy of increasing
adoption rates, and potential recommendations to increase adoption.
(c) Expansion of Financial Institution Provision of Remittance
Transfers.--
(1) Provision of guidelines to institutions.--Each of the
Federal banking agencies and the National Credit Union
Administration shall provide guidelines to financial institutions
under the jurisdiction of the agency regarding the offering of low-
cost remittance transfers and no-cost or low-cost basic consumer
accounts, as well as agency services to remittance transfer
providers.
(2) Assistance to financial literacy commission.--As part of
its duties as members of the Financial Literacy and Education
Commission, the Bureau, the Federal banking agencies, and the
National Credit Union Administration shall assist the Financial
Literacy and Education Commission in executing the Strategy for
Assuring Financial Empowerment (or the ``SAFE Strategy''), as it
relates to remittances.
(d) Federal Credit Union Act Conforming Amendment.--Paragraph (12)
of section 107 of the Federal Credit Union Act (12 U.S.C. 1757) is
amended to read as follows:
``(12) in accordance with regulations prescribed by the Board--
``(A) to sell, to persons in the field of membership,
negotiable checks (including travelers checks), money orders,
and other similar money transfer instruments (including
international and domestic electronic fund transfers and
remittance transfers, as defined in section 919 of the
Electronic Fund Transfer Act); and
``(B) to cash checks and money orders for persons in the
field of membership for a fee;''.
(e) Report on Feasibility of and Impediments to Use of Remittance
History in Calculation of Credit Score.--Before the end of the 365-day
period beginning on the date of enactment of this Act, the Director
shall submit a report to the President, the Committee on Banking,
Housing, and Urban Affairs of the Senate, and the Committee on
Financial Services of the House of Representatives regarding--
(1) the manner in which the remittance history of a consumer
could be used to enhance the credit score of the consumer;
(2) the current legal and business model barriers and
impediments that impede the use of the remittance history of the
consumer to enhance the credit score of the consumer; and
(3) recommendations on the manner in which maximum transparency
and disclosure to consumers of exchange rates for remittance
transfers subject to this title and the amendments made by this
title may be accomplished, whether or not such exchange rates are
known at the time of origination or payment by the consumer for the
remittance transfer, including disclosure to the sender of the
actual exchange rate used and the amount of currency that the
recipient of the remittance transfer received, using the values of
the currency into which the funds were exchanged, as contained in
sections 919(a)(2)(D) and 919(a)(3) of the Electronic Fund Transfer
Act (as amended by this section).
SEC. 1074. DEPARTMENT OF THE TREASURY STUDY ON ENDING THE
CONSERVATORSHIP OF FANNIE MAE, FREDDIE MAC, AND REFORMING THE HOUSING
FINANCE SYSTEM.
(a) Study Required.--
(1) In general.--The Secretary of the Treasury shall conduct a
study of and develop recommendations regarding the options for
ending the conservatorship of the Federal National Mortgage
Association (in this section referred to as ``Fannie Mae'') and the
Federal Home Loan Mortgage Corporation (in this section referred to
as ``Freddie Mac''), while minimizing the cost to taxpayers,
including such options as--
(A) the gradual wind-down and liquidation of such entities;
(B) the privatization of such entities;
(C) the incorporation of the functions of such entities
into a Federal agency;
(D) the dissolution of Fannie Mae and Freddie Mac into
smaller companies; or
(E) any other measures the Secretary determines
appropriate.
(2) Analyses.--The study required under paragraph (1) shall
include an analysis of--
(A) the role of the Federal Government in supporting a
stable, well-functioning housing finance system, and whether
and to what extent the Federal Government should bear risks in
meeting Federal housing finance objectives;
(B) how the current structure of the housing finance system
can be improved;
(C) how the housing finance system should support the
continued availability of mortgage credit to all segments of
the market;
(D) how the housing finance system should be structured to
ensure that consumers continue to have access to 30-year, fixed
rate, pre-payable mortgages and other mortgage products that
have simple terms that can be easily understood;
(E) the role of the Federal Housing Administration and the
Department of Veterans Affairs in a future housing system;
(F) the impact of reforms of the housing finance system on
the financing of rental housing;
(G) the impact of reforms of the housing finance system on
secondary market liquidity;
(H) the role of standardization in the housing finance
system;
(I) how housing finance systems in other countries offer
insights that can help inform options for reform in the United
States; and
(J) the options for transition to a reformed housing
finance system.
(b) Report and Recommendations.--Not later than January 31, 2011,
the Secretary of the Treasury shall submit the report and
recommendations required under subsection (a) to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives.
SEC. 1075. REASONABLE FEES AND RULES FOR PAYMENT CARD TRANSACTIONS.
(a) In General.--The Electronic Fund Transfer Act (15 U.S.C. 1693
et seq.) is amended--
(1) by redesignating sections 920 and 921 as sections 921 and
922, respectively; and
(2) by inserting after section 919 the following:
``SEC. 920. REASONABLE FEES AND RULES FOR PAYMENT CARD
TRANSACTIONS.
``(a) Reasonable Interchange Transaction Fees for Electronic Debit
Transactions.--
``(1) Regulatory authority over interchange transaction fees.--
The Board may prescribe regulations, pursuant to section 553 of
title 5, United States Code, regarding any interchange transaction
fee that an issuer may receive or charge with respect to an
electronic debit transaction, to implement this subsection
(including related definitions), and to prevent circumvention or
evasion of this subsection.
``(2) Reasonable interchange transaction fees.--The amount of
any interchange transaction fee that an issuer may receive or
charge with respect to an electronic debit transaction shall be
reasonable and proportional to the cost incurred by the issuer with
respect to the transaction.
``(3) Rulemaking required.--
``(A) In general.--The Board shall prescribe regulations in
final form not later than 9 months after the date of enactment
of the Consumer Financial Protection Act of 2010, to establish
standards for assessing whether the amount of any interchange
transaction fee described in paragraph (2) is reasonable and
proportional to the cost incurred by the issuer with respect to
the transaction.
``(B) Information collection.--The Board may require any
issuer (or agent of an issuer) or payment card network to
provide the Board with such information as may be necessary to
carry out the provisions of this subsection and the Board, in
issuing rules under subparagraph (A) and on at least a bi-
annual basis thereafter, shall disclose such aggregate or
summary information concerning the costs incurred, and
interchange transaction fees charged or received, by issuers or
payment card networks in connection with the authorization,
clearance or settlement of electronic debit transactions as the
Board considers appropriate and in the public interest.
``(4) Considerations; consultation.--In prescribing regulations
under paragraph (3)(A), the Board shall--
``(A) consider the functional similarity between--
``(i) electronic debit transactions; and
``(ii) checking transactions that are required within
the Federal Reserve bank system to clear at par;
``(B) distinguish between--
``(i) the incremental cost incurred by an issuer for
the role of the issuer in the authorization, clearance, or
settlement of a particular electronic debit transaction,
which cost shall be considered under paragraph (2); and
``(ii) other costs incurred by an issuer which are not
specific to a particular electronic debit transaction,
which costs shall not be considered under paragraph (2);
and
``(C) consult, as appropriate, with the Comptroller of the
Currency, the Board of Directors of the Federal Deposit
Insurance Corporation, the Director of the Office of Thrift
Supervision, the National Credit Union Administration Board,
the Administrator of the Small Business Administration, and the
Director of the Bureau of Consumer Financial Protection.
``(5) Adjustments to interchange transaction fees for fraud
prevention costs.--
``(A) Adjustments.--The Board may allow for an adjustment
to the fee amount received or charged by an issuer under
paragraph (2), if--
``(i) such adjustment is reasonably necessary to make
allowance for costs incurred by the issuer in preventing
fraud in relation to electronic debit transactions
involving that issuer; and
``(ii) the issuer complies with the fraud-related
standards established by the Board under subparagraph (B),
which standards shall--
``(I) be designed to ensure that any fraud-related
adjustment of the issuer is limited to the amount
described in clause (i) and takes into account any
fraud-related reimbursements (including amounts from
charge-backs) received from consumers, merchants, or
payment card networks in relation to electronic debit
transactions involving the issuer; and
``(II) require issuers to take effective steps to
reduce the occurrence of, and costs from, fraud in
relation to electronic debit transactions, including
through the development and implementation of cost-
effective fraud prevention technology.
``(B) Rulemaking required.--
``(i) In general.--The Board shall prescribe
regulations in final form not later than 9 months after the
date of enactment of the Consumer Financial Protection Act
of 2010, to establish standards for making adjustments
under this paragraph.
``(ii) Factors for consideration.--In issuing the
standards and prescribing regulations under this paragraph,
the Board shall consider--
``(I) the nature, type, and occurrence of fraud in
electronic debit transactions;
``(II) the extent to which the occurrence of fraud
depends on whether authorization in an electronic debit
transaction is based on signature, PIN, or other means;
``(III) the available and economical means by which
fraud on electronic debit transactions may be reduced;
``(IV) the fraud prevention and data security costs
expended by each party involved in electronic debit
transactions (including consumers, persons who accept
debit cards as a form of payment, financial
institutions, retailers and payment card networks);
``(V) the costs of fraudulent transactions absorbed
by each party involved in such transactions (including
consumers, persons who accept debit cards as a form of
payment, financial institutions, retailers and payment
card networks);
``(VI) the extent to which interchange transaction
fees have in the past reduced or increased incentives
for parties involved in electronic debit transactions
to reduce fraud on such transactions; and
``(VII) such other factors as the Board considers
appropriate.
``(6) Exemption for small issuers.--
``(A) In general.--This subsection shall not apply to any
issuer that, together with its affiliates, has assets of less
than $10,000,000,000, and the Board shall exempt such issuers
from regulations prescribed under paragraph (3)(A).
``(B) Definition.--For purposes of this paragraph, the term
``issuer'' shall be limited to the person holding the asset
account that is debited through an electronic debit
transaction.
``(7) Exemption for government-administered payment programs
and reloadable prepaid cards.--
``(A) In general.--This subsection shall not apply to an
interchange transaction fee charged or received with respect to
an electronic debit transaction in which a person uses--
``(i) a debit card or general-use prepaid card that has
been provided to a person pursuant to a Federal, State or
local government-administered payment program, in which the
person may only use the debit card or general-use prepaid
card to transfer or debit funds, monetary value, or other
assets that have been provided pursuant to such program; or
``(ii) a plastic card, payment code, or device that
is--
``(I) linked to funds, monetary value, or assets
which are purchased or loaded on a prepaid basis;
``(II) not issued or approved for use to access or
debit any account held by or for the benefit of the
card holder (other than a subaccount or other method of
recording or tracking funds purchased or loaded on the
card on a prepaid basis);
``(III) redeemable at multiple, unaffiliated
merchants or service providers, or automated teller
machines;
``(IV) used to transfer or debit funds, monetary
value, or other assets; and
``(V) reloadable and not marketed or labeled as a
gift card or gift certificate.
``(B) Exception.--Notwithstanding subparagraph (A), after
the end of the 1-year period beginning on the effective date
provided in paragraph (9), this subsection shall apply to an
interchange transaction fee charged or received with respect to
an electronic debit transaction described in subparagraph
(A)(i) in which a person uses a general-use prepaid card, or an
electronic debit transaction described in subparagraph (A)(ii),
if any of the following fees may be charged to a person with
respect to the card:
``(i) A fee for an overdraft, including a shortage of
funds or a transaction processed for an amount exceeding
the account balance.
``(ii) A fee imposed by the issuer for the first
withdrawal per month from an automated teller machine that
is part of the issuer's designated automated teller machine
network.
``(C) Definition.--For purposes of subparagraph (B), the
term `designated automated teller machine network' means
either--
``(i) all automated teller machines identified in the
name of the issuer; or
``(ii) any network of automated teller machines
identified by the issuer that provides reasonable and
convenient access to the issuer's customers.
``(D) Reporting.--Beginning 12 months after the date of
enactment of the Consumer Financial Protection Act of 2010, the
Board shall annually provide a report to the Congress regarding
--
``(i) the prevalence of the use of general-use prepaid
cards in Federal, State or local government-administered
payment programs; and
``(ii) the interchange transaction fees and cardholder
fees charged with respect to the use of such general-use
prepaid cards.
``(8) Regulatory authority over network fees.--
``(A) In general.--The Board may prescribe regulations,
pursuant to section 553 of title 5, United States Code,
regarding any network fee.
``(B) Limitation.--The authority under subparagraph (A) to
prescribe regulations shall be limited to regulations to ensure
that--
``(i) a network fee is not used to directly or
indirectly compensate an issuer with respect to an
electronic debit transaction; and
``(ii) a network fee is not used to circumvent or evade
the restrictions of this subsection and regulations
prescribed under such subsection.
``(C) Rulemaking required.--The Board shall prescribe
regulations in final form before the end of the 9-month period
beginning on the date of the enactment of the Consumer
Financial Protection Act of 2010, to carry out the authorities
provided under subparagraph (A).
``(9) Effective date.--This subsection shall take effect at the
end of the 12-month period beginning on the date of the enactment
of the Consumer Financial Protection Act of 2010.
``(b) Limitation on Payment Card Network Restrictions.--
``(1) Prohibitions against exclusivity arrangements.--
``(A) No exclusive network.--The Board shall, before the
end of the 1-year period beginning on the date of the enactment
of the Consumer Financial Protection Act of 2010, prescribe
regulations providing that an issuer or payment card network
shall not directly or through any agent, processor, or licensed
member of a payment card network, by contract, requirement,
condition, penalty, or otherwise, restrict the number of
payment card networks on which an electronic debit transaction
may be processed to--
``(i) 1 such network; or
``(ii) 2 or more such networks which are owned,
controlled, or otherwise operated by --
``(I) affiliated persons; or
``(II) networks affiliated with such issuer.
``(B) No routing restrictions.--The Board shall, before the
end of the 1-year period beginning on the date of the enactment
of the Consumer Financial Protection Act of 2010, prescribe
regulations providing that an issuer or payment card network
shall not, directly or through any agent, processor, or
licensed member of the network, by contract, requirement,
condition, penalty, or otherwise, inhibit the ability of any
person who accepts debit cards for payments to direct the
routing of electronic debit transactions for processing over
any payment card network that may process such transactions.
``(2) Limitation on restrictions on offering discounts for use
of a form of payment.--
``(A) In general.--A payment card network shall not,
directly or through any agent, processor, or licensed member of
the network, by contract, requirement, condition, penalty, or
otherwise, inhibit the ability of any person to provide a
discount or in-kind incentive for payment by the use of cash,
checks, debit cards, or credit cards to the extent that--
``(i) in the case of a discount or in-kind incentive
for payment by the use of debit cards, the discount or in-
kind incentive does not differentiate on the basis of the
issuer or the payment card network;
``(ii) in the case of a discount or in-kind incentive
for payment by the use of credit cards, the discount or in-
kind incentive does not differentiate on the basis of the
issuer or the payment card network; and
``(iii) to the extent required by Federal law and
applicable State law, such discount or in-kind incentive is
offered to all prospective buyers and disclosed clearly and
conspicuously.
``(B) Lawful discounts.--For purposes of this paragraph,
the network may not penalize any person for the providing of a
discount that is in compliance with Federal law and applicable
State law.
``(3) Limitation on restrictions on setting transaction
minimums or maximums.--
``(A) In general.--A payment card network shall not,
directly or through any agent, processor, or licensed member of
the network, by contract, requirement, condition, penalty, or
otherwise, inhibit the ability--
``(i) of any person to set a minimum dollar value for
the acceptance by that person of credit cards, to the
extent that --
``(I) such minimum dollar value does not
differentiate between issuers or between payment card
networks; and
``(II) such minimum dollar value does not exceed
$10.00; or
``(ii) of any Federal agency or institution of higher
education to set a maximum dollar value for the acceptance
by that Federal agency or institution of higher education
of credit cards, to the extent that such maximum dollar
value does not differentiate between issuers or between
payment card networks.
``(B) Increase in minimum dollar amount.--The Board may, by
regulation prescribed pursuant to section 553 of title 5,
United States Code, increase the amount of the dollar value
listed in subparagraph (A)(i)(II).
``(4) Rule of construction:.--No provision of this subsection
shall be construed to authorize any person--
``(A) to discriminate between debit cards within a payment
card network on the basis of the issuer that issued the debit
card; or
``(B) to discriminate between credit cards within a payment
card network on the basis of the issuer that issued the credit
card.
``(c) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Affiliate.--The term `affiliate' means any company that
controls, is controlled by, or is under common control with another
company.
``(2) Debit card.--The term `debit card'--
``(A) means any card, or other payment code or device,
issued or approved for use through a payment card network to
debit an asset account (regardless of the purpose for which the
account is established), whether authorization is based on
signature, PIN, or other means;
``(B) includes a general-use prepaid card, as that term is
defined in section 915(a)(2)(A); and
``(C) does not include paper checks.
``(3) Credit card.--The term `credit card' has the same meaning
as in section 103 of the Truth in Lending Act.
``(4) Discount.--The term `discount'--
``(A) means a reduction made from the price that customers
are informed is the regular price; and
``(B) does not include any means of increasing the price
that customers are informed is the regular price.
``(5) Electronic debit transaction.--The term `electronic debit
transaction' means a transaction in which a person uses a debit
card.
``(6) Federal agency.--The term `Federal agency' means--
``(A) an agency (as defined in section 101 of title 31,
United States Code); and
``(B) a Government corporation (as defined in section 103
of title 5, United States Code).
``(7) Institution of higher education.--The term `institution
of higher education' has the same meaning as in 101 and 102 of the
Higher Education Act of 1965 (20 U.S.C. 1001, 1002).
``(8) Interchange transaction fee.--The term `interchange
transaction fee' means any fee established, charged or received by
a payment card network for the purpose of compensating an issuer
for its involvement in an electronic debit transaction.
``(9) Issuer.--The term `issuer' means any person who issues a
debit card, or credit card, or the agent of such person with
respect to such card.
``(10) Network fee.--The term `network fee' means any fee
charged and received by a payment card network with respect to an
electronic debit transaction, other than an interchange transaction
fee.
``(11) Payment card network.--The term `payment card network'
means an entity that directly, or through licensed members,
processors, or agents, provides the proprietary services,
infrastructure, and software that route information and data to
conduct debit card or credit card transaction authorization,
clearance, and settlement, and that a person uses in order to
accept as a form of payment a brand of debit card, credit card or
other device that may be used to carry out debit or credit
transactions.
``(d) Enforcement.--
``(1) In general.--Compliance with the requirements imposed
under this section shall be enforced under section 918.
``(2) Exception.--Sections 916 and 917 shall not apply with
respect to this section or the requirements imposed pursuant to
this section.''.
(b) Amendment to the Food and Nutrition Act of 2008.--Section
7(h)(10) of the Food and Nutrition Act of 2008 (7 U.S.C. 2016(h)(10))
is amended to read as follows:
``(10) Federal law not applicable.--Section 920 of the
Electronic Fund Transfer Act shall not apply to electronic benefit
transfer or reimbursement systems under this Act.''.
(c) Amendment to the Farm Security and Rural Investment Act of
2002.--Section 4402 of the Farm Security and Rural Investment Act of
2002 (7 U.S.C. 3007) is amended by adding at the end the following new
subsection:
``(f) Federal Law Not Applicable.--Section 920 of the Electronic
Fund Transfer Act shall not apply to electronic benefit transfer
systems established under this section.''.
(d) Amendment to the Child Nutrition Act of 1966.--Section 11 of
the Child Nutrition Act of 1966 (42 U.S.C. 1780) is amended by adding
at the end the following:
``(c) Federal Law Not Applicable.--Section 920 of the Electronic
Fund Transfer Act shall not apply to electronic benefit transfer
systems established under this Act or the Richard B. Russell National
School Lunch Act (42 U.S.C. 1751 et seq.).''.
SEC. 1076. REVERSE MORTGAGE STUDY AND REGULATIONS.
(a) Study.--Not later than 1 year after the designated transfer
date, the Bureau shall conduct a study on reverse mortgage
transactions.
(b) Regulations.--
(1) In general.--If the Bureau determines through the study
required under subsection (a) that conditions or limitations on
reverse mortgage transactions are necessary or appropriate for
accomplishing the purposes and objectives of this title, including
protecting borrowers with respect to the obtaining of reverse
mortgage loans for the purpose of funding investments, annuities,
and other investment products and the suitability of a borrower in
obtaining a reverse mortgage for such purpose.
(2) Identified practices and integrated disclosures.--The
regulations prescribed under paragraph (1) may, as the Bureau may
so determine--
(A) identify any practice as unfair, deceptive, or abusive
in connection with a reverse mortgage transaction; and
(B) provide for an integrated disclosure standard and model
disclosures for reverse mortgage transactions, consistent with
section 4302(d), that combines the relevant disclosures
required under the Truth in Lending Act (15 U.S.C. 1601 et
seq.) and the Real Estate Settlement Procedures Act, with the
disclosures required to be provided to consumers for Home
Equity Conversion Mortgages under section 255 of the National
Housing Act.
(c) Rule of Construction.--This section shall not be construed as
limiting the authority of the Bureau to issue regulations, orders, or
guidance that apply to reverse mortgages prior to the completion of the
study required under subsection (a).
SEC. 1077. REPORT ON PRIVATE EDUCATION LOANS AND PRIVATE EDUCATIONAL
LENDERS.
(a) Report.--Not later than 2 years after the date of enactment of
this Act, the Director and the Secretary of Education, in consultation
with the Commissioners of the Federal Trade Commission, and the
Attorney General of the United States, shall submit a report to the
Committee on Banking, Housing, and Urban Affairs and the Committee on
Health, Education, Labor, and Pensions of the Senate and the Committee
on Financial Services and the Committee on Education and Labor of the
House of Representatives, on private education loans (as that term is
defined in section 140 of the Truth in Lending Act (15 U.S.C. 1650))
and private educational lenders (as that term is defined in such
section).
(b) Content.--The report required by this section shall examine, at
a minimum--
(1) the growth and changes of the private education loan market
in the United States;
(2) factors influencing such growth and changes;
(3) the extent to which students and parents of students rely
on private education loans to finance postsecondary education and
the private education loan indebtedness of borrowers;
(4) the characteristics of private education loan borrowers,
including--
(A) the types of institutions of higher education that they
attend;
(B) socioeconomic characteristics (including income and
education levels, racial characteristics, geographical
background, age, and gender);
(C) what other forms of financing borrowers use to pay for
education;
(D) whether they exhaust their Federal loan options before
taking out a private loan;
(E) whether such borrowers are dependent or independent
students (as determined under part F of title IV of the Higher
Education Act of 1965) or parents of such students;
(F) whether such borrowers are students enrolled in a
program leading to a certificate, license, or credential other
than a degree, an associates degree, a baccalaureate degree, or
a graduate or professional degree; and
(G) if practicable, employment and repayment behaviors;
(5) the characteristics of private educational lenders,
including whether such creditors are for-profit, non-profit, or
institutions of higher education;
(6) the underwriting criteria used by private educational
lenders, including the use of cohort default rate (as such term is
defined in section 435(m) of the Higher Education Act of 1965);
(7) the terms, conditions, and pricing of private education
loans;
(8) the consumer protections available to private education
loan borrowers, including the effectiveness of existing disclosures
and requirements and borrowers' awareness and understanding about
terms and conditions of various financial products;
(9) whether Federal regulators and the public have access to
information sufficient to provide them with assurances that private
education loans are provided in accord with the Nation's fair
lending laws and that allows public officials to determine lender
compliance with fair lending laws; and
(10) any statutory or legislative recommendations necessary to
improve consumer protections for private education loan borrowers
and to better enable Federal regulators and the public to ascertain
private educational lender compliance with fair lending laws.
SEC. 1078. STUDY AND REPORT ON CREDIT SCORES.
(a) Study.--The Bureau shall conduct a study on the nature, range,
and size of variations between the credit scores sold to creditors and
those sold to consumers by consumer reporting agencies that compile and
maintain files on consumers on a nationwide basis (as defined in
section 603(p) of the Fair Credit Reporting Act; 15 U.S.C. 1681a(p)),
and whether such variations disadvantage consumers.
(b) Report to Congress.--The Bureau shall submit a report to
Congress on the results of the study conducted under subsection (a) not
later than 1 year after the date of enactment of this Act.
SEC. 1079. REVIEW, REPORT, AND PROGRAM WITH RESPECT TO EXCHANGE
FACILITATORS.
(a) Review.--The Director shall review all Federal laws and
regulations relating to the protection of consumers who use exchange
facilitators for transactions primarily for personal, family, or
household purposes.
(b) Report.--Not later than 1 year after the designated transfer
date, the Director shall submit to Congress a report describing--
(1) recommendations for legislation to ensure the appropriate
protection of consumers who use exchange facilitators for
transactions primarily for personal, family, or household purposes;
(2) recommendations for updating the regulations of Federal
departments and agencies to ensure the appropriate protection of
such consumers; and
(3) recommendations for regulations to ensure the appropriate
protection of such consumers.
(c) Program.--Not later than 2 years after the date of the
submission of the report under subsection (b), the Bureau shall,
consistent with subtitle B, propose regulations or otherwise establish
a program to protect consumers who use exchange facilitators.
(d) Exchange Facilitator Defined.--In this section, the term
``exchange facilitator'' means a person that--
(1) facilitates, for a fee, an exchange of like kind property
by entering into an agreement with a taxpayer by which the exchange
facilitator acquires from the taxpayer the contractual rights to
sell the taxpayer's relinquished property and transfers a
replacement property to the taxpayer as a qualified intermediary
(within the meaning of Treasury Regulations section 1.1031(k)-
1(g)(4)) or enters into an agreement with the taxpayer to take
title to a property as an exchange accommodation titleholder
(within the meaning of Revenue Procedure 2000-37) or enters into an
agreement with a taxpayer to act as a qualified trustee or
qualified escrow holder (within the meaning of Treasury Regulations
section 1.1031(k)-1(g)(3));
(2) maintains an office for the purpose of soliciting business
to perform the services described in paragraph (1); or
(3) advertises any of the services described in paragraph (1)
or solicits clients in printed publications, direct mail,
television or radio advertisements, telephone calls, facsimile
transmissions, or other electronic communications directed to the
general public for purposes of providing any such services.
SEC. 1079A. FINANCIAL FRAUD PROVISIONS.
(a) Sentencing Guidelines.--
(1) Securities fraud.--
(A) Directive.--Pursuant to its authority under section 994
of title 28, United States Code, and in accordance with this
paragraph, the United States Sentencing Commission shall review
and, if appropriate, amend the Federal Sentencing Guidelines
and policy statements applicable to persons convicted of
offenses relating to securities fraud or any other similar
provision of law, in order to reflect the intent of Congress
that penalties for the offenses under the guidelines and policy
statements appropriately account for the potential and actual
harm to the public and the financial markets from the offenses.
(B) Requirements.--In making any amendments to the Federal
Sentencing Guidelines and policy statements under subparagraph
(A), the United States Sentencing Commission shall--
(i) ensure that the guidelines and policy statements,
particularly section 2B1.1(b)(14) and section 2B1.1(b)(17)
(and any successors thereto), reflect--
(I) the serious nature of the offenses described in
subparagraph (A);
(II) the need for an effective deterrent and
appropriate punishment to prevent the offenses; and
(III) the effectiveness of incarceration in
furthering the objectives described in subclauses (I)
and (II);
(ii) consider the extent to which the guidelines
appropriately account for the potential and actual harm to
the public and the financial markets resulting from the
offenses;
(iii) ensure reasonable consistency with other relevant
directives and guidelines and Federal statutes;
(iv) make any necessary conforming changes to
guidelines; and
(v) ensure that the guidelines adequately meet the
purposes of sentencing, as set forth in section 3553(a)(2)
of title 18, United States Code.
(2) Financial institution fraud.--
(A) Directive.--Pursuant to its authority under section 994
of title 28, United States Code, and in accordance with this
paragraph, the United States Sentencing Commission shall review
and, if appropriate, amend the Federal Sentencing Guidelines
and policy statements applicable to persons convicted of fraud
offenses relating to financial institutions or federally
related mortgage loans and any other similar provisions of law,
to reflect the intent of Congress that the penalties for the
offenses under the guidelines and policy statements ensure
appropriate terms of imprisonment for offenders involved in
substantial bank frauds or other frauds relating to financial
institutions.
(B) Requirements.--In making any amendments to the Federal
Sentencing Guidelines and policy statements under subparagraph
(A), the United States Sentencing Commission shall--
(i) ensure that the guidelines and policy statements
reflect--
(I) the serious nature of the offenses described in
subparagraph (A);
(II) the need for an effective deterrent and
appropriate punishment to prevent the offenses; and
(III) the effectiveness of incarceration in
furthering the objectives described in subclauses (I)
and (II);
(ii) consider the extent to which the guidelines
appropriately account for the potential and actual harm to
the public and the financial markets resulting from the
offenses;
(iii) ensure reasonable consistency with other relevant
directives and guidelines and Federal statutes;
(iv) make any necessary conforming changes to
guidelines; and
(v) ensure that the guidelines adequately meet the
purposes of sentencing, as set forth in section 3553(a)(2)
of title 18, United States Code.
(b) Extension of Statute of Limitations for Securities Fraud
Violations.--
(1) In general.--Chapter 213 of title 18, United States Code,
is amended by adding at the end the following:
``Sec. 3301. Securities fraud offenses
``(a) Definition.--In this section, the term `securities fraud
offense' means a violation of, or a conspiracy or an attempt to
violate--
``(1) section 1348;
``(2) section 32(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78ff(a));
``(3) section 24 of the Securities Act of 1933 (15 U.S.C. 77x);
``(4) section 217 of the Investment Advisers Act of 1940 (15
U.S.C. 80b-17);
``(5) section 49 of the Investment Company Act of 1940 (15
U.S.C. 80a-48); or
``(6) section 325 of the Trust Indenture Act of 1939 (15 U.S.C.
77yyy).
``(b) Limitation.--No person shall be prosecuted, tried, or
punished for a securities fraud offense, unless the indictment is found
or the information is instituted within 6 years after the commission of
the offense.''.
(2) Technical and conforming amendment.--The table of sections
for chapter 213 of title 18, United States Code, is amended by
adding at the end the following:
``3301. Securities fraud offenses.''.
(c) Amendments to the False Claims Act Relating to Limitations on
Actions.--Section 3730(h) of title 31, United States Code, is amended--
(1) in paragraph (1), by striking ``or agent on behalf of the
employee, contractor, or agent or associated others in furtherance
of other efforts to stop 1 or more violations of this subchapter''
and inserting ``agent or associated others in furtherance of an
action under this section or other efforts to stop 1 or more
violations of this subchapter''; and
(2) by adding at the end the following:
``(3) Limitation on bringing civil action.--A civil action
under this subsection may not be brought more than 3 years after
the date when the retaliation occurred.''.
Subtitle H--Conforming Amendments
SEC. 1081. AMENDMENTS TO THE INSPECTOR GENERAL ACT.
Effective on the date of enactment of this Act, the Inspector
General Act of 1978 (5 U.S.C. App. 3) is amended--
(1) in section 8G(a)(2), by inserting ``and the Bureau of
Consumer Financial Protection'' after ``Board of Governors of the
Federal Reserve System'';
(2) in section 8G(c), by adding at the end the following: ``For
purposes of implementing this section, the Chairman of the Board of
Governors of the Federal Reserve System shall appoint the Inspector
General of the Board of Governors of the Federal Reserve System and
the Bureau of Consumer Financial Protection. The Inspector General
of the Board of Governors of the Federal Reserve System and the
Bureau of Consumer Financial Protection shall have all of the
authorities and responsibilities provided by this Act with respect
to the Bureau of Consumer Financial Protection, as if the Bureau
were part of the Board of Governors of the Federal Reserve
System.''; and
(3) in section 8G(g)(3), by inserting ``and the Bureau of
Consumer Financial Protection'' after ``Board of Governors of the
Federal Reserve System'' the first place that term appears.
SEC. 1082. AMENDMENTS TO THE PRIVACY ACT OF 1974.
Effective on the date of enactment of this Act, section 552a of
title 5, United States Code, is amended by adding at the end the
following:
``(w) Applicability to Bureau of Consumer Financial Protection.--
Except as provided in the Consumer Financial Protection Act of 2010,
this section shall apply with respect to the Bureau of Consumer
Financial Protection.''.
SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY
ACT OF 1982.
(a) In General.--The Alternative Mortgage Transaction Parity Act of
1982 (12 U.S.C. 3801 et seq.) is amended--
(1) in section 803 (12 U.S.C. 3802(1)), by striking ``1974''
and all that follows through ``described and defined'' and
inserting the following: ``1974), in which the interest rate or
finance charge may be adjusted or renegotiated, described and
defined''; and
(2) in section 804 (12 U.S.C. 3803)--
(A) in subsection (a)--
(i) in each of paragraphs (1), (2), and (3), by
inserting after ``transactions made'' each place that term
appears ``on or before the designated transfer date, as
determined under section 1062 of the Consumer Financial
Protection Act of 2010,'';
(ii) in paragraph (2), by striking ``and'' at the end;
(iii) in paragraph (3), by striking the period at the
end and inserting ``; and''; and
(iv) by adding at the end the following new paragraph:
``(4) with respect to transactions made after the designated
transfer date, only in accordance with regulations governing
alternative mortgage transactions, as issued by the Bureau of
Consumer Financial Protection for federally chartered housing
creditors, in accordance with the rulemaking authority granted to
the Bureau of Consumer Financial Protection with regard to
federally chartered housing creditors under provisions of law other
than this section.'';
(B) by striking subsection (c) and inserting the following:
``(c) Preemption of State Law.--An alternative mortgage transaction
may be made by a housing creditor in accordance with this section,
notwithstanding any State constitution, law, or regulation that
prohibits an alternative mortgage transaction. For purposes of this
subsection, a State constitution, law, or regulation that prohibits an
alternative mortgage transaction does not include any State
constitution, law, or regulation that regulates mortgage transactions
generally, including any restriction on prepayment penalties or late
charges.''; and
(C) by adding at the end the following:
``(d) Bureau Actions.--The Bureau of Consumer Financial Protection
shall--
``(1) review the regulations identified by the Comptroller of
the Currency and the National Credit Union Administration, (as
those rules exist on the designated transfer date), as applicable
under paragraphs (1) through (3) of subsection (a);
``(2) determine whether such regulations are fair and not
deceptive and otherwise meet the objectives of the Consumer
Financial Protection Act of 2010; and
``(3) promulgate regulations under subsection (a)(4) after the
designated transfer date.
``(e) Designated Transfer Date.--As used in this section, the term
`designated transfer date' means the date determined under section 1062
of the Consumer Financial Protection Act of 2010.''.
(b) Effective Date.--This section and the amendments made by this
section shall become effective on the designated transfer date.
(c) Rule of Construction.--The amendments made by subsection (a)
shall not affect any transaction covered by the Alternative Mortgage
Transaction Parity Act of l982 (12 U.S.C. 3801 et seq.) and entered
into on or before the designated transfer date.
SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND TRANSFER ACT.
The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) is
amended--
(1) by striking ``Board'' each place that term appears and
inserting ``Bureau'', except in subsections (a) and (e) of section
904 (as amended in paragraph (3) of this section) and in 918 (15
U.S.C. 1693o) (as so designated by the Credit Card Act of 2009) and
section 920 (as added by section 1076);
(2) in section 903 (15 U.S.C. 1693a)--
(A) by redesignating paragraphs (3) through (11) as
paragraphs (4) through (12), respectively; and
(B) by inserting after paragraph (3) the following:
``(4) the term `Bureau' means the Bureau of Consumer Financial
Protection;'';
(3) in section 904 (15 U.S.C. 1693b)--
(A) in subsection (a), by striking ``(a) Prescription by
Board.--The Board shall prescribe regulations to carry out the
purposes of this title.'' and inserting the following:
``(a) Prescription by the Bureau and the Board.--
``(1) In general.--Except as provided in paragraph (2), the
Bureau shall prescribe rules to carry out the purposes of this
title.
``(2) Authority of the board.--The Board shall have sole
authority to prescribe rules--
``(A) to carry out the purposes of this title with respect
to a person described in section 1029(a) of the Consumer
Financial Protection Act of 2010; and
``(B) to carry out the purposes of section 920.''; and
(B) by adding at the end the following new subsection:
``(e) Deference.--No provision of this title may be construed as
altering, limiting, or otherwise affecting the deference that a court
affords to--
``(1) the Bureau in making determinations regarding the meaning
or interpretation of any provision of this title for which the
Bureau has authority to prescribe regulations; or
``(2) the Board in making determinations regarding the meaning
or interpretation of section 920.''.
(4) in section 916(d) (15 U.S.C. 1693m) (as so designated by
the Credit CARD Act of 2009)--
(A) in the subsection heading, by striking ``of Board or
Approval of Duly Authorized Official or Employee of Federal
Reserve System'';
(B) by inserting ``Bureau or the'' before ``Board'' each
place that term appears; and
(C) by inserting ``Bureau of Consumer Financial Protection
or the'' before ``Federal Reserve System''; and
(5) in section 918 (15 U.S.C. 1693o) (as so designated by the
Credit CARD Act of 2009)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and inserting ``Subject
to subtitle B of the Consumer Financial Protection Act of
2010, compliance'';
(ii) by striking paragraphs (1) and (2), and inserting
the following:
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency, as defined in section 3(q) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with respect
to--
``(A) national banks, Federal savings associations, and
Federal branches and Federal agencies of foreign banks;
``(B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign banks
(other than Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial lending companies
owned or controlled by foreign banks, and organizations
operating under section 25 or 25A of the Federal Reserve Act;
and
``(C) banks and State savings associations insured by the
Federal Deposit Insurance Corporation (other than members of
the Federal Reserve System), and insured State branches of
foreign banks;'';
(iii) by redesignating paragraphs (3) through (5) as
paragraphs (2) through (4), respectively;
(iv) in paragraph (2) (as so redesignated), by striking
the period at the end and inserting a semicolon;
(v) in paragraph (3) (as so redesignated), by striking
``and'' at the end;
(vi) in paragraph (4) (as so redesignated), by striking
the period at the end and inserting ``and''; and
(vii) by adding at the end the following:
``(5) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
title, except that the Bureau shall not have authority to enforce
the requirements of section 920 or any regulations prescribed by
the Board under section 920.'';
(B) in subsection (b), by inserting ``any of paragraphs (1)
through (4) of'' before ``subsection (a)'' each place that term
appears; and
(C) by striking subsection (c) and inserting the following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the requirements
imposed under this title is specifically committed to some other
Government agency under any of paragraphs (1) through (4) of subsection
(a), and subject to subtitle B of the Consumer Financial Protection Act
of 2010, the Federal Trade Commission shall be authorized to enforce
such requirements. For the purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal Trade
Commission Act, a violation of any requirement imposed under this title
shall be deemed a violation of a requirement imposed under that Act.
All of the functions and powers of the Federal Trade Commission under
the Federal Trade Commission Act are available to the Federal Trade
Commission to enforce compliance by any person subject to the
jurisdiction of the Federal Trade Commission with the requirements
imposed under this title, irrespective of whether that person is
engaged in commerce or meets any other jurisdictional tests under the
Federal Trade Commission Act.''.
SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.
The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) is
amended--
(1) by striking ``Board'' each place that term appears, other
than in section 703(f) (as added by this section) and section
704(a)(4) (15 U.S.C. 1691c(a)(4)), and inserting ``Bureau'';
(2) in section 702 (15 U.S.C. 1691a), by striking subsection
(c) and inserting the following:
``(c) The term `Bureau' means the Bureau of Consumer Financial
Protection.'';
(3) in section 703 (15 U.S.C. 1691b)--
(A) by striking the section heading and inserting the
following:
``SEC. 703. PROMULGATION OF REGULATIONS BY THE BUREAU.'';
(B) by striking ``(a) Regulations.--'';
(C) by striking subsection (b);
(D) by redesignating paragraphs (1) through (5) as
subsections (a) through (e), respectively;
(E) in subsection (c), as so redesignated, by striking
``paragraph (2)'' and inserting ``subsection (b)''; and
(F) by adding at the end the following:
``(f) Board Authority.--Notwithstanding subsection (a), the Board
shall prescribe regulations to carry out the purposes of this title
with respect to a person described in section 1029(a) of the Consumer
Financial Protection Act of 2010. These regulations may contain but are
not limited to such classifications, differentiation, or other
provision, and may provide for such adjustments and exceptions for any
class of transactions, as in the judgment of the Board are necessary or
proper to effectuate the purposes of this title, to prevent
circumvention or evasion thereof, or to facilitate or substantiate
compliance therewith.
``(g) Deference.--Notwithstanding any power granted to any Federal
agency under this title, the deference that a court affords to a
Federal agency with respect to a determination made by such agency
relating to the meaning or interpretation of any provision of this
title that is subject to the jurisdiction of such agency shall be
applied as if that agency were the only agency authorized to apply,
enforce, interpret, or administer the provisions of this title'';
(4) in section 704 (15 U.S.C. 1691c)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and inserting ``Subject
to subtitle B of the Consumer Protection Financial
Protection Act of 2010'';
(ii) by striking paragraphs (1) and (2) and inserting
the following:
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency, as defined in section 3(q) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with respect
to--
``(A) national banks, Federal savings associations, and
Federal branches and Federal agencies of foreign banks;
``(B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign banks
(other than Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial lending companies
owned or controlled by foreign banks, and organizations
operating under section 25 or 25A of the Federal Reserve Act;
and
``(C) banks and State savings associations insured by the
Federal Deposit Insurance Corporation (other than members of
the Federal Reserve System), and insured State branches of
foreign banks;'';
(iii) by redesignating paragraphs (3) through (9) as
paragraphs (2) through (8), respectively;
(iv) in paragraph (7) (as so redesignated), by striking
``and'' at the end;
(v) in paragraph (8) (as so redesignated), by striking
the period at the end, and inserting ``; and''; and
(vi) by adding at the end the following:
``(9) Subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
title.'';
(B) by striking subsection (c) and inserting the following:
``(c) Overall Enforcement Authority of Federal Trade Commission.--
Except to the extent that enforcement of the requirements imposed under
this title is specifically committed to some other Government agency
under any of paragraphs (1) through (8) of subsection (a), and subject
to subtitle B of the Consumer Financial Protection Act of 2010, the
Federal Trade Commission shall be authorized to enforce such
requirements. For the purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.), a violation of any requirement
imposed under this subchapter shall be deemed a violation of a
requirement imposed under that Act. All of the functions and powers of
the Federal Trade Commission under the Federal Trade Commission Act are
available to the Federal Trade Commission to enforce compliance by any
person with the requirements imposed under this title, irrespective of
whether that person is engaged in commerce or meets any other
jurisdictional tests under the Federal Trade Commission Act, including
the power to enforce any rule prescribed by the Bureau under this title
in the same manner as if the violation had been a violation of a
Federal Trade Commission trade regulation rule.''; and
(C) in subsection (d), by striking ``Board'' and inserting
``Bureau'';
(5) in section 706(e) (15 U.S.C. 1691e(e))--
(A) in the subsection heading--
(i) by striking ``Board'' each place that term appears
and inserting ``Bureau''; and
(ii) by striking ``Federal Reserve System'' and
inserting ``Bureau of Consumer Financial Protection''; and
(B) by striking ``Federal Reserve System'' and inserting
``Bureau of Consumer Financial Protection'';
(6) in section 706(g) (15 U.S.C. 1691e(g)), by striking ``(3)''
and inserting ``(9)''; and
(7) in section 706(f) (15 U.S.C. 1691e(f)), by striking ``two
years from'' each place that term appears and inserting ``5 years
after''.
SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY ACT.
(a) Amendment to Section 603.--Section 603(d)(1) of the Expedited
Funds Availability Act (12 U.S.C. 4002) is amended by inserting after
``Board'' the following ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''.
(b) Amendments to Section 604.--Section 604 of the Expedited Funds
Availability Act (12 U.S.C. 4003) is amended--
(1) by inserting after ``Board'' each place that term appears,
other than in subsection (f), the following: ``, jointly with the
Director of the Bureau of Consumer Financial Protection,''; and
(2) in subsection (f), by striking ``Board.'' each place that
term appears and inserting the following: ``Board, jointly with the
Director of the Bureau of Consumer Financial Protection.''.
(c) Amendments to Section 605.--Section 605 of the Expedited Funds
Availability Act (12 U.S.C. 4004) is amended--
(1) by inserting after ``Board'' each place that term appears,
other than in the heading for section 605(f)(1), the following: ``,
jointly with the Director of the Bureau of Consumer Financial
Protection,''; and
(2) in subsection (f)(1), in the paragraph heading, by
inserting ``and bureau'' after ``board''.
(d) Amendments to Section 609.--Section 609 of the Expedited Funds
Availability Act (12 U.S.C. 4008) is amended:
(1) in subsection (a), by inserting after ``Board'' the
following ``, jointly with the Director of the Bureau of Consumer
Financial Protection,''; and
(2) by striking subsection (e) and inserting the following:
``(e) Consultations.--In prescribing regulations under subsections
(a) and (b), the Board and the Director of the Bureau of Consumer
Financial Protection, in the case of subsection (a), and the Board, in
the case of subsection (b), shall consult with the Comptroller of the
Currency, the Board of Directors of the Federal Deposit Insurance
Corporation, and the National Credit Union Administration Board.''.
(e) Expedited Funds Availability Improvements.--Section 603 of the
Expedited Funds Availability Act (12 U.S.C. 4002) is amended--
(1) in subsection (a)(2)(D), by striking ``$100'' and inserting
``$200''; and
(2) in subsection (b)(3)(C), in the subparagraph heading, by
striking ``$100'' and inserting ``$200''; and
(3) in subsection (c)(1)(B)(iii), in the clause heading, by
striking ``$100'' and inserting ``$200''.
(f) Regular Adjustments for Inflation.--Section 607 of the
Expedited Funds Availability Act (12 U.S.C. 4006) is amended by adding
at the end the following:
``(f) Adjustments to Dollar Amounts for Inflation.--The dollar
amounts under this title shall be adjusted every 5 years after December
31, 2011, by the annual percentage increase in the Consumer Price Index
for Urban Wage Earners and Clerical Workers, as published by the Bureau
of Labor Statistics, rounded to the nearest multiple of $25.''.
SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING ACT.
The Fair Credit Billing Act (15 U.S.C. 1666-1666j) is amended by
striking ``Board'' each place that term appears, other than in section
105(i) (as added by this subtitle) and inserting ``Bureau''.
SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING ACT AND THE FAIR AND
ACCURATE CREDIT TRANSACTIONS ACT OF 2003.
(a) Fair Credit Reporting Act.--The Fair Credit Reporting Act (15
U.S.C. 1681 et seq.) is amended--
(1) in section 603 (15 U.S.C. 1681a)--
(A) by redesignating subsections (w) and (x) as subsections
(x) and (y), respectively; and
(B) by inserting after subsection (v) the following:
``(w) The term `Bureau' means the Bureau of Consumer Financial
Protection.''; and
(2) except as otherwise specifically provided in this
subsection--
(A) by striking ``Federal Trade Commission'' each place
that term appears and inserting ``Bureau'';
(B) by striking ``FTC'' each place that term appears and
inserting ``Bureau'';
(C) by striking ``the Commission'' each place that term
appears, other than sections 615(e) (15 U.S.C. 1681m(e)) and
628(a)(1) (15 U.S.C. 1681w(a)(1)), and inserting ``the
Bureau''; and
(D) by striking ``The Federal banking agencies, the
National Credit Union Administration, and the Commission shall
jointly'' each place that term appears, other than section
615(e)(1) (15 U.S.C. 1681m(e)) and section 628(a)(1) (15 U.S.C.
1681w(a)(1)), and inserting ``The Bureau shall'';
(3) in section 603(k)(2) (15 U.S.C. 1681a(k)(2)), by striking
``Board of Governors of the Federal Reserve System'' and inserting
``Bureau'';
(4) in section 604(g) (15 U.S.C. 1681b(g))--
(A) in paragraph (3), by striking subparagraph (C) and
inserting the following:
``(C) as otherwise determined to be necessary and
appropriate, by regulation or order, by the Bureau or the
applicable State insurance authority (with respect to any
person engaged in providing insurance or annuities).''; and
(B) by striking paragraph (5) and inserting the following:
``(5) Regulations and effective date for paragraph (2).--
``(A) Regulations required.--The Bureau may, after notice
and opportunity for comment, prescribe regulations that permit
transactions under paragraph (2) that are determined to be
necessary and appropriate to protect legitimate operational,
transactional, risk, consumer, and other needs (and which shall
include permitting actions necessary for administrative
verification purposes), consistent with the intent of paragraph
(2) to restrict the use of medical information for
inappropriate purposes.'';
(5) in section 605(h)(2)(A) (15 U.S.C. 1681c(h)(2)(A)), by
striking ``with respect to the entities that are subject to their
respective enforcement authority under section 621'' and inserting
``, in consultation with the Federal banking agencies, the National
Credit Union Administration, and the Federal Trade Commission,''.
(6) in section 611(e)(2) (15 U.S.C. 1681i(e)), by striking
paragraph (2) and inserting the following:
``(2) Exclusion.--Complaints received or obtained by the Bureau
pursuant to its investigative authority under the Consumer
Financial Protection Act of 2010 shall not be subject to paragraph
(1).'';
(7) in section 615(d)(2)(B) (15 U.S.C. 1681m(d)(2)(B)), by
striking ``the Federal banking agencies'' and inserting ``the
Federal Trade Commission, the Federal banking agencies,'';
(8) in section 615(e)(1) (15 U.S.C. 1681m(e)(1)), by striking
``and the Commission'' and inserting ``the Federal Trade
Commission, the Commodity Futures Trading Commission, and the
Securities and Exchange Commission'';
(9) in section 615(h)(6) (15 U.S.C. 1681m(h)(6)), by striking
subparagraph (A) and inserting the following:
``(A) Rules required.--The Bureau shall prescribe rules to
carry out this subsection.'';
(10) in section 621 (15 U.S.C. 1681s)--
(A) by striking subsection (a) and inserting the following:
``(a) Enforcement by Federal Trade Commission.--
``(1) In general.--The Federal Trade Commission shall be
authorized to enforce compliance with the requirements imposed by
this title under the Federal Trade Commission Act (15 U.S.C. 41 et
seq.), with respect to consumer reporting agencies and all other
persons subject thereto, except to the extent that enforcement of
the requirements imposed under this title is specifically committed
to some other Government agency under any of subparagraphs (A)
through (G) of subsection (b)(1), and subject to subtitle B of the
Consumer Financial Protection Act of 2010, subsection (b). For the
purpose of the exercise by the Federal Trade Commission of its
functions and powers under the Federal Trade Commission Act, a
violation of any requirement or prohibition imposed under this
title shall constitute an unfair or deceptive act or practice in
commerce, in violation of section 5(a) of the Federal Trade
Commission Act (15 U.S.C. 45(a)), and shall be subject to
enforcement by the Federal Trade Commission under section 5(b) of
that Act with respect to any consumer reporting agency or person
that is subject to enforcement by the Federal Trade Commission
pursuant to this subsection, irrespective of whether that person is
engaged in commerce or meets any other jurisdictional tests under
the Federal Trade Commission Act. The Federal Trade Commission
shall have such procedural, investigative, and enforcement powers,
including the power to issue procedural rules in enforcing
compliance with the requirements imposed under this title and to
require the filing of reports, the production of documents, and the
appearance of witnesses, as though the applicable terms and
conditions of the Federal Trade Commission Act were part of this
title. Any person violating any of the provisions of this title
shall be subject to the penalties and entitled to the privileges
and immunities provided in the Federal Trade Commission Act as
though the applicable terms and provisions of such Act are part of
this title.
``(2) Penalties.--
``(A) Knowing violations.--Except as otherwise provided by
subtitle B of the Consumer Financial Protection Act of 2010, in
the event of a knowing violation, which constitutes a pattern
or practice of violations of this title, the Federal Trade
Commission may commence a civil action to recover a civil
penalty in a district court of the United States against any
person that violates this title. In such action, such person
shall be liable for a civil penalty of not more than $2,500 per
violation.
``(B) Determining penalty amount.--In determining the
amount of a civil penalty under subparagraph (A), the court
shall take into account the degree of culpability, any history
of such prior conduct, ability to pay, effect on ability to
continue to do business, and such other matters as justice may
require.
``(C) Limitation.--Notwithstanding paragraph (2), a court
may not impose any civil penalty on a person for a violation of
section 623(a)(1), unless the person has been enjoined from
committing the violation, or ordered not to commit the
violation, in an action or proceeding brought by or on behalf
of the Federal Trade Commission, and has violated the
injunction or order, and the court may not impose any civil
penalty for any violation occurring before the date of the
violation of the injunction or order.'';
(B) by striking subsection (b) and inserting the following:
``(b) Enforcement by Other Agencies.--
``(1) In general.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the requirements
imposed under this title with respect to consumer reporting
agencies, persons who use consumer reports from such agencies,
persons who furnish information to such agencies, and users of
information that are subject to section 615(d) shall be enforced
under--
``(A) section 8 of the Federal Deposit Insurance Act (12
U.S.C. 1818), by the appropriate Federal banking agency, as
defined in section 3(q) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(q)), with respect to--
``(i) any national bank or State savings association,
and any Federal branch or Federal agency of a foreign bank;
``(ii) any member bank of the Federal Reserve System
(other than a national bank), a branch or agency of a
foreign bank (other than a Federal branch, Federal agency,
or insured State branch of a foreign bank), a commercial
lending company owned or controlled by a foreign bank, and
any organization operating under section 25 or 25A of the
Federal Reserve Act; and
``(iii) any bank or Federal savings association insured
by the Federal Deposit Insurance Corporation (other than a
member of the Federal Reserve System) and any insured State
branch of a foreign bank;
``(B) the Federal Credit Union Act (12 U.S.C. 1751 et
seq.), by the Administrator of the National Credit Union
Administration with respect to any Federal credit union;
``(C) subtitle IV of title 49, United States Code, by the
Secretary of Transportation, with respect to all carriers
subject to the jurisdiction of the Surface Transportation
Board;
``(D) the Federal Aviation Act of 1958 (49 U.S.C. App. 1301
et seq.), by the Secretary of Transportation, with respect to
any air carrier or foreign air carrier subject to that Act;
``(E) the Packers and Stockyards Act, 1921 (7 U.S.C. 181 et
seq.) (except as provided in section 406 of that Act), by the
Secretary of Agriculture, with respect to any activities
subject to that Act;
``(F) the Commodity Exchange Act, with respect to a person
subject to the jurisdiction of the Commodity Futures Trading
Commission;
``(G) the Federal securities laws, and any other laws that
are subject to the jurisdiction of the Securities and Exchange
Commission, with respect to a person that is subject to the
jurisdiction of the Securities and Exchange Commission; and
``(H) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau, with respect to any person subject to
this title.
``(2) Incorporated definitions.--The terms used in paragraph
(1) that are not defined in this title or otherwise defined in
section 3(s) of the Federal Deposit Insurance Act (12 U.S.C.
1813(s)) have the same meanings as in section 1(b) of the
International Banking Act of 1978 (12 U.S.C. 3101).'';
(C) in subsection (c)(2)--
(i) by inserting ``and the Federal Trade Commission''
before ``or the appropriate''; and
(ii) by inserting ``and the Federal Trade Commission''
before ``or appropriate'' each place that term appears;
(D) in subsection (c)(4), by inserting before ``or the
appropriate'' each place that term appears the following: ``,
the Federal Trade Commission,'';
(E) by striking subsection (e) and inserting the following:
``(e) Regulatory Authority.--
``(1) In general.--The Bureau shall prescribe such regulations
as are necessary to carry out the purposes of this title, except
with respect to sections 615(e) and 628. The Bureau may prescribe
regulations as may be necessary or appropriate to administer and
carry out the purposes and objectives of this title, and to prevent
evasions thereof or to facilitate compliance therewith. Except as
provided in section 1029(a) of the Consumer Financial Protection
Act of 2010, the regulations prescribed by the Bureau under this
title shall apply to any person that is subject to this title,
notwithstanding the enforcement authorities granted to other
agencies under this section.
``(2) Deference.--Notwithstanding any power granted to any
Federal agency under this title, the deference that a court affords
to a Federal agency with respect to a determination made by such
agency relating to the meaning or interpretation of any provision
of this title that is subject to the jurisdiction of such agency
shall be applied as if that agency were the only agency authorized
to apply, enforce, interpret, or administer the provisions of this
title The regulations prescribed by the Bureau under this title
shall apply to any person that is subject to this title,
notwithstanding the enforcement authorities granted to other
agencies under this section.''; and
(F) in subsection (f)(2), by striking ``the Federal banking
agencies'' and insert ``the Federal Trade Commission, the
Federal banking agencies,'';
(11) in section 623 (15 U.S.C. 1681s-2)--
(A) in subsection (a)(7), by striking subparagraph (D) and
inserting the following:
``(D) Model disclosure.--
``(i) Duty of bureau.--The Bureau shall prescribe a
brief model disclosure that a financial institution may use
to comply with subparagraph (A), which shall not exceed 30
words.
``(ii) Use of model not required.--No provision of this
paragraph may be construed to require a financial
institution to use any such model form prescribed by the
Bureau.
``(iii) Compliance using model.--A financial
institution shall be deemed to be in compliance with
subparagraph (A) if the financial institution uses any
model form prescribed by the Bureau under this
subparagraph, or the financial institution uses any such
model form and rearranges its format.'';
(B) in subsection (a)(8), by inserting ``, in consultation
with the Federal Trade Commission, the Federal banking
agencies, and the National Credit Union Administration,''
before ``shall jointly''; and
(C) by striking subsection (e) and inserting the following:
``(e) Accuracy Guidelines and Regulations Required.--
``(1) Guidelines.--The Bureau shall, with respect to persons or
entities that are subject to the enforcement authority of the
Bureau under section 621--
``(A) establish and maintain guidelines for use by each
person that furnishes information to a consumer reporting
agency regarding the accuracy and integrity of the information
relating to consumers that such entities furnish to consumer
reporting agencies, and update such guidelines as often as
necessary; and
``(B) prescribe regulations requiring each person that
furnishes information to a consumer reporting agency to
establish reasonable policies and procedures for implementing
the guidelines established pursuant to subparagraph (A).
``(2) Criteria.--In developing the guidelines required by
paragraph (1)(A), the Bureau shall--
``(A) identify patterns, practices, and specific forms of
activity that can compromise the accuracy and integrity of
information furnished to consumer reporting agencies;
``(B) review the methods (including technological means)
used to furnish information relating to consumers to consumer
reporting agencies;
``(C) determine whether persons that furnish information to
consumer reporting agencies maintain and enforce policies to
ensure the accuracy and integrity of information furnished to
consumer reporting agencies; and
``(D) examine the policies and processes that persons that
furnish information to consumer reporting agencies employ to
conduct reinvestigations and correct inaccurate information
relating to consumers that has been furnished to consumer
reporting agencies.'';
(12) in section 628(a)(1) (15 U.S.C. 1681w(a)(1)), by striking
``Not later than'' and all that follows through ``Exchange
Commission,'' and inserting ``The Federal Trade Commission, the
Securities and Exchange Commission, the Commodity Futures Trading
Commission, the Federal banking agencies, and the National Credit
Union Administration, with respect to the entities that are subject
to their respective enforcement authority under section 621,''; and
(13) in section 628(a)(3) (15 U.S.C. 1681w(a)(3)), by striking
``the Federal banking agencies, the National Credit Union
Administration, the Commission, and the Securities and Exchange
Commission'' and inserting ``the agencies identified in paragraph
(1)''.
(b) Fair and Accurate Credit Transactions Act of 2003.--The Fair
and Accurate Credit Transactions Act of 2003 (Public Law 108-159) is
amended--
(1) in section 112(b) (15 U.S.C. 1681c-1 note), by striking
``Commission'' and inserting ``Bureau'';
(2) in section 211(d) (15 U.S.C. 1681j note), by striking
``Commission'' each place that term appears and inserting
``Bureau'';
(3) in section 214(b) (15 U.S.C. 1681s-3 note), by striking
paragraph (1) and inserting the following:
``(1) In general.--Regulations to carry out section 624 of the
Fair Credit Reporting Act (15 U.S.C. 1681s-3), shall be prescribed,
as described in paragraph (2), by--
``(A) the Commodity Futures Trading Commission, with
respect to entities subject to its enforcement authorities;
``(B) the Securities and Exchange Commission, with respect
to entities subject to its enforcement authorities; and
``(C) the Bureau, with respect to other entities subject to
this Act.''; and
(4) in section 214(e)(1) (15 U.S.C. 1681s-3 note), by striking
``Commission'' and inserting ``Bureau''.
SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES ACT.
The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.) is
amended--
(1) by striking ``Commission'' each place that term appears and
inserting ``Bureau'';
(2) in section 803 (15 U.S.C. 1692a)--
(A) by striking paragraph (1) and inserting the following:
``(1) The term `Bureau' means the Bureau of Consumer Financial
Protection.'';
(3) in section 814 (15 U.S.C. 1692l)--
(A) by striking subsection (a) and inserting the following:
``(a) Federal Trade Commission.--The Federal Trade Commission shall
be authorized to enforce compliance with this title, except to the
extent that enforcement of the requirements imposed under this title is
specifically committed to another Government agency under any of
paragraphs (1) through (5) of subsection (b), subject to subtitle B of
the Consumer Financial Protection Act of 2010. For purpose of the
exercise by the Federal Trade Commission of its functions and powers
under the Federal Trade Commission Act (15 U.S.C. 41 et seq.), a
violation of this title shall be deemed an unfair or deceptive act or
practice in violation of that Act. All of the functions and powers of
the Federal Trade Commission under the Federal Trade Commission Act are
available to the Federal Trade Commission to enforce compliance by any
person with this title, irrespective of whether that person is engaged
in commerce or meets any other jurisdictional tests under the Federal
Trade Commission Act, including the power to enforce the provisions of
this title, in the same manner as if the violation had been a violation
of a Federal Trade Commission trade regulation rule.''; and
(B) in subsection (b)--
(i) by striking ``Compliance'' and inserting ``Subject
to subtitle B of the Consumer Financial Protection Act of
2010, compliance'';
(ii) by striking paragraphs (1) and (2) and inserting
the following:
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency, as defined in section 3(q) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with respect
to--
``(A) national banks, Federal savings associations, and
Federal branches and Federal agencies of foreign banks;
``(B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign banks
(other than Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial lending companies
owned or controlled by foreign banks, and organizations
operating under section 25 or 25A of the Federal Reserve Act;
and
``(C) banks and State savings associations insured by the
Federal Deposit Insurance Corporation (other than members of
the Federal Reserve System), and insured State branches of
foreign banks;'';
(iii) by redesignating paragraphs (3) through (6), as
paragraphs (2) through (5), respectively;
(iv) in paragraph (4) (as so redesignated), by striking
``and'' at the end;
(v) in paragraph (5) (as so redesignated), by striking
the period at the end and inserting ``; and''; and
(vi) by inserting before the undesignated matter at the
end the following:
``(6) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
title.''.
(4) in subsection (d), by striking ``Neither the Commission''
and all that follows through the end of the subsection and
inserting the following: ``Except as provided in section 1029(a) of
the Consumer Financial Protection Act of 2010, the Bureau may
prescribe rules with respect to the collection of debts by debt
collectors, as defined in this title.''.
SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is
amended--
(1) in section 8(t) (12 U.S.C. 1818(t)), by adding at the end
the following:
``(6) Referral to bureau of consumer financial protection.--
Subject to subtitle B of the Consumer Financial Protection Act of
2010, each appropriate Federal banking agency shall make a referral
to the Bureau of Consumer Financial Protection when the Federal
banking agency has a reasonable belief that a violation of an
enumerated consumer law, as defined in the Consumer Financial
Protection Act of 2010, has been committed by any insured
depository institution or institution-affiliated party within the
jurisdiction of that appropriate Federal banking agency.''; and
(2) in section 43 (12 U.S.C. 1831t)--
(A) in subsection (c), by striking ``Federal Trade
Commission'' and inserting ``Bureau'';
(B) in subsection (d), by striking ``Federal Trade
Commission'' and inserting ``Bureau'';
(C) in subsection (e)--
(i) in paragraph (2), by striking ``Federal Trade
Commission'' and inserting ``Bureau''; and
(ii) by adding at the end the following new paragraph:
``(5) Bureau.--The term `Bureau' means the Bureau of Consumer
Financial Protection.''; and
(D) in subsection (f)--
(i) by striking paragraph (1) and inserting the
following:
``(1) Limited enforcement authority.--Compliance with the
requirements of subsections (b), (c), and (e), and any regulation
prescribed or order issued under such subsection, shall be enforced
under the Consumer Financial Protection Act of 2010, by the Bureau,
subject to subtitle B of the Consumer Financial Protection Act of
2010, and under the Federal Trade Commission Act (15 U.S.C. 41 et
seq.) by the Federal Trade Commission.''; and
(ii) in paragraph (2), by striking subparagraph (C) and
inserting the following:
``(C) Limitation on state action while federal action
pending.--If the Bureau or Federal Trade Commission has
instituted an enforcement action for a violation of this
section, no appropriate State supervisory agency may, during
the pendency of such action, bring an action under this section
against any defendant named in the complaint of the Bureau or
Federal Trade Commission for any violation of this section that
is alleged in that complaint.''.
SEC. 1091. AMENDMENT TO FEDERAL FINANCIAL INSTITUTIONS EXAMINATION
COUNCIL ACT OF 1978.
Section 1004(a)(4) of the Federal Financial Institutions
Examination Council Act of 1978 (12 U.S.C. 3303(a)(4)) is amended by
striking ``Director, Office of Thrift Supervision'' and inserting
``Director of the Consumer Financial Protection Bureau''.
SEC. 1092. AMENDMENTS TO THE FEDERAL TRADE COMMISSION ACT.
Section 18(f) of the Federal Trade Commission Act (15 U.S.C.
57a(f)) is amended--
(1) by striking the subsection heading and inserting the
following:
``(f) Definitions of Banks, Savings and Loan Institutions, and
Federal Credit Unions.--''.
(2) by striking paragraph (1) and inserting the following:
``(1) [Repealed.]'';
(3) by striking paragraphs (5) through (7);
(4) in paragraph (2)--
(A) by striking ``(2) Enforcement'' and all that follows
through ``in the case of'' and inserting the following:
``(2) Definition.--For purposes of this Act, the term `bank'
means'';
(B) in subparagraph (A), by striking ``, by the division''
and all that follows through ``Currency'';
(C) in subparagraph (B)--
(i) by striking ``, by the division'' and all that
follows through ``System''; and
(ii) by striking ``25(a)'' and inserting ``25A''; and
(D) in subparagraph (C)--
(i) by striking ``(other'' and inserting ``(other
than''; and
(ii) by striking ``, by the division'' and all that
follows through ``Corporation'';
(5) in paragraph (3), by striking ``Compliance'' and all that
follows through ``as defined in'' and inserting the following:
``For purposes of this Act, the term ``savings and loan
institution'' has the same meaning as in''; and
(6) in paragraph (4), by striking ``Compliance'' and all that
follows through ``credit unions under'' and inserting the
following: ``For purposes of this Act, the term ``Federal credit
union'' has the same meaning as in''.
SEC. 1093. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.
Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.) is
amended--
(1) in section 501(b) (15 U.S.C. 6801(b)), by inserting ``,
other than the Bureau of Consumer Financial Protection,'' after
``505(a)'';
(2) in section 502(e)(5) (15 U.S.C. 6802(e)(5)), by inserting
``the Bureau of Consumer Financial Protection'' after
``(including'';
(3) in section 504(a) (15 U.S.C. 6804(a))--
(A) by striking paragraphs (1) and (2) and inserting the
following:
``(1) Rulemaking.--
``(A) In general.--Except as provided in subparagraph (C),
the Bureau of Consumer Financial Protection and the Securities
and Exchange Commission shall have authority to prescribe such
regulations as may be necessary to carry out the purposes of
this subtitle with respect to financial institutions and other
persons subject to their respective jurisdiction under section
505 (and notwithstanding subtitle B of the Consumer Financial
Protection Act of 2010), except that the Bureau of Consumer
Financial Protection shall not have authority to prescribe
regulations with respect to the standards under section 501.
``(B) CFTC.--The Commodity Futures Trading Commission shall
have authority to prescribe such regulations as may be
necessary to carry out the purposes of this subtitle with
respect to financial institutions and other persons subject to
the jurisdiction of the Commodity Futures Trading Commission
under section 5g of the Commodity Exchange Act.
``(C) Federal trade commission authority.--Notwithstanding
the authority of the Bureau of Consumer Financial Protection
under subparagraph (A), the Federal Trade Commission shall have
authority to prescribe such regulations as may be necessary to
carry out the purposes of this subtitle with respect to any
financial institution that is a person described in section
1029(a) of the Consumer Financial Protection Act of 2010.
``(D) Rule of construction.--Nothing in this paragraph
shall be construed to alter, affect, or otherwise limit the
authority of a State insurance authority to adopt regulations
to carry out this subtitle.
``(2) Coordination, consistency, and comparability.--Each of
the agencies authorized under paragraph (1) to prescribe
regulations shall consult and coordinate with the other such
agencies and, as appropriate, and with representatives of State
insurance authorities designated by the National Association of
Insurance Commissioners, for the purpose of assuring, to the extent
possible, that the regulations prescribed by each such agency are
consistent and comparable with the regulations prescribed by the
other such agencies.''; and
(B) in paragraph (3), by striking ``, and shall be issued
in final form not later than 6 months after the date of
enactment of this Act'';
(4) in section 505(a) (15 U.S.C. 6805(a))--
(A) by striking ``This subtitle'' and all that follows
through ``as follows:'' and inserting ``Subject to subtitle B
of the Consumer Financial Protection Act of 2010, this subtitle
and the regulations prescribed thereunder shall be enforced by
the Bureau of Consumer Financial Protection, the Federal
functional regulators, the State insurance authorities, and the
Federal Trade Commission with respect to financial institutions
and other persons subject to their jurisdiction under
applicable law, as follows:'';
(B) in paragraph (1)--
(i) in the matter preceding subparagraph (A), by
inserting ``by the appropriate Federal banking agency, as
defined in section 3(q) of the Federal Deposit Insurance
Act,'' after ``Act,'';
(ii) in subparagraph (A), by striking ``, by the Office
of the Comptroller of the Currency'';
(iii) in subparagraph (B), by striking ``, by the Board
of Governors of the Federal Reserve System'';
(iv) in subparagraph (C), by striking ``, by the Board
of Directors of the Federal Deposit Insurance
Corporation''; and
(v) in subparagraph (D), by striking ``, by the
Director of the Office of Thrift Supervision''; and
(C) by adding at the end the following:
``(8) Under subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau of Consumer Financial Protection, in the
case of any financial institution and other covered person or
service provider that is subject to the jurisdiction of the Bureau
and any person subject to this subtitle, but not with respect to
the standards under section 501.'';
(5) in section 505(b)(1) (15 U.S.C. 6805(b)(1)), by inserting
``, other than the Bureau of Consumer Financial Protection,'' after
``subsection (a)''; and
(6) in section 507(b) (15 U.S.C. 6807), by striking ``Federal
Trade Commission'' and inserting ``Bureau of Consumer Financial
Protection''.
SEC. 1094. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT OF 1975.
The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et seq.)
is amended--
(1) by striking ``Board'' each place that term appears, other
than in sections 303, 304(h), 305(b) (as amended by this section),
and 307(a) (as amended by this section) and inserting ``Bureau''.
(2) in section 303 (12 U.S.C. 2802)--
(A) by redesignating paragraphs (1) through (6) as
paragraphs (2) through (7), respectively; and
(B) by inserting before paragraph (2) the following:
``(1) the term `Bureau' means the Bureau of Consumer Financial
Protection;'';
(3) in section 304 (12 U.S.C. 2803)--
(A) in subsection (b)--
(i) in paragraph (4), by inserting ``age,'' before
``and gender'';
(ii) in paragraph (3), by striking ``and'' at the end;
(iii) in paragraph (4), by striking the period at the
end and inserting a semicolon; and
(iv) by adding at the end the following:
``(5) the number and dollar amount of mortgage loans grouped
according to measurements of--
``(A) the total points and fees payable at origination in
connection with the mortgage as determined by the Bureau,
taking into account 15 U.S.C. 1602(aa)(4);
``(B) the difference between the annual percentage rate
associated with the loan and a benchmark rate or rates for all
loans;
``(C) the term in months of any prepayment penalty or other
fee or charge payable on repayment of some portion of principal
or the entire principal in advance of scheduled payments; and
``(D) such other information as the Bureau may require; and
``(6) the number and dollar amount of mortgage loans and
completed applications grouped according to measurements of--
``(A) the value of the real property pledged or proposed to
be pledged as collateral;
``(B) the actual or proposed term in months of any
introductory period after which the rate of interest may
change;
``(C) the presence of contractual terms or proposed
contractual terms that would allow the mortgagor or applicant
to make payments other than fully amortizing payments during
any portion of the loan term;
``(D) the actual or proposed term in months of the mortgage
loan;
``(E) the channel through which application was made,
including retail, broker, and other relevant categories;
``(F) as the Bureau may determine to be appropriate, a
unique identifier that identifies the loan originator as set
forth in section 1503 of the S.A.F.E. Mortgage Licensing Act of
2008;
``(G) as the Bureau may determine to be appropriate, a
universal loan identifier;
``(H) as the Bureau may determine to be appropriate, the
parcel number that corresponds to the real property pledged or
proposed to be pledged as collateral;
``(I) the credit score of mortgage applicants and
mortgagors, in such form as the Bureau may prescribe; and
``(J) such other information as the Bureau may require.'';
(B) by striking subsection (h) and inserting the following:
``(h) Submission to Agencies.--
``(1) In general.--The data required to be disclosed under
subsection (b) shall be submitted to the Bureau or to the
appropriate agency for the institution reporting under this title,
in accordance with rules prescribed by the Bureau. Notwithstanding
the requirement of subsection (a)(2)(A) for disclosure by census
tract, the Bureau, in consultation with other appropriate agencies
described in paragraph (2) and, after notice and comment, shall
develop regulations that--
``(A) prescribe the format for such disclosures, the method
for submission of the data to the appropriate agency, and the
procedures for disclosing the information to the public;
``(B) require the collection of data required to be
disclosed under subsection (b) with respect to loans sold by
each institution reporting under this title;
``(C) require disclosure of the class of the purchaser of
such loans;
``(D) permit any reporting institution to submit in writing
to the Bureau or to the appropriate agency such additional data
or explanations as it deems relevant to the decision to
originate or purchase mortgage loans; and
``(E) modify or require modification of itemized
information, for the purpose of protecting the privacy
interests of the mortgage applicants or mortgagors, that is or
will be available to the public.
``(2) Other appropriate agencies.--The appropriate agencies
described in this paragraph are--
``(A) the appropriate Federal banking agencies, as defined
in section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)), with respect to the entities that are subject to the
jurisdiction of each such agency, respectively;
``(B) the Federal Deposit Insurance Corporation for banks
insured by the Federal Deposit Insurance Corporation (other
than members of the Federal Reserve System), mutual savings
banks, insured State branches of foreign banks, and any other
depository institution described in section 303(2)(A) which is
not otherwise referred to in this paragraph;
``(C) the National Credit Union Administration Board with
respect to credit unions; and
``(D) the Secretary of Housing and Urban Development with
respect to other lending institutions not regulated by the
agencies referred to in subparagraph (A) or (B).
``(3) Rules for modifications under paragraph (1).--
``(A) Application.--A modification under paragraph (1)(E)
shall apply to information concerning--
``(i) credit score data described in subsection
(b)(6)(I), in a manner that is consistent with the purpose
described in paragraph (1)(E); and
``(ii) age or any other category of data described in
paragraph (5) or (6) of subsection (b), as the Bureau
determines to be necessary to satisfy the purpose described
in paragraph (1)(E), and in a manner consistent with that
purpose.
``(B) Standards.--The Bureau shall prescribe standards for
any modification under paragraph (1)(E) to effectuate the
purposes of this title, in light of the privacy interests of
mortgage applicants or mortgagors. Where necessary to protect
the privacy interests of mortgage applicants or mortgagors, the
Bureau shall provide for the disclosure of information
described in subparagraph (A) in aggregate or other reasonably
modified form, in order to effectuate the purposes of this
title.'';
(C) in subsection (i), by striking ``subsection (b)(4)''
and inserting ``subsections (b)(4), (b)(5), and (b)(6)'';
(D) in subsection (j)--
(i) by striking paragraph (3) and inserting the
following:
``(3) Change of form not required.--A depository institution
meets the disclosure requirement of paragraph (1) if the
institution provides the information required under such paragraph
in such formats as the Bureau may require''; and
(ii) in paragraph (2)(A), by striking ``in the format
in which such information is maintained by the
institution'' and inserting ``in such formats as the Bureau
may require'';
(E) in subsection (m), by striking paragraph (2) and
inserting the following:
``(2) Form of information.--In complying with paragraph (1), a
depository institution shall provide the person requesting the
information with a copy of the information requested in such
formats as the Bureau may require.''; and
(F) by adding at the end the following:
``(n) Timing of Certain Disclosures.--The data required to be
disclosed under subsection (b) shall be submitted to the Bureau or to
the appropriate agency for any institution reporting under this title,
in accordance with regulations prescribed by the Bureau. Institutions
shall not be required to report new data under paragraph (5) or (6) of
subsection (b) before the first January 1 that occurs after the end of
the 9-month period beginning on the date on which regulations are
issued by the Bureau in final form with respect to such disclosures.'';
(4) in section 305 (12 U.S.C. 2804)--
(A) by striking subsection (b) and inserting the following:
``(b) Powers of Certain Other Agencies.--
``(1) In general.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the requirements
of this title shall be enforced--
``(A) under section 8 of the Federal Deposit Insurance Act,
the appropriate Federal banking agency, as defined in section
3(q) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)),
with respect to--
``(i) any national bank or Federal savings association,
and any Federal branch or Federal agency of a foreign bank;
``(ii) any member bank of the Federal Reserve System
(other than a national bank), branch or agency of a foreign
bank (other than a Federal branch, Federal agency, and
insured State branch of a foreign bank), commercial lending
company owned or controlled by a foreign bank, and any
organization operating under section 25 or 25A of the
Federal Reserve Act; and
``(iii) any bank or State savings association insured
by the Federal Deposit Insurance Corporation (other than a
member of the Federal Reserve System), any mutual savings
bank as, defined in section 3(f) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(f)), any insured State branch
of a foreign bank, and any other depository institution not
referred to in this paragraph or subparagraph (B) or (C);
``(B) under subtitle E of the Consumer Financial Protection
Act of 2010, by the Bureau, with respect to any person subject
to this subtitle;
``(C) under the Federal Credit Union Act, by the
Administrator of the National Credit Union Administration with
respect to any insured credit union; and
``(D) with respect to other lending institutions, by the
Secretary of Housing and Urban Development.
``(2) Incorporated definitions.--The terms used in paragraph
(1) that are not defined in this title or otherwise defined in
section 3(s) of the Federal Deposit Insurance Act (12 U.S.C.
1813(s)) shall have the same meanings as in section 1(b) of the
International Banking Act of 1978 (12 U.S.C. 3101).''; and
(B) by adding at the end the following:
``(d) Overall Enforcement Authority of the Bureau of Consumer
Financial Protection.--Subject to subtitle B of the Consumer Financial
Protection Act of 2010, enforcement of the requirements imposed under
this title is committed to each of the agencies under subsection (b).
To facilitate research, examinations, and enforcement, all data
collected pursuant to section 304 shall be available to the entities
listed under subsection (b). The Bureau may exercise its authorities
under the Consumer Financial Protection Act of 2010 to exercise
principal authority to examine and enforce compliance by any person
with the requirements of this title.'';
(5) in section 306 (12 U.S.C. 2805(b)), by striking subsection
(b) and inserting the following:
``(b) Exemption Authority.--The Bureau may, by regulation, exempt
from the requirements of this title any State-chartered depository
institution within any State or subdivision thereof, if the agency
determines that, under the law of such State or subdivision, that
institution is subject to requirements that are substantially similar
to those imposed under this title, and that such law contains adequate
provisions for enforcement. Notwithstanding any other provision of this
subsection, compliance with the requirements imposed under this
subsection shall be enforced by the Office of the Comptroller of the
Currency under section 8 of the Federal Deposit Insurance Act, in the
case of national banks and Federal savings associations, the deposits
of which are insured by the Federal Deposit Insurance Corporation.'';
and
(6) by striking section 307 (12 U.S.C. 2806) and inserting the
following:
``SEC. 307. COMPLIANCE IMPROVEMENT METHODS.
``(a) In General.--
``(1) Consultation required.--The Director of the Bureau of
Consumer Financial Protection, with the assistance of the
Secretary, the Director of the Bureau of the Census, the Board of
Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, and such other persons as the Bureau deems
appropriate, shall develop or assist in the improvement of, methods
of matching addresses and census tracts to facilitate compliance by
depository institutions in as economical a manner as possible with
the requirements of this title.
``(2) Authorization of appropriations.--There are authorized to
be appropriated, such sums as may be necessary to carry out this
subsection.
``(3) Contracting authority.--The Director of the Bureau of
Consumer Financial Protection is authorized to utilize, contract
with, act through, or compensate any person or agency in order to
carry out this subsection.
``(b) Recommendations to Congress.--The Director of the Bureau of
Consumer Financial Protection shall recommend to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives, such additional
legislation as the Director of the Bureau of Consumer Financial
Protection deems appropriate to carry out the purpose of this title.''.
SEC. 1095. AMENDMENTS TO THE HOMEOWNERS PROTECTION ACT OF 1998.
Section 10 of the Homeowners Protection Act of 1998 (12 U.S.C.
4909) is amended--
(1) in subsection (a)--
(A) by striking ``Compliance'' and all that follows through
the end of paragraph (1) and inserting the following: ``Subject
to subtitle B of the Consumer Financial Protection Act of 2010,
compliance with the requirements imposed under this Act shall
be enforced under--
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency (as defined in section 3(q) of
that Act), with respect to--
``(A) insured depository institutions (as defined in
section 3(c)(2) of that Act);
``(B) depository institutions described in clause (i),
(ii), or (iii) of section 19(b)(1)(A) of the Federal Reserve
Act which are not insured depository institutions (as defined
in section 3(c)(2) of the Federal Deposit Insurance Act); and
``(C) depository institutions described in clause (v) or
(vi) of section 19(b)(1)(A) of the Federal Reserve Act which
are not insured depository institutions (as defined in section
3(c)(2) of the Federal Deposit Insurance Act);'';
(B) in paragraph (2), by striking ``and'' at the end;
(C) in paragraph (3), by striking the period at the end and
inserting ``; and''; and
(D) by adding at the end the following:
``(4) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau of Consumer Financial Protection, with respect
to any person subject to this Act.''; and
(2) in subsection (b)(2), by inserting before the period at the
end the following: ``, subject to subtitle B of the Consumer
Financial Protection Act of 2010''.
SEC. 1096. AMENDMENTS TO THE HOME OWNERSHIP AND EQUITY PROTECTION ACT
OF 1994.
The Home Ownership and Equity Protection Act of 1994 (15 U.S.C.
1601 note) is amended--
(1) in section 158(a), by striking ``Board of Governors of the
Federal Reserve System, in consultation with the Consumer Advisory
Council of the Board'' and inserting ``Bureau, in consultation with
the Advisory Board to the Bureau''; and
(2) in section 158(b), by striking ``Board of Governors of the
Federal Reserve System'' and inserting ``Bureau''.
SEC. 1097. AMENDMENTS TO THE OMNIBUS APPROPRIATIONS ACT, 2009.
Section 626 of the Omnibus Appropriations Act, 2009 (15 U.S.C. 1638
note) is amended--
(1) by striking subsection (a) and inserting the following:
``(a)(1) The Bureau of Consumer Financial Protection shall have
authority to prescribe rules with respect to mortgage loans in
accordance with section 553 of title 5, United States Code. Such
rulemaking shall relate to unfair or deceptive acts or practices
regarding mortgage loans, which may include unfair or deceptive acts or
practices involving loan modification and foreclosure rescue services.
Any violation of a rule prescribed under this paragraph shall be
treated as a violation of a rule prohibiting unfair, deceptive, or
abusive acts or practices under the Consumer Financial Protection Act
of 2010 and a violation of a rule under section 18 of the Federal Trade
Commission Act (15 U.S.C. 57a) regarding unfair or deceptive acts or
practices.
``(2) The Bureau of Consumer Financial Protection shall enforce the
rules issued under paragraph (1) in the same manner, by the same means,
and with the same jurisdiction, powers, and duties, as though all
applicable terms and provisions of the Consumer Financial Protection
Act of 2010 were incorporated into and made part of this subsection.
``(3) Subject to subtitle B of the Consumer Financial Protection
Act of 2010, the Federal Trade Commission shall enforce the rules
issued under paragraph (1), in the same manner, by the same means, and
with the same jurisdiction, as though all applicable terms and
provisions of the Federal Trade Commission Act were incorporated into
and made part of this section.''; and
(2) in subsection (b)--
(A) by striking paragraph (1) and inserting the following:
``(1) Except as provided in paragraph (6), in any case in which
the attorney general of a State has reason to believe that an
interest of the residents of the State has been or is threatened or
adversely affected by the engagement of any person subject to a
rule prescribed under subsection (a) in practices that violate such
rule, the State, as parens patriae, may bring a civil action on
behalf of its residents in an appropriate district court of the
United States or other court of competent jurisdiction--
``(A) to enjoin that practice;
``(B) to enforce compliance with the rule;
``(C) to obtain damages, restitution, or other compensation
on behalf of the residents of the State; or
``(D) to obtain penalties and relief provided under the
Consumer Financial Protection Act of 2010, the Federal Trade
Commission Act, and such other relief as the court deems
appropriate.'';
(B) in paragraphs (2) and (3), by striking ``the primary
Federal regulator'' each time the term appears and inserting
``the Bureau of Consumer Financial Protection or the
Commission, as appropriate'';
(C) in paragraph (3), by inserting ``and subject to
subtitle B of the Consumer Financial Protection Act of 2010,''
after ``paragraph (2),''; and
(D) in paragraph (6), by striking ``the primary Federal
regulator'' each place that term appears and inserting ``the
Bureau of Consumer Financial Protection or the Commission''.
SEC. 1098. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF
1974.
The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601
et seq.) is amended--
(1) in section 3 (12 U.S.C. 2602)--
(A) in paragraph (7), by striking ``and'' at the end;
(B) in paragraph (8), by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(9) the term `Bureau' means the Bureau of Consumer Financial
Protection.'';
(2) in section 4 (12 U.S.C. 2603)--
(A) in subsection (a), by striking the first sentence and
inserting the following: ``The Bureau shall publish a single,
integrated disclosure for mortgage loan transactions (including
real estate settlement cost statements) which includes the
disclosure requirements of this section and section 5, in
conjunction with the disclosure requirements of the Truth in
Lending Act that, taken together, may apply to a transaction
that is subject to both or either provisions of law. The
purpose of such model disclosure shall be to facilitate
compliance with the disclosure requirements of this title and
the Truth in Lending Act, and to aid the borrower or lessee in
understanding the transaction by utilizing readily
understandable language to simplify the technical nature of the
disclosures.'';
(B) by striking ``Secretary'' each place that term appears
and inserting ``Bureau''; and
(C) by striking ``form'' each place that term appears and
inserting ``forms'';
(3) in section 5 (12 U.S.C. 2604)--
(A) by striking ``Secretary'' each place that term appears
and inserting ``Bureau''; and
(B) in subsection (a), by striking the first sentence and
inserting the following: ``The Bureau shall prepare and
distribute booklets jointly addressing compliance with the
requirements of the Truth in Lending Act and the provisions of
this title, in order to help persons borrowing money to finance
the purchase of residential real estate better to understand
the nature and costs of real estate settlement services.'';
(4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))--
(A) by striking ``Secretary'' and inserting ``Bureau''; and
(B) by striking ``, by regulations that shall take effect
not later than April 20, 1991,'';
(5) in section 7(b) (12 U.S.C. 2606(b)) by striking
``Secretary'' and inserting ``Bureau'';
(6) in section 8(c)(5) (12 U.S.C. 2607(c)(5)), by striking
``Secretary'' and inserting ``Bureau'';
(7) in section 8(d) (12 U.S.C. 2607(d))--
(A) in the subsection heading, by inserting ``Bureau and''
before ``Secretary''; and
(B) by striking paragraph (4), and inserting the following:
``(4) The Bureau, the Secretary, or the attorney general or the
insurance commissioner of any State may bring an action to enjoin
violations of this section. Except, to the extent that a person is
subject to the jurisdiction of the Bureau, the Secretary, or the
attorney general or the insurance commissioner of any State, the
Bureau shall have primary authority to enforce or administer this
section, subject to subtitle B of the Consumer Financial Protection
Act of 2010.'';
(8) in section 10(c) (12 U.S.C. 2609(c) and (d)), by striking
``Secretary'' and inserting ``Bureau'';
(9) in section 16 (12 U.S.C. 2614), by inserting ``the
Bureau,'' before ``the Secretary'';
(10) in section 18 (12 U.S.C. 2616), by striking ``Secretary''
each place that term appears and inserting ``Bureau''; and
(11) in section 19 (12 U.S.C. 2617)--
(A) in the section heading by striking ``secretary'' and
inserting ``bureau'';
(B) in subsection (a), by striking ``Secretary'' each place
that term appears and inserting ``Bureau''; and
(C) in subsections (b) and (c), by striking ``the
Secretary'' each place that term appears and inserting ``the
Bureau''.
SEC. 1098A. AMENDMENTS TO THE INTERSTATE LAND SALES FULL DISCLOSURE
ACT.
The Interstate Land Sales Full Disclosure Act (15 U.S.C. 1701 et
seq.) is amended--
(1) by striking ``Secretary'' each place that term appears and
inserting ``Director'';
(2) by striking ``Department of Housing and Urban Development''
each place that term appears and inserting ``Bureau of Consumer
Financial Protection'';
(3) by striking ``Department'' each place that term appears and
inserting ``Bureau'';
(4) in section 1402 (15 U.S.C. 1701)--
(A) by striking paragraph (1) and inserting the following:
``(1) `Director' means the Director of the Bureau of Consumer
Financial Protection;'';
(B) in paragraph (10), by striking ``and'' at the end;
(C) in paragraph (11), by striking the period at the end
and inserting ``; and''; and
(D) by adding at the end the following:
``(12) `Bureau' means the Bureau of Consumer Financial
Protection.''; and
(5) in section 1416(a) (15 U.S.C. 1715(a)), by striking
``Secretary of Housing and Urban Development'' and inserting
``Director of the Bureau of Consumer Financial Protection''.
SEC. 1099. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978.
The Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.)
is amended--
(1) in section 1101--
(A) in paragraph (6)--
(i) in subparagraph (A), by inserting ``and'' after the
semicolon;
(ii) in subparagraph (B), by striking ``and'' at the
end; and
(iii) by striking subparagraph (C); and
(B) in paragraph (7), by striking subparagraph (B), and
inserting the following:
``(B) the Bureau of Consumer Financial Protection;'';
(2) in section 1112(e) (12 U.S.C. 3412(e)), by striking ``and
the Commodity Futures Trading Commission is permitted'' and
inserting ``the Commodity Futures Trading Commission, and the
Bureau of Consumer Financial Protection is permitted''; and
(3) in section 1113 (12 U.S.C. 3413), by adding at the end the
following new subsection:
``(r) Disclosure to the Bureau of Consumer Financial Protection.--
Nothing in this title shall apply to the examination by or disclosure
to the Bureau of Consumer Financial Protection of financial records or
information in the exercise of its authority with respect to a
financial institution.''.
SEC. 1100. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT FOR MORTGAGE
LICENSING ACT OF 2008.
The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et
seq.) is amended--
(1) by striking ``a Federal banking agency'' each place that
term appears, other than in paragraphs (7) and (11) of section 1503
and section 1507(a)(1), and inserting ``the Bureau'';
(2) by striking ``Federal banking agencies'' each place that
term appears and inserting ``Bureau''; and
(3) by striking ``Secretary'' each place that term appears and
inserting ``Director'';
(4) in section 1503 (12 U.S.C. 5102)--
(A) by redesignating paragraphs (2) through (12) as (3)
through (13), respectively;
(B) by striking paragraph (1) and inserting the following:
``(1) Bureau.--The term `Bureau' means the Bureau of Consumer
Financial Protection.
``(2) Federal banking agency.--The term `Federal banking
agency' means the Board of Governors of the Federal Reserve System,
the Office of the Comptroller of the Currency, the National Credit
Union Administration, and the Federal Deposit Insurance
Corporation.''; and
(C) by striking paragraph (10), as so designated by this
section, and inserting the following:
``(10) Director.--The term `Director' means the Director of the
Bureau of Consumer Financial Protection.''; and
(5) in section 1507 (12 U.S.C. 5106)--
(A) in subsection (a)--
(i) by striking paragraph (1) and inserting the
following:
``(1) In general.--The Bureau shall develop and maintain a
system for registering employees of a depository institution,
employees of a subsidiary that is owned and controlled by a
depository institution and regulated by a Federal banking agency,
or employees of an institution regulated by the Farm Credit
Administration, as registered loan originators with the Nationwide
Mortgage Licensing System and Registry. The system shall be
implemented before the end of the 1-year period beginning on the
date of enactment of the Consumer Financial Protection Act of
2010.''; and
(ii) in paragraph (2)--
(I) by striking ``appropriate Federal banking
agency and the Farm Credit Administration'' and
inserting ``Bureau''; and
(II) by striking ``employees's identity'' and
inserting ``identity of the employee''; and
(B) in subsection (b), by striking ``through the Financial
Institutions Examination Council, and the Farm Credit
Administration'', and inserting ``and the Bureau of Consumer
Financial Protection'';
(6) in section 1508 (12 U.S.C. 5107)--
(A) by striking the section heading and inserting the
following: ``sec. 1508. bureau of consumer financial protection
backup authority to establish loan originator licensing
system.''; and
(B) by adding at the end the following:
``(f) Regulation Authority.--
``(1) In general.--The Bureau is authorized to promulgate
regulations setting minimum net worth or surety bond requirements
for residential mortgage loan originators and minimum requirements
for recovery funds paid into by loan originators.
``(2) Considerations.--In issuing regulations under paragraph
(1), the Bureau shall take into account the need to provide
originators adequate incentives to originate affordable and
sustainable mortgage loans, as well as the need to ensure a
competitive origination market that maximizes consumer access to
affordable and sustainable mortgage loans.'';
(7) by striking section 1510 (12 U.S.C. 5109) and inserting the
following:
``SEC. 1510. FEES.
``The Bureau, the Farm Credit Administration, and the Nationwide
Mortgage Licensing System and Registry may charge reasonable fees to
cover the costs of maintaining and providing access to information from
the Nationwide Mortgage Licensing System and Registry, to the extent
that such fees are not charged to consumers for access to such system
and registry.'';
(8) by striking section 1513 (12 U.S.C. 5112) and inserting the
following:
``SEC. 1513. LIABILITY PROVISIONS.
``The Bureau, any State official or agency, or any organization
serving as the administrator of the Nationwide Mortgage Licensing
System and Registry or a system established by the Director under
section 1509, or any officer or employee of any such entity, shall not
be subject to any civil action or proceeding for monetary damages by
reason of the good faith action or omission of any officer or employee
of any such entity, while acting within the scope of office or
employment, relating to the collection, furnishing, or dissemination of
information concerning persons who are loan originators or are applying
for licensing or registration as loan originators.''; and
(9) in section 1514 (12 U.S.C. 5113) in the section heading, by
striking ``under hud backup licensing system'' and inserting ``by
the bureau''.
SEC. 1100A. AMENDMENTS TO THE TRUTH IN LENDING ACT.
The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended--
(1) in section 103 (15 U.S.C. 1602)--
(A) by redesignating subsections (b) through (bb) as
subsections (c) through (cc), respectively; and
(B) by inserting after subsection (a) the following:
``(b) Bureau.--The term `Bureau' means the Bureau of Consumer
Financial Protection.'';
(2) by striking ``Board'' each place that term appears, other
than in section 140(d) and sections 105(i) and 108(a), as amended
by this section, and inserting ``Bureau'';
(3) by striking ``Federal Trade Commission'' each place that
term appears, other than in section 108(c) and section 129(m), as
amended by this Act, and other than in the context of a reference
to the Federal Trade Commission Act, and inserting ``Bureau'';
(4) in section 105(a) (15 U.S.C. 1604(a)), in the second
sentence--
(A) by striking ``Except in the case of a mortgage referred
to in section 103(aa), these regulations may contain such'' and
inserting ``Except with respect to the provisions of section
129 that apply to a mortgage referred to in section 103(aa),
such regulations may contain such additional requirements,'';
and
(B) by inserting ``all or'' after ``exceptions for'';
(5) in section 105(b) (15 U.S.C. 1604(b)), by striking the
first sentence and inserting the following: ``The Bureau shall
publish a single, integrated disclosure for mortgage loan
transactions (including real estate settlement cost statements)
which includes the disclosure requirements of this title in
conjunction with the disclosure requirements of the Real Estate
Settlement Procedures Act of 1974 that, taken together, may apply
to a transaction that is subject to both or either provisions of
law. The purpose of such model disclosure shall be to facilitate
compliance with the disclosure requirements of this title and the
Real Estate Settlement Procedures Act of 1974, and to aid the
borrower or lessee in understanding the transaction by utilizing
readily understandable language to simplify the technical nature of
the disclosures.'';
(6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), by inserting
``all or'' after ``from all or part of this title'';
(7) in section 105 (15 U.S.C. 1604), by adding at the end the
following:
``(i) Authority of the board to prescribe rules.--
Notwithstanding subsection (a), the Board shall have
authority to prescribe rules under this title with respect
to a person described in section 1029(a) of the Consumer
Financial Protection Act of 2010. Regulations prescribed
under this subsection may contain such classifications,
differentiations, or other provisions, as in the judgment
of the Board are necessary or proper to effectuate the
purposes of this title, to prevent circumvention or evasion
thereof, or to facilitate compliance therewith.'';
(8) in section 108 (15 U.S.C. 1604), by adding at the end the
following:
(A) by striking subsection (a) and inserting the following:
``(a) Enforcing Agencies.--Subject to subtitle B of the Consumer
Financial Protection Act of 2010, compliance with the requirements
imposed under this title shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance Act, by the
appropriate Federal banking agency, as defined in section 3(q) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(q)), with respect
to--
``(A) national banks, Federal savings associations, and
Federal branches and Federal agencies of foreign banks;
``(B) member banks of the Federal Reserve System (other
than national banks), branches and agencies of foreign banks
(other than Federal branches, Federal agencies, and insured
State branches of foreign banks), commercial lending companies
owned or controlled by foreign banks, and organizations
operating under section 25 or 25A of the Federal Reserve Act;
and
``(C) banks and State savings associations insured by the
Federal Deposit Insurance Corporation (other than members of
the Federal Reserve System), and insured State branches of
foreign banks;
``(2) the Federal Credit Union Act, by the Director of the
National Credit Union Administration, with respect to any Federal
credit union;
``(3) the Federal Aviation Act of 1958, by the Secretary of
Transportation, with respect to any air carrier or foreign air
carrier subject to that Act;
``(4) the Packers and Stockyards Act, 1921 (except as provided
in section 406 of that Act), by the Secretary of Agriculture, with
respect to any activities subject to that Act;
``(5) the Farm Credit Act of 1971, by the Farm Credit
Administration with respect to any Federal land bank, Federal land
bank association, Federal intermediate credit bank, or production
credit association; and
``(6) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
title.''; and
(B) by striking subsection (c) and inserting the following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the requirements
imposed under this title is specifically committed to some other
Government agency under any of paragraphs (1) through (5) of subsection
(a), and subject to subtitle B of the Consumer Financial Protection Act
of 2010, the Federal Trade Commission shall be authorized to enforce
such requirements. For the purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal Trade
Commission Act, a violation of any requirement imposed under this title
shall be deemed a violation of a requirement imposed under that Act.
All of the functions and powers of the Federal Trade Commission under
the Federal Trade Commission Act are available to the Federal Trade
Commission to enforce compliance by any person with the requirements
under this title, irrespective of whether that person is engaged in
commerce or meets any other jurisdictional tests under the Federal
Trade Commission Act.''; and
(9) in section 129 (15 U.S.C. 1639), by striking subsection (m)
and inserting the following:
``(m) Civil Penalties in Federal Trade Commission Enforcement
Actions.--For purposes of enforcement by the Federal Trade Commission,
any violation of a regulation issued by the Bureau pursuant to
subsection (l)(2) shall be treated as a violation of a rule promulgated
under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a)
regarding unfair or deceptive acts or practices.''; and
(10) in chapter 5 (15 U.S.C. 1667 et seq.)--
(A) by striking ``the Board'' each place that term appears
and inserting ``the Bureau''; and
(B) by striking ``The Board'' each place that term appears
and inserting ``The Bureau''.
SEC. 1100B. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.
The Truth in Savings Act (12 U.S.C. 4301 et seq.) is amended--
(1) by striking ``Board'' each place that term appears, other
than in section 272(b) (12 U.S.C. 4311), and inserting ``Bureau'';
(2) in section 270(a) (12 U.S.C. 4309)--
(A) by striking ``Compliance'' and all that follows through
the end of paragraph (1) and inserting: ``Subject to subtitle B
of the Consumer Financial Protection Act of 2010, compliance
with the requirements imposed under this subtitle shall be
enforced under--
``(1) section 8 of the Federal Deposit Insurance Act by the
appropriate Federal banking agency (as defined in section 3(q) of
that Act), with respect to--
``(A) insured depository institutions (as defined in
section 3(c)(2) of that Act);
``(B) depository institutions described in clause (i),
(ii), or (iii) of section 19(b)(1)(A) of the Federal Reserve
Act which are not insured depository institutions (as defined
in section 3(c)(2) of the Federal Deposit Insurance Act); and
``(C) depository institutions described in clause (v) or
(vi) of section 19(b)(1)(A) of the Federal Reserve Act which
are not insured depository institutions (as defined in section
3(c)(2) of the Federal Deposit Insurance Act);'';
(B) in paragraph (2), by striking the period at the end and
inserting ``; and''; and
(C) by adding at the end the following:
``(3) subtitle E of the Consumer Financial Protection Act of
2010, by the Bureau, with respect to any person subject to this
subtitle.'';
(3) in section 272(b) (12 U.S.C. 4311(b)), by striking
``regulation prescribed by the Board'' each place that term appears
and inserting ``regulation prescribed by the Bureau''; and
(4) in section 274 (12 U.S.C. 4313), by striking paragraph (4)
and inserting the following:
``(4) Bureau.--The term `Bureau' means the Bureau of Consumer
Financial Protection.''.
SEC. 1100C. AMENDMENTS TO THE TELEMARKETING AND CONSUMER FRAUD AND
ABUSE PREVENTION ACT.
(a) Amendments to Section 3.--Section 3 of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6102) is amended by
striking subsections (b) and (c) and inserting the following:
``(b) Rulemaking Authority.--The Commission shall have authority to
prescribe rules under subsection (a), in accordance with section 553 of
title 5, United States Code. In prescribing a rule under this section
that relates to the provision of a consumer financial product or
service that is subject to the Consumer Financial Protection Act of
2010, including any enumerated consumer law thereunder, the Commission
shall consult with the Bureau of Consumer Financial Protection
regarding the consistency of a proposed rule with standards, purposes,
or objectives administered by the Bureau of Consumer Financial
Protection.
``(c) Violations.--Any violation of any rule prescribed under
subsection (a)--
``(1) shall be treated as a violation of a rule under section
18 of the Federal Trade Commission Act regarding unfair or
deceptive acts or practices; and
``(2) that is committed by a person subject to the Consumer
Financial Protection Act of 2010 shall be treated as a violation of
a rule under section 1031 of that Act regarding unfair, deceptive,
or abusive acts or practices.''.
(b) Amendments to Section 4.--Section 4(d) of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6103(d)) is amended
by inserting after ``Commission'' each place that term appears the
following: ``or the Bureau of Consumer Financial Protection''.
(c) Amendments to Section 5.--Section 5(c) of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6104(c)) is amended
by inserting after ``Commission'' each place that term appears the
following: ``or the Bureau of Consumer Financial Protection''.
(d) Amendment to Section 6.--Section 6 of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6105) is amended by
adding at the end the following:
``(d) Enforcement by Bureau of Consumer Financial Protection.--
Except as otherwise provided in sections 3(d), 3(e), 4, and 5, and
subject to subtitle B of the Consumer Financial Protection Act of 2010,
this Act shall be enforced by the Bureau of Consumer Financial
Protection under subtitle E of the Consumer Financial Protection Act of
2010, with respect to the offering or provision of a consumer financial
product or service subject to that Act.''.
SEC. 1100D. AMENDMENTS TO THE PAPERWORK REDUCTION ACT.
(a) Designation as an Independent Agency.--Section 2(5) of the
Paperwork Reduction Act (44 U.S.C. 3502(5)) is amended by inserting
``the Bureau of Consumer Financial Protection, the Office of Financial
Research,'' after ``the Securities and Exchange Commission,''.
(b) Comparable Treatment.--Section 3513 of title 44, United States
Code, is amended by adding at the end the following:
``(c) Comparable Treatment.--Notwithstanding any other provision of
law, the Director shall treat or review a rule or order prescribed or
proposed by the Director of the Bureau of Consumer Financial Protection
on the same terms and conditions as apply to any rule or order
prescribed or proposed by the Board of Governors of the Federal Reserve
System.''.
SEC. 1100E. ADJUSTMENTS FOR INFLATION IN THE TRUTH IN LENDING ACT.
(a) Caps.--
(1) Credit transactions.--Section 104(3) of the Truth in
Lending Act (15 U.S.C. 1603(3)) is amended by striking ``$25,000''
and inserting ``$50,000''.
(2) Consumer leases.--Section 181(1) of the Truth in Lending
Act (15 U.S.C. 1667(1)) is amended by striking ``$25,000'' and
inserting ``$50,000''.
(b) Adjustments for Inflation.--On and after December 31, 2011, the
Bureau shall adjust annually the dollar amounts described in sections
104(3) and 181(1) of the Truth in Lending Act (as amended by this
section), by the annual percentage increase in the Consumer Price Index
for Urban Wage Earners and Clerical Workers, as published by the Bureau
of Labor Statistics, rounded to the nearest multiple of $100, or
$1,000, as applicable.
SEC. 1100F. USE OF CONSUMER REPORTS.
Section 615 of the Fair Credit Reporting Act (15 U.S.C. 1681m) is
amended--
(1) in subsection (a)--
(A) by redesignating paragraphs (2) and (3) as paragraphs
(3) and (4), respectively;
(B) by inserting after paragraph (1) the following:
``(2) provide to the consumer written or electronic
disclosure--
``(A) of a numerical credit score as defined in section
609(f)(2)(A) used by such person in taking any adverse action
based in whole or in part on any information in a consumer
report; and
``(B) of the information set forth in subparagraphs (B)
through (E) of section 609(f)(1);''; and
(C) in paragraph (4) (as so redesignated), by striking
``paragraph (2)'' and inserting ``paragraph (3)''; and
(2) in subsection (h)(5)--
(A) in subparagraph (C), by striking ``; and'' and
inserting a semicolon;
(B) in subparagraph (D), by striking the period and
inserting ``; and''; and
(C) by inserting at the end the following:
``(E) include a statement informing the consumer of--
``(i) a numerical credit score as defined in section
609(f)(2)(A), used by such person in making the credit
decision described in paragraph (1) based in whole or in
part on any information in a consumer report; and
``(ii) the information set forth in subparagraphs (B)
through (E) of section 609(f)(1).''.
SEC. 1100G. SMALL BUSINESS FAIRNESS AND REGULATORY TRANSPARENCY.
(a) Panel Requirement.--Section 609(d) of title 5, United States
Code, is amended by striking ``means the'' and all that follows and
inserting the following: ``means--
``(1) the Environmental Protection Agency;
``(2) the Consumer Financial Protection Bureau of the Federal
Reserve System; and
``(3) the Occupational Safety and Health Administration of the
Department of Labor.''.
(b) Initial Regulatory Flexibility Analysis.--Section 603 of title
5, United States Code, is amended by adding at the end the following:
``(d)(1) For a covered agency, as defined in section 609(d)(2),
each initial regulatory flexibility analysis shall include a
description of--
``(A) any projected increase in the cost of credit for small
entities;
``(B) any significant alternatives to the proposed rule which
accomplish the stated objectives of applicable statutes and which
minimize any increase in the cost of credit for small entities; and
``(C) advice and recommendations of representatives of small
entities relating to issues described in subparagraphs (A) and (B)
and subsection (b).
``(2) A covered agency, as defined in section 609(d)(2), shall, for
purposes of complying with paragraph (1)(C)--
``(A) identify representatives of small entities in
consultation with the Chief Counsel for Advocacy of the Small
Business Administration; and
``(B) collect advice and recommendations from the
representatives identified under subparagraph (A) relating to
issues described in subparagraphs (A) and (B) of paragraph (1) and
subsection (b).''.
(c) Final Regulatory Flexibility Analysis.--Section 604(a) of title
5, United States Code, is amended--
(1) in paragraph (4), by striking ``and'' at the end;
(2) in paragraph (5), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(6) for a covered agency, as defined in section 609(d)(2), a
description of the steps the agency has taken to minimize any
additional cost of credit for small entities.''.
SEC. 1100H. EFFECTIVE DATE.
Except as otherwise provided in this subtitle and the amendments
made by this subtitle, this subtitle and the amendments made by this
subtitle, other than sections 1081 and 1082, shall become effective on
the designated transfer date.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
SEC. 1101. FEDERAL RESERVE ACT AMENDMENTS ON EMERGENCY LENDING
AUTHORITY.
(a) Federal Reserve Act.--The third undesignated paragraph of
section 13 of the Federal Reserve Act (12 U.S.C. 343) (relating to
emergency lending authority) is amended--
(1) by inserting ``(3)(A)'' before ``In unusual'';
(2) by striking ``individual, partnership, or corporation'' the
first place that term appears and inserting the following:
``participant in any program or facility with broad-based
eligibility'';
(3) by striking ``exchange for an individual or a partnership
or corporation'' and inserting ``exchange,'';
(4) by striking ``such individual, partnership, or
corporation'' and inserting the following: ``such participant in
any program or facility with broad-based eligibility'';
(5) by striking ``for individuals, partnerships, corporations''
and inserting ``for any participant in any program or facility with
broad-based eligibility''; and
(6) by striking ``may prescribe.'' and inserting the following:
``may prescribe.
``(B)(i) As soon as is practicable after the date of
enactment of this subparagraph, the Board shall establish, by
regulation, in consultation with the Secretary of the Treasury,
the policies and procedures governing emergency lending under
this paragraph. Such policies and procedures shall be designed
to ensure that any emergency lending program or facility is for
the purpose of providing liquidity to the financial system, and
not to aid a failing financial company, and that the security
for emergency loans is sufficient to protect taxpayers from
losses and that any such program is terminated in a timely and
orderly fashion. The policies and procedures established by the
Board shall require that a Federal reserve bank assign,
consistent with sound risk management practices and to ensure
protection for the taxpayer, a lendable value to all collateral
for a loan executed by a Federal reserve bank under this
paragraph in determining whether the loan is secured
satisfactorily for purposes of this paragraph.
``(ii) The Board shall establish procedures to prohibit
borrowing from programs and facilities by borrowers that are
insolvent. Such procedures may include a certification from the
chief executive officer (or other authorized officer) of the
borrower, at the time the borrower initially borrows under the
program or facility (with a duty by the borrower to update the
certification if the information in the certification
materially changes), that the borrower is not insolvent. A
borrower shall be considered insolvent for purposes of this
subparagraph, if the borrower is in bankruptcy, resolution
under title II of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, or any other Federal or State
insolvency proceeding.
``(iii) A program or facility that is structured to remove
assets from the balance sheet of a single and specific company,
or that is established for the purpose of assisting a single
and specific company avoid bankruptcy, resolution under title
II of the Dodd-Frank Wall Street Reform and Consumer Protection
Act, or any other Federal or State insolvency proceeding, shall
not be considered a program or facility with broad-based
eligibility.
``(iv) The Board may not establish any program or facility
under this paragraph without the prior approval of the
Secretary of the Treasury.
``(C) The Board shall provide to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives--
``(i) not later than 7 days after the Board authorizes
any loan or other financial assistance under this
paragraph, a report that includes--
``(I) the justification for the exercise of
authority to provide such assistance;
``(II) the identity of the recipients of such
assistance;
``(III) the date and amount of the assistance, and
form in which the assistance was provided; and
``(IV) the material terms of the assistance,
including--
``(aa) duration;
``(bb) collateral pledged and the value
thereof;
``(cc) all interest, fees, and other revenue or
items of value to be received in exchange for the
assistance;
``(dd) any requirements imposed on the
recipient with respect to employee compensation,
distribution of dividends, or any other corporate
decision in exchange for the assistance; and
``(ee) the expected costs to the taxpayers of
such assistance; and
``(ii) once every 30 days, with respect to any
outstanding loan or other financial assistance under this
paragraph, written updates on--
``(I) the value of collateral;
``(II) the amount of interest, fees, and other
revenue or items of value received in exchange for the
assistance; and
``(III) the expected or final cost to the taxpayers
of such assistance.
``(D) The information required to be submitted to Congress
under subparagraph (C) related to--
``(i) the identity of the participants in an emergency
lending program or facility commenced under this paragraph;
``(ii) the amounts borrowed by each participant in any
such program or facility;
``(iii) identifying details concerning the assets or
collateral held by, under, or in connection with such a
program or facility,
shall be kept confidential, upon the written request of the
Chairman of the Board, in which case such information shall be
made available only to the Chairpersons or Ranking Members of
the Committees described in subparagraph (C).
``(E) If an entity to which a Federal reserve bank has
provided a loan under this paragraph becomes a covered
financial company, as defined in section 201 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, at any time
while such loan is outstanding, and the Federal reserve bank
incurs a realized net loss on the loan, then the Federal
reserve bank shall have a claim equal to the amount of the net
realized loss against the covered entity, with the same
priority as an obligation to the Secretary of the Treasury
under section 210(b) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.''.
(b) Conforming Amendment.--Section 507(a)(2) of title 11, United
States Code, is amended by inserting ``unsecured claims of any Federal
reserve bank related to loans made through programs or facilities
authorized under section 13(3) of the Federal Reserve Act (12 U.S.C.
343),'' after ``this title,''.
(c) References.--On and after the date of enactment of this Act,
any reference in any provision of Federal law to the third undesignated
paragraph of section 13 of the Federal Reserve Act (12 U.S.C. 343)
shall be deemed to be a reference to section 13(3) of the Federal
Reserve Act, as so designated by this section.
SEC. 1102. AUDITS OF SPECIAL FEDERAL RESERVE CREDIT FACILITIES.
(a) Audits.--Section 714 of title 31, United States Code, is
amended by adding at the end the following:
``(f) Audits of Credit Facilities of the Federal Reserve System.--
``(1) Definitions.--In this subsection, the following
definitions shall apply:
``(A) Credit facility.--The term `credit facility' means a
program or facility, including any special purpose vehicle or
other entity established by or on behalf of the Board of
Governors of the Federal Reserve System or a Federal reserve
bank, authorized by the Board of Governors under section 13(3)
of the Federal Reserve Act (12 U.S.C. 343), that is not subject
to audit under subsection (e).
``(B) Covered transaction.--The term `covered transaction'
means any open market transaction or discount window advance
that meets the definition of `covered transaction' in section
11(s) of the Federal Reserve Act.
``(2) Authority for audits and examinations.--Subject to
paragraph (3), and notwithstanding any limitation in subsection (b)
on the auditing and oversight of certain functions of the Board of
Governors of the Federal Reserve System or any Federal reserve
bank, the Comptroller General of the United States may conduct
audits, including onsite examinations, of the Board of Governors, a
Federal reserve bank, or a credit facility, if the Comptroller
General determines that such audits are appropriate, solely for the
purposes of assessing, with respect to a credit facility or a
covered transaction--
``(A) the operational integrity, accounting, financial
reporting, and internal controls governing the credit facility
or covered transaction;
``(B) the effectiveness of the security and collateral
policies established for the facility or covered transaction in
mitigating risk to the relevant Federal reserve bank and
taxpayers;
``(C) whether the credit facility or the conduct of a
covered transaction inappropriately favors one or more specific
participants over other institutions eligible to utilize the
facility; and
``(D) the policies governing the use, selection, or payment
of third-party contractors by or for any credit facility or to
conduct any covered transaction.
``(3) Reports and delayed disclosure.--
``(A) Reports required.--A report on each audit conducted
under paragraph (2) shall be submitted by the Comptroller
General to the Congress before the end of the 90-day period
beginning on the date on which such audit is completed.
``(B) Contents.--The report under subparagraph (A) shall
include a detailed description of the findings and conclusions
of the Comptroller General with respect to the matters
described in paragraph (2) that were audited and are the
subject of the report, together with such recommendations for
legislative or administrative action relating to such matters
as the Comptroller General may determine to be appropriate.
``(C) Delayed release of certain information.--
``(i) In general.--The Comptroller General shall not
disclose to any person or entity, including to Congress,
the names or identifying details of specific participants
in any credit facility or covered transaction, the amounts
borrowed by or transferred by or to specific participants
in any credit facility or covered transaction, or
identifying details regarding assets or collateral held or
transferred by, under, or in connection with any credit
facility or covered transaction, and any report provided
under subparagraph (A) shall be redacted to ensure that
such names and details are not disclosed.
``(ii) Delayed release.--The nondisclosure obligation
under clause (i) shall expire with respect to any
participant on the date on which the Board of Governors,
directly or through a Federal reserve bank, publicly
discloses the identity of the subject participant or the
identifying details of the subject assets, collateral, or
transaction.
``(iii) General release.--The Comptroller General shall
release a nonredacted version of any report on a credit
facility 1 year after the effective date of the termination
by the Board of Governors of the authorization for the
credit facility. For purposes of this clause, a credit
facility shall be deemed to have terminated 24 months after
the date on which the credit facility ceases to make
extensions of credit and loans, unless the credit facility
is otherwise terminated by the Board of Governors.
``(iv) Exceptions.--The nondisclosure obligation under
clause (i) shall not apply to the credit facilities Maiden
Lane, Maiden Lane II, and Maiden Lane III.
``(v) Release of covered transaction information.--The
Comptroller General shall release a nonredacted version of
any report regarding covered transactions upon the release
of the information regarding such covered transactions by
the Board of Governors of the Federal Reserve System, as
provided in section 11(s) of the Federal Reserve Act.''.
(b) Access to Records.--Section 714(d) of title 31, United States
Code, is amended--
(1) in paragraph (2), by inserting ``or any person or entity
described in paragraph (3)(A)'' after ``used by an agency'';
(2) in paragraph (3), by inserting ``or (f)'' after
``subsection (e)'' each place that term appears;
(3) in clauses (i) and (ii) of paragraph (3)(A), by inserting
``or the Federal Reserve banks'' after ``by the Board'' each place
that term appears;
(4) in paragraph (3)(A)(ii), by inserting ``participating in
or'' after ``any entity''; and
(5) in paragraph (3)(B), by adding at the end the following:
``The Comptroller General may make and retain copies of books,
accounts, and other records provided under subparagraph (A) as the
Comptroller General deems appropriate. The Comptroller General
shall provide to any person or entity described in subparagraph (A)
a current list of officers and employees to whom, with proper
identification, records and property may be made available, and who
may make notes or copies necessary to carry out a audit or
examination under this subsection.''.
SEC. 1103. PUBLIC ACCESS TO INFORMATION.
(a) In General.--Section 2B of the Federal Reserve Act (12 U.S.C.
225b) is amended by adding at the end the following:
``(c) Public Access to Information.--The Board shall place on its
home Internet website, a link entitled `Audit', which shall link to a
webpage that shall serve as a repository of information made available
to the public for a reasonable period of time, not less than 6 months
following the date of release of the relevant information, including--
``(1) the reports prepared by the Comptroller General under
section 714 of title 31, United States Code;
``(2) the annual financial statements prepared by an
independent auditor for the Board in accordance with section 11B;
``(3) the reports to the Committee on Banking, Housing, and
Urban Affairs of the Senate required under section 13(3) (relating
to emergency lending authority); and
``(4) such other information as the Board reasonably believes
is necessary or helpful to the public in understanding the
accounting, financial reporting, and internal controls of the Board
and the Federal reserve banks.''.
(b) Federal Reserve Transparency and Release of Information.--
Section 11 of the Federal Reserve Act (12 U.S.C. 248) is amended by
adding at the end the following new subsection:
``(s) Federal Reserve Transparency and Release of Information.--
``(1) In general.--In order to ensure the disclosure in a
timely manner consistent with the purposes of this Act of
information concerning the borrowers and counterparties
participating in emergency credit facilities, discount window
lending programs, and open market operations authorized or
conducted by the Board or a Federal reserve bank, the Board of
Governors shall disclose, as provided in paragraph (2)--
``(A) the names and identifying details of each borrower,
participant, or counterparty in any credit facility or covered
transaction;
``(B) the amount borrowed by or transferred by or to a
specific borrower, participant, or counterparty in any credit
facility or covered transaction;
``(C) the interest rate or discount paid by each borrower,
participant, or counterparty in any credit facility or covered
transaction; and
``(D) information identifying the types and amounts of
collateral pledged or assets transferred in connection with
participation in any credit facility or covered transaction.
``(2) Mandatory release date.--In the case of--
``(A) a credit facility, the Board shall disclose the
information described in paragraph (1) on the date that is 1
year after the effective date of the termination by the Board
of the authorization of the credit facility; and
``(B) a covered transaction, the Board shall disclose the
information described in paragraph (1) on the last day of the
eighth calendar quarter following the calendar quarter in which
the covered transaction was conducted.
``(3) Earlier release date authorized.--The Chairman of the
Board may publicly release the information described in paragraph
(1) before the relevant date specified in paragraph (2), if the
Chairman determines that such disclosure would be in the public
interest and would not harm the effectiveness of the relevant
credit facility or the purpose or conduct of covered transactions.
``(4) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Credit facility.--The term `credit facility' has the
same meaning as in section 714(f)(1)(A) of title 31, United
States Code.
``(B) Covered transaction.--The term `covered transaction'
means--
``(i) any open market transaction with a
nongovernmental third party conducted under the first
undesignated paragraph of section 14 or subparagraph (a),
(b), or (c) of the 2nd undesignated paragraph of such
section, after the date of enactment of the Dodd-Frank Wall
Street Reform and Consumer Protection Act; and
``(ii) any advance made under section 10B after the
date of enactment of that Act.
``(5) Termination of credit facility by operation of law.--A
credit facility shall be deemed to have terminated as of the end of
the 24-month period beginning on the date on which the credit
facility ceases to make extensions of credit and loans, unless the
credit facility is otherwise terminated by the Board before such
date.
``(6) Consistent treatment of information.--Except as provided
in this subsection or section 13(3)(D), or in section 714(f)(3)(C)
of title 31, United States Code, the information described in
paragraph (1) and information concerning the transactions described
in section 714(f) of such title, shall be confidential, including
for purposes of section 552(b)(3) of title 5 of such Code, until
the relevant mandatory release date described in paragraph (2),
unless the Chairman of the Board determines that earlier disclosure
of such information would be in the public interest and would not
harm the effectiveness of the relevant credit facility or the
purpose of conduct of the relevant transactions.
``(7) Protection of personal privacy.--This subsection and
section 13(3)(C), section 714(f)(3)(C) of title 31, United States
Code, and subsection (a) or (c) of section 1109 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act shall not be
construed as requiring any disclosure of nonpublic personal
information (as defined for purposes of section 502 of the Gramm-
Leach-Bliley Act (12 U.S.C. 6802)) concerning any individual who is
referenced in collateral pledged or assets transferred in
connection with a credit facility or covered transaction, unless
the person is a borrower, participant, or counterparty under the
credit facility or covered transaction.
``(8) Study of foia exemption impact.--
``(A) Study.--The Inspector General of the Board of
Governors of the Federal Reserve System shall--
``(i) conduct a study on the impact that the exemption
from section 552(b)(3) of title 5 (known as the Freedom of
Information Act) established under paragraph (6) has had on
the ability of the public to access information about the
administration by the Board of Governors of emergency
credit facilities, discount window lending programs, and
open market operations; and
``(ii) make any recommendations on whether the
exemption described in clause (i) should remain in effect.
``(B) Report.--Not later than 30 months after the date of
enactment of this section, the Inspector General of the Board
of Governors of the Federal Reserve System shall submit a
report on the findings of the study required under subparagraph
(A) to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House
of Representatives, and publish the report on the website of
the Board.
``(9) Rule of construction.--Nothing in this section is meant
to affect any pending litigation or lawsuit filed under section 552
of title 5, United States Code (popularly known as the Freedom of
Information Act), on or before the date of enactment of the Dodd-
Frank Wall Street Reform and Consumer Protection Act.''.
SEC. 1104. LIQUIDITY EVENT DETERMINATION.
(a) Determination and Written Recommendation.--
(1) Determination request.--The Secretary may request the
Corporation and the Board of Governors to determine whether a
liquidity event exists that warrants use of the guarantee program
authorized under section 1105.
(2) Requirements of determination.--Any determination pursuant
to paragraph (1) shall--
(A) be written; and
(B) contain an evaluation of the evidence that--
(i) a liquidity event exists;
(ii) failure to take action would have serious adverse
effects on financial stability or economic conditions in
the United States; and
(iii) actions authorized under section 1105 are needed
to avoid or mitigate potential adverse effects on the
United States financial system or economic conditions.
(b) Procedures.--Notwithstanding any other provision of Federal or
State law, upon the determination of both the Corporation (upon a vote
of not fewer than \2/3\ of the members of the Corporation then serving)
and the Board of Governors (upon a vote of not fewer than \2/3\ of the
members of the Board of Governors then serving) under subsection (a)
that a liquidity event exists that warrants use of the guarantee
program authorized under section 1105, and with the written consent of
the Secretary--
(1) the Corporation shall take action in accordance with
section 1105(a); and
(2) the Secretary (in consultation with the President) shall
take action in accordance with section 1105(c).
(c) Documentation and Review.--
(1) Documentation.--The Secretary shall--
(A) maintain the written documentation of each
determination of the Corporation and the Board of Governors
under this section; and
(B) provide the documentation for review under paragraph
(2).
(2) GAO review.--The Comptroller General of the United States
shall review and report to Congress on any determination of the
Corporation and the Board of Governors under subsection (a),
including--
(A) the basis for the determination; and
(B) the likely effect of the actions taken.
(d) Report to Congress.--On the earlier of the date of a submission
made to Congress under section 1105(c), or within 30 days of the date
of a determination under subsection (a), the Secretary shall provide
written notice of the determination of the Corporation and the Board of
Governors to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House of
Representatives, including a description of the basis for the
determination.
SEC. 1105. EMERGENCY FINANCIAL STABILIZATION.
(a) In General.--Upon the written determination of the Corporation
and the Board of Governors under section 1104, the Corporation shall
create a widely available program to guarantee obligations of solvent
insured depository institutions or solvent depository institution
holding companies (including any affiliates thereof) during times of
severe economic distress, except that a guarantee of obligations under
this section may not include the provision of equity in any form.
(b) Rulemaking and Terms and Conditions.--
(1) Policies and procedures.--As soon as is practicable after
the date of enactment of this Act, the Corporation shall establish,
by regulation, and in consultation with the Secretary, policies and
procedures governing the issuance of guarantees authorized by this
section. Such policies and procedures may include a requirement of
collateral as a condition of any such guarantee.
(2) Terms and conditions.--The terms and conditions of any
guarantee program shall be established by the Corporation, with the
concurrence of the Secretary.
(c) Determination of Guaranteed Amount.--
(1) In general.--In connection with any program established
pursuant to subsection (a) and subject to paragraph (2) of this
subsection, the Secretary (in consultation with the President)
shall determine the maximum amount of debt outstanding that the
Corporation may guarantee under this section, and the President may
transmit to Congress a written report on the plan of the
Corporation to exercise the authority under this section to issue
guarantees up to that maximum amount and a request for approval of
such plan. The Corporation shall exercise the authority under this
section to issue guarantees up to that specified maximum amount
upon passage of the joint resolution of approval, as provided in
subsection (d). Absent such approval, the Corporation shall issue
no such guarantees.
(2) Additional debt guarantee authority.--If the Secretary (in
consultation with the President) determines, after a submission to
Congress under paragraph (1), that the maximum guarantee amount
should be raised, and the Council concurs with that determination,
the President may transmit to Congress a written report on the plan
of the Corporation to exercise the authority under this section to
issue guarantees up to the increased maximum debt guarantee amount.
The Corporation shall exercise the authority under this section to
issue guarantees up to that specified maximum amount upon passage
of the joint resolution of approval, as provided in subsection (d).
Absent such approval, the Corporation shall issue no such
guarantees.
(d) Resolution of Approval.--
(1) Additional debt guarantee authority.--A request by the
President under this section shall be considered granted by
Congress upon adoption of a joint resolution approving such
request. Such joint resolution shall be considered in the Senate
under expedited procedures.
(2) Fast track consideration in senate.--
(A) Reconvening.--Upon receipt of a request under
subsection (c), if the Senate has adjourned or recessed for
more than 2 days, the majority leader of the Senate, after
consultation with the minority leader of the Senate, shall
notify the Members of the Senate that, pursuant to this
section, the Senate shall convene not later than the second
calendar day after receipt of such message.
(B) Placement on calendar.--Upon introduction in the
Senate, the joint resolution shall be placed immediately on the
calendar.
(C) Floor consideration.--
(i) In general.--Notwithstanding Rule XXII of the
Standing Rules of the Senate, it is in order at any time
during the period beginning on the 4th day after the date
on which Congress receives a request under subsection (c),
and ending on the 7th day after that date (even though a
previous motion to the same effect has been disagreed to)
to move to proceed to the consideration of the joint
resolution, and all points of order against the joint
resolution (and against consideration of the joint
resolution) are waived. The motion to proceed is not
debatable. The motion is not subject to a motion to
postpone. A motion to reconsider the vote by which the
motion is agreed to or disagreed to shall not be in order.
If a motion to proceed to the consideration of the
resolution is agreed to, the joint resolution shall remain
the unfinished business until disposed of.
(ii) Debate.--Debate on the joint resolution, and on
all debatable motions and appeals in connection therewith,
shall be limited to not more than 10 hours, which shall be
divided equally between the majority and minority leaders
or their designees. A motion further to limit debate is in
order and not debatable. An amendment to, or a motion to
postpone, or a motion to proceed to the consideration of
other business, or a motion to recommit the joint
resolution is not in order.
(iii) Vote on passage.--The vote on passage shall occur
immediately following the conclusion of the debate on the
joint resolution, and a single quorum call at the
conclusion of the debate if requested in accordance with
the rules of the Senate.
(iv) Rulings of the chair on procedure.--Appeals from
the decisions of the Chair relating to the application of
the rules of the Senate, as the case may be, to the
procedure relating to a joint resolution shall be decided
without debate.
(3) Rules.--
(A) Coordination with action by house of representatives.--
If, before the passage by the Senate of a joint resolution of
the Senate, the Senate receives a joint resolution, from the
House of Representatives, then the following procedures shall
apply:
(i) The joint resolution of the House of
Representatives shall not be referred to a committee.
(ii) With respect to a joint resolution of the Senate--
(I) the procedure in the Senate shall be the same
as if no joint resolution had been received from the
other House; but
(II) the vote on passage shall be on the joint
resolution of the House of Representatives.
(B) Treatment of joint resolution of house of
representatives.--If the Senate fails to introduce or consider
a joint resolution under this section, the joint resolution of
the House of Representatives shall be entitled to expedited
floor procedures under this subsection.
(C) Treatment of companion measures.--If, following passage
of the joint resolution in the Senate, the Senate then receives
the companion measure from the House of Representatives, the
companion measure shall not be debatable.
(D) Rules of the senate.--This subsection is enacted by
Congress--
(i) as an exercise of the rulemaking power of the
Senate, and as such it is deemed a part of the rules of the
Senate, but applicable only with respect to the procedure
to be followed in the Senate in the case of a joint
resolution, and it supersedes other rules, only to the
extent that it is inconsistent with such rules; and
(ii) with full recognition of the constitutional right
of the Senate to change the rules (so far as relating to
the procedure of the Senate) at any time, in the same
manner, and to the same extent as in the case of any other
rule of the Senate.
(4) Definition.--As used in this subsection, the term ``joint
resolution'' means only a joint resolution--
(A) that is introduced not later than 3 calendar days after
the date on which the request referred to in subsection (c) is
received by Congress;
(B) that does not have a preamble;
(C) the title of which is as follows: ``Joint resolution
relating to the approval of a plan to guarantee obligations
under section 1105 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act''; and
(D) the matter after the resolving clause of which is as
follows: ``That Congress approves the obligation of any amount
described in section 1105(c) of the Dodd-Frank Wall Street
Reform and Consumer Protection Act.''.
(e) Funding.--
(1) Fees and other charges.--The Corporation shall charge fees
and other assessments to all participants in the program
established pursuant to this section, in such amounts as are
necessary to offset projected losses and administrative expenses,
including amounts borrowed pursuant to paragraph (3), and such
amounts shall be available to the Corporation.
(2) Excess funds.--If, at the conclusion of the program
established under this section, there are any excess funds
collected from the fees associated with such program, the funds
shall be deposited in the General Fund of the Treasury.
(3) Authority of corporation.--The Corporation--
(A) may borrow funds from the Secretary of the Treasury and
issue obligations of the Corporation to the Secretary for
amounts borrowed, and the amounts borrowed shall be available
to the Corporation for purposes of carrying out a program
established pursuant to this section, including the payment of
reasonable costs of administering the program, and the
obligations issued shall be repaid in full with interest
through fees and charges paid by participants in accordance
with paragraphs (1) and (4), as applicable; and
(B) may not borrow funds from the Deposit Insurance Fund
established pursuant to section 11(a)(4) of the Federal Deposit
Insurance Act.
(4) Backup special assessments.--To the extent that the funds
collected pursuant to paragraph (1) are insufficient to cover any
losses or expenses, including amounts borrowed pursuant to
paragraph (3), arising from a program established pursuant to this
section, the Corporation shall impose a special assessment solely
on participants in the program, in amounts necessary to address
such insufficiency, and which shall be available to the Corporation
to cover such losses or expenses.
(5) Authority of the secretary.--The Secretary may purchase any
obligations issued under paragraph (3)(A). For such purpose, the
Secretary may use the proceeds of the sale of any securities issued
under chapter 31 of title 31, United States Code, and the purposes
for which securities may be issued under that chapter 31 are
extended to include such purchases, and the amount of any
securities issued under that chapter 31 for such purpose shall be
treated in the same manner as securities issued under section
208(n)(5)(E).
(f) Rule of Construction.--For purposes of this section, a
guarantee of deposits held by insured depository institutions shall not
be treated as a debt guarantee program.
(g) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Company.--The term ``company'' means any entity other than
a natural person that is incorporated or organized under Federal
law or the laws of any State.
(2) Depository institution holding company.--The term
``depository institution holding company'' has the same meaning as
in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).
(3) Liquidity event.--The term ``liquidity event'' means--
(A) an exceptional and broad reduction in the general
ability of financial market participants--
(i) to sell financial assets without an unusual and
significant discount; or
(ii) to borrow using financial assets as collateral
without an unusual and significant increase in margin; or
(B) an unusual and significant reduction in the ability of
financial market participants to obtain unsecured credit.
(4) Solvent.--The term ``solvent'' means that the value of the
assets of an entity exceed its obligations to creditors.
SEC. 1106. ADDITIONAL RELATED AMENDMENTS.
(a) Suspension of Parallel Federal Deposit Insurance Act
Authority.--Effective upon the date of enactment of this section, the
Corporation may not exercise its authority under section 13(c)(4)(G)(i)
of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) to
establish any widely available debt guarantee program for which section
1105 would provide authority.
(b) Federal Deposit Insurance Act.--Section 13(c)(4)(G) of the
Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)) is amended--
(1) in clause (i)--
(A) in subclause (I), by inserting ``for which the
Corporation has been appointed receiver'' before ``would have
serious''; and
(B) in the undesignated matter following subclause (II), by
inserting ``for the purpose of winding up the insured
depository institution for which the Corporation has been
appointed receiver'' after ``provide assistance under this
section''; and
(2) in clause (v)(I), by striking ``The'' and inserting ``Not
later than 3 days after making a determination under clause (i),
the''.
(c) Effect of Default on an FDIC Guarantee.--If an insured
depository institution or depository institution holding company (as
those terms are defined in section 3 of the Federal Deposit Insurance
Act) participating in a program under section 1105, or any participant
in a debt guarantee program established pursuant to section
13(c)(4)(G)(i) of the Federal Deposit Insurance Act defaults on any
obligation guaranteed by the Corporation after the date of enactment of
this Act, the Corporation shall--
(1) appoint itself as receiver for the insured depository
institution that defaults; and
(2) with respect to any other participating company that is not
an insured depository institution that defaults--
(A) require--
(i) consideration of whether a determination shall be
made, as provided in section 203 to resolve the company
under section 202; and
(ii) the company to file a petition for bankruptcy
under section 301 of title 11, United States Code, if the
Corporation is not appointed receiver pursuant to section
202 within 30 days of the date of default; or
(B) file a petition for involuntary bankruptcy on behalf of
the company under section 303 of title 11, United States Code.
SEC. 1107. FEDERAL RESERVE ACT AMENDMENTS ON FEDERAL RESERVE BANK
GOVERNANCE.
The 5th subparagraph of the 4th undesignated paragraph of section 4
of the Federal Reserve Act (12 U.S.C. 341) is amended by striking the
2nd sentence and inserting the following: ``The president shall be the
chief executive officer of the bank and shall be appointed by the Class
B and Class C directors of the bank, with the approval of the Board of
Governors of the Federal Reserve System, for a term of 5 years; and all
other executive officers and all employees of the bank shall be
directly responsible to the president.''.
SEC. 1108. FEDERAL RESERVE ACT AMENDMENTS ON SUPERVISION AND REGULATION
POLICY.
(a) Establishment of the Position of Vice Chairman for
Supervision.--
(1) Position established.--The second undesignated paragraph of
section 10 of the Federal Reserve Act (12 U.S.C. 242) (relating to
the Chairman and Vice Chairman of the Board) is amended by striking
the third sentence and inserting the following: ``Of the persons
thus appointed, 1 shall be designated by the President, by and with
the advice and consent of the Senate, to serve as Chairman of the
Board for a term of 4 years, and 2 shall be designated by the
President, by and with the advice and consent of the Senate, to
serve as Vice Chairmen of the Board, each for a term of 4 years, 1
of whom shall serve in the absence of the Chairman, as provided in
the fourth undesignated paragraph of this section, and 1 of whom
shall be designated Vice Chairman for Supervision. The Vice
Chairman for Supervision shall develop policy recommendations for
the Board regarding supervision and regulation of depository
institution holding companies and other financial firms supervised
by the Board, and shall oversee the supervision and regulation of
such firms.''.
(2) Effective date.--The amendment made by subsection (a) takes
effect on the date of enactment of this title and applies to
individuals who are designated by the President on or after that
date to serve as Vice Chairman of Supervision.
(b) Appearances Before Congress.--Section 10 of the Federal Reserve
Act (12 U.S.C. 241 et seq.) is amended by adding at the end the
following:
``(12) Appearances before congress.--The Vice Chairman for
Supervision shall appear before the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives and at semi-annual
hearings regarding the efforts, activities, objectives, and plans
of the Board with respect to the conduct of supervision and
regulation of depository institution holding companies and other
financial firms supervised by the Board.''.
(c) Board Responsibility To Set Supervision and Regulatory
Policy.--Section 11 of the Federal Reserve Act (12 U.S.C. 248)
(relating to enumerated powers of the Board) is amended by adding at
the end of subsection (k) (relating to delegation) the following: ``The
Board of Governors may not delegate to a Federal reserve bank its
functions for the establishment of policies for the supervision and
regulation of depository institution holding companies and other
financial firms supervised by the Board of Governors.''.
(d) Exercise of Federal Reserve Authority.--
(1) No decisions by federal reserve bank presidents.--No
provision of title I relating to the authority of the Board of
Governors shall be construed as conferring any decision-making
authority on presidents of Federal reserve banks.
(2) Voting decisions by board.--The Board of Governors shall
not delegate the authority to make any voting decision that the
Board of Governors is authorized or required to make under title I
of this Act in contravention of section 11(k) of the Federal
Reserve Act.
SEC. 1109. GAO AUDIT OF THE FEDERAL RESERVE FACILITIES; PUBLICATION OF
BOARD ACTIONS.
(a) GAO Audit.--
(1) In general.--Notwithstanding section 714(b) of title 31,
United States Code, or any other provision of law, the Comptroller
General of the United States (in this subsection referred to as the
``Comptroller General'') shall conduct a one-time audit of all
loans and other financial assistance provided during the period
beginning on December 1, 2007 and ending on the date of enactment
of this Act by the Board of Governors or a Federal reserve bank
under the Asset-Backed Commercial Paper Money Market Mutual Fund
Liquidity Facility, the Term Asset-Backed Securities Loan Facility,
the Primary Dealer Credit Facility, the Commercial Paper Funding
Facility, the Term Securities Lending Facility, the Term Auction
Facility, Maiden Lane, Maiden Lane II, Maiden Lane III, the agency
Mortgage-Backed Securities program, foreign currency liquidity swap
lines, and any other program created as a result of section 13(3)
of the Federal Reserve Act (as so designated by this title).
(2) Assessments.--In conducting the audit under paragraph (1),
the Comptroller General shall assess--
(A) the operational integrity, accounting, financial
reporting, and internal controls of the credit facility;
(B) the effectiveness of the security and collateral
policies established for the facility in mitigating risk to the
relevant Federal reserve bank and taxpayers;
(C) whether the credit facility inappropriately favors one
or more specific participants over other institutions eligible
to utilize the facility;
(D) the policies governing the use, selection, or payment
of third-party contractors by or for any credit facility; and
(E) whether there were conflicts of interest with respect
to the manner in which such facility was established or
operated.
(3) Timing.--The audit required by this subsection shall be
commenced not later than 30 days after the date of enactment of
this Act, and shall be completed not later than 12 months after
that date of enactment.
(4) Report required.--The Comptroller General shall submit a
report on the audit conducted under paragraph (1) to the Congress
not later than 12 months after the date of enactment of this Act,
and such report shall be made available to--
(A) the Speaker of the House of Representatives;
(B) the majority and minority leaders of the House of
Representatives;
(C) the majority and minority leaders of the Senate;
(D) the Chairman and Ranking Member of the Committee on
Banking, Housing, and Urban Affairs of the Senate and of the
Committee on Financial Services of the House of
Representatives; and
(E) any member of Congress who requests it.
(b) Audit of Federal Reserve Bank Governance.--
(1) Audit.--
(A) In general.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General shall complete
an audit of the governance of the Federal reserve bank system.
(B) Required examinations.--The audit required under
subparagraph (A) shall--
(i) examine the extent to which the current system of
appointing Federal reserve bank directors effectively
represents ``the public, without discrimination on the
basis of race, creed, color, sex or national origin, and
with due but not exclusive consideration to the interests
of agriculture, commerce, industry, services, labor, and
consumers'' in the selection of bank directors, as such
requirement is set forth under section 4 of the Federal
Reserve Act;
(ii) examine whether there are actual or potential
conflicts of interest created when the directors of Federal
reserve banks, which execute the supervisory functions of
the Board of Governors of the Federal Reserve System, are
elected by member banks;
(iii) examine the establishment and operations of each
facility described in subsection (a)(1) and each Federal
reserve bank involved in the establishment and operations
thereof; and
(iv) identify changes to selection procedures for
Federal reserve bank directors, or to other aspects of
Federal reserve bank governance, that would--
(I) improve how the public is represented;
(II) eliminate actual or potential conflicts of
interest in bank supervision;
(III) increase the availability of information
useful for the formation and execution of monetary
policy; or
(IV) in other ways increase the effectiveness or
efficiency of reserve banks.
(2) Report required.--A report on the audit conducted under
paragraph (1) shall be submitted by the Comptroller General to the
Congress before the end of the 90-day period beginning on the date
on which such audit is completed, and such report shall be made
available to--
(A) the Speaker of the House of Representatives;
(B) the majority and minority leaders of the House of
Representatives;
(C) the majority and minority leaders of the Senate;
(D) the Chairman and Ranking Member of the Committee on
Banking, Housing, and Urban Affairs of the Senate and of the
Committee on Financial Services of the House of
Representatives; and
(E) any member of Congress who requests it.
(c) Publication of Board Actions.--Notwithstanding any other
provision of law, the Board of Governors shall publish on its website,
not later than December 1, 2010, with respect to all loans and other
financial assistance provided during the period beginning on December
1, 2007 and ending on the date of enactment of this Act under the
Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity
Facility, the Term Asset-Backed Securities Loan Facility, the Primary
Dealer Credit Facility, the Commercial Paper Funding Facility, the Term
Securities Lending Facility, the Term Auction Facility, Maiden Lane,
Maiden Lane II, Maiden Lane III, the agency Mortgage-Backed Securities
program, foreign currency liquidity swap lines, and any other program
created as a result of section 13(3) of the Federal Reserve Act (as so
designated by this title)--
(1) the identity of each business, individual, entity, or
foreign central bank to which the Board of Governors or a Federal
reserve bank has provided such assistance;
(2) the type of financial assistance provided to that business,
individual, entity, or foreign central bank;
(3) the value or amount of that financial assistance;
(4) the date on which the financial assistance was provided;
(5) the specific terms of any repayment expected, including the
repayment time period, interest charges, collateral, limitations on
executive compensation or dividends, and other material terms; and
(6) the specific rationale for each such facility or program.
TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
SEC. 1201. SHORT TITLE.
This title may be cited as the ``Improving Access to Mainstream
Financial Institutions Act of 2010''.
SEC. 1202. PURPOSE.
The purpose of this title is to encourage initiatives for financial
products and services that are appropriate and accessible for millions
of Americans who are not fully incorporated into the financial
mainstream.
SEC. 1203. DEFINITIONS.
In this title, the following definitions shall apply:
(1) Account.--The term ``account'' means an agreement between
an individual and an eligible entity under which the individual
obtains from or through the entity 1 or more banking products and
services, and includes a deposit account, a savings account
(including a money market savings account), an account for a
closed-end loan, and other products or services, as the Secretary
deems appropriate.
(2) Community development financial institution.--The term
``community development financial institution'' has the same
meaning as in section 103(5) of the Community Development Banking
and Financial Institutions Act of 1994 (12 U.S.C. 4702(5)).
(3) Eligible entity.--The term ``eligible entity'' means--
(A) an organization described in section 501(c)(3) of the
Internal Revenue Code of 1986, and exempt from tax under
section 501(a) of such Code;
(B) a federally insured depository institution;
(C) a community development financial institution;
(D) a State, local, or tribal government entity; or
(E) a partnership or other joint venture comprised of 1 or
more of the entities described in subparagraphs (A) through
(D), in accordance with regulations prescribed by the Secretary
under this title.
(4) Federally insured depository institution.--The term
``federally insured depository institution'' means any insured
depository institution (as that term is defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813)) and any insured
credit union (as that term is defined in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752)).
SEC. 1204. EXPANDED ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS.
(a) In General.--The Secretary is authorized to establish a
multiyear program of grants, cooperative agreements, financial agency
agreements, and similar contracts or undertakings to promote
initiatives designed--
(1) to enable low- and moderate-income individuals to establish
one or more accounts in a federally insured depository institution
that are appropriate to meet the financial needs of such
individuals; and
(2) to improve access to the provision of accounts, on
reasonable terms, for low- and moderate-income individuals.
(b) Program Eligibility and Activities.--
(1) In general.--The Secretary shall restrict participation in
any program established under subsection (a) to an eligible entity.
Subject to regulations prescribed by the Secretary under this
title, 1 or more eligible entities may participate in 1 or several
programs established under subsection (a).
(2) Account activities.--Subject to regulations prescribed by
the Secretary, an eligible entity may, in participating in a
program established under subsection (a), offer or provide to low-
and moderate-income individuals products and services relating to
accounts, including--
(A) small-dollar value loans; and
(B) financial education and counseling relating to
conducting transactions in and managing accounts.
SEC. 1205. LOW-COST ALTERNATIVES TO SMALL DOLLAR LOANS.
(a) Grants Authorized.--The Secretary is authorized to establish
multiyear demonstration programs by means of grants, cooperative
agreements, financial agency agreements, and similar contracts or
undertakings, with eligible entities to provide low-cost, small loans
to consumers that will provide alternatives to more costly small dollar
loans.
(b) Terms and Conditions.--
(1) In general.--Loans under this section shall be made on
terms and conditions, and pursuant to lending practices, that are
reasonable for consumers.
(2) Financial literacy and education opportunities.--
(A) In general.--Each eligible entity awarded a grant under
this section shall promote and take appropriate steps to ensure
the provision of financial literacy and education
opportunities, such as relevant counseling services,
educational courses, or wealth building programs, to each
consumer provided with a loan pursuant to this section.
(B) Authority to expand access.--As part of the grants,
agreements, and undertakings established under this section,
the Secretary may implement reasonable measures or programs
designed to expand access to financial literacy and education
opportunities, including relevant counseling services,
educational courses, or wealth building programs to be provided
to individuals who obtain loans from eligible entities under
this section.
SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.
The Community Development Banking and Financial Institutions Act of
1994 (12 U.S.C. 4701 et seq.) is amended by adding at the end the
following:
``SEC. 122. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.
``(a) Purposes.--The purposes of this section are--
``(1) to make financial assistance available from the Fund in
order to help community development financial institutions defray
the costs of operating small dollar loan programs, by providing the
amounts necessary for such institutions to establish their own loan
loss reserve funds to mitigate some of the losses on such small
dollar loan programs; and
``(2) to encourage community development financial institutions
to establish and maintain small dollar loan programs that would
help give consumers access to mainstream financial institutions and
combat high cost small dollar lending.
``(b) Grants.--
``(1) Loan-loss reserve fund grants.--The Fund shall make
grants to community development financial institutions or to any
partnership between such community development financial
institutions and any other federally insured depository institution
with a primary mission to serve targeted investment areas, as such
areas are defined under section 103(16), to enable such
institutions or any partnership of such institutions to establish a
loan-loss reserve fund in order to defray the costs of a small
dollar loan program established or maintained by such institution.
``(2) Matching requirement.--A community development financial
institution or any partnership of institutions established pursuant
to paragraph (1) shall provide non-Federal matching funds in an
amount equal to 50 percent of the amount of any grant received
under this section.
``(3) Use of funds.--Any grant amounts received by a community
development financial institution or any partnership between or
among such institutions under paragraph (1)--
``(A) may not be used by such institution to provide direct
loans to consumers;
``(B) may be used by such institution to help recapture a
portion or all of a defaulted loan made under the small dollar
loan program of such institution; and
``(C) may be used to designate and utilize a fiscal agent
for services normally provided by such an agent.
``(4) Technical assistance grants.--The Fund shall make
technical assistance grants to community development financial
institutions or any partnership between or among such institutions
to support and maintain a small dollar loan program. Any grant
amounts received under this paragraph may be used for technology,
staff support, and other costs associated with establishing a small
dollar loan program.
``(c) Definitions.--For purposes of this section--
``(1) the term `consumer reporting agency that compiles and
maintains files on consumers on a nationwide basis' has the same
meaning given such term in section 603(p) of the Fair Credit
Reporting Act (15 U.S.C. 1681a(p)); and
``(2) the term `small dollar loan program' means a loan program
wherein a community development financial institution or any
partnership between or among such institutions offers loans to
consumers that--
``(A) are made in amounts not exceeding $2,500;
``(B) must be repaid in installments;
``(C) have no pre-payment penalty;
``(D) the institution has to report payments regarding the
loan to at least 1 of the consumer reporting agencies that
compiles and maintains files on consumers on a nationwide
basis; and
``(E) meet any other affordability requirements as may be
established by the Administrator.''.
SEC. 1207. PROCEDURAL PROVISIONS.
An eligible entity desiring to participate in a program or obtain a
grant under this title shall submit an application to the Secretary, in
such form and containing such information as the Secretary may require.
SEC. 1208. AUTHORIZATION OF APPROPRIATIONS.
(a) Authorization to the Secretary.--There are authorized to be
appropriated to the Secretary, such sums as are necessary to both
administer and fund the programs and projects authorized by this title,
to remain available until expended.
(b) Authorization to the Fund.--There is authorized to be
appropriated to the Fund for each fiscal year beginning in fiscal year
2010, an amount equal to the amount of the administrative costs of the
Fund for the operation of the grant program established under this
title.
SEC. 1209. REGULATIONS.
(a) In General.--The Secretary is authorized to promulgate
regulations to implement and administer the grant programs and
undertakings authorized by this title.
(b) Regulatory Authority.--Regulations prescribed under this
section may contain such classifications, differentiations, or other
provisions, and may provide for such adjustments and exceptions for any
class of grant programs, undertakings, or eligible entities, as, in the
judgment of the Secretary, are necessary or proper to effectuate the
purposes of this title, to prevent circumvention or evasion of this
title, or to facilitate compliance with this title.
SEC. 1210. EVALUATION AND REPORTS TO CONGRESS.
For each fiscal year in which a program or project is carried out
under this title, the Secretary shall submit a report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives containing a
description of the activities funded, amounts distributed, and
measurable results, as appropriate and available.
TITLE XIII--PAY IT BACK ACT
SEC. 1301. SHORT TITLE.
This title may be cited as the ``Pay It Back Act''.
SEC. 1302. AMENDMENT TO REDUCE TARP AUTHORIZATION.
Section 115(a) of the Emergency Economic Stabilization Act of 2008
(12 U.S.C. 5225(a)) is amended--
(1) in paragraph (3)--
(A) by striking ``, $700,000,000,000, as such amount is
reduced by $1,259,000,000, as such amount is reduced by
$1,244,000,000'' and inserting ``$475,000,000,000''; and
(B) by striking ``outstanding at any one time''; and
(2) by adding at the end the following:
``(4) For purposes of this subsection, the amount of authority
considered to be exercised by the Secretary shall not be reduced
by--
``(A) any amounts received by the Secretary before, on, or
after the date of enactment of the Pay It Back Act from
repayment of the principal of financial assistance by an entity
that has received financial assistance under the TARP or any
other program enacted by the Secretary under the authorities
granted to the Secretary under this Act;
``(B) any amounts committed for any guarantees pursuant to
the TARP that became or become uncommitted; or
``(C) any losses realized by the Secretary.
``(5) No authority under this Act may be used to incur any
obligation for a program or initiative that was not initiated prior
to June 25, 2010.''.
SEC. 1303. REPORT.
Section 106 of the Emergency Economic Stabilization Act of 2008 (12
U.S.C. 5216) is amended by inserting at the end the following:
``(f) Report.--The Secretary of the Treasury shall report to
Congress every 6 months on amounts received and transferred to the
general fund under subsection (d).''.
SEC. 1304. AMENDMENTS TO HOUSING AND ECONOMIC RECOVERY ACT OF 2008.
(a) Sale of Fannie Mae Obligations and Securities by the Treasury;
Deficit Reduction.--Section 304(g)(2) of the Federal National Mortgage
Association Charter Act (12 U.S.C. 1719(g)(2)) is amended--
(1) by redesignating subparagraph (C) as subparagraph (D); and
(2) by inserting after subparagraph (B) the following:
``(C) Deficit reduction.--The Secretary of the Treasury
shall deposit in the General Fund of the Treasury any amounts
received by the Secretary from the sale of any obligation
acquired by the Secretary under this subsection, where such
amounts shall be--
``(i) dedicated for the sole purpose of deficit
reduction; and
``(ii) prohibited from use as an offset for other
spending increases or revenue reductions.''.
(b) Sale of Freddie Mac Obligations and Securities by the Treasury;
Deficit Reduction.--Section 306(l)(2) of the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1455(l)(2)) is amended--
(1) by redesignating subparagraph (C) as subparagraph (D); and
(2) by inserting after subparagraph (B) the following:
``(C) Deficit reduction.--The Secretary of the Treasury
shall deposit in the General Fund of the Treasury any amounts
received by the Secretary from the sale of any obligation
acquired by the Secretary under this subsection, where such
amounts shall be--
``(i) dedicated for the sole purpose of deficit
reduction; and
``(ii) prohibited from use as an offset for other
spending increases or revenue reductions.''.
(c) Sale of Federal Home Loan Banks Obligations by the Treasury;
Deficit Reduction.--Section 11(l)(2) of the Federal Home Loan Bank Act
(12 U.S.C. 1431(l)(2)) is amended--
(1) by redesignating subparagraph (C) as subparagraph (D); and
(2) by inserting after subparagraph (B) the following:
``(C) Deficit reduction.--The Secretary of the Treasury
shall deposit in the General Fund of the Treasury any amounts
received by the Secretary from the sale of any obligation
acquired by the Secretary under this subsection, where such
amounts shall be--
``(i) dedicated for the sole purpose of deficit
reduction; and
``(ii) prohibited from use as an offset for other
spending increases or revenue reductions.''.
(d) Repayment of Fees.--Any periodic commitment fee or any other
fee or assessment paid by the Federal National Mortgage Association or
Federal Home Loan Mortgage Corporation to the Secretary of the Treasury
as a result of any preferred stock purchase agreement, mortgage-backed
security purchase program, or any other program or activity authorized
or carried out pursuant to the authorities granted to the Secretary of
the Treasury under section 1117 of the Housing and Economic Recovery
Act of 2008 (Public Law 110-289; 122 Stat. 2683), including any fee
agreed to by contract between the Secretary and the Association or
Corporation, shall be deposited in the General Fund of the Treasury
where such amounts shall be--
(1) dedicated for the sole purpose of deficit reduction; and
(2) prohibited from use as an offset for other spending
increases or revenue reductions.
SEC. 1305. FEDERAL HOUSING FINANCE AGENCY REPORT.
The Director of the Federal Housing Finance Agency shall submit to
Congress a report on the plans of the Agency to continue to support and
maintain the Nation's vital housing industry, while at the same time
guaranteeing that the American taxpayer will not suffer unnecessary
losses.
SEC. 1306. REPAYMENT OF UNOBLIGATED ARRA FUNDS.
(a) Rejection of ARRA Funds by State.--Section 1607 of the American
Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123 Stat. 305)
is amended by adding at the end the following:
``(d) Statewide Rejection of Funds.--If funds provided to any State
in any division of this Act are not accepted for use by the Governor of
the State pursuant to subsection (a) or by the State legislature
pursuant to subsection (b), then all such funds shall be--
``(1) rescinded; and
``(2) deposited in the General Fund of the Treasury where such
amounts shall be--
``(A) dedicated for the sole purpose of deficit reduction;
and
``(B) prohibited from use as an offset for other spending
increases or revenue reductions.''.
(b) Withdrawal or Recapture of Unobligated Funds.--Title XVI of the
American Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123
Stat. 302) is amended by adding at the end the following:
``SEC. 1613. WITHDRAWAL OR RECAPTURE OF UNOBLIGATED FUNDS.
``Notwithstanding any other provision of this Act, if the head of
any executive agency withdraws or recaptures for any reason funds
appropriated or otherwise made available under this division, and such
funds have not been obligated by a State to a local government or for a
specific project, such recaptured funds shall be--
``(1) rescinded; and
``(2) deposited in the General Fund of the Treasury where such
amounts shall be--
``(A) dedicated for the sole purpose of deficit reduction;
and
``(B) prohibited from use as an offset for other spending
increases or revenue reductions.''.
(c) Return of Unobligated Funds by End of 2012.--Section 1603 of
the American Recovery and Reinvestment Act of 2009 (Public Law 111-5;
123 Stat. 302) is amended by--
(1) striking ``All funds'' and inserting ``(a) In General.--All
funds''; and
(2) adding at the end the following:
``(b) Repayment of Unobligated Funds.--Any discretionary
appropriations made available in this division that have not been
obligated as of December 31, 2012, are hereby rescinded, and such
amounts shall be deposited in the General Fund of the Treasury where
such amounts shall be--
``(1) dedicated for the sole purpose of deficit reduction; and
``(2) prohibited from use as an offset for other spending
increases or revenue reductions.
``(c) Presidential Waiver Authority.--
``(1) In general.--The President may waive the requirements
under subsection (b), if the President determines that it is not in
the best interest of the Nation to rescind a specific unobligated
amount after December 31, 2012.
``(2) Requests.--The head of an executive agency may also apply
to the President for a waiver from the requirements under
subsection (b).''.
TITLE XIV--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
SEC. 1400. SHORT TITLE; DESIGNATION AS ENUMERATED CONSUMER LAW.
(a) Short Title.--This title may be cited as the ``Mortgage Reform
and Anti-Predatory Lending Act''.
(b) Designation as Enumerated Consumer Law Under the Purview of the
Bureau of Consumer Financial Protection.--Subtitles A, B, C, and E and
sections 1471, 1472, 1475, and 1476, and the amendments made by such
subtitles and sections, shall be enumerated consumer laws, as defined
in section 1002, and come under the purview of the Bureau of Consumer
Financial Protection for purposes of title X, including the transfer of
functions and personnel under subtitle F of title X and the savings
provisions of such subtitle.
(c) Regulations; Effective Date.--
(1) Regulations.--The regulations required to be prescribed
under this title or the amendments made by this title shall--
(A) be prescribed in final form before the end of the 18-
month period beginning on the designated transfer date; and
(B) take effect not later than 12 months after the date of
issuance of the regulations in final form.
(2) Effective date established by rule.--Except as provided in
paragraph (3), a section, or provision thereof, of this title shall
take effect on the date on which the final regulations implementing
such section, or provision, take effect.
(3) Effective date.--A section of this title for which
regulations have not been issued on the date that is 18 months
after the designated transfer date shall take effect on such date.
Subtitle A--Residential Mortgage Loan Origination Standards
SEC. 1401. DEFINITIONS.
Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended
by adding at the end the following new subsection:
``(cc) Definitions Relating to Mortgage Origination and Residential
Mortgage Loans.--
``(1) Commission.--Unless otherwise specified, the term
`Commission' means the Federal Trade Commission.
``(2) Mortgage originator.--The term `mortgage originator'--
``(A) means any person who, for direct or indirect
compensation or gain, or in the expectation of direct or
indirect compensation or gain--
``(i) takes a residential mortgage loan application;
``(ii) assists a consumer in obtaining or applying to
obtain a residential mortgage loan; or
``(iii) offers or negotiates terms of a residential
mortgage loan;
``(B) includes any person who represents to the public,
through advertising or other means of communicating or
providing information (including the use of business cards,
stationery, brochures, signs, rate lists, or other promotional
items), that such person can or will provide any of the
services or perform any of the activities described in
subparagraph (A);
``(C) does not include any person who is (i) not otherwise
described in subparagraph (A) or (B) and who performs purely
administrative or clerical tasks on behalf of a person who is
described in any such subparagraph, or (ii) an employee of a
retailer of manufactured homes who is not described in clause
(i) or (iii) of subparagraph (A) and who does not advise a
consumer on loan terms (including rates, fees, and other
costs);
``(D) does not include a person or entity that only
performs real estate brokerage activities and is licensed or
registered in accordance with applicable State law, unless such
person or entity is compensated by a lender, a mortgage broker,
or other mortgage originator or by any agent of such lender,
mortgage broker, or other mortgage originator;
``(E) does not include, with respect to a residential
mortgage loan, a person, estate, or trust that provides
mortgage financing for the sale of 3 properties in any 12-month
period to purchasers of such properties, each of which is owned
by such person, estate, or trust and serves as security for the
loan, provided that such loan--
``(i) is not made by a person, estate, or trust that
has constructed, or acted as a contractor for the
construction of, a residence on the property in the
ordinary course of business of such person, estate, or
trust;
``(ii) is fully amortizing;
``(iii) is with respect to a sale for which the seller
determines in good faith and documents that the buyer has a
reasonable ability to repay the loan;
``(iv) has a fixed rate or an adjustable rate that is
adjustable after 5 or more years, subject to reasonable
annual and lifetime limitations on interest rate increases;
and
``(v) meets any other criteria the Board may prescribe;
``(F) does not include the creditor (except the creditor in
a table-funded transaction) under paragraph (1), (2), or (4) of
section 129B(c); and
``(G) does not include a servicer or servicer employees,
agents and contractors, including but not limited to those who
offer or negotiate terms of a residential mortgage loan for
purposes of renegotiating, modifying, replacing and
subordinating principal of existing mortgages where borrowers
are behind in their payments, in default or have a reasonable
likelihood of being in default or falling behind.
``(3) Nationwide mortgage licensing system and registry.--The
term `Nationwide Mortgage Licensing System and Registry' has the
same meaning as in the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008.
``(4) Other definitions relating to mortgage originator.--For
purposes of this subsection, a person `assists a consumer in
obtaining or applying to obtain a residential mortgage loan' by,
among other things, advising on residential mortgage loan terms
(including rates, fees, and other costs), preparing residential
mortgage loan packages, or collecting information on behalf of the
consumer with regard to a residential mortgage loan.
``(5) Residential mortgage loan.--The term `residential
mortgage loan' means any consumer credit transaction that is
secured by a mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling or on residential real
property that includes a dwelling, other than a consumer credit
transaction under an open end credit plan or, for purposes of
sections 129B and 129C and section 128(a) (16), (17), (18), and
(19), and sections 128(f) and 130(k), and any regulations
promulgated thereunder, an extension of credit relating to a plan
described in section 101(53D) of title 11, United States Code.
``(6) Secretary.--The term `Secretary', when used in connection
with any transaction or person involved with a residential mortgage
loan, means the Secretary of Housing and Urban Development.
``(7) Servicer.--The term `servicer' has the same meaning as in
section 6(i)(2) of the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2605(i)(2)).''.
SEC. 1402. RESIDENTIAL MORTGAGE LOAN ORIGINATION.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended--
(1) by redesignating the 2nd of the 2 sections designated as
section 129 (15 U.S.C. 1639a) (relating to duty of servicers of
residential mortgages) as section 129A; and
(2) by inserting after section 129A (as so redesignated) the
following new section:
``Sec. 129B. Residential mortgage loan origination
``(a) Finding and Purpose.--
``(1) Finding.--The Congress finds that economic stabilization
would be enhanced by the protection, limitation, and regulation of
the terms of residential mortgage credit and the practices related
to such credit, while ensuring that responsible, affordable
mortgage credit remains available to consumers.
``(2) Purpose.--It is the purpose of this section and section
129C to assure that consumers are offered and receive residential
mortgage loans on terms that reasonably reflect their ability to
repay the loans and that are understandable and not unfair,
deceptive or abusive.
``(b) Duty of Care.--
``(1) Standard.--Subject to regulations prescribed under this
subsection, each mortgage originator shall, in addition to the
duties imposed by otherwise applicable provisions of State or
Federal law--
``(A) be qualified and, when required, registered and
licensed as a mortgage originator in accordance with applicable
State or Federal law, including the Secure and Fair Enforcement
for Mortgage Licensing Act of 2008; and
``(B) include on all loan documents any unique identifier
of the mortgage originator provided by the Nationwide Mortgage
Licensing System and Registry.
``(2) Compliance procedures required.--The Board shall
prescribe regulations requiring depository institutions to
establish and maintain procedures reasonably designed to assure and
monitor the compliance of such depository institutions, the
subsidiaries of such institutions, and the employees of such
institutions or subsidiaries with the requirements of this section
and the registration procedures established under section 1507 of
the Secure and Fair Enforcement for Mortgage Licensing Act of
2008.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129 the following new items:
``129A. Fiduciary duty of servicers of pooled residential mortgages.
``129B. Residential mortgage loan origination.''.
SEC. 1403. PROHIBITION ON STEERING INCENTIVES.
Section 129B of the Truth in Lending Act (as added by section
1402(a)) is amended by inserting after subsection (b) the following new
subsection:
``(c) Prohibition on Steering Incentives.--
``(1) In general.--For any residential mortgage loan, no
mortgage originator shall receive from any person and no person
shall pay to a mortgage originator, directly or indirectly,
compensation that varies based on the terms of the loan (other than
the amount of the principal).
``(2) Restructuring of financing origination fee.--
``(A) In general.--For any mortgage loan, a mortgage
originator may not receive from any person other than the
consumer and no person, other than the consumer, who knows or
has reason to know that a consumer has directly compensated or
will directly compensate a mortgage originator may pay a
mortgage originator any origination fee or charge except bona
fide third party charges not retained by the creditor, mortgage
originator, or an affiliate of the creditor or mortgage
originator .
``(B) Exception.--Notwithstanding subparagraph (A), a
mortgage originator may receive from a person other than the
consumer an origination fee or charge, and a person other than
the consumer may pay a mortgage originator an origination fee
or charge, if--
``(i) the mortgage originator does not receive any
compensation directly from the consumer; and
``(ii) the consumer does not make an upfront payment of
discount points, origination points, or fees, however
denominated (other than bona fide third party charges not
retained by the mortgage originator, creditor, or an
affiliate of the creditor or originator), except that the
Board may, by rule, waive or provide exemptions to this
clause if the Board determines that such waiver or
exemption is in the interest of consumers and in the public
interest.
``(3) Regulations.--The Board shall prescribe regulations to
prohibit--
``(A) mortgage originators from steering any consumer to a
residential mortgage loan that--
``(i) the consumer lacks a reasonable ability to repay
(in accordance with regulations prescribed under section
129C(a)); or
``(ii) has predatory characteristics or effects (such
as equity stripping, excessive fees, or abusive terms);
``(B) mortgage originators from steering any consumer from
a residential mortgage loan for which the consumer is qualified
that is a qualified mortgage (as defined in section 129C(b)(2))
to a residential mortgage loan that is not a qualified
mortgage;
``(C) abusive or unfair lending practices that promote
disparities among consumers of equal credit worthiness but of
different race, ethnicity, gender, or age; and
``(D) mortgage originators from--
``(i) mischaracterizing the credit history of a
consumer or the residential mortgage loans available to a
consumer;
``(ii) mischaracterizing or suborning the
mischaracterization of the appraised value of the property
securing the extension of credit; or
``(iii) if unable to suggest, offer, or recommend to a
consumer a loan that is not more expensive than a loan for
which the consumer qualifies, discouraging a consumer from
seeking a residential mortgage loan secured by a consumer's
principal dwelling from another mortgage originator.
``(4) Rules of construction.--No provision of this subsection
shall be construed as--
``(A) permitting any yield spread premium or other similar
compensation that would, for any residential mortgage loan,
permit the total amount of direct and indirect compensation
from all sources permitted to a mortgage originator to vary
based on the terms of the loan (other than the amount of the
principal);
``(B) limiting or affecting the amount of compensation
received by a creditor upon the sale of a consummated loan to a
subsequent purchaser;
``(C) restricting a consumer's ability to finance, at the
option of the consumer, including through principal or rate,
any origination fees or costs permitted under this subsection,
or the mortgage originator's right to receive such fees or
costs (including compensation) from any person, subject to
paragraph (2)(B), so long as such fees or costs do not vary
based on the terms of the loan (other than the amount of the
principal) or the consumer's decision about whether to finance
such fees or costs; or
``(D) prohibiting incentive payments to a mortgage
originator based on the number of residential mortgage loans
originated within a specified period of time.''.
SEC. 1404. LIABILITY.
Section 129B of the Truth in Lending Act is amended by inserting
after subsection (c) (as added by section 1403) the following new
subsection:
``(d) Liability for Violations.--
``(1) In general.--For purposes of providing a cause of action
for any failure by a mortgage originator, other than a creditor, to
comply with any requirement imposed under this section and any
regulation prescribed under this section, section 130 shall be
applied with respect to any such failure by substituting `mortgage
originator' for `creditor' each place such term appears in each
such subsection.
``(2) Maximum.--The maximum amount of any liability of a
mortgage originator under paragraph (1) to a consumer for any
violation of this section shall not exceed the greater of actual
damages or an amount equal to 3 times the total amount of direct
and indirect compensation or gain accruing to the mortgage
originator in connection with the residential mortgage loan
involved in the violation, plus the costs to the consumer of the
action, including a reasonable attorney's fee.''.
SEC. 1405. REGULATIONS.
(a) Discretionary Regulatory Authority.--Section 129B of the Truth
in Lending Act is amended by inserting after subsection (d) (as added
by section 1404) the following new subsection:
``(e) Discretionary Regulatory Authority.--
``(1) In general.--The Board shall, by regulations, prohibit or
condition terms, acts or practices relating to residential mortgage
loans that the Board finds to be abusive, unfair, deceptive,
predatory, necessary or proper to ensure that responsible,
affordable mortgage credit remains available to consumers in a
manner consistent with the purposes of this section and section
129C, necessary or proper to effectuate the purposes of this
section and section 129C, to prevent circumvention or evasion
thereof, or to facilitate compliance with such sections, or are not
in the interest of the borrower.
``(2) Application.--The regulations prescribed under paragraph
(1) shall be applicable to all residential mortgage loans and shall
be applied in the same manner as regulations prescribed under
section 105.
``(f) Section 129B and any regulations promulgated thereunder do
not apply to an extension of credit relating to a plan described in
section 101(53D) of title 11, United States Code.''.
(b) Disclosures.--Notwithstanding any other provision of this
title, in order to improve consumer awareness and understanding of
transactions involving residential mortgage loans through the use of
disclosures, the Board may, by rule, exempt from or modify disclosure
requirements, in whole or in part, for any class of residential
mortgage loans if the Board determines that such exemption or
modification is in the interest of consumers and in the public
interest.
SEC. 1406. STUDY OF SHARED APPRECIATION MORTGAGES.
(a) Study.--The Secretary of Housing and Urban Development, in
consultation with the Secretary of the Treasury and other relevant
agencies, shall conduct a comprehensive study to determine prudent
statutory and regulatory requirements sufficient to provide for the
widespread use of shared appreciation mortgages to strengthen local
housing markets, provide new opportunities for affordable
homeownership, and enable homeowners at risk of foreclosure to
refinance or modify their mortgages.
(b) Report.--Not later than the expiration of the 6-month period
beginning on the date of the enactment of this Act, the Secretary of
Housing and Urban Development shall submit a report to the Congress on
the results of the study, which shall include recommendations for the
regulatory and legislative requirements referred to in subsection (a).
Subtitle B--Minimum Standards For Mortgages
SEC. 1411. ABILITY TO REPAY.
(a) In General.--
(1) Rule of construction.--No regulation, order, or guidance
issued by the Bureau under this title shall be construed as
requiring a depository institution to apply mortgage underwriting
standards that do not meet the minimum underwriting standards
required by the appropriate prudential regulator of the depository
institution.
(2) Amendment to truth in lending act.--Chapter 2 of the Truth
in Lending Act (15 U.S.C. 1631 et seq.) is amended by inserting
after section 129B (as added by section 1402(a)) the following new
section:
``Sec. 129C. Minimum standards for residential mortgage loans
``(a) Ability To Repay.--
``(1) In general.--In accordance with regulations prescribed by
the Board, no creditor may make a residential mortgage loan unless
the creditor makes a reasonable and good faith determination based
on verified and documented information that, at the time the loan
is consummated, the consumer has a reasonable ability to repay the
loan, according to its terms, and all applicable taxes, insurance
(including mortgage guarantee insurance), and assessments.
``(2) Multiple loans.--If the creditor knows, or has reason to
know, that 1 or more residential mortgage loans secured by the same
dwelling will be made to the same consumer, the creditor shall make
a reasonable and good faith determination, based on verified and
documented information, that the consumer has a reasonable ability
to repay the combined payments of all loans on the same dwelling
according to the terms of those loans and all applicable taxes,
insurance (including mortgage guarantee insurance), and
assessments.
``(3) Basis for determination.--A determination under this
subsection of a consumer's ability to repay a residential mortgage
loan shall include consideration of the consumer's credit history,
current income, expected income the consumer is reasonably assured
of receiving, current obligations, debt-to-income ratio or the
residual income the consumer will have after paying non-mortgage
debt and mortgage-related obligations, employment status, and other
financial resources other than the consumer's equity in the
dwelling or real property that secures repayment of the loan. A
creditor shall determine the ability of the consumer to repay using
a payment schedule that fully amortizes the loan over the term of
the loan.
``(4) Income verification.--A creditor making a residential
mortgage loan shall verify amounts of income or assets that such
creditor relies on to determine repayment ability, including
expected income or assets, by reviewing the consumer's Internal
Revenue Service Form W-2, tax returns, payroll receipts, financial
institution records, or other third-party documents that provide
reasonably reliable evidence of the consumer's income or assets. In
order to safeguard against fraudulent reporting, any consideration
of a consumer's income history in making a determination under this
subsection shall include the verification of such income by the use
of--
``(A) Internal Revenue Service transcripts of tax returns;
or
``(B) a method that quickly and effectively verifies income
documentation by a third party subject to rules prescribed by
the Board.
``(5) Exemption.--With respect to loans made, guaranteed, or
insured by Federal departments or agencies identified in subsection
(b)(3)(B)(ii), such departments or agencies may exempt refinancings
under a streamlined refinancing from this income verification
requirement as long as the following conditions are met:
``(A) The consumer is not 30 days or more past due on the
prior existing residential mortgage loan.
``(B) The refinancing does not increase the principal
balance outstanding on the prior existing residential mortgage
loan, except to the extent of fees and charges allowed by the
department or agency making, guaranteeing, or insuring the
refinancing.
``(C) Total points and fees (as defined in section
103(aa)(4), other than bona fide third party charges not
retained by the mortgage originator, creditor, or an affiliate
of the creditor or mortgage originator) payable in connection
with the refinancing do not exceed 3 percent of the total new
loan amount.
``(D) The interest rate on the refinanced loan is lower
than the interest rate of the original loan, unless the
borrower is refinancing from an adjustable rate to a fixed-rate
loan, under guidelines that the department or agency shall
establish for loans they make, guarantee, or issue.
``(E) The refinancing is subject to a payment schedule that
will fully amortize the refinancing in accordance with the
regulations prescribed by the department or agency making,
guaranteeing, or insuring the refinancing.
``(F) The terms of the refinancing do not result in a
balloon payment, as defined in subsection (b)(2)(A)(ii).
``(G) Both the residential mortgage loan being refinanced
and the refinancing satisfy all requirements of the department
or agency making, guaranteeing, or insuring the refinancing.
``(6) Nonstandard loans.--
``(A) Variable rate loans that defer repayment of any
principal or interest.--For purposes of determining, under this
subsection, a consumer's ability to repay a variable rate
residential mortgage loan that allows or requires the consumer
to defer the repayment of any principal or interest, the
creditor shall use a fully amortizing repayment schedule.
``(B) Interest-only loans.--For purposes of determining,
under this subsection, a consumer's ability to repay a
residential mortgage loan that permits or requires the payment
of interest only, the creditor shall use the payment amount
required to amortize the loan by its final maturity.
``(C) Calculation for negative amortization.--In making any
determination under this subsection, a creditor shall also take
into consideration any balance increase that may accrue from
any negative amortization provision.
``(D) Calculation process.--For purposes of making any
determination under this subsection, a creditor shall calculate
the monthly payment amount for principal and interest on any
residential mortgage loan by assuming--
``(i) the loan proceeds are fully disbursed on the date
of the consummation of the loan;
``(ii) the loan is to be repaid in substantially equal
monthly amortizing payments for principal and interest over
the entire term of the loan with no balloon payment, unless
the loan contract requires more rapid repayment (including
balloon payment), in which case the calculation shall be
made (I) in accordance with regulations prescribed by the
Board, with respect to any loan which has an annual
percentage rate that does not exceed the average prime
offer rate for a comparable transaction, as of the date the
interest rate is set, by 1.5 or more percentage points for
a first lien residential mortgage loan; and by 3.5 or more
percentage points for a subordinate lien residential
mortgage loan; or (II) using the contract's repayment
schedule, with respect to a loan which has an annual
percentage rate, as of the date the interest rate is set,
that is at least 1.5 percentage points above the average
prime offer rate for a first lien residential mortgage
loan; and 3.5 percentage points above the average prime
offer rate for a subordinate lien residential mortgage
loan; and
``(iii) the interest rate over the entire term of the
loan is a fixed rate equal to the fully indexed rate at the
time of the loan closing, without considering the
introductory rate.
``(E) Refinance of hybrid loans with current lender.--In
considering any application for refinancing an existing hybrid
loan by the creditor into a standard loan to be made by the
same creditor in any case in which there would be a reduction
in monthly payment and the mortgagor has not been delinquent on
any payment on the existing hybrid loan, the creditor may--
``(i) consider the mortgagor's good standing on the
existing mortgage;
``(ii) consider if the extension of new credit would
prevent a likely default should the original mortgage reset
and give such concerns a higher priority as an acceptable
underwriting practice; and
``(iii) offer rate discounts and other favorable terms
to such mortgagor that would be available to new customers
with high credit ratings based on such underwriting
practice.
``(7) Fully-indexed rate defined.--For purposes of this
subsection, the term `fully indexed rate' means the index rate
prevailing on a residential mortgage loan at the time the loan is
made plus the margin that will apply after the expiration of any
introductory interest rates.
``(8) Reverse mortgages and bridge loans.--This subsection
shall not apply with respect to any reverse mortgage or temporary
or bridge loan with a term of 12 months or less, including to any
loan to purchase a new dwelling where the consumer plans to sell a
different dwelling within 12 months.
``(9) Seasonal income.--If documented income, including income
from a small business, is a repayment source for a residential
mortgage loan, a creditor may consider the seasonality and
irregularity of such income in the underwriting of and scheduling
of payments for such credit.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129B (as added by section 1402(b)) the following new item:
``129C. Minimum standards for residential mortgage loans.''.
SEC. 1412. SAFE HARBOR AND REBUTTABLE PRESUMPTION.
Section 129C of the Truth in Lending Act is amended by inserting
after subsection (a) (as added by section 1411) the following new
subsection:
``(b) Presumption of Ability To Repay.--
``(1) In general.--Any creditor with respect to any residential
mortgage loan, and any assignee of such loan subject to liability
under this title, may presume that the loan has met the
requirements of subsection (a), if the loan is a qualified
mortgage.
``(2) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Qualified mortgage.--The term `qualified mortgage'
means any residential mortgage loan--
``(i) for which the regular periodic payments for the
loan may not--
``(I) result in an increase of the principal
balance; or
``(II) except as provided in subparagraph (E),
allow the consumer to defer repayment of principal;
``(ii) except as provided in subparagraph (E), the
terms of which do not result in a balloon payment, where a
`balloon payment' is a scheduled payment that is more than
twice as large as the average of earlier scheduled
payments;
``(iii) for which the income and financial resources
relied upon to qualify the obligors on the loan are
verified and documented;
``(iv) in the case of a fixed rate loan, for which the
underwriting process is based on a payment schedule that
fully amortizes the loan over the loan term and takes into
account all applicable taxes, insurance, and assessments;
``(v) in the case of an adjustable rate loan, for which
the underwriting is based on the maximum rate permitted
under the loan during the first 5 years, and a payment
schedule that fully amortizes the loan over the loan term
and takes into account all applicable taxes, insurance, and
assessments;
``(vi) that complies with any guidelines or regulations
established by the Board relating to ratios of total
monthly debt to monthly income or alternative measures of
ability to pay regular expenses after payment of total
monthly debt, taking into account the income levels of the
borrower and such other factors as the Board may determine
relevant and consistent with the purposes described in
paragraph (3)(B)(i);
``(vii) for which the total points and fees (as defined
in subparagraph (C)) payable in connection with the loan do
not exceed 3 percent of the total loan amount;
``(viii) for which the term of the loan does not exceed
30 years, except as such term may be extended under
paragraph (3), such as in high-cost areas; and
``(ix) in the case of a reverse mortgage (except for
the purposes of subsection (a) of section 129C, to the
extent that such mortgages are exempt altogether from those
requirements), a reverse mortgage which meets the standards
for a qualified mortgage, as set by the Board in rules that
are consistent with the purposes of this subsection.
``(B) Average prime offer rate.--The term `average prime
offer rate' means the average prime offer rate for a comparable
transaction as of the date on which the interest rate for the
transaction is set, as published by the Board..
``(C) Points and fees.--
``(i) In general.--For purposes of subparagraph (A),
the term `points and fees' means points and fees as defined
by section 103(aa)(4) (other than bona fide third party
charges not retained by the mortgage originator, creditor,
or an affiliate of the creditor or mortgage originator).
``(ii) Computation.--For purposes of computing the
total points and fees under this subparagraph, the total
points and fees shall exclude either of the amounts
described in the following subclauses, but not both:
``(I) Up to and including 2 bona fide discount
points payable by the consumer in connection with the
mortgage, but only if the interest rate from which the
mortgage's interest rate will be discounted does not
exceed by more than 1 percentage point the average
prime offer rate.
``(II) Unless 2 bona fide discount points have been
excluded under subclause (I), up to and including 1
bona fide discount point payable by the consumer in
connection with the mortgage, but only if the interest
rate from which the mortgage's interest rate will be
discounted does not exceed by more than 2 percentage
points the average prime offer rate.
``(iii) Bona fide discount points defined.--For
purposes of clause (ii), the term `bona fide discount
points' means loan discount points which are knowingly paid
by the consumer for the purpose of reducing, and which in
fact result in a bona fide reduction of, the interest rate
or time-price differential applicable to the mortgage.
``(iv) Interest rate reduction.--Subclauses (I) and
(II) of clause (ii) shall not apply to discount points used
to purchase an interest rate reduction unless the amount of
the interest rate reduction purchased is reasonably
consistent with established industry norms and practices
for secondary mortgage market transactions.
``(D) Smaller loans.--The Board shall prescribe rules
adjusting the criteria under subparagraph (A)(vii) in order to
permit lenders that extend smaller loans to meet the
requirements of the presumption of compliance under paragraph
(1). In prescribing such rules, the Board shall consider the
potential impact of such rules on rural areas and other areas
where home values are lower.
``(E) Balloon loans.--The Board may, by regulation, provide
that the term `qualified mortgage' includes a balloon loan--
``(i) that meets all of the criteria for a qualified
mortgage under subparagraph (A) (except clauses (i)(II),
(ii), (iv), and (v) of such subparagraph);
``(ii) for which the creditor makes a determination
that the consumer is able to make all scheduled payments,
except the balloon payment, out of income or assets other
than the collateral;
``(iii) for which the underwriting is based on a
payment schedule that fully amortizes the loan over a
period of not more than 30 years and takes into account all
applicable taxes, insurance, and assessments; and
``(iv) that is extended by a creditor that--
``(I) operates predominantly in rural or
underserved areas;
``(II) together with all affiliates, has total
annual residential mortgage loan originations that do
not exceed a limit set by the Board;
``(III) retains the balloon loans in portfolio; and
``(IV) meets any asset size threshold and any other
criteria as the Board may establish, consistent with
the purposes of this subtitle.
``(3) Regulations.--
``(A) In general.--The Board shall prescribe regulations to
carry out the purposes of this subsection.
``(B) Revision of safe harbor criteria.--
``(i) In general.--The Board may prescribe regulations
that revise, add to, or subtract from the criteria that
define a qualified mortgage upon a finding that such
regulations are necessary or proper to ensure that
responsible, affordable mortgage credit remains available
to consumers in a manner consistent with the purposes of
this section, necessary and appropriate to effectuate the
purposes of this section and section 129B, to prevent
circumvention or evasion thereof, or to facilitate
compliance with such sections.
``(ii) Loan definition.--The following agencies shall,
in consultation with the Board, prescribe rules defining
the types of loans they insure, guarantee, or administer,
as the case may be, that are qualified mortgages for
purposes of paragraph (2)(A), and such rules may revise,
add to, or subtract from the criteria used to define a
qualified mortgage under paragraph (2)(A), upon a finding
that such rules are consistent with the purposes of this
section and section 129B, to prevent circumvention or
evasion thereof, or to facilitate compliance with such
sections:
``(I) The Department of Housing and Urban
Development, with regard to mortgages insured under the
National Housing Act (12 U.S.C. 1707 et seq.).
``(II) The Department of Veterans Affairs, with
regard to a loan made or guaranteed by the Secretary of
Veterans Affairs.
``(III) The Department of Agriculture, with regard
loans guaranteed by the Secretary of Agriculture
pursuant to 42 U.S.C. 1472(h).
``(IV) The Rural Housing Service, with regard to
loans insured by the Rural Housing Service.''.
SEC. 1413. DEFENSE TO FORECLOSURE.
Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is amended
by adding at the end the following new subsection:
``(k) Defense to Foreclosure.--
``(1) In general.--Notwithstanding any other provision of law,
when a creditor, assignee, or other holder of a residential
mortgage loan or anyone acting on behalf of such creditor,
assignee, or holder, initiates a judicial or nonjudicial
foreclosure of the residential mortgage loan, or any other action
to collect the debt in connection with such loan, a consumer may
assert a violation by a creditor of paragraph (1) or (2) of section
129B(c), or of section 129C(a), as a matter of defense by
recoupment or set off without regard for the time limit on a
private action for damages under subsection (e).
``(2) Amount of recoupment or setoff.--
``(A) In general.--The amount of recoupment or set-off
under paragraph (1) shall equal the amount to which the
consumer would be entitled under subsection (a) for damages for
a valid claim brought in an original action against the
creditor, plus the costs to the consumer of the action,
including a reasonable attorney's fee.
``(B) Special rule.--Where such judgment is rendered after
the expiration of the applicable time limit on a private action
for damages under subsection (e), the amount of recoupment or
set-off under paragraph (1) derived from damages under
subsection (a)(4) shall not exceed the amount to which the
consumer would have been entitled under subsection (a)(4) for
damages computed up to the day preceding the expiration of the
applicable time limit.''.
SEC. 1414. ADDITIONAL STANDARDS AND REQUIREMENTS.
(a) In General.--Section 129C of the Truth in Lending Act is
amended by inserting after subsection (b) (as added by this title) the
following new subsections:
``(c) Prohibition on Certain Prepayment Penalties.--
``(1) Prohibited on certain loans.--
``(A) In general.--A residential mortgage loan that is not
a `qualified mortgage', as defined under subsection (b)(2), may
not contain terms under which a consumer must pay a prepayment
penalty for paying all or part of the principal after the loan
is consummated.
``(B) Exclusions.--For purposes of this subsection, a
`qualified mortgage' may not include a residential mortgage
loan that--
``(i) has an adjustable rate; or
``(ii) has an annual percentage rate that exceeds the
average prime offer rate for a comparable transaction, as
of the date the interest rate is set--
``(I) by 1.5 or more percentage points, in the case
of a first lien residential mortgage loan having a
original principal obligation amount that is equal to
or less than the amount of the maximum limitation on
the original principal obligation of mortgage in effect
for a residence of the applicable size, as of the date
of such interest rate set, pursuant to the 6th sentence
of section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2));
``(II) by 2.5 or more percentage points, in the
case of a first lien residential mortgage loan having a
original principal obligation amount that is more than
the amount of the maximum limitation on the original
principal obligation of mortgage in effect for a
residence of the applicable size, as of the date of
such interest rate set, pursuant to the 6th sentence of
section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2)); and
``(III) by 3.5 or more percentage points, in the
case of a subordinate lien residential mortgage loan.
``(2) Publication of average prime offer rate and apr
thresholds.--The Board--
``(A) shall publish, and update at least weekly, average
prime offer rates;
``(B) may publish multiple rates based on varying types of
mortgage transactions; and
``(C) shall adjust the thresholds established under
subclause (I), (II), and (III) of paragraph (1)(B)(ii) as
necessary to reflect significant changes in market conditions
and to effectuate the purposes of the Mortgage Reform and Anti-
Predatory Lending Act.
``(3) Phased-out penalties on qualified mortgages.--A qualified
mortgage (as defined in subsection (b)(2)) may not contain terms
under which a consumer must pay a prepayment penalty for paying all
or part of the principal after the loan is consummated in excess of
the following limitations:
``(A) During the 1-year period beginning on the date the
loan is consummated, the prepayment penalty shall not exceed an
amount equal to 3 percent of the outstanding balance on the
loan.
``(B) During the 1-year period beginning after the period
described in subparagraph (A), the prepayment penalty shall not
exceed an amount equal to 2 percent of the outstanding balance
on the loan.
``(C) During the 1-year period beginning after the 1-year
period described in subparagraph (B), the prepayment penalty
shall not exceed an amount equal to 1 percent of the
outstanding balance on the loan.
``(D) After the end of the 3-year period beginning on the
date the loan is consummated, no prepayment penalty may be
imposed on a qualified mortgage.
``(4) Option for no prepayment penalty required.--A creditor
may not offer a consumer a residential mortgage loan product that
has a prepayment penalty for paying all or part of the principal
after the loan is consummated as a term of the loan without
offering the consumer a residential mortgage loan product that does
not have a prepayment penalty as a term of the loan.
``(d) Single Premium Credit Insurance Prohibited.--No creditor may
finance, directly or indirectly, in connection with any residential
mortgage loan or with any extension of credit under an open end
consumer credit plan secured by the principal dwelling of the consumer,
any credit life, credit disability, credit unemployment, or credit
property insurance, or any other accident, loss-of-income, life, or
health insurance, or any payments directly or indirectly for any debt
cancellation or suspension agreement or contract, except that--
``(1) insurance premiums or debt cancellation or suspension
fees calculated and paid in full on a monthly basis shall not be
considered financed by the creditor; and
``(2) this subsection shall not apply to credit unemployment
insurance for which the unemployment insurance premiums are
reasonable, the creditor receives no direct or indirect
compensation in connection with the unemployment insurance
premiums, and the unemployment insurance premiums are paid pursuant
to another insurance contract and not paid to an affiliate of the
creditor.
``(e) Arbitration.--
``(1) In general.--No residential mortgage loan and no
extension of credit under an open end consumer credit plan secured
by the principal dwelling of the consumer may include terms which
require arbitration or any other nonjudicial procedure as the
method for resolving any controversy or settling any claims arising
out of the transaction.
``(2) Post-controversy agreements.--Subject to paragraph (3),
paragraph (1) shall not be construed as limiting the right of the
consumer and the creditor or any assignee to agree to arbitration
or any other nonjudicial procedure as the method for resolving any
controversy at any time after a dispute or claim under the
transaction arises.
``(3) No waiver of statutory cause of action.--No provision of
any residential mortgage loan or of any extension of credit under
an open end consumer credit plan secured by the principal dwelling
of the consumer, and no other agreement between the consumer and
the creditor relating to the residential mortgage loan or extension
of credit referred to in paragraph (1), shall be applied or
interpreted so as to bar a consumer from bringing an action in an
appropriate district court of the United States, or any other court
of competent jurisdiction, pursuant to section 130 or any other
provision of law, for damages or other relief in connection with
any alleged violation of this section, any other provision of this
title, or any other Federal law.
``(f) Mortgages With Negative Amortization.--No creditor may extend
credit to a borrower in connection with a consumer credit transaction
under an open or closed end consumer credit plan secured by a dwelling
or residential real property that includes a dwelling, other than a
reverse mortgage, that provides or permits a payment plan that may, at
any time over the term of the extension of credit, result in negative
amortization unless, before such transaction is consummated--
``(1) the creditor provides the consumer with a statement
that--
``(A) the pending transaction will or may, as the case may
be, result in negative amortization;
``(B) describes negative amortization in such manner as the
Board shall prescribe;
``(C) negative amortization increases the outstanding
principal balance of the account; and
``(D) negative amortization reduces the consumer's equity
in the dwelling or real property; and
``(2) in the case of a first-time borrower with respect to a
residential mortgage loan that is not a qualified mortgage, the
first-time borrower provides the creditor with sufficient
documentation to demonstrate that the consumer received
homeownership counseling from organizations or counselors certified
by the Secretary of Housing and Urban Development as competent to
provide such counseling.''.
(b) Conforming Amendment Relating to Enforcement.--Section 108(a)
of the Truth in Lending Act (15 U.S.C. 1607(a)) is amended by inserting
after paragraph (6) the following new paragraph:
``(7) sections 21B and 21C of the Securities Exchange Act of
1934, in the case of a broker or dealer, other than a depository
institution, by the Securities and Exchange Commission.''.
(c) Protection Against Loss of Anti-deficiency Protection.--Section
129C of the Truth in Lending Act is amended by inserting after
subsection (f) (as added by subsection (a)) the following new
subsection:
``(g) Protection Against Loss of Anti-deficiency Protection.--
``(1) Definition.--For purposes of this subsection, the term
`anti-deficiency law' means the law of any State which provides
that, in the event of foreclosure on the residential property of a
consumer securing a mortgage, the consumer is not liable, in
accordance with the terms and limitations of such State law, for
any deficiency between the sale price obtained on such property
through foreclosure and the outstanding balance of the mortgage.
``(2) Notice at time of consummation.--In the case of any
residential mortgage loan that is, or upon consummation will be,
subject to protection under an anti-deficiency law, the creditor or
mortgage originator shall provide a written notice to the consumer
describing the protection provided by the anti-deficiency law and
the significance for the consumer of the loss of such protection
before such loan is consummated.
``(3) Notice before refinancing that would cause loss of
protection.--In the case of any residential mortgage loan that is
subject to protection under an anti-deficiency law, if a creditor
or mortgage originator provides an application to a consumer, or
receives an application from a consumer, for any type of
refinancing for such loan that would cause the loan to lose the
protection of such anti-deficiency law, the creditor or mortgage
originator shall provide a written notice to the consumer
describing the protection provided by the anti-deficiency law and
the significance for the consumer of the loss of such protection
before any agreement for any such refinancing is consummated.''.
(d) Policy Regarding Acceptance of Partial Payment.--Section 129C
of the Truth in Lending Act is amended by inserting after subsection
(g) (as added by subsection (c)) the following new subsection:
``(h) Policy Regarding Acceptance of Partial Payment.--In the case
of any residential mortgage loan, a creditor shall disclose prior to
settlement or, in the case of a person becoming a creditor with respect
to an existing residential mortgage loan, at the time such person
becomes a creditor--
``(1) the creditor's policy regarding the acceptance of partial
payments; and
``(2) if partial payments are accepted, how such payments will
be applied to such mortgage and if such payments will be placed in
escrow.
``(i) Timeshare Plans.--This section and any regulations
promulgated under this section do not apply to an extension of credit
relating to a plan described in section 101(53D) of title 11, United
States Code.''.
SEC. 1415. RULE OF CONSTRUCTION.
Except as otherwise expressly provided in section 129B or 129C of
the Truth in Lending Act (as added by this title), no provision of such
section 129B or 129C shall be construed as superseding, repealing, or
affecting any duty, right, obligation, privilege, or remedy of any
person under any other provision of the Truth in Lending Act or any
other provision of Federal or State law.
SEC. 1416. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.
(a) Increase in Amount of Civil Money Penalties for Certain
Violations.--Section 130(a) of the Truth in Lending Act (15 U.S.C.
1640(a)) is amended--
(1) in paragraph (2)(A)(ii)--
(A) by striking ``$100'' and inserting ``$200''; and
(B) by striking ``$1,000'' and inserting ``$2,000'';
(2) in paragraph (2)(B), by striking ``$500,000'' and inserting
``$1,000,000''; and
(3) in paragraph (4), by inserting ``, paragraph (1) or (2) of
section 129B(c), or section 129C(a)'' after ``section 129''.
(b) Statute of Limitations Extended for Section 129 Violations.--
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is
amended--
(1) in the first sentence, by striking ``Any action'' and
inserting ``Except as provided in the subsequent sentence, any
action''; and
(2) by inserting after the first sentence the following new
sentence: ``Any action under this section with respect to any
violation of section 129, 129B, or 129C may be brought in any
United States district court, or in any other court of competent
jurisdiction, before the end of the 3-year period beginning on the
date of the occurrence of the violation.''.
SEC. 1417. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.
Section 130 of the Truth in Lending Act (15 U.S.C. 1640) is amended
by adding after subsection (k) (as added by this title) the following
new subsection:
``(l) Exemption From Liability and Rescission in Case of Borrower
Fraud or Deception.--In addition to any other remedy available by law
or contract, no creditor or assignee shall be liable to an obligor
under this section, if such obligor, or co-obligor has been convicted
of obtaining by actual fraud such residential mortgage loan.''.
SEC. 1418. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID ADJUSTABLE
RATE MORTGAGES.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 128 the following
new section:
``Sec. 128A. Reset of hybrid adjustable rate mortgages
``(a) Hybrid Adjustable Rate Mortgages Defined.--For purposes of
this section, the term `hybrid adjustable rate mortgage' means a
consumer credit transaction secured by the consumer's principal
residence with a fixed interest rate for an introductory period that
adjusts or resets to a variable interest rate after such period.
``(b) Notice of Reset and Alternatives.--During the 1-month period
that ends 6 months before the date on which the interest rate in effect
during the introductory period of a hybrid adjustable rate mortgage
adjusts or resets to a variable interest rate or, in the case of such
an adjustment or resetting that occurs within the first 6 months after
consummation of such loan, at consummation, the creditor or servicer of
such loan shall provide a written notice, separate and distinct from
all other correspondence to the consumer, that includes the following:
``(1) Any index or formula used in making adjustments to or
resetting the interest rate and a source of information about the
index or formula.
``(2) An explanation of how the new interest rate and payment
would be determined, including an explanation of how the index was
adjusted, such as by the addition of a margin.
``(3) A good faith estimate, based on accepted industry
standards, of the creditor or servicer of the amount of the monthly
payment that will apply after the date of the adjustment or reset,
and the assumptions on which this estimate is based.
``(4) A list of alternatives consumers may pursue before the
date of adjustment or reset, and descriptions of the actions
consumers must take to pursue these alternatives, including--
``(A) refinancing;
``(B) renegotiation of loan terms;
``(C) payment forbearances; and
``(D) pre-foreclosure sales.
``(5) The names, addresses, telephone numbers, and Internet
addresses of counseling agencies or programs reasonably available
to the consumer that have been certified or approved and made
publicly available by the Secretary of Housing and Urban
Development or a State housing finance authority (as defined in
section 1301 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989).
``(6) The address, telephone number, and Internet address for
the State housing finance authority (as so defined) for the State
in which the consumer resides.
``(c) Savings Clause.--The Board may require the notice in
paragraph (b) or other notice consistent with this Act for adjustable
rate mortgage loans that are not hybrid adjustable rate mortgage
loans.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 128 the following new item:
``128A. Reset of hybrid adjustable rate mortgages.''.
SEC. 1419. REQUIRED DISCLOSURES.
Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a)) is
amended by adding at the end the following new paragraphs:
``(16) In the case of a variable rate residential mortgage loan
for which an escrow or impound account will be established for the
payment of all applicable taxes, insurance, and assessments--
``(A) the amount of initial monthly payment due under the
loan for the payment of principal and interest, and the amount
of such initial monthly payment including the monthly payment
deposited in the account for the payment of all applicable
taxes, insurance, and assessments; and
``(B) the amount of the fully indexed monthly payment due
under the loan for the payment of principal and interest, and
the amount of such fully indexed monthly payment including the
monthly payment deposited in the account for the payment of all
applicable taxes, insurance, and assessments.
``(17) In the case of a residential mortgage loan, the
aggregate amount of settlement charges for all settlement services
provided in connection with the loan, the amount of charges that
are included in the loan and the amount of such charges the
borrower must pay at closing, the approximate amount of the
wholesale rate of funds in connection with the loan, and the
aggregate amount of other fees or required payments in connection
with the loan.
``(18) In the case of a residential mortgage loan, the
aggregate amount of fees paid to the mortgage originator in
connection with the loan, the amount of such fees paid directly by
the consumer, and any additional amount received by the originator
from the creditor.
``(19) In the case of a residential mortgage loan, the total
amount of interest that the consumer will pay over the life of the
loan as a percentage of the principal of the loan. Such amount
shall be computed assuming the consumer makes each monthly payment
in full and on-time, and does not make any over-payments.''.
SEC. 1420. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR RESIDENTIAL
MORTGAGE LOANS.
Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended
by adding at the end the following new subsection:
``(f) Periodic Statements for Residential Mortgage Loans.--
``(1) In general.--The creditor, assignee, or servicer with
respect to any residential mortgage loan shall transmit to the
obligor, for each billing cycle, a statement setting forth each of
the following items, to the extent applicable, in a conspicuous and
prominent manner:
``(A) The amount of the principal obligation under the
mortgage.
``(B) The current interest rate in effect for the loan.
``(C) The date on which the interest rate may next reset or
adjust.
``(D) The amount of any prepayment fee to be charged, if
any.
``(E) A description of any late payment fees.
``(F) A telephone number and electronic mail address that
may be used by the obligor to obtain information regarding the
mortgage.
``(G) The names, addresses, telephone numbers, and Internet
addresses of counseling agencies or programs reasonably
available to the consumer that have been certified or approved
and made publicly available by the Secretary of Housing and
Urban Development or a State housing finance authority (as
defined in section 1301 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989).
``(H) Such other information as the Board may prescribe in
regulations.
``(2) Development and use of standard form.--The Board shall
develop and prescribe a standard form for the disclosure required
under this subsection, taking into account that the statements
required may be transmitted in writing or electronically.
``(3) Exception.--Paragraph (1) shall not apply to any fixed
rate residential mortgage loan where the creditor, assignee, or
servicer provides the obligor with a coupon book that provides the
obligor with substantially the same information as required in
paragraph (1).''.
SEC. 1421. REPORT BY THE GAO.
(a) Report Required.--The Comptroller General of the United States
shall conduct a study to determine the effects the enactment of this
Act will have on the availability and affordability of credit for
consumers, small businesses, homebuyers, and mortgage lending,
including the effect--
(1) on the mortgage market for mortgages that are not within
the safe harbor provided in the amendments made by this subtitle;
(2) on the ability of prospective homebuyers to obtain
financing;
(3) on the ability of homeowners facing resets or adjustments
to refinance--for example, do they have fewer refinancing options
due to the unavailability of certain loan products that were
available before the enactment of this Act;
(4) on minorities' ability to access affordable credit compared
with other prospective borrowers;
(5) on home sales and construction;
(6) of extending the rescission right, if any, on adjustable
rate loans and its impact on litigation;
(7) of State foreclosure laws and, if any, an investor's
ability to transfer a property after foreclosure;
(8) of expanding the existing provisions of the Home Ownership
and Equity Protection Act of 1994;
(9) of prohibiting prepayment penalties on high-cost mortgages;
and
(10) of establishing counseling services under the Department
of Housing and Urban Development and offered through the Office of
Housing Counseling.
(b) Report.--Before the end of the 1-year period beginning on the
date of the enactment of this Act, the Comptroller General shall submit
a report to the Congress containing the findings and conclusions of the
Comptroller General with respect to the study conducted pursuant to
subsection (a).
(c) Examination Related to Certain Credit Risk Retention
Provisions.--The report required by subsection (b) shall also include
an analysis by the Comptroller General of the effect on the capital
reserves and funding of lenders of credit risk retention provisions for
non-qualified mortgages, including an analysis of the exceptions and
adjustments authorized in section 129C(b)(3) of the Truth in Lending
Act and a recommendation on whether a uniform standard is needed.
(d) Analysis of Credit Risk Retention Provisions.--The report
required by subsection (b) shall also include--
(1) an analysis by the Comptroller General of whether the
credit risk retention provisions have significantly reduced risks
to the larger credit market of the repackaging and selling of
securitized loans on a secondary market; and
(2) recommendations to the Congress on adjustments that should
be made, or additional measures that should be undertaken.
SEC. 1422. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is
amended by striking ``section 129 may also'' and inserting ``section
129, 129B, 129C, 129D, 129E, 129F, 129G, or 129H of this Act may
also''.
Subtitle C--High-Cost Mortgages
SEC. 1431. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.
(a) High-cost Mortgage Defined.--Section 103(aa) of the Truth in
Lending Act (15 U.S.C. 1602(aa)) is amended by striking all that
precedes paragraph (2) and inserting the following:
``(aa) High-cost Mortgage.--
``(1) Definition.--
``(A) In general.--The term `high-cost mortgage', and a
mortgage referred to in this subsection, means a consumer
credit transaction that is secured by the consumer's principal
dwelling, other than a reverse mortgage transaction, if--
``(i) in the case of a credit transaction secured--
``(I) by a first mortgage on the consumer's
principal dwelling, the annual percentage rate at
consummation of the transaction will exceed by more
than 6.5 percentage points (8.5 percentage points, if
the dwelling is personal property and the transaction
is for less than $50,000) the average prime offer rate,
as defined in section 129C(b)(2)(B), for a comparable
transaction; or
``(II) by a subordinate or junior mortgage on the
consumer's principal dwelling, the annual percentage
rate at consummation of the transaction will exceed by
more than 8.5 percentage points the average prime offer
rate, as defined in section 129C(b)(2)(B), for a
comparable transaction;
``(ii) the total points and fees payable in connection
with the transaction, other than bona fide third party
charges not retained by the mortgage originator, creditor,
or an affiliate of the creditor or mortgage originator,
exceed--
``(I) in the case of a transaction for $20,000 or
more, 5 percent of the total transaction amount; or
``(II) in the case of a transaction for less than
$20,000, the lesser of 8 percent of the total
transaction amount or $1,000 (or such other dollar
amount as the Board shall prescribe by regulation); or
``(iii) the credit transaction documents permit the
creditor to charge or collect prepayment fees or penalties
more than 36 months after the transaction closing or such
fees or penalties exceed, in the aggregate, more than 2
percent of the amount prepaid.
``(B) Introductory rates taken into account.--For purposes
of subparagraph (A)(i), the annual percentage rate of interest
shall be determined based on the following interest rate:
``(i) In the case of a fixed-rate transaction in which
the annual percentage rate will not vary during the term of
the loan, the interest rate in effect on the date of
consummation of the transaction.
``(ii) In the case of a transaction in which the rate
of interest varies solely in accordance with an index, the
interest rate determined by adding the index rate in effect
on the date of consummation of the transaction to the
maximum margin permitted at any time during the loan
agreement.
``(iii) In the case of any other transaction in which
the rate may vary at any time during the term of the loan
for any reason, the interest charged on the transaction at
the maximum rate that may be charged during the term of the
loan.
``(C) Mortgage insurance.--For the purposes of computing
the total points and fees under paragraph (4), the total points
and fees shall exclude--
``(i) any premium provided by an agency of the Federal
Government or an agency of a State;
``(ii) any amount that is not in excess of the amount
payable under policies in effect at the time of origination
under section 203(c)(2)(A) of the National Housing Act (12
U.S.C. 1709(c)(2)(A)), provided that the premium, charge,
or fee is required to be refundable on a pro-rated basis
and the refund is automatically issued upon notification of
the satisfaction of the underlying mortgage loan; and
``(iii) any premium paid by the consumer after
closing.''.
(b) Adjustment of Percentage Points.--Section 103(aa)(2) of the
Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by striking
subparagraph (B) and inserting the following new subparagraph:
``(B) An increase or decrease under subparagraph (A)--
``(i) may not result in the number of percentage points
referred to in paragraph (1)(A)(i)(I) being less than 6
percentage points or greater than 10 percentage points; and
``(ii) may not result in the number of percentage
points referred to in paragraph (1)(A)(i)(II) being less
than 8 percentage points or greater than 12 percentage
points.''.
(c) Points and Fees Defined.--
(1) In general.--Section 103(aa)(4) of the Truth in Lending Act
(15 U.S.C. 1602(aa)(4)) is amended--
(A) by striking subparagraph (B) and inserting the
following:
``(B) all compensation paid directly or indirectly by a
consumer or creditor to a mortgage originator from any source,
including a mortgage originator that is also the creditor in a
table-funded transaction;'';
(B) by redesignating subparagraph (D) as subparagraph (G);
and
(C) by inserting after subparagraph (C) the following new
subparagraphs:
``(D) premiums or other charges payable at or before
closing for any credit life, credit disability, credit
unemployment, or credit property insurance, or any other
accident, loss-of-income, life or health insurance, or any
payments directly or indirectly for any debt cancellation or
suspension agreement or contract, except that insurance
premiums or debt cancellation or suspension fees calculated and
paid in full on a monthly basis shall not be considered
financed by the creditor;
``(E) the maximum prepayment fees and penalties which may
be charged or collected under the terms of the credit
transaction;
``(F) all prepayment fees or penalties that are incurred by
the consumer if the loan refinances a previous loan made or
currently held by the same creditor or an affiliate of the
creditor; and''.
(2) Calculation of points and fees for open-end consumer credit
plans.--Section 103(aa) of the Truth in Lending Act (15 U.S.C.
1602(aa)) is amended--
(A) by redesignating paragraph (5) as paragraph (6); and
(B) by inserting after paragraph (4) the following new
paragraph:
``(5) Calculation of points and fees for open-end consumer
credit plans.--In the case of open-end consumer credit plans,
points and fees shall be calculated, for purposes of this section
and section 129, by adding the total points and fees known at or
before closing, including the maximum prepayment penalties which
may be charged or collected under the terms of the credit
transaction, plus the minimum additional fees the consumer would be
required to pay to draw down an amount equal to the total credit
line.''.
(d) Bona Fide Discount Loan Discount Points.--Section 103 of the
Truth in Lending Act (15 U.S.C. 1602) is amended by inserting after
subsection (cc) (as added by section 1401) the following new
subsection:
``(dd) Bona Fide Discount Points and Prepayment Penalties.--For the
purposes of determining the amount of points and fees for purposes of
subsection (aa), either the amounts described in paragraph (1) or (2)
of the following paragraphs, but not both, shall be excluded:
``(1) Up to and including 2 bona fide discount points payable
by the consumer in connection with the mortgage, but only if the
interest rate from which the mortgage's interest rate will be
discounted does not exceed by more than 1 percentage point--
``(A) the average prime offer rate, as defined in section
129C; or
``(B) if secured by a personal property loan, the average
rate on a loan in connection with which insurance is provided
under title I of the National Housing Act (12 U.S.C. 1702 et
seq.).
``(2) Unless 2 bona fide discount points have been excluded
under paragraph (1), up to and including 1 bona fide discount point
payable by the consumer in connection with the mortgage, but only
if the interest rate from which the mortgage's interest rate will
be discounted does not exceed by more than 2 percentage points--
``(A) the average prime offer rate, as defined in section
129C; or
``(B) if secured by a personal property loan, the average
rate on a loan in connection with which insurance is provided
under title I of the National Housing Act (12 U.S.C. 1702 et
seq.).
``(3) For purposes of paragraph (1), the term `bona fide
discount points' means loan discount points which are knowingly
paid by the consumer for the purpose of reducing, and which in fact
result in a bona fide reduction of, the interest rate or time-price
differential applicable to the mortgage.
``(4) Paragraphs (1) and (2) shall not apply to discount points
used to purchase an interest rate reduction unless the amount of
the interest rate reduction purchased is reasonably consistent with
established industry norms and practices for secondary mortgage
market transactions.''.
SEC. 1432. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN MORTGAGES.
(a) Prepayment Penalty Provisions.--Section 129(c)(2) of the Truth
in Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed.
(b) No Balloon Payments.--Section 129(e) of the Truth in Lending
Act (15 U.S.C. 1639(e)) is amended to read as follows:
``(e) No Balloon Payments.--No high-cost mortgage may contain a
scheduled payment that is more than twice as large as the average of
earlier scheduled payments. This subsection shall not apply when the
payment schedule is adjusted to the seasonal or irregular income of the
consumer.''.
SEC. 1433. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.
(a) Additional Requirements for Certain Mortgages.--Section 129 of
the Truth in Lending Act (15 U.S.C. 1639) is amended--
(1) by redesignating subsections (j), (k), (l) and (m) as
subsections (n), (o), (p), and (q) respectively; and
(2) by inserting after subsection (i) the following new
subsections:
``(j) Recommended Default.--No creditor shall recommend or
encourage default on an existing loan or other debt prior to and in
connection with the closing or planned closing of a high-cost mortgage
that refinances all or any portion of such existing loan or debt.
``(k) Late Fees.--
``(1) In general.--No creditor may impose a late payment charge
or fee in connection with a high-cost mortgage--
``(A) in an amount in excess of 4 percent of the amount of
the payment past due;
``(B) unless the loan documents specifically authorize the
charge or fee;
``(C) before the end of the 15-day period beginning on the
date the payment is due, or in the case of a loan on which
interest on each installment is paid in advance, before the end
of the 30-day period beginning on the date the payment is due;
or
``(D) more than once with respect to a single late payment.
``(2) Coordination with subsequent late fees.--If a payment is
otherwise a full payment for the applicable period and is paid on
its due date or within an applicable grace period, and the only
delinquency or insufficiency of payment is attributable to any late
fee or delinquency charge assessed on any earlier payment, no late
fee or delinquency charge may be imposed on such payment.
``(3) Failure to make installment payment.--If, in the case of
a loan agreement the terms of which provide that any payment shall
first be applied to any past due principal balance, the consumer
fails to make an installment payment and the consumer subsequently
resumes making installment payments but has not paid all past due
installments, the creditor may impose a separate late payment
charge or fee for any principal due (without deduction due to late
fees or related fees) until the default is cured.
``(l) Acceleration of Debt.--No high-cost mortgage may contain a
provision which permits the creditor to accelerate the indebtedness,
except when repayment of the loan has been accelerated by default in
payment, or pursuant to a due-on-sale provision, or pursuant to a
material violation of some other provision of the loan document
unrelated to payment schedule.
``(m) Restriction on Financing Points and Fees.--No creditor may
directly or indirectly finance, in connection with any high-cost
mortgage, any of the following:
``(1) Any prepayment fee or penalty payable by the consumer in
a refinancing transaction if the creditor or an affiliate of the
creditor is the noteholder of the note being refinanced.
``(2) Any points or fees.''.
(b) Prohibitions on Evasions.--Section 129 of the Truth in Lending
Act (15 U.S.C. 1639) is amended by inserting after subsection (q) (as
so redesignated by subsection (a)(1)) the following new subsection:
``(r) Prohibitions on Evasions, Structuring of Transactions, and
Reciprocal Arrangements.--A creditor may not take any action in
connection with a high-cost mortgage--
``(1) to structure a loan transaction as an open-end credit
plan or another form of loan for the purpose and with the intent of
evading the provisions of this title; or
``(2) to divide any loan transaction into separate parts for
the purpose and with the intent of evading provisions of this
title.''.
(c) Modification or Deferral Fees.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection
(r) (as added by subsection (b) of this section) the following new
subsection:
``(s) Modification and Deferral Fees Prohibited.--A creditor,
successor in interest, assignee, or any agent of any of the above, may
not charge a consumer any fee to modify, renew, extend, or amend a
high-cost mortgage, or to defer any payment due under the terms of such
mortgage.''.
(d) Payoff Statement.--Section 129 of the Truth in Lending Act (15
U.S.C. 1639) is amended by inserting after subsection (s) (as added by
subsection (c) of this section) the following new subsection:
``(t) Payoff Statement.--
``(1) Fees.--
``(A) In general.--Except as provided in subparagraph (B),
no creditor or servicer may charge a fee for informing or
transmitting to any person the balance due to pay off the
outstanding balance on a high-cost mortgage.
``(B) Transaction fee.--When payoff information referred to
in subparagraph (A) is provided by facsimile transmission or by
a courier service, a creditor or servicer may charge a
processing fee to cover the cost of such transmission or
service in an amount not to exceed an amount that is comparable
to fees imposed for similar services provided in connection
with consumer credit transactions that are secured by the
consumer's principal dwelling and are not high-cost mortgages.
``(C) Fee disclosure.--Prior to charging a transaction fee
as provided in subparagraph (B), a creditor or servicer shall
disclose that payoff balances are available for free pursuant
to subparagraph (A).
``(D) Multiple requests.--If a creditor or servicer has
provided payoff information referred to in subparagraph (A)
without charge, other than the transaction fee allowed by
subparagraph (B), on 4 occasions during a calendar year, the
creditor or servicer may thereafter charge a reasonable fee for
providing such information during the remainder of the calendar
year.
``(2) Prompt delivery.--Payoff balances shall be provided
within 5 business days after receiving a request by a consumer or a
person authorized by the consumer to obtain such information.''.
(e) Pre-Loan Counseling Required.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection
t) (as added by subsection (d) of this section) the following new
subsection:
``(u) Pre-Loan Counseling.--
``(1) In general.--A creditor may not extend credit to a
consumer under a high-cost mortgage without first receiving
certification from a counselor that is approved by the Secretary of
Housing and Urban Development, or at the discretion of the
Secretary, a State housing finance authority, that the consumer has
received counseling on the advisability of the mortgage. Such
counselor shall not be employed by the creditor or an affiliate of
the creditor or be affiliated with the creditor.
``(2) Disclosures required prior to counseling.--No counselor
may certify that a consumer has received counseling on the
advisability of the high-cost mortgage unless the counselor can
verify that the consumer has received each statement required (in
connection with such loan) by this section or the Real Estate
Settlement Procedures Act of 1974 with respect to the transaction.
``(3) Regulations.--The Board may prescribe such regulations as
the Board determines to be appropriate to carry out the
requirements of paragraph (1).''.
(f) Corrections and Unintentional Violations.--Section 129 of the
Truth in Lending Act (15 U.S.C. 1639) is amended by inserting after
subsection (u) (as added by subsection (e)) the following new
subsection:
``(v) Corrections and Unintentional Violations.--A creditor or
assignee in a high-cost mortgage who, when acting in good faith, fails
to comply with any requirement under this section will not be deemed to
have violated such requirement if the creditor or assignee establishes
that either--
``(1) within 30 days of the loan closing and prior to the
institution of any action, the consumer is notified of or discovers
the violation, appropriate restitution is made, and whatever
adjustments are necessary are made to the loan to either, at the
choice of the consumer--
``(A) make the loan satisfy the requirements of this
chapter; or
``(B) in the case of a high-cost mortgage, change the terms
of the loan in a manner beneficial to the consumer so that the
loan will no longer be a high-cost mortgage; or
``(2) within 60 days of the creditor's discovery or receipt of
notification of an unintentional violation or bona fide error and
prior to the institution of any action, the consumer is notified of
the compliance failure, appropriate restitution is made, and
whatever adjustments are necessary are made to the loan to either,
at the choice of the consumer--
``(A) make the loan satisfy the requirements of this
chapter; or
``(B) in the case of a high-cost mortgage, change the terms
of the loan in a manner beneficial so that the loan will no
longer be a high-cost mortgage.''.
Subtitle D--Office of Housing Counseling
SEC. 1441. SHORT TITLE.
This subtitle may be cited as the ``Expand and Preserve Home
Ownership Through Counseling Act''.
SEC. 1442. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.
Section 4 of the Department of Housing and Urban Development Act
(42 U.S.C. 3533) is amended by adding at the end the following new
subsection:
``(g) Office of Housing Counseling.--
``(1) Establishment.--There is established, in the Department,
the Office of Housing Counseling.
``(2) Director.--There is established the position of Director
of Housing Counseling. The Director shall be the head of the Office
of Housing Counseling and shall be appointed by, and shall report
to, the Secretary. Such position shall be a career-reserved
position in the Senior Executive Service.
``(3) Functions.--
``(A) In general.--The Director shall have primary
responsibility within the Department for all activities and
matters relating to homeownership counseling and rental housing
counseling, including--
``(i) research, grant administration, public outreach,
and policy development relating to such counseling; and
``(ii) establishment, coordination, and administration
of all regulations, requirements, standards, and
performance measures under programs and laws administered
by the Department that relate to housing counseling,
homeownership counseling (including maintenance of homes),
mortgage-related counseling (including home equity
conversion mortgages and credit protection options to avoid
foreclosure), and rental housing counseling, including the
requirements, standards, and performance measures relating
to housing counseling.
``(B) Specific functions.--The Director shall carry out the
functions assigned to the Director and the Office under this
section and any other provisions of law. Such functions shall
include establishing rules necessary for--
``(i) the counseling procedures under section 106(g)(1)
of the Housing and Urban Development Act of 1968 (12 U.S.C.
1701x(h)(1));
``(ii) carrying out all other functions of the
Secretary under section 106(g) of the Housing and Urban
Development Act of 1968, including the establishment,
operation, and publication of the availability of the toll-
free telephone number under paragraph (2) of such section;
``(iii) contributing to the distribution of home buying
information booklets pursuant to section 5 of the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C. 2604);
``(iv) carrying out the certification program under
section 106(e) of the Housing and Urban Development Act of
1968 (12 U.S.C. 1701x(e));
``(v) carrying out the assistance program under section
106(a)(4) of the Housing and Urban Development Act of 1968,
including criteria for selection of applications to receive
assistance;
``(vi) carrying out any functions regarding abusive,
deceptive, or unscrupulous lending practices relating to
residential mortgage loans that the Secretary considers
appropriate, which shall include conducting the study under
section 6 of the Expand and Preserve Home Ownership Through
Counseling Act;
``(vii) providing for operation of the advisory
committee established under paragraph (4) of this
subsection;
``(viii) collaborating with community-based
organizations with expertise in the field of housing
counseling; and
``(ix) providing for the building of capacity to
provide housing counseling services in areas that lack
sufficient services, including underdeveloped areas that
lack basic water and sewer systems, electricity services,
and safe, sanitary housing.
``(4) Advisory committee.--
``(A) In general.--The Secretary shall appoint an advisory
committee to provide advice regarding the carrying out of the
functions of the Director.
``(B) Members.--Such advisory committee shall consist of
not more than 12 individuals, and the membership of the
committee shall equally represent the mortgage and real estate
industry, including consumers and housing counseling agencies
certified by the Secretary.
``(C) Terms.--Except as provided in subparagraph (D), each
member of the advisory committee shall be appointed for a term
of 3 years. Members may be reappointed at the discretion of the
Secretary.
``(D) Terms of initial appointees.--As designated by the
Secretary at the time of appointment, of the members first
appointed to the advisory committee, 4 shall be appointed for a
term of 1 year and 4 shall be appointed for a term of 2 years.
``(E) Prohibition of pay; travel expenses.--Members of the
advisory committee shall serve without pay, but shall receive
travel expenses, including per diem in lieu of subsistence, in
accordance with applicable provisions under subchapter I of
chapter 57 of title 5, United States Code.
``(F) Advisory role only.--The advisory committee shall
have no role in reviewing or awarding housing counseling
grants.
``(5) Scope of homeownership counseling.--In carrying out the
responsibilities of the Director, the Director shall ensure that
homeownership counseling provided by, in connection with, or
pursuant to any function, activity, or program of the Department
addresses the entire process of homeownership, including the
decision to purchase a home, the selection and purchase of a home,
issues arising during or affecting the period of ownership of a
home (including refinancing, default and foreclosure, and other
financial decisions), and the sale or other disposition of a
home.''.
SEC. 1443. COUNSELING PROCEDURES.
(a) In General.--Section 106 of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the
following new subsection:
``(g) Procedures and Activities.--
``(1) Counseling procedures.--
``(A) In general.--The Secretary shall establish,
coordinate, and monitor the administration by the Department of
Housing and Urban Development of the counseling procedures for
homeownership counseling and rental housing counseling provided
in connection with any program of the Department, including all
requirements, standards, and performance measures that relate
to homeownership and rental housing counseling.
``(B) Homeownership counseling.--For purposes of this
subsection and as used in the provisions referred to in this
subparagraph, the term `homeownership counseling' means
counseling related to homeownership and residential mortgage
loans. Such term includes counseling related to homeownership
and residential mortgage loans that is provided pursuant to--
``(i) section 105(a)(20) of the Housing and Community
Development Act of 1974 (42 U.S.C. 5305(a)(20));
``(ii) in the United States Housing Act of 1937--
``(I) section 9(e) (42 U.S.C. 1437g(e));
``(II) section 8(y)(1)(D) (42 U.S.C.
1437f(y)(1)(D));
``(III) section 18(a)(4)(D) (42 U.S.C.
1437p(a)(4)(D));
``(IV) section 23(c)(4) (42 U.S.C. 1437u(c)(4));
``(V) section 32(e)(4) (42 U.S.C. 1437z-4(e)(4));
``(VI) section 33(d)(2)(B) (42 U.S.C. 1437z-
5(d)(2)(B));
``(VII) sections 302(b)(6) and 303(b)(7) (42 U.S.C.
1437aaa-1(b)(6), 1437aaa-2(b)(7)); and
``(VIII) section 304(c)(4) (42 U.S.C. 1437aaa-
3(c)(4));
``(iii) section 302(a)(4) of the American Homeownership
and Economic Opportunity Act of 2000 (42 U.S.C. 1437f
note);
``(iv) sections 233(b)(2) and 258(b) of the Cranston-
Gonzalez National Affordable Housing Act (42 U.S.C.
12773(b)(2), 12808(b));
``(v) this section and section 101(e) of the Housing
and Urban Development Act of 1968 (12 U.S.C. 1701x,
1701w(e));
``(vi) section 220(d)(2)(G) of the Low-Income Housing
Preservation and Resident Homeownership Act of 1990 (12
U.S.C. 4110(d)(2)(G));
``(vii) sections 422(b)(6), 423(b)(7), 424(c)(4),
442(b)(6), and 443(b)(6) of the Cranston-Gonzalez National
Affordable Housing Act (42 U.S.C. 12872(b)(6), 12873(b)(7),
12874(c)(4), 12892(b)(6), and 12893(b)(6));
``(viii) section 491(b)(1)(F)(iii) of the McKinney-
Vento Homeless Assistance Act (42 U.S.C.
11408(b)(1)(F)(iii));
``(ix) sections 202(3) and 810(b)(2)(A) of the Native
American Housing and Self-Determination Act of 1996 (25
U.S.C. 4132(3), 4229(b)(2)(A));
``(x) in the National Housing Act--
``(I) in section 203 (12 U.S.C. 1709), the
penultimate undesignated paragraph of paragraph (2) of
subsection (b), subsection (c)(2)(A), and subsection
(r)(4);
``(II) subsections (a) and (c)(3) of section 237
(12 U.S.C. 1715z-2); and
``(III) subsections (d)(2)(B) and (m)(1) of section
255 (12 U.S.C. 1715z-20);
``(xi) section 502(h)(4)(B) of the Housing Act of 1949
(42 U.S.C. 1472(h)(4)(B));
``(xii) section 508 of the Housing and Urban
Development Act of 1970 (12 U.S.C. 1701z-7); and
``(xiii) section 106 of the Energy Policy Act of 1992
(42 U.S.C. 12712 note).
``(C) Rental housing counseling.--For purposes of this
subsection, the term `rental housing counseling' means
counseling related to rental of residential property, which may
include counseling regarding future homeownership opportunities
and providing referrals for renters and prospective renters to
entities providing counseling and shall include counseling
related to such topics that is provided pursuant to--
``(i) section 105(a)(20) of the Housing and Community
Development Act of 1974 (42 U.S.C. 5305(a)(20));
``(ii) in the United States Housing Act of 1937--
``(I) section 9(e) (42 U.S.C. 1437g(e));
``(II) section 18(a)(4)(D) (42 U.S.C.
1437p(a)(4)(D));
``(III) section 23(c)(4) (42 U.S.C. 1437u(c)(4));
``(IV) section 32(e)(4) (42 U.S.C. 1437z-4(e)(4));
``(V) section 33(d)(2)(B) (42 U.S.C. 1437z-
5(d)(2)(B)); and
``(VI) section 302(b)(6) (42 U.S.C. 1437aaa-
1(b)(6));
``(iii) section 233(b)(2) of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12773(b)(2));
``(iv) section 106 of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x);
``(v) section 422(b)(6) of the Cranston-Gonzalez
National Affordable Housing Act (42 U.S.C. 12872(b)(6));
``(vi) section 491(b)(1)(F)(iii) of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11408(b)(1)(F)(iii));
``(vii) sections 202(3) and 810(b)(2)(A) of the Native
American Housing and Self-Determination Act of 1996 (25
U.S.C. 4132(3), 4229(b)(2)(A)); and
``(viii) the rental assistance program under section 8
of the United States Housing Act of 1937 (42 U.S.C. 1437f).
``(2) Standards for materials.--The Secretary, in consultation
with the advisory committee established under subsection (g)(4) of
the Department of Housing and Urban Development Act, shall
establish standards for materials and forms to be used, as
appropriate, by organizations providing homeownership counseling
services, including any recipients of assistance pursuant to
subsection (a)(4).
``(3) Mortgage software systems.--
``(A) Certification.--The Secretary shall provide for the
certification of various computer software programs for
consumers to use in evaluating different residential mortgage
loan proposals. The Secretary shall require, for such
certification, that the mortgage software systems take into
account--
``(i) the consumer's financial situation and the cost
of maintaining a home, including insurance, taxes, and
utilities;
``(ii) the amount of time the consumer expects to
remain in the home or expected time to maturity of the
loan; and
``(iii) such other factors as the Secretary considers
appropriate to assist the consumer in evaluating whether to
pay points, to lock in an interest rate, to select an
adjustable or fixed rate loan, to select a conventional or
government-insured or guaranteed loan and to make other
choices during the loan application process.
If the Secretary determines that available existing software is
inadequate to assist consumers during the residential mortgage
loan application process, the Secretary shall arrange for the
development by private sector software companies of new
mortgage software systems that meet the Secretary's
specifications.
``(B) Use and initial availability.--Such certified
computer software programs shall be used to supplement, not
replace, housing counseling. The Secretary shall provide that
such programs are initially used only in connection with the
assistance of housing counselors certified pursuant to
subsection (e).
``(C) Availability.--After a period of initial availability
under subparagraph (B) as the Secretary considers appropriate,
the Secretary shall take reasonable steps to make mortgage
software systems certified pursuant to this paragraph widely
available through the Internet and at public locations,
including public libraries, senior-citizen centers, public
housing sites, offices of public housing agencies that
administer rental housing assistance vouchers, and housing
counseling centers.
``(D) Budget compliance.--This paragraph shall be effective
only to the extent that amounts to carry out this paragraph are
made available in advance in appropriations Acts.
``(4) National public service multimedia campaigns to promote
housing counseling.--
``(A) In general.--The Director of Housing Counseling shall
develop, implement, and conduct national public service
multimedia campaigns designed to make persons facing mortgage
foreclosure, persons considering a subprime mortgage loan to
purchase a home, elderly persons, persons who face language
barriers, low-income persons, minorities, and other potentially
vulnerable consumers aware that it is advisable, before seeking
or maintaining a residential mortgage loan, to obtain
homeownership counseling from an unbiased and reliable sources
and that such homeownership counseling is available, including
through programs sponsored by the Secretary of Housing and
Urban Development.
``(B) Contact information.--Each segment of the multimedia
campaign under subparagraph (A) shall publicize the toll-free
telephone number and website of the Department of Housing and
Urban Development through which persons seeking housing
counseling can locate a housing counseling agency in their
State that is certified by the Secretary of Housing and Urban
Development and can provide advice on buying a home, renting,
defaults, foreclosures, credit issues, and reverse mortgages.
``(C) Authorization of appropriations.--There are
authorized to be appropriated to the Secretary, not to exceed
$3,000,000 for fiscal years 2009, 2010, and 2011, for the
development, implementation, and conduct of national public
service multimedia campaigns under this paragraph.
``(D) Foreclosure rescue education programs.--
``(i) In general.--Ten percent of any funds
appropriated pursuant to the authorization under
subparagraph (C) shall be used by the Director of Housing
Counseling to conduct an education program in areas that
have a high density of foreclosure. Such program shall
involve direct mailings to persons living in such areas
describing--
``(I) tips on avoiding foreclosure rescue scams;
``(II) tips on avoiding predatory lending mortgage
agreements;
``(III) tips on avoiding for-profit foreclosure
counseling services; and
``(IV) local counseling resources that are approved
by the Department of Housing and Urban Development.
``(ii) Program emphasis.--In conducting the education
program described under clause (i), the Director of Housing
Counseling shall also place an emphasis on serving
communities that have a high percentage of retirement
communities or a high percentage of low-income minority
communities.
``(iii) Terms defined.--For purposes of this
subparagraph:
``(I) High density of foreclosures.--An area has a
`high density of foreclosures' if such area is one of
the metropolitan statistical areas (as that term is
defined by the Director of the Office of Management and
Budget) with the highest home foreclosure rates.
``(II) High percentage of retirement communities.--
An area has a `high percentage of retirement
communities' if such area is one of the metropolitan
statistical areas (as that term is defined by the
Director of the Office of Management and Budget) with
the highest percentage of residents aged 65 or older.
``(III) High percentage of low-income minority
communities.--An area has a `high percentage of low-
income minority communities' if such area contains a
higher-than-normal percentage of residents who are both
minorities and low-income, as defined by the Director
of Housing Counseling.
``(5) Education programs.--The Secretary shall provide advice
and technical assistance to States, units of general local
government, and nonprofit organizations regarding the establishment
and operation of, including assistance with the development of
content and materials for, educational programs to inform and
educate consumers, particularly those most vulnerable with respect
to residential mortgage loans (such as elderly persons, persons
facing language barriers, low-income persons, minorities, and other
potentially vulnerable consumers), regarding home mortgages,
mortgage refinancing, home equity loans, home repair loans, and
where appropriate by region, any requirements and costs associated
with obtaining flood or other disaster-specific insurance
coverage.''.
(b) Conforming Amendments to Grant Program for Homeownership
Counseling Organizations.--Section 106(c)(5)(A)(ii) of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is
amended--
(1) in subclause (III), by striking ``and'' at the end;
(2) in subclause (IV) by striking the period at the end and
inserting ``; and''; and
(3) by inserting after subclause (IV) the following new
subclause:
``(V) notify the housing or mortgage applicant of
the availability of mortgage software systems provided
pursuant to subsection (g)(3).''.
SEC. 1444. GRANTS FOR HOUSING COUNSELING ASSISTANCE.
Section 106(a) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(a)) is amended by adding at the end the following new
paragraph:
``(4) Homeownership and Rental Counseling Assistance.--
``(A) In general.--The Secretary shall make financial
assistance available under this paragraph to HUD-approved housing
counseling agencies and State housing finance agencies.
``(B) Qualified entities.--The Secretary shall establish
standards and guidelines for eligibility of organizations
(including governmental and nonprofit organizations) to receive
assistance under this paragraph, in accordance with subparagraph
(D).
``(C) Distribution.--Assistance made available under this
paragraph shall be distributed in a manner that encourages
efficient and successful counseling programs and that ensures
adequate distribution of amounts for rural areas having
traditionally low levels of access to such counseling services,
including areas with insufficient access to the Internet. In
distributing such assistance, the Secretary may give priority
consideration to entities serving areas with the highest home
foreclosure rates.
``(D) Limitation on distribution of assistance.--
``(i) In general.--None of the amounts made available under
this paragraph shall be distributed to--
``(I) any organization which has been convicted for a
violation under Federal law relating to an election for
Federal office; or
``(II) any organization which employs applicable
individuals.
``(ii) Definition of applicable individuals.--In this
subparagraph, the term `applicable individual' means an
individual who--
``(I) is--
``(aa) employed by the organization in a permanent
or temporary capacity;
``(bb) contracted or retained by the organization;
or
``(cc) acting on behalf of, or with the express or
apparent authority of, the organization; and
``(II) has been convicted for a violation under Federal
law relating to an election for Federal office.
``(E) Grantmaking process.--In making assistance available
under this paragraph, the Secretary shall consider appropriate ways
of streamlining and improving the processes for grant application,
review, approval, and award.
``(F) Authorization of appropriations.--There are authorized to
be appropriated $45,000,000 for each of fiscal years 2009 through
2012 for--
``(i) the operations of the Office of Housing Counseling of
the Department of Housing and Urban Development;
``(ii) the responsibilities of the Director of Housing
Counseling under paragraphs (2) through (5) of subsection (g);
and
``(iii) assistance pursuant to this paragraph for entities
providing homeownership and rental counseling.''.
SEC. 1445. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD
PROGRAMS.
Section 106(e) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(e)) is amended--
(1) by striking paragraph (1) and inserting the following new
paragraph:
``(1) Requirement for assistance.--An organization may not
receive assistance for counseling activities under subsection
(a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or under
section 101(e), unless the organization, or the individuals through
which the organization provides such counseling, has been certified
by the Secretary under this subsection as competent to provide such
counseling.'';
(2) in paragraph (2)--
(A) by inserting ``and for certifying organizations''
before the period at the end of the first sentence; and
(B) in the second sentence by striking ``for
certification'' and inserting ``, for certification of an
organization, that each individual through which the
organization provides counseling shall demonstrate, and, for
certification of an individual,'';
(3) in paragraph (3), by inserting ``organizations and'' before
``individuals'';
(4) by redesignating paragraph (3) as paragraph (5); and
(5) by inserting after paragraph (2) the following new
paragraphs:
``(3) Requirement under hud programs.--Any homeownership
counseling or rental housing counseling (as such terms are defined
in subsection (g)(1)) required under, or provided in connection
with, any program administered by the Department of Housing and
Urban Development shall be provided only by organizations or
counselors certified by the Secretary under this subsection as
competent to provide such counseling.
``(4) Outreach.--The Secretary shall take such actions as the
Secretary considers appropriate to ensure that individuals and
organizations providing homeownership or rental housing counseling
are aware of the certification requirements and standards of this
subsection and of the training and certification programs under
subsection (f).''.
SEC. 1446. STUDY OF DEFAULTS AND FORECLOSURES.
The Secretary of Housing and Urban Development shall conduct an
extensive study of the root causes of default and foreclosure of home
loans, using as much empirical data as are available. The study shall
also examine the role of escrow accounts in helping prime and nonprime
borrowers to avoid defaults and foreclosures, and the role of computer
registries of mortgages, including those used for trading mortgage
loans. Not later than 12 months after the date of the enactment of this
Act, the Secretary shall submit to the Congress a preliminary report
regarding the study. Not later than 24 months after such date of
enactment, the Secretary shall submit a final report regarding the
results of the study, which shall include any recommended legislation
relating to the study, and recommendations for best practices and for a
process to identify populations that need counseling the most.
SEC. 1447. DEFAULT AND FORECLOSURE DATABASE.
(a) Establishment.--The Secretary of Housing and Urban Development
and the Director of the Bureau, in consultation with the Federal
agencies responsible for regulation of banking and financial
institutions involved in residential mortgage lending and servicing,
shall establish and maintain a database of information on foreclosures
and defaults on mortgage loans for one- to four-unit residential
properties and shall make such information publicly available, subject
to subsection (e).
(b) Census Tract Data.--Information in the database may be
collected, aggregated, and made available on a census tract basis.
(c) Requirements.--Information collected and made available through
the database shall include--
(1) the number and percentage of such mortgage loans that are
delinquent by more than 30 days;
(2) the number and percentage of such mortgage loans that are
delinquent by more than 90 days;
(3) the number and percentage of such properties that are real
estate-owned;
(4) number and percentage of such mortgage loans that are in
the foreclosure process;
(5) the number and percentage of such mortgage loans that have
an outstanding principal obligation amount that is greater than the
value of the property for which the loan was made; and
(6) such other information as the Secretary of Housing and
Urban Development and the Director of the Bureau consider
appropriate.
(d) Rule of Construction.--Nothing in this section shall be
construed to encourage discriminatory or unsound allocation of credit
or lending policies or practices.
(e) Privacy and Confidentiality.--In establishing and maintaining
the database described in subsection (a), the Secretary of Housing and
Urban Development and the Director of the Bureau shall--
(1) be subject to the standards applicable to Federal agencies
for the protection of the confidentiality of personally
identifiable information and for data security and integrity;
(2) implement the necessary measures to conform to the
standards for data integrity and security described in paragraph
(1); and
(3) collect and make available information under this section,
in accordance with paragraphs (5) and (6) of section 1022(c) and
the rules prescribed under such paragraphs, in order to protect
privacy and confidentiality.
SEC. 1448. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.
Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x), as amended by the preceding provisions of this subtitle,
is amended by adding at the end the following new subsection:
``(h) Definitions.--For purposes of this section:
``(1) Nonprofit organization.--The term `nonprofit
organization' has the meaning given such term in section 104(5) of
the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C.
12704(5)), except that subparagraph (D) of such section shall not
apply for purposes of this section.
``(2) State.--The term `State' means each of the several
States, the Commonwealth of Puerto Rico, the District of Columbia,
the Commonwealth of the Northern Mariana Islands, Guam, the Virgin
Islands, American Samoa, the Trust Territories of the Pacific, or
any other possession of the United States.
``(3) Unit of general local government.--The term `unit of
general local government' means any city, county, parish, town,
township, borough, village, or other general purpose political
subdivision of a State.
``(4) HUD-approved counseling agency.--The term `HUD-approved
counseling agency' means a private or public nonprofit organization
that is--
``(A) exempt from taxation under section 501(c) of the
Internal Revenue Code of 1986; and
``(B) certified by the Secretary to provide housing
counseling services.
``(5) State housing finance agency.--The term `State housing
finance agency' means any public body, agency, or instrumentality
specifically created under State statute that is authorised to
finance activities designed to provide housing and related
facilities throughout an entire State through land acquisition,
construction, or rehabilitation.''.
SEC. 1449. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS.
Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x), as amended by the preceding provisions of this subtitle,
is amended by adding at the end the following:
``(i) Accountability for Recipients of Covered Assistance.--
``(1) Tracking of funds.--The Secretary shall--
``(A) develop and maintain a system to ensure that any
organization or entity that receives any covered assistance
uses all amounts of covered assistance in accordance with this
section, the regulations issued under this section, and any
requirements or conditions under which such amounts were
provided; and
``(B) require any organization or entity, as a condition of
receipt of any covered assistance, to agree to comply with such
requirements regarding covered assistance as the Secretary
shall establish, which shall include--
``(i) appropriate periodic financial and grant activity
reporting, record retention, and audit requirements for the
duration of the covered assistance to the organization or
entity to ensure compliance with the limitations and
requirements of this section, the regulations under this
section, and any requirements or conditions under which
such amounts were provided; and
``(ii) any other requirements that the Secretary
determines are necessary to ensure appropriate
administration and compliance.
``(2) Misuse of funds.--If any organization or entity that
receives any covered assistance is determined by the Secretary to
have used any covered assistance in a manner that is materially in
violation of this section, the regulations issued under this
section, or any requirements or conditions under which such
assistance was provided--
``(A) the Secretary shall require that, within 12 months
after the determination of such misuse, the organization or
entity shall reimburse the Secretary for such misused amounts
and return to the Secretary any such amounts that remain unused
or uncommitted for use; and
``(B) such organization or entity shall be ineligible, at
any time after such determination, to apply for or receive any
further covered assistance.
The remedies under this paragraph are in addition to any other
remedies that may be available under law.
``(3) Covered assistance.--For purposes of this subsection, the
term `covered assistance' means any grant or other financial
assistance provided under this section.''.
SEC. 1450. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.
Section 5 of the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2604) is amended--
(1) in the section heading, by striking ``special'' and
inserting ``home buying'';
(2) by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Preparation and Distribution.--The Director of the Bureau of
Consumer Financial Protection (hereafter in this section referred to as
the `Director') shall prepare, at least once every 5 years, a booklet
to help consumers applying for federally related mortgage loans to
understand the nature and costs of real estate settlement services. The
Director shall prepare the booklet in various languages and cultural
styles, as the Director determines to be appropriate, so that the
booklet is understandable and accessible to homebuyers of different
ethnic and cultural backgrounds. The Director shall distribute such
booklets to all lenders that make federally related mortgage loans. The
Director shall also distribute to such lenders lists, organized by
location, of homeownership counselors certified under section 106(e) of
the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) for
use in complying with the requirement under subsection (c) of this
section.
``(b) Contents.--Each booklet shall be in such form and detail as
the Director shall prescribe and, in addition to such other information
as the Director may provide, shall include in plain and understandable
language the following information:
``(1) A description and explanation of the nature and purpose
of the costs incident to a real estate settlement or a federally
related mortgage loan. The description and explanation shall
provide general information about the mortgage process as well as
specific information concerning, at a minimum--
``(A) balloon payments;
``(B) prepayment penalties;
``(C) the advantages of prepayment; and
``(D) the trade-off between closing costs and the interest
rate over the life of the loan.
``(2) An explanation and sample of the uniform settlement
statement required by section 4.
``(3) A list and explanation of lending practices, including
those prohibited by the Truth in Lending Act or other applicable
Federal law, and of other unfair practices and unreasonable or
unnecessary charges to be avoided by the prospective buyer with
respect to a real estate settlement.
``(4) A list and explanation of questions a consumer obtaining
a federally related mortgage loan should ask regarding the loan,
including whether the consumer will have the ability to repay the
loan, whether the consumer sufficiently shopped for the loan,
whether the loan terms include prepayment penalties or balloon
payments, and whether the loan will benefit the borrower.
``(5) An explanation of the right of rescission as to certain
transactions provided by sections 125 and 129 of the Truth in
Lending Act.
``(6) A brief explanation of the nature of a variable rate
mortgage and a reference to the booklet entitled `Consumer Handbook
on Adjustable Rate Mortgages', published by the Director, or to any
suitable substitute of such booklet that the Director may
subsequently adopt pursuant to such section.
``(7) A brief explanation of the nature of a home equity line
of credit and a reference to the pamphlet required to be provided
under section 127A of the Truth in Lending Act.
``(8) Information about homeownership counseling services made
available pursuant to section 106(a)(4) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a recommendation
that the consumer use such services, and notification that a list
of certified providers of homeownership counseling in the area, and
their contact information, is available.
``(9) An explanation of the nature and purpose of escrow
accounts when used in connection with loans secured by residential
real estate and the requirements under section 10 of this Act
regarding such accounts.
``(10) An explanation of the choices available to buyers of
residential real estate in selecting persons to provide necessary
services incidental to a real estate settlement.
``(11) An explanation of a consumer's responsibilities,
liabilities, and obligations in a mortgage transaction.
``(12) An explanation of the nature and purpose of real estate
appraisals, including the difference between an appraisal and a
home inspection.
``(13) Notice that the Office of Housing of the Department of
Housing and Urban Development has made publicly available a
brochure regarding loan fraud and a World Wide Web address and
toll-free telephone number for obtaining the brochure.
The booklet prepared pursuant to this section shall take into
consideration differences in real estate settlement procedures that may
exist among the several States and territories of the United States and
among separate political subdivisions within the same State and
territory.'';
(3) in subsection (c), by inserting at the end the following
new sentence: ``Each lender shall also include with the booklet a
reasonably complete or updated list of homeownership counselors who
are certified pursuant to section 106(e) of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x(e)) and located in the
area of the lender.''; and
(4) in subsection (d), by inserting after the period at the end
of the first sentence the following: ``The lender shall provide the
booklet in the version that is most appropriate for the person
receiving it.''.
SEC. 1451. HOME INSPECTION COUNSELING.
(a) Public Outreach.--
(1) In general.--The Secretary of Housing and Urban Development
(in this section referred to as the ``Secretary'') shall take such
actions as may be necessary to inform potential homebuyers of the
availability and importance of obtaining an independent home
inspection. Such actions shall include--
(A) publication of the HUD/FHA form HUD 92564-CN entitled
``For Your Protection: Get a Home Inspection'', in both English
and Spanish languages;
(B) publication of the HUD/FHA booklet entitled ``For Your
Protection: Get a Home Inspection'', in both English and
Spanish languages;
(C) development and publication of a HUD booklet entitled
``For Your Protection--Get a Home Inspection'' that does not
reference FHA-insured homes, in both English and Spanish
languages; and
(D) publication of the HUD document entitled ``Ten
Important Questions To Ask Your Home Inspector'', in both
English and Spanish languages.
(2) Availability.--The Secretary shall make the materials
specified in paragraph (1) available for electronic access and,
where appropriate, inform potential homebuyers of such availability
through home purchase counseling public service announcements and
toll-free telephone hotlines of the Department of Housing and Urban
Development. The Secretary shall give special emphasis to reaching
first-time and low-income homebuyers with these materials and
efforts.
(3) Updating.--The Secretary may periodically update and revise
such materials, as the Secretary determines to be appropriate.
(b) Requirement for FHA-approved Lenders.--Each mortgagee approved
for participation in the mortgage insurance programs under title II of
the National Housing Act shall provide prospective homebuyers, at first
contact, whether upon pre-qualification, pre-approval, or initial
application, the materials specified in subparagraphs (A), (B), and (D)
of subsection (a)(1).
(c) Requirements for HUD-approved Counseling Agencies.--Each
counseling agency certified pursuant by the Secretary to provide
housing counseling services shall provide each of their clients, as
part of the home purchase counseling process, the materials specified
in subparagraphs (C) and (D) of subsection (a)(1).
(d) Training.--Training provided the Department of Housing and
Urban Development for housing counseling agencies, whether such
training is provided directly by the Department or otherwise, shall
include--
(1) providing information on counseling potential homebuyers of
the availability and importance of getting an independent home
inspection;
(2) providing information about the home inspection process,
including the reasons for specific inspections such as radon and
lead-based paint testing;
(3) providing information about advising potential homebuyers
on how to locate and select a qualified home inspector; and
(4) review of home inspection public outreach materials of the
Department.
SEC. 1452. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE SCAMS.
(a) Assistance to NRC.--Notwithstanding any other provision of law,
of any amounts made available for any fiscal year pursuant to section
106(a)(4)(F) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(a)(4)(F)) (as added by section 1444), 10 percent shall be
used only for assistance to the Neighborhood Reinvestment Corporation
for activities, in consultation with servicers of residential mortgage
loans, to provide notice to borrowers under such loans who are
delinquent with respect to payments due under such loans that makes
such borrowers aware of the dangers of fraudulent activities associated
with foreclosure.
(b) Notice.--The Neighborhood Reinvestment Corporation, in
consultation with servicers of residential mortgage loans, shall use
the amounts provided pursuant to subsection (a) to carry out activities
to inform borrowers under residential mortgage loans--
(1) that the foreclosure process is complex and can be
confusing;
(2) that the borrower may be approached during the foreclosure
process by persons regarding saving their home and they should use
caution in any such dealings;
(3) that there are Federal Government and nonprofit agencies
that may provide information about the foreclosure process,
including the Department of Housing and Urban Development;
(4) that they should contact their lender immediately, contact
the Department of Housing and Urban Development to find a housing
counseling agency certified by the Department to assist in avoiding
foreclosure, or visit the Department's website regarding tips for
avoiding foreclosure; and
(5) of the telephone number of the loan servicer or successor,
the telephone number of the Department of Housing and Urban
Development housing counseling line, and the Uniform Resource
Locators (URLs) for the Department of Housing and Urban Development
Web sites for housing counseling and for tips for avoiding
foreclosure.
Subtitle E--Mortgage Servicing
SEC. 1461. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER
CREDIT TRANSACTIONS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129C (as added by
section 1411) the following new section:
``Sec. 129D. Escrow or impound accounts relating to certain consumer
credit transactions
``(a) In General.--Except as provided in subsection (b), (c), (d),
or (e), a creditor, in connection with the consummation of a consumer
credit transaction secured by a first lien on the principal dwelling of
the consumer, other than a consumer credit transaction under an open
end credit plan or a reverse mortgage, shall establish, before the
consummation of such transaction, an escrow or impound account for the
payment of taxes and hazard insurance, and, if applicable, flood
insurance, mortgage insurance, ground rents, and any other required
periodic payments or premiums with respect to the property or the loan
terms, as provided in, and in accordance with, this section.
``(b) When Required.--No impound, trust, or other type of account
for the payment of property taxes, insurance premiums, or other
purposes relating to the property may be required as a condition of a
real property sale contract or a loan secured by a first deed of trust
or mortgage on the principal dwelling of the consumer, other than a
consumer credit transaction under an open end credit plan or a reverse
mortgage, except when--
``(1) any such impound, trust, or other type of escrow or
impound account for such purposes is required by Federal or State
law;
``(2) a loan is made, guaranteed, or insured by a State or
Federal governmental lending or insuring agency;
``(3) the transaction is secured by a first mortgage or lien on
the consumer's principal dwelling having an original principal
obligation amount that--
``(A) does not exceed the amount of the maximum limitation
on the original principal obligation of mortgage in effect for
a residence of the applicable size, as of the date such
interest rate set, pursuant to the sixth sentence of section
305(a)(2) the Federal Home Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2)), and the annual percentage rate will exceed
the average prime offer rate as defined in section 129C by 1.5
or more percentage points; or
``(B) exceeds the amount of the maximum limitation on the
original principal obligation of mortgage in effect for a
residence of the applicable size, as of the date such interest
rate set, pursuant to the sixth sentence of section 305(a)(2)
the Federal Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)), and the annual percentage rate will exceed the
average prime offer rate as defined in section 129C by 2.5 or
more percentage points; or
``(4) so required pursuant to regulation.
``(c) Exemptions.--The Board may, by regulation, exempt from the
requirements of subsection (a) a creditor that--
``(1) operates predominantly in rural or underserved areas;
``(2) together with all affiliates, has total annual mortgage
loan originations that do not exceed a limit set by the Board;
``(3) retains its mortgage loan originations in portfolio; and
``(4) meets any asset size threshold and any other criteria the
Board may establish, consistent with the purposes of this subtitle.
``(d) Duration of Mandatory Escrow or Impound Account.--An escrow
or impound account established pursuant to subsection (b) shall remain
in existence for a minimum period of 5 years, beginning with the date
of the consummation of the loan, unless and until--
``(1) such borrower has sufficient equity in the dwelling
securing the consumer credit transaction so as to no longer be
required to maintain private mortgage insurance;
``(2) such borrower is delinquent;
``(3) such borrower otherwise has not complied with the legal
obligation, as established by rule; or
``(4) the underlying mortgage establishing the account is
terminated.
``(e) Limited Exemptions for Loans Secured by Shares in a
Cooperative or in Which an Association Must Maintain a Master Insurance
Policy.--Escrow accounts need not be established for loans secured by
shares in a cooperative. Insurance premiums need not be included in
escrow accounts for loans secured by dwellings or units, where the
borrower must join an association as a condition of ownership, and that
association has an obligation to the dwelling or unit owners to
maintain a master policy insuring the dwellings or units.
``(f) Clarification on Escrow Accounts for Loans Not Meeting
Statutory Test.--For mortgages not covered by the requirements of
subsection (b), no provision of this section shall be construed as
precluding the establishment of an impound, trust, or other type of
account for the payment of property taxes, insurance premiums, or other
purposes relating to the property--
``(1) on terms mutually agreeable to the parties to the loan;
``(2) at the discretion of the lender or servicer, as provided
by the contract between the lender or servicer and the borrower; or
``(3) pursuant to the requirements for the escrowing of flood
insurance payments for regulated lending institutions in section
102(d) of the Flood Disaster Protection Act of 1973.
``(g) Administration of Mandatory Escrow or Impound Accounts.--
``(1) In general.--Except as may otherwise be provided for in
this title or in regulations prescribed by the Board, escrow or
impound accounts established pursuant to subsection (b) shall be
established in a federally insured depository institution or credit
union.
``(2) Administration.--Except as provided in this section or
regulations prescribed under this section, an escrow or impound
account subject to this section shall be administered in accordance
with--
``(A) the Real Estate Settlement Procedures Act of 1974 and
regulations prescribed under such Act;
``(B) the Flood Disaster Protection Act of 1973 and
regulations prescribed under such Act; and
``(C) the law of the State, if applicable, where the real
property securing the consumer credit transaction is located.
``(3) Applicability of payment of interest.--If prescribed by
applicable State or Federal law, each creditor shall pay interest
to the consumer on the amount held in any impound, trust, or escrow
account that is subject to this section in the manner as prescribed
by that applicable State or Federal law.
``(4) Penalty coordination with respa.--Any action or omission
on the part of any person which constitutes a violation of the Real
Estate Settlement Procedures Act of 1974 or any regulation
prescribed under such Act for which the person has paid any fine,
civil money penalty, or other damages shall not give rise to any
additional fine, civil money penalty, or other damages under this
section, unless the action or omission also constitutes a direct
violation of this section.
``(h) Disclosures Relating to Mandatory Escrow or Impound
Account.--In the case of any impound, trust, or escrow account that is
required under subsection (b), the creditor shall disclose by written
notice to the consumer at least 3 business days before the consummation
of the consumer credit transaction giving rise to such account or in
accordance with timeframes established in prescribed regulations the
following information:
``(1) The fact that an escrow or impound account will be
established at consummation of the transaction.
``(2) The amount required at closing to initially fund the
escrow or impound account.
``(3) The amount, in the initial year after the consummation of
the transaction, of the estimated taxes and hazard insurance,
including flood insurance, if applicable, and any other required
periodic payments or premiums that reflects, as appropriate, either
the taxable assessed value of the real property securing the
transaction, including the value of any improvements on the
property or to be constructed on the property (whether or not such
construction will be financed from the proceeds of the transaction)
or the replacement costs of the property.
``(4) The estimated monthly amount payable to be escrowed for
taxes, hazard insurance (including flood insurance, if applicable)
and any other required periodic payments or premiums.
``(5) The fact that, if the consumer chooses to terminate the
account in the future, the consumer will become responsible for the
payment of all taxes, hazard insurance, and flood insurance, if
applicable, as well as any other required periodic payments or
premiums on the property unless a new escrow or impound account is
established.
``(6) Such other information as the Board determines necessary
for the protection of the consumer.
``(i) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Flood insurance.--The term `flood insurance' means flood
insurance coverage provided under the national flood insurance
program pursuant to the National Flood Insurance Act of 1968.
``(2) Hazard insurance.--The term `hazard insurance' shall have
the same meaning as provided for `hazard insurance', `casualty
insurance', `homeowner's insurance', or other similar term under
the law of the State where the real property securing the consumer
credit transaction is located.''.
(b) Exemptions and Modifications.--The Board may prescribe rules
that revise, add to, or subtract from the criteria of section 129D(b)
of the Truth in Lending Act if the Board determines that such rules are
in the interest of consumers and in the public interest.
(c) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129C (as added by section 1411) the following new item:
``129D. Escrow or impound accounts relating to certain consumer credit
transactions.''.
SEC. 1462. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW
SERVICES.
Section 129D of the Truth in Lending Act (as added by section 1461)
is amended by adding at the end the following new subsection:
``(j) Disclosure Notice Required for Consumers Who Waive Escrow
Services.--
``(1) In general.--If--
``(A) an impound, trust, or other type of account for the
payment of property taxes, insurance premiums, or other
purposes relating to real property securing a consumer credit
transaction is not established in connection with the
transaction; or
``(B) a consumer chooses, and provides written notice to
the creditor or servicer of such choice, at any time after such
an account is established in connection with any such
transaction and in accordance with any statute, regulation, or
contractual agreement, to close such account,
the creditor or servicer shall provide a timely and clearly written
disclosure to the consumer that advises the consumer of the
responsibilities of the consumer and implications for the consumer
in the absence of any such account.
``(2) Disclosure requirements.--Any disclosure provided to a
consumer under paragraph (1) shall include the following:
``(A) Information concerning any applicable fees or costs
associated with either the non-establishment of any such
account at the time of the transaction, or any subsequent
closure of any such account.
``(B) A clear and prominent statement that the consumer is
responsible for personally and directly paying the non-escrowed
items, in addition to paying the mortgage loan payment, in the
absence of any such account, and the fact that the costs for
taxes, insurance, and related fees can be substantial.
``(C) A clear explanation of the consequences of any
failure to pay non-escrowed items, including the possible
requirement for the forced placement of insurance by the
creditor or servicer and the potentially higher cost (including
any potential commission payments to the servicer) or reduced
coverage for the consumer in the event of any such creditor-
placed insurance.
``(D) Such other information as the Board determines
necessary for the protection of the consumer.''.
SEC. 1463. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENTS.
(a) Servicer Prohibitions.--Section 6 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end
the following new subsections:
``(k) Servicer Prohibitions.--
``(1) In general.--A servicer of a federally related mortgage
shall not--
``(A) obtain force-placed hazard insurance unless there is
a reasonable basis to believe the borrower has failed to comply
with the loan contract's requirements to maintain property
insurance;
``(B) charge fees for responding to valid qualified written
requests (as defined in regulations which the Bureau of
Consumer Financial Protection shall prescribe) under this
section;
``(C) fail to take timely action to respond to a borrower's
requests to correct errors relating to allocation of payments,
final balances for purposes of paying off the loan, or avoiding
foreclosure, or other standard servicer's duties;
``(D) fail to respond within 10 business days to a request
from a borrower to provide the identity, address, and other
relevant contact information about the owner or assignee of the
loan; or
``(E) fail to comply with any other obligation found by the
Bureau of Consumer Financial Protection, by regulation, to be
appropriate to carry out the consumer protection purposes of
this Act.
``(2) Force-placed insurance defined.--For purposes of this
subsection and subsections (l) and (m), the term `force-placed
insurance' means hazard insurance coverage obtained by a servicer
of a federally related mortgage when the borrower has failed to
maintain or renew hazard insurance on such property as required of
the borrower under the terms of the mortgage.
``(l) Requirements for Force-placed Insurance.--A servicer of a
federally related mortgage shall not be construed as having a
reasonable basis for obtaining force-placed insurance unless the
requirements of this subsection have been met.
``(1) Written notices to borrower.--A servicer may not impose
any charge on any borrower for force-placed insurance with respect
to any property securing a federally related mortgage unless--
``(A) the servicer has sent, by first-class mail, a written
notice to the borrower containing--
``(i) a reminder of the borrower's obligation to
maintain hazard insurance on the property securing the
federally related mortgage;
``(ii) a statement that the servicer does not have
evidence of insurance coverage of such property;
``(iii) a clear and conspicuous statement of the
procedures by which the borrower may demonstrate that the
borrower already has insurance coverage; and
``(iv) a statement that the servicer may obtain such
coverage at the borrower's expense if the borrower does not
provide such demonstration of the borrower's existing
coverage in a timely manner;
``(B) the servicer has sent, by first-class mail, a second
written notice, at least 30 days after the mailing of the
notice under subparagraph (A) that contains all the information
described in each clause of such subparagraph; and
``(C) the servicer has not received from the borrower any
demonstration of hazard insurance coverage for the property
securing the mortgage by the end of the 15-day period beginning
on the date the notice under subparagraph (B) was sent by the
servicer.
``(2) Sufficiency of demonstration.--A servicer of a federally
related mortgage shall accept any reasonable form of written
confirmation from a borrower of existing insurance coverage, which
shall include the existing insurance policy number along with the
identity of, and contact information for, the insurance company or
agent, or as otherwise required by the Bureau of Consumer Financial
Protection.
``(3) Termination of force-placed insurance.--Within 15 days of
the receipt by a servicer of confirmation of a borrower's existing
insurance coverage, the servicer shall--
``(A) terminate the force-placed insurance; and
``(B) refund to the consumer all force-placed insurance
premiums paid by the borrower during any period during which
the borrower's insurance coverage and the force-placed
insurance coverage were each in effect, and any related fees
charged to the consumer's account with respect to the force-
placed insurance during such period.
``(4) Clarification with respect to flood disaster protection
act.--No provision of this section shall be construed as
prohibiting a servicer from providing simultaneous or concurrent
notice of a lack of flood insurance pursuant to section 102(e) of
the Flood Disaster Protection Act of 1973.
``(m) Limitations on Force-placed Insurance Charges.--All charges,
apart from charges subject to State regulation as the business of
insurance, related to force-placed insurance imposed on the borrower by
or through the servicer shall be bona fide and reasonable.''.
(b) Increase in Penalty Amounts.--Section 6(f) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
(1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000''
each place such term appears and inserting ``$2,000''; and
(2) in paragraph (2)(B)(i), by striking ``$500,000'' and
inserting ``$1,000,000''.
(c) Decrease in Response Times.--Section 6(e) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended--
(1) in paragraph (1)(A), by striking ``20 days'' and inserting
``5 days'';
(2) in paragraph (2), by striking ``60 days'' and inserting
``30 days''; and
(3) by adding at the end the following new paragraph:
``(4) Limited extension of response time.--The 30-day period
described in paragraph (2) may be extended for not more than 15
days if, before the end of such 30-day period, the servicer
notifies the borrower of the extension and the reasons for the
delay in responding.''.
(d) Prompt Refund of Escrow Accounts Upon Payoff.--Section 6(g) of
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(g))
is amended by adding at the end the following new sentence: ``Any
balance in any such account that is within the servicer's control at
the time the loan is paid off shall be promptly returned to the
borrower within 20 business days or credited to a similar account for a
new mortgage loan to the borrower with the same lender.''.
SEC. 1464. TRUTH IN LENDING ACT AMENDMENTS.
(a) Requirements for Prompt Crediting of Home Loan Payments.--
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by inserting after section 129E (as added by section 1472) the
following new section:
``Sec. 129F. Requirements for prompt crediting of home loan payments
``(a) In General.--In connection with a consumer credit transaction
secured by a consumer's principal dwelling, no servicer shall fail to
credit a payment to the consumer's loan account as of the date of
receipt, except when a delay in crediting does not result in any charge
to the consumer or in the reporting of negative information to a
consumer reporting agency, except as required in subsection (b).
``(b) Exception.--If a servicer specifies in writing requirements
for the consumer to follow in making payments, but accepts a payment
that does not conform to the requirements, the servicer shall credit
the payment as of 5 days after receipt.''.
(b) Requests for Payoff Amounts.--Chapter 2 of the Truth in Lending
Act (15 U.S.C. 1631 et seq.), as amended by this title, is amended by
inserting after section 129F (as added by subsection (a)) the following
new section:
``Sec. 129G. Requests for payoff amounts of home loan
``A creditor or servicer of a home loan shall send an accurate
payoff balance within a reasonable time, but in no case more than 7
business days, after the receipt of a written request for such balance
from or on behalf of the borrower.''.
SEC. 1465. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.
Section 128(b) of the Truth in Lending Act (15 U.S.C. 1638(b)) is
amended by adding at the end the following new paragraph:
``(4) Repayment analysis required to include escrow payments.--
``(A) In general.--In the case of any consumer credit
transaction secured by a first mortgage or lien on the
principal dwelling of the consumer, other than a consumer
credit transaction under an open end credit plan or a reverse
mortgage, for which an impound, trust, or other type of account
has been or will be established in connection with the
transaction for the payment of property taxes, hazard and flood
(if any) insurance premiums, or other periodic payments or
premiums with respect to the property, the information required
to be provided under subsection (a) with respect to the number,
amount, and due dates or period of payments scheduled to repay
the total of payments shall take into account the amount of any
monthly payment to such account for each such repayment in
accordance with section 10(a)(2) of the Real Estate Settlement
Procedures Act of 1974.
``(B) Assessment value.--The amount taken into account
under subparagraph (A) for the payment of property taxes,
hazard and flood (if any) insurance premiums, or other periodic
payments or premiums with respect to the property shall reflect
the taxable assessed value of the real property securing the
transaction after the consummation of the transaction,
including the value of any improvements on the property or to
be constructed on the property (whether or not such
construction will be financed from the proceeds of the
transaction), if known, and the replacement costs of the
property for hazard insurance, in the initial year after the
transaction.''.
Subtitle F--Appraisal Activities
SEC. 1471. PROPERTY APPRAISAL REQUIREMENTS.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by inserting after 129G (as added by section 1464(b)) the
following new section:
``Sec. 129H. Property appraisal requirements
``(a) In General.--A creditor may not extend credit in the form of
a higher-risk mortgage to any consumer without first obtaining a
written appraisal of the property to be mortgaged prepared in
accordance with the requirements of this section.
``(b) Appraisal Requirements.--
``(1) Physical property visit.--Subject to the rules prescribed
under paragraph (4), an appraisal of property to be secured by a
higher-risk mortgage does not meet the requirement of this section
unless it is performed by a certified or licensed appraiser who
conducts a physical property visit of the interior of the mortgaged
property.
``(2) Second appraisal under certain circumstances.--
``(A) In general.--If the purpose of a higher-risk mortgage
is to finance the purchase or acquisition of the mortgaged
property from a person within 180 days of the purchase or
acquisition of such property by that person at a price that was
lower than the current sale price of the property, the creditor
shall obtain a second appraisal from a different certified or
licensed appraiser. The second appraisal shall include an
analysis of the difference in sale prices, changes in market
conditions, and any improvements made to the property between
the date of the previous sale and the current sale.
``(B) No cost to applicant.--The cost of any second
appraisal required under subparagraph (A) may not be charged to
the applicant.
``(3) Certified or licensed appraiser defined.--For purposes of
this section, the term `certified or licensed appraiser' means a
person who--
``(A) is, at a minimum, certified or licensed by the State
in which the property to be appraised is located; and
``(B) performs each appraisal in conformity with the
Uniform Standards of Professional Appraisal Practice and title
XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989, and the regulations prescribed under
such title, as in effect on the date of the appraisal.
``(4) Regulations.--
``(A) In general.--The Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Federal Housing
Finance Agency, and the Bureau shall jointly prescribe
regulations to implement this section.
``(B) Exemption.--The agencies listed in subparagraph (A)
may jointly exempt, by rule, a class of loans from the
requirements of this subsection or subsection (a) if the
agencies determine that the exemption is in the public interest
and promotes the safety and soundness of creditors.
``(c) Free Copy of Appraisal.--A creditor shall provide 1 copy of
each appraisal conducted in accordance with this section in connection
with a higher-risk mortgage to the applicant without charge, and at
least 3 days prior to the transaction closing date.
``(d) Consumer Notification.--At the time of the initial mortgage
application, the applicant shall be provided with a statement by the
creditor that any appraisal prepared for the mortgage is for the sole
use of the creditor, and that the applicant may choose to have a
separate appraisal conducted at the expense of the applicant.
``(e) Violations.--In addition to any other liability to any person
under this title, a creditor found to have willfully failed to obtain
an appraisal as required in this section shall be liable to the
applicant or borrower for the sum of $2,000.
``(f) Higher-risk Mortgage Defined.--For purposes of this section,
the term `higher-risk mortgage' means a residential mortgage loan,
other than a reverse mortgage loan that is a qualified mortgage, as
defined in section 129C, secured by a principal dwelling--
``(1) that is not a qualified mortgage, as defined in section
129C; and
``(2) with an annual percentage rate that exceeds the average
prime offer rate for a comparable transaction, as defined in
section 129C, as of the date the interest rate is set--
``(A) by 1.5 or more percentage points, in the case of a
first lien residential mortgage loan having an original
principal obligation amount that does not exceed the amount of
the maximum limitation on the original principal obligation of
mortgage in effect for a residence of the applicable size, as
of the date of such interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2));
``(B) by 2.5 or more percentage points, in the case of a
first lien residential mortgage loan having an original
principal obligation amount that exceeds the amount of the
maximum limitation on the original principal obligation of
mortgage in effect for a residence of the applicable size, as
of the date of such interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2)); and
``(C) by 3.5 or more percentage points for a subordinate
lien residential mortgage loan.''.
SEC. 1472. APPRAISAL INDEPENDENCE REQUIREMENTS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129D (as added by
section 1461(a)) the following new section:
``Sec. 129E. Appraisal independence requirements
``(a) In General.--It shall be unlawful, in extending credit or in
providing any services for a consumer credit transaction secured by the
principal dwelling of the consumer, to engage in any act or practice
that violates appraisal independence as described in or pursuant to
regulations prescribed under this section.
``(b) Appraisal Independence.--For purposes of subsection (a), acts
or practices that violate appraisal independence shall include--
``(1) any appraisal of a property offered as security for
repayment of the consumer credit transaction that is conducted in
connection with such transaction in which a person with an interest
in the underlying transaction compensates, coerces, extorts,
colludes, instructs, induces, bribes, or intimidates a person,
appraisal management company, firm, or other entity conducting or
involved in an appraisal, or attempts, to compensate, coerce,
extort, collude, instruct, induce, bribe, or intimidate such a
person, for the purpose of causing the appraised value assigned,
under the appraisal, to the property to be based on any factor
other than the independent judgment of the appraiser;
``(2) mischaracterizing, or suborning any mischaracterization
of, the appraised value of the property securing the extension of
the credit;
``(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the making or
pricing of the transaction; and
``(4) withholding or threatening to withhold timely payment for
an appraisal report or for appraisal services rendered when the
appraisal report or services are provided for in accordance with
the contract between the parties.
``(c) Exceptions.--The requirements of subsection (b) shall not be
construed as prohibiting a mortgage lender, mortgage broker, mortgage
banker, real estate broker, appraisal management company, employee of
an appraisal management company, consumer, or any other person with an
interest in a real estate transaction from asking an appraiser to
undertake 1 or more of the following:
``(1) Consider additional, appropriate property information,
including the consideration of additional comparable properties to
make or support an appraisal.
``(2) Provide further detail, substantiation, or explanation
for the appraiser's value conclusion.
``(3) Correct errors in the appraisal report.
``(d) Prohibitions on Conflicts of Interest.--No certified or
licensed appraiser conducting, and no appraisal management company
procuring or facilitating, an appraisal in connection with a consumer
credit transaction secured by the principal dwelling of a consumer may
have a direct or indirect interest, financial or otherwise, in the
property or transaction involving the appraisal.
``(e) Mandatory Reporting.--Any mortgage lender, mortgage broker,
mortgage banker, real estate broker, appraisal management company,
employee of an appraisal management company, or any other person
involved in a real estate transaction involving an appraisal in
connection with a consumer credit transaction secured by the principal
dwelling of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable laws, or is
otherwise engaging in unethical or unprofessional conduct, shall refer
the matter to the applicable State appraiser certifying and licensing
agency.
``(f) No Extension of Credit.--In connection with a consumer credit
transaction secured by a consumer's principal dwelling, a creditor who
knows, at or before loan consummation, of a violation of the appraisal
independence standards established in subsections (b) or (d) shall not
extend credit based on such appraisal unless the creditor documents
that the creditor has acted with reasonable diligence to determine that
the appraisal does not materially misstate or misrepresent the value of
such dwelling.
``(g) Rules and Interpretive Guidelines.--
``(1) In general.--Except as provided under paragraph (2), the
Board, the Comptroller of the Currency, the Federal Deposit
Insurance Corporation, the National Credit Union Administration
Board, the Federal Housing Finance Agency, and the Bureau may
jointly issue rules, interpretive guidelines, and general
statements of policy with respect to acts or practices that violate
appraisal independence in the provision of mortgage lending
services for a consumer credit transaction secured by the principal
dwelling of the consumer and mortgage brokerage services for such a
transaction, within the meaning of subsections (a), (b), (c), (d),
(e), (f), (h), and (i).
``(2) Interim final regulations.--The Board shall, for purposes
of this section, prescribe interim final regulations no later than
90 days after the date of enactment of this section defining with
specificity acts or practices that violate appraisal independence
in the provision of mortgage lending services for a consumer credit
transaction secured by the principal dwelling of the consumer or
mortgage brokerage services for such a transaction and defining any
terms in this section or such regulations. Rules prescribed by the
Board under this paragraph shall be deemed to be rules prescribed
by the agencies jointly under paragraph (1).
``(h) Appraisal Report Portability.--Consistent with the
requirements of this section, the Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the National
Credit Union Administration Board, the Federal Housing Finance Agency,
and the Bureau may jointly issue regulations that address the issue of
appraisal report portability, including regulations that ensure the
portability of the appraisal report between lenders for a consumer
credit transaction secured by a 1-4 unit single family residence that
is the principal dwelling of the consumer, or mortgage brokerage
services for such a transaction.
``(i) Customary and Reasonable Fee.--
``(1) In general.--Lenders and their agents shall compensate
fee appraisers at a rate that is customary and reasonable for
appraisal services performed in the market area of the property
being appraised. Evidence for such fees may be established by
objective third-party information, such as government agency fee
schedules, academic studies, and independent private sector
surveys. Fee studies shall exclude assignments ordered by known
appraisal management companies.
``(2) Fee appraiser definition.--For purposes of this section,
the term `fee appraiser' means a person who is not an employee of
the mortgage loan originator or appraisal management company
engaging the appraiser and is--
``(A) a State licensed or certified appraiser who receives
a fee for performing an appraisal and certifies that the
appraisal has been prepared in accordance with the Uniform
Standards of Professional Appraisal Practice; or
``(B) a company not subject to the requirements of section
1124 of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) that utilizes
the services of State licensed or certified appraisers and
receives a fee for performing appraisals in accordance with the
Uniform Standards of Professional Appraisal Practice.
``(3) Exception for complex assignments.--In the case of an
appraisal involving a complex assignment, the customary and
reasonable fee may reflect the increased time, difficulty, and
scope of the work required for such an appraisal and include an
amount over and above the customary and reasonable fee for non-
complex assignments.
``(j) Sunset.--Effective on the date the interim final regulations
are promulgated pursuant to subsection (g), the Home Valuation Code of
Conduct announced by the Federal Housing Finance Agency on December 23,
2008, shall have no force or effect.
``(k) Penalties.--
``(1) First violation.--In addition to the enforcement
provisions referred to in section 130, each person who violates
this section shall forfeit and pay a civil penalty of not more than
$10,000 for each day any such violation continues.
``(2) Subsequent violations.--In the case of any person on whom
a civil penalty has been imposed under paragraph (1), paragraph (1)
shall be applied by substituting `$20,000' for `$10,000' with
respect to all subsequent violations.
``(3) Assessment.--The agency referred to in subsection (a) or
(c) of section 108 with respect to any person described in
paragraph (1) shall assess any penalty under this subsection to
which such person is subject.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129D (as added by section 1461(c)) the following new items:
``129E. Appraisal independence requirements.
``129F. Requirements for prompt crediting of home loan payments.
``129G. Requests for payoff amounts of home loan.
``129H. Property appraisal requirements.''.
(c) Deference.--Section 105 of the Truth in Lending Act (15 U.S.C.
1604) is amended by adding at the end the following:
``(h) Deference.--Notwithstanding any power granted to any Federal
agency under this title, the deference that a court affords to the
Bureau with respect to a determination made by the Bureau relating to
the meaning or interpretation of any provision of this title, other
than section 129E or 129H, shall be applied as if the Bureau were the
only agency authorized to apply, enforce, interpret, or administer the
provisions of this title.''.
(d) Conforming Amendments in Title X Not Applicable to Sections
129E and 129H.--Notwithstanding section 1099A, the term ``Board'' in
sections 129E and 129H, as added by this subtitle, shall not be
substituted by the term ``Bureau''.
SEC. 1473. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FFIEC,
APPRAISER INDEPENDENCE MONITORING, APPROVED APPRAISER EDUCATION,
APPRAISAL MANAGEMENT COMPANIES, APPRAISER COMPLAINT HOTLINE, AUTOMATED
VALUATION MODELS, AND BROKER PRICE OPINIONS.
(a) Threshold Levels.--Section 1112(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3341(b)) is amended by inserting before the period the following: ``,
and receives concurrence from the Bureau of Consumer Financial
Protection that such threshold level provides reasonable protection for
consumers who purchase 1-4 unit single-family residences''.
(b) Annual Report of Appraisal Subcommittee.--Section 1103(a) of
the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3332(a)) is amended at the end by inserting the
following new paragraph:
``(5) transmit an annual report to the Congress not later than
June 15 of each year that describes the manner in which each
function assigned to the Appraisal Subcommittee has been carried
out during the preceding year. The report shall also detail the
activities of the Appraisal Subcommittee, including the results of
all audits of State appraiser regulatory agencies, and provide an
accounting of disapproved actions and warnings taken in the
previous year, including a description of the conditions causing
the disapproval and actions taken to achieve compliance.''.
(c) Open Meetings.--Section 1104(b) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3333(b)) is
amended--
(1) by inserting ``in public session after notice in the
Federal Register, but may close certain portions of these meetings
related to personnel and review of preliminary State audit
reports,'' after ``shall meet''; and
(2) by adding after the final period the following: ``The
subject matter discussed in any closed or executive session shall
be described in the Federal Register notice of the meeting.''.
(d) Regulations.--Section 1106 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) is
amended--
(1) by inserting ``prescribe regulations in accordance with
chapter 5 of title 5, United States Code (commonly referred to as
the Administrative Procedures Act) after notice and opportunity for
comment,'' after ``hold hearings''; and
(2) at the end by inserting ``Any regulations prescribed by the
Appraisal Subcommittee shall (unless otherwise provided in this
title) be limited to the following functions: temporary practice,
national registry, information sharing, and enforcement. For
purposes of prescribing regulations, the Appraisal Subcommittee
shall establish an advisory committee of industry participants,
including appraisers, lenders, consumer advocates, real estate
agents, and government agencies, and hold meetings as necessary to
support the development of regulations.''.
(e) Appraisal Reviews and Complex Appraisals.--
(1) Section 1110.--Section 1110 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3339) is
amended--
(A) in paragraph (1), by striking ``and'';
(B) in paragraph (2), by striking the period at the end and
inserting ``; and''; and
(C) by inserting after paragraph (2) the following:
``(3) that such appraisals shall be subject to appropriate
review for compliance with the Uniform Standards of Professional
Appraisal Practice.''.
(2) Section 1113.--Section 1113 of the Financial Institutions
and Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3342)
is amended by inserting before the period the following: ``, where
a complex 1-to-4 unit single family residential appraisal means an
appraisal for which the property to be appraised, the form of
ownership, the property characteristics, or the market conditions
are atypical''.
(f) Appraisal Management Services.--
(1) Supervision of third party providers of appraisal
management services.--Section 1103(a) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3332(a))
(as previously amended by this section) is amended--
(A) by amending paragraph (1) to read as follows:
``(1) monitor the requirements established by States--
``(A) for the certification and licensing of individuals
who are qualified to perform appraisals in connection with
federally related transactions, including a code of
professional responsibility; and
``(B) for the registration and supervision of the
operations and activities of an appraisal management
company;''; and
(B) by adding at the end the following new paragraph:
``(6) maintain a national registry of appraisal management
companies that either are registered with and subject to
supervision of a State appraiser certifying and licensing agency or
are operating subsidiaries of a Federally regulated financial
institution.''.
(2) Appraisal management company minimum requirements.--Title
XI of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3331 et seq.) is amended by adding at the
end the following new section (and amending the table of contents
accordingly):
``SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM REQUIREMENTS.
``(a) In General.--The Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the National Credit Union Administration Board, the
Federal Housing Finance Agency, and the Bureau of Consumer Financial
Protection shall jointly, by rule, establish minimum requirements to be
applied by a State in the registration of appraisal management
companies. Such requirements shall include a requirement that such
companies--
``(1) register with and be subject to supervision by a State
appraiser certifying and licensing agency in each State in which
such company operates;
``(2) verify that only licensed or certified appraisers are
used for federally related transactions;
``(3) require that appraisals coordinated by an appraisal
management company comply with the Uniform Standards of
Professional Appraisal Practice; and
``(4) require that appraisals are conducted independently and
free from inappropriate influence and coercion pursuant to the
appraisal independence standards established under section 129E of
the Truth in Lending Act.
``(b) Relation to State Law.--Nothing in this section shall be
construed to prevent States from establishing requirements in addition
to any rules promulgated under subsection (a).
``(c) Federally Regulated Financial Institutions.--The requirements
of subsection (a) shall apply to an appraisal management company that
is a subsidiary owned and controlled by a financial institution and
regulated by a Federal financial institution regulatory agency. An
appraisal management company that is a subsidiary owned and controlled
by a financial institution regulated by a Federal financial institution
regulatory agency shall not be required to register with a State.
``(d) Registration Limitations.--An appraisal management company
shall not be registered by a State or included on the national registry
if such company, in whole or in part, directly or indirectly, is owned
by any person who has had an appraiser license or certificate refused,
denied, cancelled, surrendered in lieu of revocation, or revoked in any
State. Additionally, each person that owns more than 10 percent of an
appraisal management company shall be of good moral character, as
determined by the State appraiser certifying and licensing agency, and
shall submit to a background investigation carried out by the State
appraiser certifying and licensing agency.
``(e) Reporting.--The Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Federal Deposit Insurance
Corporation, the National Credit Union Administration Board, the
Federal Housing Finance Agency, and the Bureau of Consumer Financial
Protection shall jointly promulgate regulations for the reporting of
the activities of appraisal management companies to the Appraisal
Subcommittee in determining the payment of the annual registry fee.
``(f) Effective Date.--
``(1) In general.--No appraisal management company may perform
services related to a federally related transaction in a State
after the date that is 36 months after the date on which the
regulations required to be prescribed under subsection (a) are
prescribed in final form unless such company is registered with
such State or subject to oversight by a Federal financial
institutions regulatory agency.
``(2) Extension of effective date.--Subject to the approval of
the Council, the Appraisal Subcommittee may extend by an additional
12 months the requirements for the registration and supervision of
appraisal management companies if it makes a written finding that a
State has made substantial progress in establishing a State
appraisal management company registration and supervision system
that appears to conform with the provisions of this title.''.
(3) State appraiser certifying and licensing agency
authority.--Section 1117 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is amended
by adding at the end the following: ``The duties of such agency may
additionally include the registration and supervision of appraisal
management companies and the addition of information about the
appraisal management company to the national registry.''.
(4) Appraisal management company definition.--Section 1121 of
the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3350) is amended by adding at the end the
following:
``(11) Appraisal management company.--The term `appraisal
management company' means, in connection with valuing properties
collateralizing mortgage loans or mortgages incorporated into a
securitization, any external third party authorized either by a
creditor of a consumer credit transaction secured by a consumer's
principal dwelling or by an underwriter of or other principal in
the secondary mortgage markets, that oversees a network or panel of
more than 15 certified or licensed appraisers in a State or 25 or
more nationally within a given year--
``(A) to recruit, select, and retain appraisers;
``(B) to contract with licensed and certified appraisers to
perform appraisal assignments;
``(C) to manage the process of having an appraisal
performed, including providing administrative duties such as
receiving appraisal orders and appraisal reports, submitting
completed appraisal reports to creditors and underwriters,
collecting fees from creditors and underwriters for services
provided, and reimbursing appraisers for services performed; or
``(D) to review and verify the work of appraisers.''.
(g) State Agency Reporting Requirement.--Section 1109(a) of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3338(a)) is amended--
(1) by striking ``and'' after the semicolon in paragraph (1);
(2) by redesignating paragraph (2) as paragraph (4); and
(3) by inserting after paragraph (1) the following new
paragraphs:
``(2) transmit reports on the issuance and renewal of licenses
and certifications, sanctions, disciplinary actions, license and
certification revocations, and license and certification
suspensions on a timely basis to the national registry of the
Appraisal Subcommittee;
``(3) transmit reports on a timely basis of supervisory
activities involving appraisal management companies or other third-
party providers of appraisals and appraisal management services,
including investigations initiated and disciplinary actions taken;
and''.
(h) Registry Fees Modified.--
(1) In general.--Section 1109(a) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3338(a))
is amended--
(A) by amending paragraph (4) (as modified by section
1473(g)) to read as follows:
``(4) collect--
``(A) from such individuals who perform or seek to perform
appraisals in federally related transactions, an annual
registry fee of not more than $40, such fees to be transmitted
by the State agencies to the Council on an annual basis; and
``(B) from an appraisal management company that either has
registered with a State appraiser certifying and licensing
agency in accordance with this title or operates as a
subsidiary of a federally regulated financial institution, an
annual registry fee of--
``(i) in the case of such a company that has been in
existence for more than a year, $25 multiplied by the
number of appraisers working for or contracting with such
company in such State during the previous year, but where
such $25 amount may be adjusted, up to a maximum of $50, at
the discretion of the Appraisal Subcommittee, if necessary
to carry out the Subcommittee's functions under this title;
and
``(ii) in the case of such a company that has not been
in existence for more than a year, $25 multiplied by an
appropriate number to be determined by the Appraisal
Subcommittee, and where such number will be used for
determining the fee of all such companies that were not in
existence for more than a year, but where such $25 amount
may be adjusted, up to a maximum of $50, at the discretion
of the Appraisal Subcommittee, if necessary to carry out
the Subcommittee's functions under this title.''; and
(B) by amending the matter following paragraph (4), as
redesignated, to read as follows:
``Subject to the approval of the Council, the Appraisal Subcommittee
may adjust the dollar amount of registry fees under paragraph (4)(A),
up to a maximum of $80 per annum, as necessary to carry out its
functions under this title. The Appraisal Subcommittee shall consider
at least once every 5 years whether to adjust the dollar amount of the
registry fees to account for inflation. In implementing any change in
registry fees, the Appraisal Subcommittee shall provide flexibility to
the States for multi-year certifications and licenses already in place,
as well as a transition period to implement the changes in registry
fees. In establishing the amount of the annual registry fee for an
appraisal management company, the Appraisal Subcommittee shall have the
discretion to impose a minimum annual registry fee for an appraisal
management company to protect against the under reporting of the number
of appraisers working for or contracted by the appraisal management
company.''.
(2) Incremental revenues.--Incremental revenues collected
pursuant to the increases required by this subsection shall be
placed in a separate account at the United States Treasury,
entitled the ``Appraisal Subcommittee Account''.
(i) Grants and Reports.--Section 1109(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3338(b)) is amended--
(1) by striking ``and'' after the semicolon in paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting a semicolon;
(3) by adding at the end the following new paragraphs:
``(5) to make grants to State appraiser certifying and
licensing agencies, in accordance with policies to be developed by
the Appraisal Subcommittee, to support the efforts of such agencies
to comply with this title, including--
``(A) the complaint process, complaint investigations, and
appraiser enforcement activities of such agencies; and
``(B) the submission of data on State licensed and
certified appraisers and appraisal management companies to the
National appraisal registry, including information affirming
that the appraiser or appraisal management company meets the
required qualification criteria and formal and informal
disciplinary actions; and
``(6) to report to all State appraiser certifying and licensing
agencies when a license or certification is surrendered, revoked,
or suspended.''.
Obligations authorized under this subsection may not exceed 75 percent
of the fiscal year total of incremental increase in fees collected and
deposited in the ``Appraisal Subcommittee Account'' pursuant to
subsection (h).
(j) Criteria.--Section 1116 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) is amended--
(1) in subsection (c), by inserting ``whose criteria for the
licensing of a real estate appraiser currently meet or exceed the
minimum criteria issued by the Appraisal Qualifications Board of
The Appraisal Foundation for the licensing of real estate
appraisers'' before the period at the end; and
(2) by striking subsection (e) and inserting the following new
subsection:
``(e) Minimum Qualification Requirements.--Any requirements
established for individuals in the position of `Trainee Appraiser' and
`Supervisory Appraiser' shall meet or exceed the minimum qualification
requirements of the Appraiser Qualifications Board of The Appraisal
Foundation. The Appraisal Subcommittee shall have the authority to
enforce these requirements.''.
(k) Monitoring of State Appraiser Certifying and Licensing
Agencies.--Section 1118 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3347) is amended--
(1) by amending subsection (a) to read as follows:
``(a) In General.--The Appraisal Subcommittee shall monitor each
State appraiser certifying and licensing agency for the purposes of
determining whether such agency--
``(1) has policies, practices, funding, staffing, and
procedures that are consistent with this title;
``(2) processes complaints and completes investigations in a
reasonable time period;
``(3) appropriately disciplines sanctioned appraisers and
appraisal management companies;
``(4) maintains an effective regulatory program; and
``(5) reports complaints and disciplinary actions on a timely
basis to the national registries on appraisers and appraisal
management companies maintained by the Appraisal Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a State
licensed or certified appraiser or a registered appraisal management
company from a national registry on an interim basis, not to exceed 90
days, pending State agency action on licensing, certification,
registration, and disciplinary proceedings. The Appraisal Subcommittee
and all agencies, instrumentalities, and Federally recognized entities
under this title shall not recognize appraiser certifications and
licenses from States whose appraisal policies, practices, funding,
staffing, or procedures are found to be inconsistent with this title.
The Appraisal Subcommittee shall have the authority to impose
sanctions, as described in this section, against a State agency that
fails to have an effective appraiser regulatory program. In determining
whether such a program is effective, the Appraisal Subcommittee shall
include an analysis of the licensing and certification of appraisers,
the registration of appraisal management companies, the issuance of
temporary licenses and certifications for appraisers, the receiving and
tracking of submitted complaints against appraisers and appraisal
management companies, the investigation of complaints, and enforcement
actions against appraisers and appraisal management companies. The
Appraisal Subcommittee shall have the authority to impose interim
actions and suspensions against a State agency as an alternative to, or
in advance of, the derecognition of a State agency.''.
(2) in subsection (b)(2), by inserting after ``authority'' the
following: ``or sufficient funding''.
(l) Reciprocity.--Subsection (b) of section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351(b)) is amended to read as follows:
``(b) Reciprocity.--Notwithstanding any other provisions of this
title, a federally related transaction shall not be appraised by a
certified or licensed appraiser unless the State appraiser certifying
or licensing agency of the State certifying or licensing such appraiser
has in place a policy of issuing a reciprocal certification or license
for an individual from another State when--
``(1) the appraiser licensing and certification program of such
other State is in compliance with the provisions of this title; and
``(2) the appraiser holds a valid certification from a State
whose requirements for certification or licensing meet or exceed
the licensure standards established by the State where an
individual seeks appraisal licensure.''.
(m) Consideration of Professional Appraisal Designations.--Section
1122(d) of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3351(d)) is amended by striking ``shall not
exclude'' and all that follows through the end of the subsection and
inserting the following: ``may include education achieved, experience,
sample appraisals, and references from prior clients. Membership in a
nationally recognized professional appraisal organization may be a
criteria considered, though lack of membership therein shall not be the
sole bar against consideration for an assignment under these
criteria.''.
(n) Appraiser Independence.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351) is amended by adding at the end the following new subsection:
``(g) Appraiser Independence Monitoring.--The Appraisal
Subcommittee shall monitor each State appraiser certifying and
licensing agency for the purpose of determining whether such agency's
policies, practices, and procedures are consistent with the purposes of
maintaining appraiser independence and whether such State has adopted
and maintains effective laws, regulations, and policies aimed at
maintaining appraiser independence.''.
(o) Appraiser Education.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351) is amended by inserting after subsection (g) (as added by
subsection (l) of this section) the following new subsection:
``(h) Approved Education.--The Appraisal Subcommittee shall
encourage the States to accept courses approved by the Appraiser
Qualification Board's Course Approval Program.''.
(p) Appraisal Complaint Hotline.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351), as amended by this section, is amended by adding at the end the
following new subsection:
``(i) Appraisal Complaint National Hotline.--If, 6 months after the
date of the enactment of this subsection, the Appraisal Subcommittee
determines that no national hotline exists to receive complaints of
non-compliance with appraisal independence standards and Uniform
Standards of Professional Appraisal Practice, including complaints from
appraisers, individuals, or other entities concerning the improper
influencing or attempted improper influencing of appraisers or the
appraisal process, the Appraisal Subcommittee shall establish and
operate such a national hotline, which shall include a toll-free
telephone number and an email address. If the Appraisal Subcommittee
operates such a national hotline, the Appraisal Subcommittee shall
refer complaints for further action to appropriate governmental bodies,
including a State appraiser certifying and licensing agency, a
financial institution regulator, or other appropriate legal
authorities. For complaints referred to State appraiser certifying and
licensing agencies or to Federal regulators, the Appraisal Subcommittee
shall have the authority to follow up such complaint referrals in order
to determine the status of the resolution of the complaint.''.
(q) Automated Valuation Models.--Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3331 et seq.), as amended by this section, is amended by adding at the
end the following new section (and amending the table of contents
accordingly):
``SEC. 1125. AUTOMATED VALUATION MODELS USED TO ESTIMATE COLLATERAL
VALUE FOR MORTGAGE LENDING PURPOSES.
``(a) In General.--Automated valuation models shall adhere to
quality control standards designed to--
``(1) ensure a high level of confidence in the estimates
produced by automated valuation models;
``(2) protect against the manipulation of data;
``(3) seek to avoid conflicts of interest;
``(4) require random sample testing and reviews; and
``(5) account for any other such factor that the agencies
listed in subsection (b) determine to be appropriate.
``(b) Adoption of Regulations.--The Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the National
Credit Union Administration Board, the Federal Housing Finance Agency,
and the Bureau of Consumer Financial Protection, in consultation with
the staff of the Appraisal Subcommittee and the Appraisal Standards
Board of the Appraisal Foundation, shall promulgate regulations to
implement the quality control standards required under this section.
``(c) Enforcement.--Compliance with regulations issued under this
subsection shall be enforced by--
``(1) with respect to a financial institution, or subsidiary
owned and controlled by a financial institution and regulated by a
Federal financial institution regulatory agency, the Federal
financial institution regulatory agency that acts as the primary
Federal supervisor of such financial institution or subsidiary; and
``(2) with respect to other participants in the market for
appraisals of 1-to-4 unit single family residential real estate,
the Federal Trade Commission, the Bureau of Consumer Financial
Protection, and a State attorney general.
``(d) Automated Valuation Model Defined.--For purposes of this
section, the term `automated valuation model' means any computerized
model used by mortgage originators and secondary market issuers to
determine the collateral worth of a mortgage secured by a consumer's
principal dwelling.''.
(r) Broker Price Opinions.--Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.),
as amended by this section, is amended by adding at the end the
following new section (and amending the table of contents accordingly):
``SEC. 1126. BROKER PRICE OPINIONS.
``(a) General Prohibition.--In conjunction with the purchase of a
consumer's principal dwelling, broker price opinions may not be used as
the primary basis to determine the value of a piece of property for the
purpose of a loan origination of a residential mortgage loan secured by
such piece of property.
``(b) Broker Price Opinion Defined.--For purposes of this section,
the term `broker price opinion' means an estimate prepared by a real
estate broker, agent, or sales person that details the probable selling
price of a particular piece of real estate property and provides a
varying level of detail about the property's condition, market, and
neighborhood, and information on comparable sales, but does not include
an automated valuation model, as defined in section 1125(c).''.
(s) Amendments to Appraisal Subcommittee.--Section 1011 of the
Federal Financial Institutions Examination Council Act of 1978 (12
U.S.C. 3310) is amended--
(1) in the first sentence, by adding before the period the
following: ``, the Bureau of Consumer Financial Protection, and the
Federal Housing Finance Agency''; and
(2) by inserting at the end the following: ``At all times at
least one member of the Appraisal Subcommittee shall have
demonstrated knowledge and competence through licensure,
certification, or professional designation within the appraisal
profession.''.
(t) Technical Corrections.--
(1) Section 1119(a)(2) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3348(a)(2)) is
amended by striking ``council,'' and inserting ``Council,''.
(2) Section 1121(6) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is
amended by striking ``Corporations,'' and inserting
``Corporation,''.
(3) Section 1121(8) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is
amended by striking ``council'' and inserting ``Council''.
(4) Section 1122 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is amended--
(A) in subsection (a)(1) by moving the left margin of
subparagraphs (A), (B), and (C) 2 ems to the right; and
(B) in subsection (c)--
(i) by striking ``Federal Financial Institutions
Examination Council'' and inserting ``Financial
Institutions Examination Council''; and
(ii) by striking ``the council's functions'' and
inserting ``the Council's functions''.
SEC. 1474. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.
Subsection (e) of section 701 of the Equal Credit Opportunity Act
(15 U.S.C. 1691) is amended to read as follows:
``(e) Copies Furnished to Applicants.--
``(1) In general.--Each creditor shall furnish to an applicant
a copy of any and all written appraisals and valuations developed
in connection with the applicant's application for a loan that is
secured or would have been secured by a first lien on a dwelling
promptly upon completion, but in no case later than 3 days prior to
the closing of the loan, whether the creditor grants or denies the
applicant's request for credit or the application is incomplete or
withdrawn.
``(2) Waiver.--The applicant may waive the 3 day requirement
provided for in paragraph (1), except where otherwise required in
law.
``(3) Reimbursement.--The applicant may be required to pay a
reasonable fee to reimburse the creditor for the cost of the
appraisal, except where otherwise required in law.
``(4) Free copy.--Notwithstanding paragraph (3), the creditor
shall provide a copy of each written appraisal or valuation at no
additional cost to the applicant.
``(5) Notification to applicants.--At the time of application,
the creditor shall notify an applicant in writing of the right to
receive a copy of each written appraisal and valuation under this
subsection.
``(6) Valuation defined.--For purposes of this subsection, the
term `valuation' shall include any estimate of the value of a
dwelling developed in connection with a creditor's decision to
provide credit, including those values developed pursuant to a
policy of a government sponsored enterprise or by an automated
valuation model, a broker price opinion, or other methodology or
mechanism.''.
SEC. 1475. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENT
RELATING TO CERTAIN APPRAISAL FEES.
Section 4 of the Real Estate Settlement Procedures Act of 1974 is
amended by adding at the end the following new subsection:
``(c) The standard form described in subsection (a) may include, in
the case of an appraisal coordinated by an appraisal management company
(as such term is defined in section 1121(11) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3350(11))), a clear disclosure of--
``(1) the fee paid directly to the appraiser by such company;
and
``(2) the administration fee charged by such company.''.
SEC. 1476. GAO STUDY ON THE EFFECTIVENESS AND IMPACT OF VARIOUS
APPRAISAL METHODS, VALUATION MODELS AND DISTRIBUTIONS CHANNELS, AND ON
THE HOME VALUATION CODE OF CONDUCT AND THE APPRAISAL SUBCOMMITTEE.
(a) In General.--The Government Accountability Office shall conduct
a study on--
(1) the effectiveness and impact of--
(A) appraisal methods, including the cost approach, the
comparative sales approach, the income approach, and others
that may be available;
(B) appraisal valuation models, including licensed and
certified appraisals, broker-priced opinions, and automated
valuation models; and
(C) appraisal distribution channels, including appraisal
management companies, independent appraisal operations within
mortgage originators, and fee-for-service appraisers;
(2) the Home Valuation Code of Conduct; and
(3) the Appraisal Subcommittee's functions pursuant to title XI
of the Financial Institutions Reform, Recovery, and Enforcement Act
of 1989.
(b) Study.--Not later than--
(1) 12 months after the date of enactment of this Act, the
Government Accountability Office shall submit a study to the
Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of
Representatives; and
(2) 90 days after the date of enactment of this Act, the
Government Accountability Office shall provide a report on the
status of the study and any preliminary findings to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of Representatives.
(c) Content of Study.--The study required by this section shall
include an examination of the following:
(1) Appraisal approaches, valuation models, and distribution
channels.--
(A) The prevalence, alone or in combination, of certain
appraisal approaches, models, and channels in purchase-money
and refinance mortgage transactions.
(B) The accuracy of these approaches, models, and channels
in assessing the property as collateral.
(C) Whether and how these approaches, models, and channels
contributed to price speculation during the previous cycle.
(D) The costs to consumers of these approaches, models, and
channels.
(E) The disclosure of fees to consumers in the appraisal
process.
(F) To what extent the usage of these approaches, models,
and channels may be influenced by a conflict of interest
between the mortgage lender and the appraiser and the mechanism
by which the lender selects and compensates the appraiser.
(G) The suitability of these approaches, models, and
channels in rural versus urban areas.
(2) Home valuation code of conduct (hvcc).--
(A) How the HVCC affects mortgage lenders' selection of
appraisers.
(B) How the HVCC affects State regulation of appraisers and
appraisal distribution channels.
(C) How the HVCC affects the quality and cost of appraisals
and the length of time to obtain an appraisal.
(D) How the HVCC affects mortgage brokers, small
businesses, and consumers.
(d) Additional Study Required.--
(1) In general.--Not later than 18 months after the date of
enactment of this Act, the Government Accountability Office shall
submit a study to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of
the House of Representatives.
(2) Content of additional study.--The study required under
paragraph (1) shall include--
(A) an examination of--
(i) the Appraisal Subcommittee's ability to monitor and
enforce State and Federal certification requirements and
standards, including by providing a summary with a
statistical breakdown of enforcement actions taken during
the last 10 years;
(ii) whether existing Federal financial institutions
regulatory agency exemptions on appraisals for federally
related transactions needs to be revised; and
(iii) whether new means of data collection, such as the
establishment of a national repository, would benefit the
Appraisal Subcommittee's ability to perform its functions;
and
(B) recommendations from this examination for
administrative and legislative action at the Federal and State
level.
Subtitle G--Mortgage Resolution and Modification
SEC. 1481. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM.
(a) Establishment.--The Secretary of Housing and Urban Development
shall develop a program under this subsection to ensure the protection
of current and future tenants and at-risk multifamily properties, where
feasible, based on criteria that may include--
(1) creating sustainable financing of such properties, that may
take into consideration such factors as--
(A) the rental income generated by such properties; and
(B) the preservation of adequate operating reserves;
(2) maintaining the level of Federal, State, and city subsidies
in effect as of the date of the enactment of this Act;
(3) providing funds for rehabilitation; and
(4) facilitating the transfer of such properties, when
appropriate and with the agreement of owners, to responsible new
owners and ensuring affordability of such properties.
(b) Coordination.--The Secretary of Housing and Urban Development
may, in carrying out the program developed under this section,
coordinate with the Secretary of the Treasury, the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve
System, the Federal Housing Finance Agency, and any other Federal
Government agency that the Secretary considers appropriate.
(c) Definition.--For purposes of this section, the term
``multifamily properties'' means a residential structure that consists
of 5 or more dwelling units.
(d) Prevention of Qualification for Criminal Applicants.--
(1) In general.--No person shall be eligible to begin receiving
assistance from the Making Home Affordable Program authorized under
the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5201 et
seq.), or any other mortgage assistance program authorized or
funded by that Act, on or after 60 days after the date of the
enactment of this Act, if such person, in connection with a
mortgage or real estate transaction, has been convicted, within the
last 10 years, of any one of the following:
(A) Felony larceny, theft, fraud, or forgery.
(B) Money laundering.
(C) Tax evasion.
(2) Procedures.--The Secretary shall establish procedures to
ensure compliance with this subsection.
(3) Report.--The Secretary shall report to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate
regarding the implementation of this provision. The report shall
also describe the steps taken to implement this subsection.
SEC. 1482. HOME AFFORDABLE MODIFICATION PROGRAM GUIDELINES.
(a) Net Present Value Input Data.--The Secretary of the Treasury
(in this section referred to as the ``Secretary'') shall revise the
supplemental directives and other guidelines for the Home Affordable
Modification Program of the Making Home Affordable initiative of the
Secretary of the Treasury, authorized under the Emergency Economic
Stabilization Act of 2008 (Public Law 110-343), to require each
mortgage servicer participating in such program to provide each
borrower under a mortgage whose request for a mortgage modification
under the Program is denied with all borrower-related and mortgage-
related input data used in any net present value (NPV) analyses
performed in connection with the subject mortgage. Such input data
shall be provided to the borrower at the time of such denial.
(b) Web-based Site for NPV Calculator and Application.--
(1) NPV calculator.--In carrying out the Home Affordable
Modification Program, the Secretary shall establish and maintain a
site on the World Wide Web that provides a calculator for net
present value analyses of a mortgage, based on the Secretary's
methodology for calculating such value, that mortgagors can use to
enter information regarding their own mortgages and that provides a
determination after entering such information regarding a mortgage
of whether such mortgage would be accepted or rejected for
modification under the Program, using such methodology.
(2) Disclosure.--Such Web site shall also prominently disclose
that each mortgage servicer participating in such Program may use a
method for calculating net present value of a mortgage that is
different than the method used by such calculator.
(3) Application.--The Secretary shall make a reasonable effort
to include on such World Wide Web site a method for homeowners to
apply for a mortgage modification under the Home Affordable
Modification Program.
(c) Public Availability of NPV Methodology, Computer Model, and
Variables.--The Secretary shall make publicly available, including by
posting on a World Wide Web site of the Secretary--
(1) the Secretary's methodology and computer model, including
all formulae used in such computer model, used for calculating net
present value of a mortgage that is used by the calculator
established pursuant to subsection (b); and
(2) all non-proprietary variables used in such net present
value analysis.
SEC. 1483. PUBLIC AVAILABILITY OF INFORMATION OF MAKING HOME AFFORDABLE
PROGRAM.
(a) Revisions to Program Guidelines.--The Secretary of the Treasury
(in this section referred to as the ``Secretary'') shall revise the
guidelines for the Home Affordable Modification Program of the Making
Home Affordable initiative of the Secretary of the Treasury, authorized
under the Emergency Economic Stabilization Act of 2008 (Public Law 110-
343), to provide that the data being collected by the Secretary from
each mortgage servicer and lender participating in the Program is made
public in accordance with subsection (b).
(b) Public Availability.--Data shall be made available according to
the following guidelines:
(1) Not more than 14 days after each monthly deadline for
submission of data by mortgage servicers and lenders participating
in the Program, reports shall be made publicly available by means
of a World Wide Web site of the Secretary, and by submitting a
report to the Congress, that shall includes the following
information:
(A) The number of requests for mortgage modifications under
the Program that the servicer or lender has received.
(B) The number of requests for mortgage modifications under
the Program that the servicer or lender has processed.
(C) The number of requests for mortgage modifications under
the Program that the servicer or lender has approved.
(D) The number of requests for mortgage modifications under
the Program that the servicer or lender has denied.
(2) Not more than 60 days after each monthly deadline for
submission of data by mortgage servicers and lenders participating
in the Program, the Secretary shall make data tables available to
the public at the individual record level. The Secretary shall
issue regulations prescribing--
(A) the procedures for disclosing such data to the public;
and
(B) such deletions as the Secretary may determine to be
appropriate to protect any privacy interest of any mortgage
modification applicant, including the deletion or alteration of
the applicant's name and identification number.
SEC. 1484. PROTECTING TENANTS AT FORECLOSURE EXTENSION AND
CLARIFICATION.
The Protecting Tenants at Foreclosure Act is amended--
(1) in section 702 (12 U.S.C. 5220 note)--
(A) in subsection (a)(2), by striking ``, as of the date of
such notice of foreclosure''; and
(B) in subsection (c), by inserting after the period the
following: ``For purposes of this section, the date of a notice
of foreclosure shall be deemed to be the date on which complete
title to a property is transferred to a successor entity or
person as a result of an order of a court or pursuant to
provisions in a mortgage, deed of trust, or security deed.'';
and
(2) in section 704 (12 U.S.C. 5201 note), by striking ``2012''
and inserting ``2014''.
Subtitle H--Miscellaneous Provisions
SEC. 1491. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT-
SPONSORED ENTERPRISES REFORM TO ENHANCE THE PROTECTION, LIMITATION, AND
REGULATION OF THE TERMS OF RESIDENTIAL MORTGAGE CREDIT.
(a) Findings.--The Congress finds as follows:
(1) The Government-sponsored enterprises, Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac), were chartered by Congress to
ensure a reliable and affordable supply of mortgage funding, but
enjoy a dual legal status as privately owned corporations with
Government mandated affordable housing goals.
(2) In 1996, the Department of Housing and Urban Development
required that 42 percent of Fannie Mae's and Freddie Mac's mortgage
financing should go to borrowers with income levels below the
median for a given area.
(3) In 2004, the Department of Housing and Urban Development
revised those goals, increasing them to 56 percent of their overall
mortgage purchases by 2008, and additionally mandated that 12
percent of all mortgage purchases by Fannie Mae and Freddie Mac be
``special affordable'' loans made to borrowers with incomes less
than 60 percent of an area's median income, a target that
ultimately increased to 28 percent for 2008.
(4) To help fulfill those mandated affordable housing goals, in
1995 the Department of Housing and Urban Development authorized
Fannie Mae and Freddie Mac to purchase subprime securities that
included loans made to low-income borrowers.
(5) After this authorization to purchase subprime securities,
subprime and near-prime loans increased from 9 percent of
securitized mortgages in 2001 to 40 percent in 2006, while the
market share of conventional mortgages dropped from 78.8 percent in
2003 to 50.1 percent by 2007 with a corresponding increase in
subprime and Alt-A loans from 10.1 percent to 32.7 percent over the
same period.
(6) In 2004 alone, Fannie Mae and Freddie Mac purchased
$175,000,000,000 in subprime mortgage securities, which accounted
for 44 percent of the market that year, and from 2005 through 2007,
Fannie Mae and Freddie Mac purchased approximately
$1,000,000,000,000 in subprime and Alt-A loans, while Fannie Mae's
acquisitions of mortgages with less than 10 percent down payments
almost tripled.
(7) According to data from the Federal Housing Finance Agency
(FHFA) for the fourth quarter of 2008, Fannie Mae and Freddie Mac
own or guarantee 75 percent of all newly originated mortgages, and
Fannie Mae and Freddie Mac currently own 13.3 percent of
outstanding mortgage debt in the United States and have issued
mortgage-backed securities for 31.0 percent of the residential debt
market, a combined total of 44.3 percent of outstanding mortgage
debt in the United States.
(8) On September 7, 2008, the FHFA placed Fannie Mae and
Freddie Mac into conservatorship, with the Treasury Department
subsequently agreeing to purchase at least $200,000,000,000 of
preferred stock from each enterprise in exchange for warrants for
the purchase of 79.9 percent of each enterprise's common stock.
(9) The conservatorship for Fannie Mae and Freddie Mac has
potentially exposed taxpayers to upwards of $5,300,000,000,000
worth of risk.
(10) The hybrid public-private status of Fannie Mae and Freddie
Mac is untenable and must be resolved to assure that consumers are
offered and receive residential mortgage loans on terms that
reasonably reflect their ability to repay the loans and that are
understandable and not unfair, deceptive, or abusive.
(b) Sense of the Congress.--It is the sense of the Congress that
efforts to enhance by the protection, limitation, and regulation of the
terms of residential mortgage credit and the practices related to such
credit would be incomplete without enactment of meaningful structural
reforms of Fannie Mae and Freddie Mac.
SEC. 1492. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT MORTGAGE
FORECLOSURE RESCUE SCAMS AND LOAN MODIFICATION FRAUD.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the current inter-agency efforts of the Secretary of
the Treasury, the Secretary of Housing and Urban Development, the
Attorney General, and the Federal Trade Commission to crackdown on
mortgage foreclosure rescue scams and loan modification fraud in order
to advise the Congress to the risks and vulnerabilities of emerging
schemes in the loan modification arena.
(b) Report.--
(1) In general.--The Comptroller General shall submit a report
to the Congress on the study conducted under subsection (a)
containing such recommendations for legislative and administrative
actions as the Comptroller General may determine to be appropriate
in addition to the recommendations required under paragraph (2).
(2) Specific topics.--The report made under paragraph (1) shall
include--
(A) an evaluation of the effectiveness of the inter-agency
task force current efforts to combat mortgage foreclosure
rescue scams and loan modification fraud scams;
(B) specific recommendations on agency or legislative
action that are essential to properly protect homeowners from
mortgage foreclosure rescue scams and loan modification fraud
scams; and
(C) the adequacy of financial resources that the Federal
Government is allocating to--
(i) crackdown on loan modification and foreclosure
rescue scams; and
(ii) the education of homeowners about fraudulent scams
relating to loan modification and foreclosure rescues.
SEC. 1493. REPORTING OF MORTGAGE DATA BY STATE.
(a) In General.--Section 104(a) of the Helping Families Save Their
Homes Act of 2009 (division A of Public Law 111-22) is amended--
(1) in paragraph (2), by striking ``resulting'' and inserting
``in each State that result'';
(2) in paragraph (3), by inserting ``each State for'' after
``modifications in''; and
(3) in paragraph (4), by inserting ``in each State'' after
``total number of loans''.
(b) Conforming Amendment.--Section 104(b)(1)(A) of such Act is
amended by adding at the end the following sentence: ``Not later than
60 days after the date of the enactment of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, the Comptroller of the Currency and
the Director of the Office of Thrift Supervision shall update such
requirements to reflect amendments made to this section by such Act.''.
SEC. 1494. STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES.
(a) Study.--The Secretary of Housing and Urban Development, in
consultation with the Secretary of the Treasury, shall conduct a study
of the effect on residential mortgage loan foreclosures of--
(1) the presence in residential structures subject to such
mortgage loans of drywall that was imported from China during the
period beginning with 2004 and ending at the end of 2007; and
(2) the availability of property insurance for residential
structures in which such drywall is present.
(b) Report.--Not later than the expiration of the 120-day period
beginning on the date of the enactment of this Act, the Secretary of
Housing and Urban Development shall submit to the Congress a report on
the study conducted under subsection (a) containing its findings,
conclusions, and recommendations.
SEC. 1495. DEFINITION.
For purposes of this title, the term ``designated transfer date''
means the date established under section 1062 of this Act.
SEC. 1496. EMERGENCY MORTGAGE RELIEF.
(a) Emergency Homeowners' Relief Fund.--Effective October 1, 2010,
and notwithstanding any other provision of law, there is hereby made
available to the Secretary of Housing and Urban Development such sums
as are necessary to provide $1,000,000,000 in assistance through the
Emergency Homeowners' Relief Fund, which such Secretary shall establish
pursuant to section 107 of the Emergency Housing Act of 1975 (12 U.S.C.
2706), as such Act is amended by this section, for use for emergency
mortgage assistance in accordance with title I of such Act.
(b) Reauthorization of Emergency Mortgage Relief Program.--Title I
of the Emergency Housing Act of 1975 is amended--
(1) in section 103 (12 U.S.C. 2702)--
(A) in paragraph (2)--
(i) by striking ``have indicated'' and all that follows
through ``regulation of the holder'' and insert ``have
certified'';
(ii) by striking ``(such as the volume of delinquent
loans in its portfolio)''; and
(iii) by striking ``, except that such statement'' and
all that follows through ``purposes of this title''; and
(B) in paragraph (4), by inserting ``or medical
conditions'' after ``adverse economic conditions'';
(2) in section 104 (12 U.S.C. 2703)--
(A) in subsection (b), by striking ``, but such
assistance'' and all that follows through the period at the end
and inserting the following: ``. The amount of assistance
provided to a homeowner under this title shall be an amount
that the Secretary determines is reasonably necessary to
supplement such amount as the homeowner is capable of
contributing toward such mortgage payment, except that the
aggregate amount of such assistance provided for any homeowner
shall not exceed $50,000.'';
(B) in subsection (d), by striking ``interest on a loan or
advance'' and all that follows through the end of the
subsection and inserting the following: ``(1) the rate of
interest on any loan or advance of credit insured under this
title shall be fixed for the life of the loan or advance of
credit and shall not exceed the rate of interest that is
generally charged for mortgages on single-family housing
insured by the Secretary of Housing and Urban Development under
title II of the National Housing Act at the time such loan or
advance of credit is made, and (2) no interest shall be charged
on interest which is deferred on a loan or advance of credit
made under this title. In establishing rates, terms and
conditions for loans or advances of credit made under this
title, the Secretary shall take into account a homeowner's
ability to repay such loan or advance of credit.''; and
(C) in subsection (e), by inserting after the period at the
end of the first sentence the following: ``Any eligible
homeowner who receives a grant or an advance of credit under
this title may repay the loan in full, without penalty, by lump
sum or by installment payments at any time before the loan
becomes due and payable.'';
(3) in section 105 (12 U.S.C. 2704)--
(A) by striking subsection (b);
(B) in subsection (e)--
(i) by inserting ``and emergency mortgage relief
payments made under section 106'' after ``insured under
this section''; and
(ii) by striking ``$1,500,000,000 at any one time'' and
inserting ``$3,000,000,000'';
(C) by redesignating subsections (c), (d), and (e) as
subsections (b), (c), and (d), respectively; and
(D) by adding at the end the following new subsection:
``(e) The Secretary shall establish underwriting guidelines or
procedures to allocate amounts made available for loans and advances
insured under this section and for emergency relief payments made under
section 106 based on the likelihood that a mortgagor will be able to
resume mortgage payments, pursuant to the requirement under section
103(5).'';
(4) in section 107--
(A) by striking ``(a)''; and
(B) by striking subsection (b);
(5) in section 108 (12 U.S.C. 2707), by adding at the end the
following new subsection:
``(d) Coverage of Existing Programs.--The Secretary shall allow
funds to be administered by a State that has an existing program that
is determined by the Secretary to provide substantially similar
assistance to homeowners. After such determination is made such State
shall not be required to modify such program to comply with the
provisions of this title.'';
(6) in section 109 (12 U.S.C. 2708)--
(A) in the section heading, by striking ``authorization
and'';
(B) by striking subsection (a);
(C) by striking ``(b)''; and
(D) by striking ``1977'' and inserting ``2011'';
(7) by striking sections 110, 111, and 113 (12 U.S.C. 2709,
2710, 2712); and
(8) by redesignating section 112 (12 U.S.C. 2711) as section
110.
SEC. 1497. ADDITIONAL ASSISTANCE FOR NEIGHBORHOOD STABILIZATION
PROGRAM.
(a) In General.--Effective October 1, 2010, out of funds in the
Treasury not otherwise appropriated, there is hereby made available to
the Secretary of Housing and Urban Development $1,000,000,000, and the
Secretary of Housing and Urban Development shall use such amounts for
assistance to States and units of general local government for the
redevelopment of abandoned and foreclosed homes, in accordance with the
same provisions applicable under the second undesignated paragraph
under the heading ``Community Planning and Development--Community
Development Fund'' in title XII of division A of the American Recovery
and Reinvestment Act of 2009 (Public Law 111-5; 123 Stat. 217) to
amounts made available under such second undesignated paragraph, except
as follows:
(1) Notwithstanding the matter of such second undesignated
paragraph that precedes the first proviso, amounts made available
by this section shall remain available until expended.
(2) The 3rd, 4th, 5th, 6th, 7th, and 15th provisos of such
second undesignated paragraph shall not apply to amounts made
available by this section.
(3) Amounts made available by this section shall be allocated
based on a funding formula for such amounts established by the
Secretary in accordance with section 2301(b) of the Housing and
Economic Recovery Act of 2008 (42 U.S.C. 5301 note), except that--
(A) notwithstanding paragraph (2) of such section 2301(b),
the formula shall be established not later than 30 days after
the date of the enactment of this Act;
(B) notwithstanding such section 2301(b), each State shall
receive, at a minimum, not less than 0.5 percent of funds made
available under this section;
(C) the Secretary may establish a minimum grant amount for
direct allocations to units of general local government located
within a State, which shall not exceed $1,000,000;
(D) each State and local government receiving grant amounts
shall establish procedures to create preferences for the
development of affordable rental housing for properties
assisted with amounts made available by this section; and
(E) the Secretary may use not more than 2 percent of the
funds made available under this section for technical
assistance to grantees.
(4) Paragraph (1) of section 2301(c) of the Housing and
Economic Recovery Act of 2008 shall not apply to amounts made
available by this section.
(5) The fourth proviso from the end of such second undesignated
paragraph shall be applied to amounts made available by this
section by substituting ``2013'' for ``2012''.
(6) Notwithstanding section 2301(a) of the Housing and Economic
Recovery Act of 2008, the term ``State'' means any State, as
defined in section 102 of the Housing and Community Development Act
of 1974 (42 U.S.C. 5302), and the District of Columbia, for
purposes of this section and this title, as applied to amounts made
available by this section.
(7)(A) None of the amounts made available by this section shall
be distributed to--
(i) any organization which has been convicted for a
violation under Federal law relating to an election for Federal
office; or
(ii) any organization which employs applicable individuals.
(B) In this paragraph, the term ``applicable individual'' means
an individual who--
(i) is--
(I) employed by the organization in a permanent or
temporary capacity;
(II) contracted or retained by the organization; or
(III) acting on behalf of, or with the express or
apparent authority of, the organization; and
(ii) has been convicted for a violation under Federal law
relating to an election for Federal office.
(8) An eligible entity receiving a grant under this section
shall, to the maximum extent feasible, provide for the hiring of
employees who reside in the vicinity, as such term is defined by
the Secretary, of projects funded under this section or contract
with small businesses that are owned and operated by persons
residing in the vicinity of such projects.
(b) Additional Amendments.--
(1) Section 2301.--Section 2301(f)(3)(A)(ii) of the Housing and
Economic Recovery Act of 2008 (42 U.S.C. 5301(f)(3)(A)(ii))--
(A) is amended by striking ``for the purchase and
redevelopment of abandoned and foreclosed upon homes or
residential properties that will be used''; and
(B) shall apply with respect to any unexpended or
unobligated balances, including recaptured and reallocated
funds made available under this Act, section 2301 of the
Housing and Economic Recovery Act of 2008 (42 U.S.C. 5301), and
the heading ``Community Planning and Development--Community
Development Fund'' in title XII of division A of the American
Recovery and Reinvestment Act of 2009 (Public Law 111-5; 123
Stat. 217).
(2) Notice of foreclosure.--For any amounts made available
under this section, under division B, title III of the Housing and
Economic Recovery Act of 2008 (42 U.S.C. 5301), or under the
heading ``Community Planning and Development--Community Development
Fund'' in title XII of division A of the American Recovery and
Reinvestment Act of 2009 (Public Law 111-5; 123 Stat. 217), the
date of a notice of foreclosure shall be deemed to be the date on
which complete title to a property is transferred to a successor
entity or person as a result of an order of a court or pursuant to
provisions in a mortgage, deed of trust, or security deed.
SEC. 1498. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.
(a) Establishment.--The Secretary of Housing and Urban Development
(hereafter in this section referred to as the ``Secretary'') shall
establish a program for making grants for providing a full range of
foreclosure legal assistance to low- and moderate-income homeowners and
tenants related to home ownership preservation, home foreclosure
prevention, and tenancy associated with home foreclosure.
(b) Competitive Allocation.--The Secretary shall allocate amounts
made available for grants under this section to State and local legal
organizations on the basis of a competitive process. For purposes of
this subsection ``State and local legal organizations'' are those State
and local organizations whose primary business or mission is to provide
legal assistance.
(c) Priority to Certain Areas.--In allocating amounts in accordance
with subsection (b), the Secretary shall give priority consideration to
State and local legal organizations that are operating in the 125
metropolitan statistical areas (as that term is defined by the Director
of the Office of Management and Budget) with the highest home
foreclosure rates.
(d) Legal Assistance.--
(1) In general.--Any State or local legal organization that
receives financial assistance pursuant to this section may use such
amounts only to assist--
(A) homeowners of owner-occupied homes with mortgages in
default, in danger of default, or subject to or at risk of
foreclosure; and
(B) tenants at risk of or subject to eviction as a result
of foreclosure of the property in which such tenant resides.
(2) Commence use within 90 days.--Any State or local legal
organization that receives financial assistance pursuant to this
section shall begin using any financial assistance received under
this section within 90 days after receipt of the assistance.
(3) Prohibition on class actions.--No funds provided to a State
or local legal organization under this section may be used to
support any class action litigation.
(4) Limitation on legal assistance.--Legal assistance funded
with amounts provided under this section shall be limited to
mortgage-related default, eviction, or foreclosure proceedings,
without regard to whether such foreclosure is judicial or
nonjudicial.
(5) Effective date.--Notwithstanding any other provision of
this Act, this subsection shall take effect on the date of the
enactment of this Act.
(e) Limitation on Distribution of Assistance.--
(1) In general.--None of the amounts made available under this
section shall be distributed to--
(A) any organization which has been convicted for a
violation under Federal law relating to an election for Federal
office; or
(B) any organization which employs applicable individuals.
(2) Definition of applicable individuals.--In this subsection,
the term ``applicable individual'' means an individual who--
(A) is--
(i) employed by the organization in a permanent or
temporary capacity;
(ii) contracted or retained by the organization; or
(iii) acting on behalf of, or with the express or
apparent authority of, the organization; and
(B) has been convicted for a violation under Federal law
relating to an election for Federal office.
(f) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary $35,000,000 for each of fiscal years 2011
through 2012 for grants under this section.
TITLE XV--MISCELLANEOUS PROVISIONS
SEC. 1501. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR FOREIGN
GOVERNMENTS; PROTECTION OF AMERICAN TAXPAYERS.
The Bretton Woods Agreements Act (22 U.S.C. 286 et seq.) is amended
by adding at the end the following:
``SEC. 68. RESTRICTIONS ON USE OF UNITED STATES FUNDS FOR FOREIGN
GOVERNMENTS; PROTECTION OF AMERICAN TAXPAYERS.
``(a) In General.--The Secretary of the Treasury shall instruct the
United States Executive Director at the International Monetary Fund--
``(1) to evaluate, prior to consideration by the Board of
Executive Directors of the Fund , any proposal submitted to the
Board for the Fund to make a loan to a country if--
``(A) the amount of the public debt of the country exceeds
the gross domestic product of the country as of the most recent
year for which such information is available; and
``(B) the country is not eligible for assistance from the
International Development Association.
``(2) Opposition to loans unlikely to be repaid in full.--If
any such evaluation indicates that the proposed loan is not likely
to be repaid in full, the Secretary of the Treasury shall instruct
the United States Executive Director at the Fund to use the voice
and vote of the United States to oppose the proposal.
``(b) Reports to Congress.--Within 30 days after the Board of
Executive Directors of the Fund approves a proposal described in
subsection (a), and annually thereafter by June 30, for the duration of
any program approved under such proposals, the Secretary of the
Treasury shall report in writing to the Committee on Financial Services
of the House of Representatives and the Committee on Foreign Relations
and the Committee on Banking, Housing, and Urban Affairs of the Senate
assessing the likelihood that loans made pursuant to such proposals
will be repaid in full, including--
``(1) the borrowing country's current debt status, including,
to the extent possible, its maturity structure, whether it has
fixed or floating rates, whether it is indexed, and by whom it is
held;
``(2) the borrowing country's external and internal
vulnerabilities that could potentially affect its ability to repay;
and
``(3) the borrowing country's debt management strategy.''.
SEC. 1502. CONFLICT MINERALS.
(a) Sense of Congress on Exploitation and Trade of Conflict
Minerals Originating in the Democratic Republic of the Congo.--It is
the sense of Congress that the exploitation and trade of conflict
minerals originating in the Democratic Republic of the Congo is helping
to finance conflict characterized by extreme levels of violence in the
eastern Democratic Republic of the Congo, particularly sexual- and
gender-based violence, and contributing to an emergency humanitarian
situation therein, warranting the provisions of section 13(p) of the
Securities Exchange Act of 1934, as added by subsection (b).
(b) Disclosure Relating to Conflict Minerals Originating in the
Democratic Republic of the Congo.--Section 13 of the Securities
Exchange Act of 1934 (15 U.S.C. 78m), as amended by this Act, is
amended by adding at the end the following new subsection:
``(p) Disclosures Relating to Conflict Minerals Originating in the
Democratic Republic of the Congo.--
``(1) Regulations.--
``(A) In general.--Not later than 270 days after the date
of the enactment of this subsection, the Commission shall
promulgate regulations requiring any person described in
paragraph (2) to disclose annually, beginning with the person's
first full fiscal year that begins after the date of
promulgation of such regulations, whether conflict minerals
that are necessary as described in paragraph (2)(B), in the
year for which such reporting is required, did originate in the
Democratic Republic of the Congo or an adjoining country and,
in cases in which such conflict minerals did originate in any
such country, submit to the Commission a report that includes,
with respect to the period covered by the report--
``(i) a description of the measures taken by the person
to exercise due diligence on the source and chain of
custody of such minerals, which measures shall include an
independent private sector audit of such report submitted
through the Commission that is conducted in accordance with
standards established by the Comptroller General of the
United States, in accordance with rules promulgated by the
Commission, in consultation with the Secretary of State;
and
``(ii) a description of the products manufactured or
contracted to be manufactured that are not DRC conflict
free (`DRC conflict free' is defined to mean the products
that do not contain minerals that directly or indirectly
finance or benefit armed groups in the Democratic Republic
of the Congo or an adjoining country), the entity that
conducted the independent private sector audit in
accordance with clause (i), the facilities used to process
the conflict minerals, the country of origin of the
conflict minerals, and the efforts to determine the mine or
location of origin with the greatest possible specificity.
``(B) Certification.--The person submitting a report under
subparagraph (A) shall certify the audit described in clause
(i) of such subparagraph that is included in such report. Such
a certified audit shall constitute a critical component of due
diligence in establishing the source and chain of custody of
such minerals.
``(C) Unreliable determination.--If a report required to be
submitted by a person under subparagraph (A) relies on a
determination of an independent private sector audit, as
described under subparagraph (A)(i), or other due diligence
processes previously determined by the Commission to be
unreliable, the report shall not satisfy the requirements of
the regulations promulgated under subparagraph (A)(i).
``(D) DRC conflict free.--For purposes of this paragraph, a
product may be labeled as `DRC conflict free' if the product
does not contain conflict minerals that directly or indirectly
finance or benefit armed groups in the Democratic Republic of
the Congo or an adjoining country.
``(E) Information available to the public.--Each person
described under paragraph (2) shall make available to the
public on the Internet website of such person the information
disclosed by such person under subparagraph (A).
``(2) Person described.--A person is described in this
paragraph if--
``(A) the person is required to file reports with the
Commission pursuant to paragraph (1)(A); and
``(B) conflict minerals are necessary to the functionality
or production of a product manufactured by such person.
``(3) Revisions and waivers.--The Commission shall revise or
temporarily waive the requirements described in paragraph (1) if
the President transmits to the Commission a determination that--
``(A) such revision or waiver is in the national security
interest of the United States and the President includes the
reasons therefor; and
``(B) establishes a date, not later than 2 years after the
initial publication of such exemption, on which such exemption
shall expire.
``(4) Termination of disclosure requirements.--The requirements
of paragraph (1) shall terminate on the date on which the President
determines and certifies to the appropriate congressional
committees, but in no case earlier than the date that is one day
after the end of the 5-year period beginning on the date of the
enactment of this subsection, that no armed groups continue to be
directly involved and benefitting from commercial activity
involving conflict minerals.
``(5) Definitions.--For purposes of this subsection, the terms
`adjoining country', `appropriate congressional committees', `armed
group', and `conflict mineral' have the meaning given those terms
under section 1502 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.''.
(c) Strategy and Map to Address Linkages Between Conflict Minerals
and Armed Groups.--
(1) Strategy.--
(A) In general.--Not later than 180 days after the date of
the enactment of this Act, the Secretary of State, in
consultation with the Administrator of the United States Agency
for International Development, shall submit to the appropriate
congressional committees a strategy to address the linkages
between human rights abuses, armed groups, mining of conflict
minerals, and commercial products.
(B) Contents.--The strategy required by subparagraph (A)
shall include the following:
(i) A plan to promote peace and security in the
Democratic Republic of the Congo by supporting efforts of
the Government of the Democratic Republic of the Congo,
including the Ministry of Mines and other relevant
agencies, adjoining countries, and the international
community, in particular the United Nations Group of
Experts on the Democratic Republic of Congo, to--
(I) monitor and stop commercial activities
involving the natural resources of the Democratic
Republic of the Congo that contribute to the activities
of armed groups and human rights violations in the
Democratic Republic of the Congo; and
(II) develop stronger governance and economic
institutions that can facilitate and improve
transparency in the cross-border trade involving the
natural resources of the Democratic Republic of the
Congo to reduce exploitation by armed groups and
promote local and regional development.
(ii) A plan to provide guidance to commercial entities
seeking to exercise due diligence on and formalize the
origin and chain of custody of conflict minerals used in
their products and on their suppliers to ensure that
conflict minerals used in the products of such suppliers do
not directly or indirectly finance armed conflict or result
in labor or human rights violations.
(iii) A description of punitive measures that could be
taken against individuals or entities whose commercial
activities are supporting armed groups and human rights
violations in the Democratic Republic of the Congo.
(2) Map.--
(A) In general.--Not later than 180 days after the date of
the enactment of this Act, the Secretary of State shall, in
accordance with the recommendation of the United Nations Group
of Experts on the Democratic Republic of the Congo in their
December 2008 report--
(i) produce a map of mineral-rich zones, trade routes,
and areas under the control of armed groups in the
Democratic Republic of the Congo and adjoining countries
based on data from multiple sources, including--
(I) the United Nations Group of Experts on the
Democratic Republic of the Congo;
(II) the Government of the Democratic Republic of
the Congo, the governments of adjoining countries, and
the governments of other Member States of the United
Nations; and
(III) local and international nongovernmental
organizations;
(ii) make such map available to the public; and
(iii) provide to the appropriate congressional
committees an explanatory note describing the sources of
information from which such map is based and the
identification, where possible, of the armed groups or
other forces in control of the mines depicted.
(B) Designation.--The map required under subparagraph (A)
shall be known as the ``Conflict Minerals Map'', and mines
located in areas under the control of armed groups in the
Democratic Republic of the Congo and adjoining countries, as
depicted on such Conflict Minerals Map, shall be known as
``Conflict Zone Mines''.
(C) Updates.--The Secretary of State shall update the map
required under subparagraph (A) not less frequently than once
every 180 days until the date on which the disclosure
requirements under paragraph (1) of section 13(p) of the
Securities Exchange Act of 1934, as added by subsection (b),
terminate in accordance with the provisions of paragraph (4) of
such section 13(p).
(D) Publication in federal register.--The Secretary of
State shall add minerals to the list of minerals in the
definition of conflict minerals under section 1502, as
appropriate. The Secretary shall publish in the Federal
Register notice of intent to declare a mineral as a conflict
mineral included in such definition not later than one year
before such declaration.
(d) Reports.--
(1) Baseline report.--Not later than 1 year after the date of
the enactment of this Act and annually thereafter until the
termination of the disclosure requirements under section 13(p) of
the Securities Exchange Act of 1934, the Comptroller General of the
United States shall submit to appropriate congressional committees
a report that includes an assessment of the rate of sexual- and
gender-based violence in war-torn areas of the Democratic Republic
of the Congo and adjoining countries.
(2) Regular report on effectiveness.--Not later than 2 years
after the date of the enactment of this Act and annually
thereafter, the Comptroller General of the United States shall
submit to the appropriate congressional committees a report that
includes the following:
(A) An assessment of the effectiveness of section 13(p) of
the Securities Exchange Act of 1934, as added by subsection
(b), in promoting peace and security in the Democratic Republic
of the Congo and adjoining countries.
(B) A description of issues encountered by the Securities
and Exchange Commission in carrying out the provisions of such
section 13(p).
(C)(i) A general review of persons described in clause (ii)
and whether information is publicly available about--
(I) the use of conflict minerals by such persons; and
(II) whether such conflict minerals originate from the
Democratic Republic of the Congo or an adjoining country.
(ii) A person is described in this clause if--
(I) the person is not required to file reports with the
Securities and Exchange Commission pursuant to section
13(p)(1)(A) of the Securities Exchange Act of 1934, as
added by subsection (b); and
(II) conflict minerals are necessary to the
functionality or production of a product manufactured by
such person.
(3) Report on private sector auditing.--Not later than 30
months after the date of the enactment of this Act, and annually
thereafter, the Secretary of Commerce shall submit to the
appropriate congressional committees a report that includes the
following:
(A) An assessment of the accuracy of the independent
private sector audits and other due diligence processes
described under section 13(p) of the Securities Exchange Act of
1934.
(B) Recommendations for the processes used to carry out
such audits, including ways to--
(i) improve the accuracy of such audits; and
(ii) establish standards of best practices.
(C) A listing of all known conflict mineral processing
facilities worldwide.
(e) Definitions.--For purposes of this section:
(1) Adjoining country.--The term ``adjoining country'', with
respect to the Democratic Republic of the Congo, means a country
that shares an internationally recognized border with the
Democratic Republic of the Congo.
(2) Appropriate congressional committees.--The term
``appropriate congressional committees'' means--
(A) the Committee on Appropriations, the Committee on
Foreign Affairs, the Committee on Ways and Means, and the
Committee on Financial Services of the House of
Representatives; and
(B) the Committee on Appropriations, the Committee on
Foreign Relations, the Committee on Finance, and the Committee
on Banking, Housing, and Urban Affairs of the Senate.
(3) Armed group.--The term ``armed group'' means an armed group
that is identified as perpetrators of serious human rights abuses
in the annual Country Reports on Human Rights Practices under
sections 116(d) and 502B(b) of the Foreign Assistance Act of 1961
(22 U.S.C. 2151n(d) and 2304(b)) relating to the Democratic
Republic of the Congo or an adjoining country.
(4) Conflict mineral.--The term ``conflict mineral'' means--
(A) columbite-tantalite (coltan), cassiterite, gold,
wolframite, or their derivatives; or
(B) any other mineral or its derivatives determined by the
Secretary of State to be financing conflict in the Democratic
Republic of the Congo or an adjoining country.
(5) Under the control of armed groups.--The term ``under the
control of armed groups'' means areas within the Democratic
Republic of the Congo or adjoining countries in which armed
groups--
(A) physically control mines or force labor of civilians to
mine, transport, or sell conflict minerals;
(B) tax, extort, or control any part of trade routes for
conflict minerals, including the entire trade route from a
Conflict Zone Mine to the point of export from the Democratic
Republic of the Congo or an adjoining country; or
(C) tax, extort, or control trading facilities, in whole or
in part, including the point of export from the Democratic
Republic of the Congo or an adjoining country.
SEC. 1503. REPORTING REQUIREMENTS REGARDING COAL OR OTHER MINE SAFETY.
(a) Reporting Mine Safety Information.--Each issuer that is
required to file reports pursuant to section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o) and that is an
operator, or that has a subsidiary that is an operator, of a coal or
other mine shall include, in each periodic report filed with the
Commission under the securities laws on or after the date of enactment
of this Act, the following information for the time period covered by
such report:
(1) For each coal or other mine of which the issuer or a
subsidiary of the issuer is an operator--
(A) the total number of violations of mandatory health or
safety standards that could significantly and substantially
contribute to the cause and effect of a coal or other mine
safety or health hazard under section 104 of the Federal Mine
Safety and Health Act of 1977 (30 U.S.C. 814) for which the
operator received a citation from the Mine Safety and Health
Administration;
(B) the total number of orders issued under section 104(b)
of such Act (30 U.S.C. 814(b));
(C) the total number of citations and orders for
unwarrantable failure of the mine operator to comply with
mandatory health or safety standards under section 104(d) of
such Act (30 U.S.C. 814(d));
(D) the total number of flagrant violations under section
110(b)(2) of such Act (30 U.S.C. 820(b)(2));
(E) the total number of imminent danger orders issued under
section 107(a) of such Act (30 U.S.C. 817(a));
(F) the total dollar value of proposed assessments from the
Mine Safety and Health Administration under such Act (30 U.S.C.
801 et seq.); and
(G) the total number of mining-related fatalities.
(2) A list of such coal or other mines, of which the issuer or
a subsidiary of the issuer is an operator, that receive written
notice from the Mine Safety and Health Administration of--
(A) a pattern of violations of mandatory health or safety
standards that are of such nature as could have significantly
and substantially contributed to the cause and effect of coal
or other mine health or safety hazards under section 104(e) of
such Act (30 U.S.C. 814(e)); or
(B) the potential to have such a pattern.
(3) Any pending legal action before the Federal Mine Safety and
Health Review Commission involving such coal or other mine.
(b) Reporting Shutdowns and Patterns of Violations.--Beginning on
and after the date of enactment of this Act, each issuer that is an
operator, or that has a subsidiary that is an operator, of a coal or
other mine shall file a current report with the Commission on Form 8-K
(or any successor form) disclosing the following regarding each coal or
other mine of which the issuer or subsidiary is an operator:
(1) The receipt of an imminent danger order issued under
section 107(a) of the Federal Mine Safety and Health Act of 1977
(30 U.S.C. 817(a)).
(2) The receipt of written notice from the Mine Safety and
Health Administration that the coal or other mine has--
(A) a pattern of violations of mandatory health or safety
standards that are of such nature as could have significantly
and substantially contributed to the cause and effect of coal
or other mine health or safety hazards under section 104(e) of
such Act (30 U.S.C. 814(e)); or
(B) the potential to have such a pattern.
(c) Rule of Construction.--Nothing in this section shall be
construed to affect any obligation of a person to make a disclosure
under any other applicable law in effect before, on, or after the date
of enactment of this Act.
(d) Commission Authority.--
(1) Enforcement.--A violation by any person of this section, or
any rule or regulation of the Commission issued under this section,
shall be treated for all purposes in the same manner as a violation
of the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) or
the rules and regulations issued thereunder, consistent with the
provisions of this section, and any such person shall be subject to
the same penalties, and to the same extent, as for a violation of
such Act or the rules or regulations issued thereunder.
(2) Rules and regulations.--The Commission is authorized to
issue such rules or regulations as are necessary or appropriate for
the protection of investors and to carry out the purposes of this
section.
(e) Definitions.--In this section--
(1) the terms ``issuer'' and ``securities laws'' have the
meaning given the terms in section 3 of the Securities Exchange Act
of 1934 (15 U.S.C. 78c);
(2) the term ``coal or other mine'' means a coal or other mine,
as defined in section 3 of the Federal Mine Safety and Health Act
of 1977 (30 U.S.C. 802), that is subject to the provisions of such
Act (30 U.S.C. 801 et seq.); and
(3) the term ``operator'' has the meaning given the term in
section 3 of the Federal Mine Safety and Health Act of 1977 (30
U.S.C. 802).
(f) Effective Date.--This section shall take effect on the day that
is 30 days after the date of enactment of this Act.
SEC. 1504. DISCLOSURE OF PAYMENTS BY RESOURCE EXTRACTION ISSUERS.
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m),
as amended by this Act, is amended by adding at the end the following:
``(q) Disclosure of Payments by Resource Extraction Issuers.--
``(1) Definitions.--In this subsection--
``(A) the term `commercial development of oil, natural gas,
or minerals' includes exploration, extraction, processing,
export, and other significant actions relating to oil, natural
gas, or minerals, or the acquisition of a license for any such
activity, as determined by the Commission;
``(B) the term `foreign government' means a foreign
government, a department, agency, or instrumentality of a
foreign government, or a company owned by a foreign government,
as determined by the Commission;
``(C) the term `payment'--
``(i) means a payment that is--
``(I) made to further the commercial development of
oil, natural gas, or minerals; and
``(II) not de minimis; and
``(ii) includes taxes, royalties, fees (including
license fees), production entitlements, bonuses, and other
material benefits, that the Commission, consistent with the
guidelines of the Extractive Industries Transparency
Initiative (to the extent practicable), determines are part
of the commonly recognized revenue stream for the
commercial development of oil, natural gas, or minerals;
``(D) the term `resource extraction issuer' means an issuer
that--
``(i) is required to file an annual report with the
Commission; and
``(ii) engages in the commercial development of oil,
natural gas, or minerals;
``(E) the term `interactive data format' means an
electronic data format in which pieces of information are
identified using an interactive data standard; and
``(F) the term `interactive data standard' means
standardized list of electronic tags that mark information
included in the annual report of a resource extraction issuer.
``(2) Disclosure.--
``(A) Information required.--Not later than 270 days after
the date of enactment of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, the Commission shall issue final rules
that require each resource extraction issuer to include in an
annual report of the resource extraction issuer information
relating to any payment made by the resource extraction issuer,
a subsidiary of the resource extraction issuer, or an entity
under the control of the resource extraction issuer to a
foreign government or the Federal Government for the purpose of
the commercial development of oil, natural gas, or minerals,
including--
``(i) the type and total amount of such payments made
for each project of the resource extraction issuer relating
to the commercial development of oil, natural gas, or
minerals; and
``(ii) the type and total amount of such payments made
to each government.
``(B) Consultation in rulemaking.--In issuing rules under
subparagraph (A), the Commission may consult with any agency or
entity that the Commission determines is relevant.
``(C) Interactive data format.--The rules issued under
subparagraph (A) shall require that the information included in
the annual report of a resource extraction issuer be submitted
in an interactive data format.
``(D) Interactive data standard.--
``(i) In general.--The rules issued under subparagraph
(A) shall establish an interactive data standard for the
information included in the annual report of a resource
extraction issuer.
``(ii) Electronic tags.--The interactive data standard
shall include electronic tags that identify, for any
payments made by a resource extraction issuer to a foreign
government or the Federal Government--
``(I) the total amounts of the payments, by
category;
``(II) the currency used to make the payments;
``(III) the financial period in which the payments
were made;
``(IV) the business segment of the resource
extraction issuer that made the payments;
``(V) the government that received the payments,
and the country in which the government is located;
``(VI) the project of the resource extraction
issuer to which the payments relate; and
``(VII) such other information as the Commission
may determine is necessary or appropriate in the public
interest or for the protection of investors.
``(E) International transparency efforts.--To the extent
practicable, the rules issued under subparagraph (A) shall
support the commitment of the Federal Government to
international transparency promotion efforts relating to the
commercial development of oil, natural gas, or minerals.
``(F) Effective date.--With respect to each resource
extraction issuer, the final rules issued under subparagraph
(A) shall take effect on the date on which the resource
extraction issuer is required to submit an annual report
relating to the fiscal year of the resource extraction issuer
that ends not earlier than 1 year after the date on which the
Commission issues final rules under subparagraph (A).
``(3) Public availability of information.--
``(A) In general.--To the extent practicable, the
Commission shall make available online, to the public, a
compilation of the information required to be submitted under
the rules issued under paragraph (2)(A).
``(B) Other information.--Nothing in this paragraph shall
require the Commission to make available online information
other than the information required to be submitted under the
rules issued under paragraph (2)(A).
``(4) Authorization of appropriations.--There are authorized to
be appropriated to the Commission such sums as may be necessary to
carry out this subsection.''.
SEC. 1505. STUDY BY THE COMPTROLLER GENERAL.
(a) In General.--Not later than 1 year after the date of enactment
of this Act, the Comptroller General of the United States shall issue a
report assessing the relative independence, effectiveness, and
expertise of presidentially appointed inspectors general and inspectors
general of designated Federal entities, as such term is defined under
section 8G of the Inspector General Act of 1978, and the effects on
independence of the amendments to the Inspector General Act of 1978
made by this Act.
(b) Report.--The report required by subsection (a) shall be issued
to the Committees on Financial Services and Oversight and Government
Reform of the House of Representatives and the Committees on Banking,
Housing, and Urban Affairs and Homeland Security and Governmental
Affairs of the Senate.
SEC. 1506. STUDY ON CORE DEPOSITS AND BROKERED DEPOSITS.
(a) Study.--The Corporation shall conduct a study to evaluate--
(1) the definition of core deposits for the purpose of
calculating the insurance premiums of banks;
(2) the potential impact on the Deposit Insurance Fund of
revising the definitions of brokered deposits and core deposits to
better distinguish between them;
(3) an assessment of the differences between core deposits and
brokered deposits and their role in the economy and banking sector
of the United States;
(4) the potential stimulative effect on local economies of
redefining core deposits; and
(5) the competitive parity between large institutions and
community banks that could result from redefining core deposits.
(b) Report to Congress.--Not later than 1 year after the date of
enactment of this Act, the Corporation shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on the
results of the study under subsection (a) that includes legislative
recommendations, if any, to address concerns arising in connection with
the definitions of core deposits and brokered deposits.
TITLE XVI--SECTION 1256 CONTRACTS
SEC. 1601. CERTAIN SWAPS, ETC., NOT TREATED AS SECTION 1256 CONTRACTS.
(a) In General.--Subsection (b) of section 1256 of the Internal
Revenue Code of 1986 is amended--
(1) by redesignating paragraphs (1) through (5) as
subparagraphs (A) through (E), respectively, and by indenting such
subparagraphs (as so redesignated) accordingly,
(2) by striking ``For purposes of'' and inserting the
following:
``(1) In general.--For purposes of'', and
(3) by striking the last sentence and inserting the following
new paragraph:
``(2) Exceptions.--The term `section 1256 contract' shall not
include--
``(A) any securities futures contract or option on such a
contract unless such contract or option is a dealer securities
futures contract, or
``(B) any interest rate swap, currency swap, basis swap,
interest rate cap, interest rate floor, commodity swap, equity
swap, equity index swap, credit default swap, or similar
agreement.''.
(b) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.