[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4173 Introduced in House (IH)]
111th CONGRESS
1st Session
H. R. 4173
To provide for financial regulatory reform, to protect consumers and
investors, to enhance Federal understanding of insurance issues, to
regulate the over-the-counter derivatives markets, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 2, 2009
Mr. Frank of Massachusetts introduced the following bill; which was
referred to the Committee on Financial Services, and in addition to the
Committees on Agriculture, Energy and Commerce, the Judiciary, Rules,
the Budget, Oversight and Government Reform, and Ways and Means, for a
period to be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To provide for financial regulatory reform, to protect consumers and
investors, to enhance Federal understanding of insurance issues, to
regulate the over-the-counter derivatives markets, 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.
This Act may be cited as the ``The Wall Street Reform and Consumer
Protection Act of 2009''.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
Sec. 1. Short title.
Sec. 2. Table of contents.
TITLE I--FINANCIAL STABILITY IMPROVEMENT ACT
Sec. 1000. Short title; definitions.
Sec. 1000A. Restrictions on the Federal Reserve System pending audit
report.
Subtitle A--The Financial Services Oversight Council
Sec. 1001. Financial Services Oversight Council established.
Sec. 1002. Resolution of disputes among Federal financial regulatory
agencies.
Sec. 1003. Technical and professional advisory committees.
Sec. 1004. Financial Services Oversight Council meetings and council
governance.
Sec. 1005. Council staff and funding.
Sec. 1006. Reports to the Congress.
Sec. 1007. Applicability of certain Federal laws.
Sec. 1008. Oversight by GAO.
Subtitle B--Prudential Regulation of Companies and Activities for
Financial Stability Purposes
Sec. 1101. Council and Board authority to obtain information.
Sec. 1102. Council prudential regulation recommendations to Federal
financial regulatory agencies.
Sec. 1103. Subjecting financial companies to stricter prudential
standards for financial stability purposes.
Sec. 1104. Stricter prudential standards for certain financial holding
companies for financial stability purposes.
Sec. 1105. Mitigation of systemic risk.
Sec. 1106. Subjecting activities or practices to stricter prudential
standards for financial stability purposes.
Sec. 1107. Stricter regulation of activities and practices for
financial stability purposes.
Sec. 1108. Effect of rescission of identification.
Sec. 1109. Emergency financial stabilization.
Sec. 1110. Corporation must receive warrants when paying or risking
taxpayer funds.
Sec. 1111. Examinations and enforcement actions for insurance and
resolutions purposes.
Sec. 1112. Study of the effects of size and complexity of financial
institutions on capital market efficiency
and economic growth.
Sec. 1113. Exercise of Federal Reserve authority.
Sec. 1114. Stress tests.
Sec. 1115. Contingent Capital.
Sec. 1116. Restriction on proprietary trading by designated financial
holding companies.
Sec. 1117. Rule of construction.
Subtitle C--Improvements to Supervision and Regulation of Federal
Depository Institutions
Sec. 1201. Definitions.
Sec. 1202. Amendments to the Home Owners' Loan Act relating to transfer
of functions.
Sec. 1203. Amendments to the revised statutes.
Sec. 1204. Power and duties transferred.
Sec. 1205. Transfer date.
Sec. 1206. Expiration of term of comptroller.
Sec. 1207. Office of Thrift Supervision abolished.
Sec. 1208. Savings provisions.
Sec. 1209. Regulations and orders.
Sec. 1210. Coordination of transition activities.
Sec. 1211. Interim responsibilities of office of the comptroller of the
currency and office of thrift supervision.
Sec. 1212. Employees transferred.
Sec. 1213. Property transferred.
Sec. 1214. Funds transferred.
Sec. 1215. Disposition of affairs.
Sec. 1216. Continuation of services.
Sec. 1217. Contracting and leasing authority.
Sec. 1218. Treatment of savings and loan holding companies.
Sec. 1219. Practices of certain mutual thrift holding companies
preserved.
Sec. 1220. Implementation plan and reports.
Sec. 1221. Composition of board of directors of the Federal Deposit
Insurance Corporation.
Sec. 1222. Amendments to section 3.
Sec. 1223. Amendments to section 7.
Sec. 1224. Amendments to section 8.
Sec. 1225. Amendments to section 11.
Sec. 1226. Amendments to section 13.
Sec. 1227. Amendments to section 18.
Sec. 1228. Amendments to section 28.
Sec. 1229. Amendments to the Alternative Mortgage Transaction Parity
Act of 1982.
Sec. 1230. Amendments to the Bank Holding Company Act of 1956.
Sec. 1231. Amendments to the Bank Protection Act of 1968.
Sec. 1232. Amendments to the Bank Service Company Act.
Sec. 1233. Amendments to the Community Reinvestment Act of 1977.
Sec. 1234. Amendments to the Depository Institution Management
Interlocks Act.
Sec. 1235. Amendments to the Emergency Homeowners' Relief Act.
Sec. 1236. Amendments to the Equal Credit Opportunity Act.
Sec. 1237. Amendments to the Federal Credit Union Act.
Sec. 1238. Amendments to the Federal Financial Institutions Examination
Council Act of 1978.
Sec. 1239. Amendments to the Federal Home Loan Bank Act.
Sec. 1240. Amendments to the Federal Reserve Act.
Sec. 1241. Amendments to the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989.
Sec. 1242. Amendments to the Housing Act of 1948.
Sec. 1243. Amendments to the Housing and Community Development Act of
1992 and the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992.
Sec. 1244. Amendment to the Housing and Urban-Rural Recovery Act of
1983.
Sec. 1245. Amendments to the National Housing Act.
Sec. 1246. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 1247. Amendments to the Balanced Budget and Emergency Deficit
Control Act of 1985.
Sec. 1248. Amendments to the Crime Control Act of 1990.
Sec. 1249. Amendment to the Flood Disaster Protection Act of 1973.
Sec. 1250. Amendment to the Investment Company Act of 1940.
Sec. 1251. Amendment to the Neighborhood Reinvestment Corporation Act.
Sec. 1252. Amendments to the Securities Exchange Act of 1934.
Sec. 1253. Amendments to title 18, United States Code.
Sec. 1254. Amendments to title 31, United States Code.
Sec. 1255. Requirement for Countercyclical Capital Requirements.
Sec. 1256. Transfer of authority to the Board with respect to savings
and loan holding companies.
Subtitle D--Further Improvements to the Regulation of Bank Holding
Companies and Depository Institutions
Sec. 1301. Treatment of industrial loan companies, savings
associations, and certain other companies
under the bank holding company act.
Sec. 1302. Registration of certain companies as bank holding companies.
Sec. 1303. Reports and examinations of bank holding companies;
regulation of functionally regulated
subsidiaries.
Sec. 1304. Requirements for financial holding companies to remain well
capitalized and well managed.
Sec. 1305. Standards for interstate acquisitions.
Sec. 1306. Enhancing existing restrictions on bank transactions with
affiliates.
Sec. 1307. Eliminating exceptions for transactions with financial
subsidiaries.
Sec. 1308. Lending limits applicable to credit exposure on derivative
transactions, repurchase agreements,
reverse repurchase agreements, and
securities lending and borrowing
transactions.
Sec. 1309. Restriction on conversions of troubled banks and thrifts.
Sec. 1310. Lending limits to insiders.
Sec. 1311. Limitations on purchases of assets from insiders.
Sec. 1312. Rules regarding capital levels of bank holding companies.
Sec. 1313. Enhancements to factors to be considered in certain
acquisitions.
Sec. 1314. Elimination of elective investment bank holding company
framework.
Sec. 1315. Examination fees for large bank holding companies.
Subtitle E--Improvements to the Federal Deposit Insurance Fund
Sec. 1401. Accounting for actual risk to the Deposit Insurance Fund.
Sec. 1402. Creating a risk-focused assessment base.
Sec. 1403. Elimination of procyclical assessments.
Sec. 1404. Enhanced access to information for deposit insurance
purposes.
Sec. 1405. Transition reserve ratio requirements to reflect new
assessment base.
Subtitle F--Improvements to the Asset-backed Securitization Process
Sec. 1501. Short title.
Sec. 1502. Credit risk retention.
Sec. 1503. Periodic and other reporting under the Securities Exchange
Act of 1934 for asset-backed securities.
Sec. 1504. Representations and warranties in asset-backed offerings.
Sec. 1505. Exempted transactions under the Securities Act of 1933.
Sec. 1506. Study on the macroeconomic effects of risk retention
requirements.
Subtitle G--Enhanced Dissolution Authority
Sec. 1601. Short title.
Sec. 1602. Definitions.
Sec. 1603. Systemic risk determination.
Sec. 1604. Resolution; stabilization.
Sec. 1605. Judicial review.
Sec. 1606. Directors not liable for acquiescing in appointment of
receiver.
Sec. 1607. Termination and exclusion of other actions.
Sec. 1608. Rulemaking.
Sec. 1609. Powers and duties of corporation.
Sec. 1610. Clarification of prohibition regarding concealment of assets
from receiver or liquidating agent.
Sec. 1611. Office of Resolution.
Sec. 1612. Miscellaneous provisions.
Sec. 1613. Amendment to Federal Deposit Insurance Act.
Sec. 1614. Application of executive compensation limitations.
Subtitle H--Additional Improvements for Financial Crisis Management
Sec. 1701. Additional improvements for financial crisis management.
Sec. 1702. Certain restrictions related to foreign currency swap
authority.
Sec. 1703. Additional oversight of financial regulatory system.
Subtitle I--Miscellaneous
Sec. 1801. Inclusion of minorities and women; Diversity in agency
workforce.
Subtitle J--International Policy Coordination
Sec. 1901. International policy coordination.
Subtitle K--International Financial Provisions
Sec. 1951. Access to United States financial market by foreign
institutions.
TITLE II--CORPORATE AND FINANCIAL INSTITUTION COMPENSATION FAIRNESS ACT
Sec. 2001. Short title.
Sec. 2002. Shareholder vote on executive compensation disclosures.
Sec. 2003. Compensation committee independence.
Sec. 2004. Enhanced compensation structure reporting to reduce perverse
incentives.
TITLE III--OVER-THE-COUNTER DERIVATIVES MARKETS ACT
Sec. 3001. Short title.
Subtitle A--Regulation of Swap Markets
Sec. 3101. Definitions.
Sec. 3102. Jurisdiction.
Sec. 3103. Clearing.
Sec. 3104. Public reporting of aggregate swap data.
Sec. 3105. Swap repositories.
Sec. 3106. Reporting and recordkeeping.
Sec. 3107. Registration and regulation of swap dealers and major swap
participants.
Sec. 3108. Segregation of assets held as collateral in swap
transactions.
Sec. 3109. Conflicts of interest.
Sec. 3110. Swap execution facilities.
Sec. 3111. Derivatives transaction execution facilities and exempt
boards of trade.
Sec. 3112. Designated contract markets.
Sec. 3113. Position limits.
Sec. 3114. Enhanced authority over registered entities.
Sec. 3115. Foreign boards of trade.
Sec. 3116. Legal certainty for swaps.
Sec. 3117. Multilateral clearing organizations.
Sec. 3118. Primary enforcement authority.
Sec. 3119. Enforcement.
Sec. 3120. Retail commodity transactions.
Sec. 3121. Large swap trader reporting.
Sec. 3122. Authority to ban abusive swaps.
Sec. 3123. International harmonization.
Sec. 3124. Authority to ban access to the United States Financial
System.
Sec. 3125. Other authority.
Sec. 3126. Antitrust.
Sec. 3127. Effective date.
Subtitle B--Regulation of Security-Based Swap Markets
Sec. 3201. Definitions under the Securities Exchange Act of 1934.
Sec. 3202. Repeal of prohibition on regulation of security-based swaps.
Sec. 3203. Amendments to the Securities Exchange Act of 1934.
Sec. 3204. Registration and regulation of swap dealers and major swap
participants.
Sec. 3205. National security exchange registration requirements.
Sec. 3206. Reporting and recordkeeping.
Sec. 3207. State gaming and bucket shop laws.
Sec. 3208. Amendments to the Securities Act of 1933; treatment of
security-based swaps.
Sec. 3209. Other authority.
Sec. 3210. Jurisdiction.
Sec. 3211. Effective date.
Subtitle C--Miscellaneous
Sec. 3301. Study on feasibility of requiring use of standardized
algorithmic descriptions for financial
derivatives.
Sec. 3302. Study of desirability and feasibility of establishing single
regulator for all transactions involving
financial derivatives.
Sec. 3303. Recommendations for changes to insolvency laws.
Sec. 3304. Prohibition against government assistance.
TITLE IV--CONSUMER FINANCIAL PROTECTION AGENCY ACT
Sec. 4001. Short title.
Sec. 4002. Definitions.
Subtitle A--Establishment of the Agency
Sec. 4101. Establishment of the Consumer Financial Protection Agency.
Sec. 4102. Director.
Sec. 4103. Consumer Financial Protection Oversight Board.
Sec. 4104. Executive and administrative powers.
Sec. 4105. Administration.
Sec. 4106. Consumer Advisory Board.
Sec. 4107. Coordination.
Sec. 4108. Reports to the Congress.
Sec. 4109. Funding; fees and assessments; penalties and fines.
Sec. 4110. Amendments relating to other administrative provisions.
Sec. 4111. Effective date.
Subtitle B--General Powers of the Director and Agency
Sec. 4201. Mandate and objectives.
Sec. 4202. Authorities.
Sec. 4203. Examination and enforcement for small banks, thrifts, and
credit unions.
Sec. 4204. Simultaneous and coordinated supervisory action.
Sec. 4205. Limitations on authority of agency and director.
Sec. 4206. Collection of information; confidentiality regulations.
Sec. 4207. Monitoring; assessments of significant regulations; reports.
Sec. 4208. Authority to restrict mandatory predispute arbitration.
Sec. 4209. Registration and supervision of nondepository covered
persons.
Sec. 4210. Effective date.
Subtitle C--Specific Authorities
Sec. 4301. Prohibiting unfair, deceptive, or abusive acts or practices.
Sec. 4302. Disclosures.
Sec. 4303. Sales practices.
Sec. 4304. Pilot disclosures.
Sec. 4305. Adopting operational standards to deter unfair, deceptive,
or abusive practices.
Sec. 4306. Duties.
Sec. 4307. Consumer rights to access information.
Sec. 4308. Prohibited acts.
Sec. 4309. Treatment of remittance transfers.
Sec. 4310. Effective date.
Sec. 4311. No authority to require the offering of financial products
or services.
Sec. 4312. Appraisal independence requirements.
Subtitle D--Preservation of State Law
Sec. 4401. Relation to State law.
Sec. 4402. Preservation of enforcement powers of States.
Sec. 4403. Preservation of existing contracts.
Sec. 4404. State law preemption standards for national banks and
subsidiaries clarified.
Sec. 4405. Visitorial standards.
Sec. 4406. Clarification of law applicable to nondepository institution
subsidiaries.
Sec. 4407. State law preemption standards for Federal savings
associations and subsidiaries clarified.
Sec. 4408. Visitorial standards.
Sec. 4409. Clarification of law applicable to nondepository institution
subsidiaries.
Sec. 4410. Effective date.
Subtitle E--Enforcement Powers
Sec. 4501. Definitions.
Sec. 4502. Investigations and administrative discovery.
Sec. 4503. Hearings and adjudication proceedings.
Sec. 4504. Litigation authority.
Sec. 4505. Relief available.
Sec. 4506. Referrals for criminal proceedings.
Sec. 4507. Employee protection.
Sec. 4508. Effective date.
Subtitle F--Transfer of Functions and Personnel; Transitional
Provisions
Sec. 4601. Transfer of certain functions.
Sec. 4602. Designated transfer date.
Sec. 4603. Savings provisions.
Sec. 4604. Transfer of certain personnel.
Sec. 4605. Incidental transfers.
Sec. 4606. Interim authority of the Secretary.
Subtitle G--Regulatory Improvements
Sec. 4701. Collection of deposit account data.
Sec. 4702. Small business data collection.
Sec. 4703. Annual financial autopsy.
Subtitle H--Conforming Amendments
Sec. 4801. Amendments to the Inspector General Act of 1978.
Sec. 4802. Amendments to the Privacy Act of 1974.
Sec. 4803. Amendments to the Alternative Mortgage Transaction Parity
Act of 1982.
Sec. 4804. Amendments to the Consumer Credit Protection Act.
Sec. 4805. Amendments to the Expedited Funds Availability Act.
Sec. 4806. Amendments to the Federal Deposit Insurance Act.
Sec. 4807. Amendments to the Gramm-Leach-Bliley Act.
Sec. 4808. Amendments to the Home Mortgage Disclosure Act of 1975.
Sec. 4809. Amendments to division D of the Omnibus Appropriations Act,
2009.
Sec. 4810. Amendments to the Homeowners Protection Act of 1998.
Sec. 4811. Amendments to the Real Estate Settlement Procedures Act of
1974.
Sec. 4812. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 4813. Amendments to the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008.
Sec. 4814. Amendments to the Truth in Savings Act.
Sec. 4815. Amendments to the Telemarketing and Consumer Fraud and Abuse
Prevention Act.
Sec. 4816. Membership in Financial Literacy and Education Commission.
Sec. 4817. Effective date.
Subtitle I--Improvements to the Federal Trade Commission Act
Sec. 4901. Amendments to the Federal Trade Commission Act.
TITLE V--CAPITAL MARKETS
Subtitle A--Private Fund Investment Advisers Registration Act
Sec. 5001. Short title.
Sec. 5002. Definitions.
Sec. 5003. Elimination of private adviser exemption; Limited exemption
for foreign private fund advisers; Limited
intrastate exemption.
Sec. 5004. Collection of systemic risk data.
Sec. 5005. Elimination of disclosure provision.
Sec. 5006. Exemption of and reporting by venture capital fund advisers.
Sec. 5007. Exemption of and reporting by certain private fund advisers.
Sec. 5008. Clarification of rulemaking authority.
Sec. 5009. GAO study.
Sec. 5010. Effective date; Transition period.
Sec. 5011. Qualified client standard.
Subtitle B--Accountability and Transparency in Rating Agencies Act
Sec. 6001. Short title.
Sec. 6002. Enhanced regulation of nationally recognized statistical
rating organizations.
Sec. 6003. Standards for private actions.
Sec. 6004. Issuer disclosure of preliminary ratings.
Sec. 6005. Change to designation.
Sec. 6006. Timeline for regulations.
Sec. 6007. Elimination of exemption from fair disclosure rule.
Sec. 6008. Advisory Board.
Sec. 6009. Removal of statutory references to credit ratings.
Sec. 6010. Review of reliance on ratings.
Sec. 6011. Publication of rating histories on the EDGAR system.
Sec. 6012. Effect of Rule 436(g).
Sec. 6013. Studies.
Subtitle C--Investor Protection Act
Sec. 7001. Short title.
Part 1--Disclosure
Sec. 7101. Investor Advisory Committee established.
Sec. 7102. Clarification of the Commission's authority to engage in
consumer testing.
Sec. 7103. Establishment of a fiduciary duty for brokers, dealers, and
investment advisers, and harmonization of
regulation.
Sec. 7104. Commission study on disclosure to retail customers before
purchase of products or services.
Sec. 7105. Beneficial ownership and short-swing profit reporting.
Sec. 7106. Revision to recordkeeping rules.
Sec. 7107. Study on enhancing investment advisor examinations.
Sec. 7108. GAO study of financial planning.
Part 2--Enforcement and Remedies
Sec. 7201. Authority to restrict mandatory pre-dispute arbitration.
Sec. 7202. Comptroller General study to review securities arbitration
system.
Sec. 7203. Whistleblower protection.
Sec. 7204. Conforming amendments for whistleblower protection.
Sec. 7205. Implementation and transition provisions for whistleblower
protections.
Sec. 7206. Collateral bars.
Sec. 7207. Aiding and abetting authority under the Securities Act and
the Investment Company Act.
Sec. 7208. Authority to impose penalties for aiding and abetting
violations of the Investment Advisers Act.
Sec. 7209. Deadline for completing examinations, inspections and
enforcement actions.
Sec. 7210. Nationwide service of subpoenas.
Sec. 7211. Authority to impose civil penalties in cease and desist
proceedings.
Sec. 7212. Formerly associated persons.
Sec. 7213. Sharing privileged information with other authorities.
Sec. 7214. Expanded access to grand jury material.
Sec. 7215. Aiding and abetting standard of knowledge satisfied by
recklessness.
Sec. 7216. Extraterritorial jurisdiction of the antifraud provisions of
the Federal securities laws.
Sec. 7217. Fidelity bonding.
Sec. 7218. Enhanced SEC authority to conduct surveillance and risk
assessment.
Sec. 7219. Investment company examinations.
Sec. 7220. Control person liability under the Securities Exchange Act.
Sec. 7221. Enhanced application of anti-fraud provisions.
Sec. 7222. SEC authority to issue rules on proxy access.
Part 3--Commission Funding and Organization
Sec. 7301. Authorization of appropriations.
Sec. 7302. Investment adviser regulation funding.
Sec. 7303. Amendments to section 31 of the Securities Exchange Act of
1934.
Sec. 7304. Commission organizational study and reform.
Sec. 7305. Capital Markets Safety Board.
Sec. 7306. Report on implementation of ``post-Madoff reforms''.
Sec. 7307. Joint Advisory Committee.
Part 4--Additional Commission Reforms
Sec. 7401. Regulation of securities lending.
Sec. 7402. Lost and stolen securities.
Sec. 7403. Fingerprinting.
Sec. 7404. Equal treatment of self-regulatory organization rules.
Sec. 7405. Clarification that section 205 of the Investment Advisers
Act of 1940 does not apply to State-
registered advisers.
Sec. 7406. Conforming amendments for the repeal of the Public Utility
Holding Company Act of 1935.
Sec. 7407. Promoting transparency in financial reporting.
Sec. 7408. Unlawful margin lending.
Sec. 7409. Protecting confidentiality of materials submitted to the
Commission.
Sec. 7410. Technical corrections.
Sec. 7411. Municipal securities.
Sec. 7412. Interested person definition.
Sec. 7413. Rulemaking authority to protect redeeming investors.
Sec. 7414. Study on SEC revolving door.
Sec. 7415. Study on internal control evaluation and reporting cost
burdens on smaller issuers.
Sec. 7416. Analysis of rule regarding smaller reporting companies.
Sec. 7417. Financial Reporting Forum.
Sec. 7418. Investment advisers subject to State authorities.
Sec. 7419. Custodial requirements.
Sec. 7420. Ombudsman.
Part 5--Securities Investor Protection Act Amendments
Sec. 7501. Increasing the minimum assessment paid by SIPC members.
Sec. 7502. Increasing the borrowing limit on treasury loans.
Sec. 7503. Increasing the cash limit of protection.
Sec. 7504. SIPC as trustee in SIPA liquidation proceedings.
Sec. 7505. Insiders ineligible for SIPC advances.
Sec. 7506. Eligibility for direct payment procedure.
Sec. 7507. Increasing the fine for prohibited acts under SIPA.
Sec. 7508. Penalty for misrepresentation of SIPC membership or
protection.
Sec. 7509. Futures held in a portfolio margin securities account
protection.
Sec. 7510. Study and report on the feasibility of risk-based
assessments for SIPC members.
Sec. 7511. Budgetary treatment of Commission loans to SIPC.
Part 6--Sarbanes-Oxley Act Amendments
Sec. 7601. Public Company Accounting Oversight Board oversight of
auditors of brokers and dealers.
Sec. 7602. Foreign regulatory information sharing.
Sec. 7603. Expansion of audit information to be produced and exchanged
with foreign counterparts.
Sec. 7604. Conforming amendment related to registration.
Sec. 7605. Fair fund amendments.
Sec. 7606. Exemption for nonaccelerated filers.
Sec. 7607. Whistleblower protection against retaliation by a subsidiary
of an issuer.
Sec. 7608. Congressional access to information.
Sec. 7609. Creation of ombudsman for the PCAOB.
Sec. 7610. Auditing Oversight Board.
Part 7--Senior Investment Protection
Sec. 7701. Findings.
Sec. 7702. Definitions.
Sec. 7703. Grants to States for enhanced protection of seniors from
being mislead by false designations.
Sec. 7704. Applications.
Sec. 7705. Length of participation.
Sec. 7706. Authorization of appropriations.
Part 8--Registration of Municipal Financial Advisors
Sec. 7801. Municipal financial adviser registration requirement.
Sec. 7802. Conforming amendments.
Sec. 7803. Effective dates.
TITLE VI--FEDERAL INSURANCE OFFICE
Sec. 8001. Short title.
Sec. 8002. Federal Insurance Office established.
Sec. 8003. Report on global reinsurance market.
Sec. 8004. Study on modernization and improvement of insurance
regulation in the United States.
TITLE I--FINANCIAL STABILITY IMPROVEMENT ACT
SEC. 1000. SHORT TITLE; DEFINITIONS.
(a) Short Title.--This title may be cited as the ``Financial
Stability Improvement Act of 2009''.
(b) Definitions.--For purposes of this title, the following
definitions shall apply:
(1) The term ``Board'' means the Board of Governors of the
Federal Reserve System.
(2) The term ``Council'' means the Financial Services
Oversight Council established under section 1001.
(3) The term ``Federal financial regulatory agency'' means
any agency that has a voting member of the Council as set forth
in section 1001(b)(1).
(4) The term ``financial company'' means a company or other
entity--
(A) that is--
(i) incorporated or organized under the
laws of the United States or any State,
territory, or possession of the United States,
the District of Columbia, Commonwealth of
Puerto Rico, Commonwealth of Northern Mariana
Islands, Guam, American Samoa, or the United
States Virgin Islands; or
(ii) a company incorporated in or organized
in a country other than the United States that
has significant operations in the United States
through--
(I) a Federal or State branch or
agency of a foreign bank as such terms
are defined in the International
Banking Act of 1978 (12 U.S.C. 3101 et
seq.); or
(II) a United States affiliate or
other United States operating entity of
a company that is incorporated or
organized in a country other than the
United States; and
(B) that is, in whole or in part, directly or
indirectly, engaged in financial activities.
(5) Financial holding company subject to stricter
standards.--The term ``financial holding company subject to
stricter standards'' means--
(A) a financial company that has been subjected to
stricter prudential standards under subtitle B; or
(B) in the case of a financial company described in
subparagraph (A) that is required to establish an
intermediate holding company under section 6 of the
Bank Holding Company Act, the section 6 holding company
through which the financial company is required to
conduct its financial activities.
(6) The term ``primary financial regulatory agency'' means
the following:
(A) The Comptroller of the Currency, with respect
to any national bank, any Federal branch or Federal
agency of a foreign bank, and, after the date on which
the functions of the Office of Thrift Supervision and
the Director of the Office of Thrift Supervision are
transferred under subtitle C, a Federal savings
association.
(B) The Board, with respect to--
(i) any State member bank;
(ii) any bank holding company and any
subsidiary of such company (as such terms are
defined in the Bank Holding Company Act), other
than a subsidiary that is described in any
other subparagraph of this paragraph to the
extent that the subsidiary is engaged in an
activity described in such subparagraph;
(iii) any financial holding company subject
to stricter standards and any subsidiary (as
such term is defined in the Bank Holding
Company Act) of such company, other than a
subsidiary that is described in any other
subparagraph of this paragraph to the extent
that the subsidiary is engaged in an activity
described in such subparagraph;
(iv) any organization organized and
operated under section 25 or 25A of the Federal
Reserve Act (12 U.S.C. 601 et seq. or 611 et
seq.); and
(v) any foreign bank or company that is
treated as a bank holding company under
subsection (a) of section 8 of the
International Banking Act of 1978 and any
subsidiary (other than a bank or other
subsidiary that is described in any other
subparagraph of this paragraph) of any such
foreign bank or company.
(C) The Federal Deposit Insurance Corporation, with
respect to a State nonmember bank, any insured State
branch of a foreign bank (as such terms are defined in
section 3 of the Federal Deposit Insurance Act), and,
after the date on which the functions of the Office of
Thrift Supervision are transferred under subtitle C,
any State savings association.
(D) 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.).
(E) The Securities and Exchange Commission, with
respect to--
(i) any broker or dealer registered with
the Securities and Exchange Commission under
the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.);
(ii) any investment company registered with
the Securities and Exchange Commission under
the Investment Company Act of 1940 (15 U.S.C.
80a-1 et seq.);
(iii) any investment adviser registered
with the Securities and Exchange Commission
under the Investment Advisers Act of 1940 (15
U.S.C. 80b-1 et seq.) with respect to the
investment advisory activities of such company
and activities incidental to such advisory
activities;
(iv) any clearing agency (as defined in
section 3(a)(23) of the Securities Exchange Act
of 1934;
(v) any exchange registered as a national
securities exchange with the Securities and
Exchange Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.);
(vi) any credit rating agency registered
with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.);
(vii) any securities information processor
registered with the Securities and Exchange
Commission under the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.); and
(viii) any transfer agent registered with
the Securities and Exchange Commission under
the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq.).
(F) The Commodity Futures Trading Commission, with
respect to--
(i) any futures commission merchant, any
commodity trading adviser, and 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 commodities activities of such entity
and activities incidental to such commodities
activities; and
(ii) any derivatives clearing organization
(as defined in the Commodity Exchange Act).
(G) The Federal Housing Finance Agency with respect
to the Federal National Mortgage Association, the
Federal Home Loan Mortgage Corporation, and the Federal
home loan banks.
(H) The State insurance authority of the State in
which an insurance company is domiciled, with respect
to the insurance activities and activities incidental
to such insurance activities of an insurance company
that is subject to supervision by the State insurance
authority under State insurance law.
(I) The Office of Thrift Supervision, with respect
to any Federal savings association, State savings
association, or savings and loan holding company, until
the date on which the functions of the Office of Thrift
Supervision are transferred under subtitle C.
(7) Terms defined in other laws.--
(A) Affiliate.--The term ``affiliate'' has the
meaning given such term in section 2(k) of the Bank
Holding Company Act of 1956.
(B) State member bank, state nonmember bank.--The
terms ``State member bank'' and ``State nonmember
bank'' have the same meanings as in subsections (d)(2)
and (e)(2), respectively, of section 3 of the Federal
Deposit Insurance Act.
SEC. 1000A. RESTRICTIONS ON THE FEDERAL RESERVE SYSTEM PENDING AUDIT
REPORT.
(a) In General.--Notwithstanding any other provision of law, the
Comptroller General of the United States shall perform an audit of all
actions taken by the Board of Governors of the Federal Reserve System
and the Federal reserve banks during the current economic crisis
pursuant to the authority granted under section 13(c) of the Federal
Reserve Act. Such audit shall be completed as expeditiously as possible
after the date of the enactment of the Financial Stability Improvement
Act of 2009.
(b) Report.--
(1) Required.--Not later than the end of the 90-day period
beginning on the date the audit referred to in subsection (a)
is completed, the Comptroller General of the United States
shall submit a report to the Congress, and make such report
available to the public.
(2) Contents.--The report under paragraph (1) shall include
a detailed description of the findings and conclusion of the
Comptroller General with respect to the audit that is the
subject of the report, together with such recommendations for
legislative or administrative action as the Comptroller General
may determine to be appropriate.
Subtitle A--The Financial Services Oversight Council
SEC. 1001. FINANCIAL SERVICES OVERSIGHT COUNCIL ESTABLISHED.
(a) Establishment.--Immediately upon enactment of this title, there
is established a Financial Services Oversight Council.
(b) Membership.--The Council shall consist of the following:
(1) Voting members.--Voting members, who shall each have
one vote on the Council, as follows:
(A) The Secretary of the Treasury, who shall serve
as the Chairman of the Council.
(B) The Chairman of the Board of Governors of the
Federal Reserve System.
(C) The Comptroller of the Currency.
(D) The Director of the Office of Thrift
Supervision, until the functions of the Director of the
Office of Thrift Supervision are transferred to
pursuant to subtitle C.
(E) The Chairman of the Securities and Exchange
Commission.
(F) The Chairman of the Commodity Futures Trading
Commission.
(G) The Chairperson of the Federal Deposit
Insurance Corporation.
(H) The Director of the Federal Housing Finance
Agency.
(I) The Chairman of the National Credit Union
Administration.
(2) Nonvoting members.--Nonvoting members, who shall serve
in an advisory capacity:
(A) A State insurance commissioner, to be
designated by a selection process determined by the
State insurance commissioners, provided that the term
for which a State insurance commissioner may serve
shall last no more than the 2-year period beginning on
the date that the commissioner is selected.
(B) A State banking supervisor, to be designated by
a selection process determined by the State bank
supervisors, provided that the term for which a State
banking supervisor may serve shall last no more than
the 2-year period beginning on the date that the
supervisor is selected.
(c) Duties.--The Council shall have the following duties:
(1) To advise the Congress on financial domestic and
international regulatory developments, including insurance and
accounting developments, and make recommendations that will
enhance the integrity, efficiency, orderliness,
competitiveness, and stability of the United States financial
markets.
(2) To monitor the financial services marketplace to
identify potential threats to the stability of the United
States financial system.
(3) To identify potential threats to the stability of the
United States financial system that do not arise out of the
financial services marketplace.
(4) To develop plans (and conduct exercises in furtherance
of those plans) to prepare for potential threats identified
under paragraphs (2) and (3).
(5) To subject financial companies and financial activities
to stricter prudential standards in order to promote financial
stability and mitigate systemic risk in accordance with
subtitle B.
(6) To issue formal recommendations that a Council member
agency adopt stricter prudential standards for firms it
regulates to mitigate systemic risk in accordance with subtitle
B of this title.
(7) To monitor international regulatory developments,
including both insurance and accounting developments, and to
identify those developments that may conflict with the policies
of the United States or place United States financial services
firms or United States financial markets at a competitive
disadvantage.
(8) To facilitate information sharing and coordination
among the members of the Council regarding financial services
policy development, rulemakings, examinations, reporting
requirements, and enforcement actions.
(9) To provide a forum for discussion and analysis of
emerging market developments and financial regulatory issues
among its members.
(10) At the request of an agency that is a Council member,
to resolve a jurisdictional dispute between that agency and
another agency that is a Council member in accordance with
section 1002.
(11) To review and submit comments to the Securities and
Exchange Commission and any standards setting body with respect
to an existing or proposed accounting principle, standard, or
procedure.
SEC. 1002. RESOLUTION OF DISPUTES AMONG FEDERAL FINANCIAL REGULATORY
AGENCIES.
(a) Request for Dispute Resolution.--The Council shall resolve a
dispute among 2 or more Federal financial regulatory agencies if--
(1) a Federal financial regulatory agency has a dispute
with another Federal financial regulatory agency about the
agencies' respective jurisdiction over a particular financial
company or financial activity or product (excluding matters for
which another dispute mechanism specifically has been provided
under Federal law);
(2) the disputing agencies cannot, after a demonstrated
good faith effort, resolve the dispute among themselves; and
(3) any of the Federal financial regulatory agencies
involved in the dispute--
(A) provides all other disputants prior notice of
its intent to request dispute resolution by the
Council; and
(B) requests in writing, no earlier than 14 days
after providing the notice described in paragraph (A),
that the Council resolve the dispute.
(b) Council Decision.--The Council shall decide the dispute--
(1) within a reasonable time after receiving the dispute
resolution request;
(2) after consideration of relevant information provided by
each 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 and Binding Effect.--A Council decision under this section
shall be in writing and include an explanation and shall be binding on
all Federal financial regulatory agencies that are parties to the
dispute.
SEC. 1003. TECHNICAL AND PROFESSIONAL ADVISORY COMMITTEES.
The Council is authorized to appoint--
(1) subsidiary working groups composed of Council members
and their staff, Council staff, or a combination; and
(2) such temporary special advisory, technical, or
professional committees as may be useful in carrying out its
functions, which may be composed of Council members and their
staff, other persons, or a combination.
SEC. 1004. FINANCIAL SERVICES OVERSIGHT COUNCIL MEETINGS AND COUNCIL
GOVERNANCE.
(a) Meetings.--The Council shall meet as frequently as the Chairman
deems necessary, but not less than quarterly.
(b) Voting.--Unless otherwise provided, the Council shall make all
decisions the Council is required or authorized to make by a majority
of the total voting membership of the Council under section 1001(b)(1).
SEC. 1005. COUNCIL STAFF AND FUNDING.
(a) Department of the Treasury.--The Secretary of the Treasury
shall--
(1) detail permanent staff from the Department of the
Treasury to provide the Council (and any temporary special
advisory, technical, or professional committees appointed by
the Council) with professional and expert support; and
(2) provide such other services and facilities necessary
for the performance of the Council's functions and fulfillment
of the duties and mission of the Council.
(b) Other Departments and Agencies.--In addition to the assistance
prescribed in subsection (a), departments and agencies of the United
States may, with the approval of the Secretary of the Treasury--
(1) detail department or agency staff on a temporary basis
to provide additional support to the Council (and any special
advisory, technical, or professional committees appointed by
the Council); and
(2) provide such services, and facilities as the other
departments or agencies may determine advisable.
(c) Staff Status; Council Funding.--
(1) Status.--Staff detailed to the Council by the Secretary
of the Treasury and other United States departments or agencies
shall--
(A) report to and be subject to oversight by the
Council during their assignment to the Council; and
(B) be compensated by the department of agency from
which the staff was detailed.
(2) Funding.--The administrative expense of the Council
shall be paid by the departments and agencies represented by
voting members of the Council on an equal basis.
SEC. 1006. REPORTS TO THE CONGRESS.
(a) In General.--Semiannually the Council shall submit a report to
the Committee on Financial Services of the House of Representatives,
the Committee on Banking, Housing, and Urban Affairs of the Senate, and
the Comptroller General of the United States that--
(1) describes significant financial and regulatory
developments, including insurance and accounting regulations
and standards, and assesses the impact of those developments on
the stability of the financial system;
(2) recommends actions that will improve financial
stability;
(3) details the size, scale, scope, concentration,
activities, and interconnectedness of the 50 largest financial
institutions, by total assets, in the United States;
(4) describes plans developed by the Council to respond to
potential threats to the stability of the United States
financial system and the outcome of exercises conducted in
furtherance of those plans;
(5) describes the nature and scope of any company or
activities identified under subtitle B and steps taken to
address them; and
(6) describes any dispute resolutions undertaken under
section 1002 and the result of such resolutions.
(b) Evaluation of Annual Report by GAO.--Not later than 120 days
after receiving the report required by subsection (a), the Comptroller
General of the United States shall submit an evaluation of such report
to the Committee on Financial Services of the House of Representatives
and the Committee on Banking, Housing, and Urban Affairs of the Senate.
(c) Statements by Voting Members of the Council.--At the time 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 prevent systemic
risk that would negatively affect the economy, submit a signed
statement to the Committee on Financial Services of the House
of Representatives and the Committee on Banking, Housing, and
Urban Affairs of the Senate 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 the Committee on Financial Services of the
House of Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate stating what actions such
member believes need to be taken in order to ensure that all
reasonable steps described under paragraph (1) are taken.
(d) Testimony by the Chairman.--The Chairman of the Council 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 a semi-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.
SEC. 1007. APPLICABILITY OF CERTAIN FEDERAL LAWS.
(a) The Federal Advisory Committee Act shall not apply to the
Financial Services Oversight Council, or any special advisory,
technical, or professional committees 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).
(b) The Council shall not be deemed an ``agency'' for purposes of
any State or Federal law.
SEC. 1008. OVERSIGHT BY GAO.
(a) Authority to Audit.--The Comptroller General of the United
States may audit the activities and financial transactions of--
(1) the Council; and
(2) any person or entity acting on behalf of or under the
authority of the Council, to the extent such activities and
financial transactions relate to such person's or entity's work
for the Council.
(b) Access to Information.--
(1) In general.--Notwithstanding any other provision of
law, the Comptroller General of the United States shall have
access, upon request and at such reasonable time and in such
reasonable form as the Comptroller General may request, to--
(A) any records or other information under the
control of the Council; and
(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 such
records or other information is relevant to an audit
under subsection (a).
(2) Certain information specified.--Access under paragraph
(1) includes access to--
(A) information provided to the Council by its
voting and nonvoting members under section 1101; and
(B) the identity of each financial holding company
subject to stricter standards.
(c) Periodic Evaluations.--The Comptroller General of the United
States shall periodically evaluate the processes and activities of the
Council and the extent to which the Council is fulfilling its duties
under this title. The Comptroller General 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 each such evaluation.
(d) Confidentiality.--Any committees or Members of Congress
receiving reports or other information from the Comptroller General of
the United States shall maintain the confidentiality of any such
information relating to--
(1) dispute resolutions undertaken under section 1002,
including the result of such dispute resolutions; and
(2) financial holding companies subject to stricter
standards.
Subtitle B--Prudential Regulation of Companies and Activities for
Financial Stability Purposes
SEC. 1101. COUNCIL AND BOARD AUTHORITY TO OBTAIN INFORMATION.
(a) In General.--The Council and the Board are authorized to
receive, and may request the production of, any data or information
from members of the Council, as necessary--
(1) to monitor the financial services marketplace to
identify potential threats to the stability of the United
States financial system;
(2) to identify global trends and developments that could
pose systemic risks to the stability of the economy of the
United States or other economies; or
(3) to otherwise carry out any of the provisions of this
title, including to ascertain a primary financial regulatory
agency's implementation of recommended prudential standards
under this subtitle.
(b) Submission by Council Members.--Notwithstanding any provision
of law, any voting or nonvoting member of the Council is authorized to
provide information to the Council, and the members of the Council
shall maintain the confidentiality of such information.
(c) Financial Company Data Collection.--
(1) In general.--The Council or the Board may require the
submission of periodic and other reports from any financial
company solely for the purpose of assessing the extent to which
a financial activity or financial market in which the financial
company participates, or the company itself, poses a threat to
financial stability.
(2) Mitigation of report burden.--Before requiring the
submission of reports from financial companies that are
regulated by the primary financial regulatory agencies, the
Council or the Board shall coordinate with such agencies and
shall, whenever possible, rely on information already being
collected by such agencies.
(d) Consultation With Agencies and Entities.--The Council or the
Board, as appropriate, may consult with Federal and State agencies and
other entities to carry out any of the provisions of this subtitle.
(e) Additional Provisions.--
(1) Data and information sharing.--The Chairman of the
Council, in consultation with the other members of the Council
may--
(A) establish procedures to share data and
information collected by the Council under this section
with the members of the Council;
(B) develop an electronic process for sharing all
information collected by the Council with the Chairman
of the Board on a real-time basis; and
(C) issue any regulations necessary to carry out
this subsection; and
(D) designate the format in which requested data
and information must be submitted to the Council,
including any electronic, digital, or other format that
facilitates the use of such data by the Council in its
analysis.
(2) Applicable privileges not waived.--A Federal financial
regulator, State financial regulator, United States financial
company, foreign financial company operating in the United
States, financial market utility, or other person shall not be
deemed to have waived any privilege otherwise applicable to any
data or information by transferring the data or information to,
or permitting that data or information to be used by--
(A) the Council;
(B) any Federal financial regulator or State
financial regulator, in any capacity; or
(C) any other agency of the Federal Government (as
defined in section 6 of title 18, United States Code).
(3) Disclosure exemption.--Any information obtained by the
Council under this section shall be exempt from the disclosure
requirements under section 552 of title 5, United States Code.
(4) Consultation with foreign governments.--Under the
supervision of the President, and in a manner consistent with
section 207 of the Foreign Service Act of 1980 (22 U.S.C.
3927), the Chairman 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.
(5) Report.--Not later than 6 months after the date of the
enactment of this title, the Chairman of the Council shall
report to the Financial Services Committee of the House of
Representatives and the Banking, Housing, and Urban Affairs
Committee of the Senate the opinion of the Council as to
whether setting up an electronic database as described in
paragraph (1)(B) would aid the Council in carrying out this
section.
SEC. 1102. COUNCIL PRUDENTIAL REGULATION RECOMMENDATIONS TO FEDERAL
FINANCIAL REGULATORY AGENCIES.
(a) In General.--The Council is authorized to issue formal
recommendations, publicly or privately, that a Federal financial
regulatory agency adopt stricter prudential standards for firms it
regulates to mitigate systemic risk.
(b) Agency Authority to Implement Standards.--A Federal financial
regulatory agency specifically is authorized to impose, require reports
regarding, examine for compliance with, and enforce stricter prudential
standards and safeguards for the firms it regulates to mitigate
systemic risk. This authority is in addition to and does not limit any
other authority of the Federal financial regulatory agencies.
Compliance by an entity with actions taken by a Federal financial
regulatory agency under this section shall be enforceable in accordance
with the statutes governing the respective Federal financial regulatory
agency's jurisdiction over the entity as if the agency action were
taken under those statutes.
(c) Agency Notice to Council.--A Federal financial regulatory
agency shall, within 60 days of receiving a Council recommendation
under this section, notify the Council in writing regarding--
(1) the actions the Federal financial regulatory agency has
taken in response to the Council's recommendation, additional
actions contemplated, and timetables therefore; or
(2) the reason the Federal financial regulatory agency has
failed to respond to the Council's request.
SEC. 1103. SUBJECTING FINANCIAL COMPANIES TO STRICTER PRUDENTIAL
STANDARDS FOR FINANCIAL STABILITY PURPOSES.
(a) In General.--The Council shall, in consultation with the Board
and any other primary financial regulatory agency that regulates the
financial company or a subsidiary of such company, subject a financial
company to stricter prudential standards under this subtitle if the
Council determines that--
(1) material financial distress at the company could pose a
threat to financial stability or the economy; or
(2) the nature, scope, size, scale, concentration, and
interconnectedness, or mix of the company's activities could
pose a threat to financial stability or the economy.
(b) Criteria.--In making a determination under subsection (a), the
Council shall consider the following criteria:
(1) The amount and nature of the company's financial
assets.
(2) The amount and nature of the company's liabilities,
including the degree of reliance on short-term funding.
(3) The extent of the company's leverage.
(4) The extent and nature of the company's off-balance
sheet exposures.
(5) The extent and nature of the company's transactions and
relationships with other financial companies.
(6) 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.
(7) The nature, scope, and mix of the company's activities.
(8) The degree to which the company is already regulated by
one or more Federal financial regulatory agencies.
(9) Any other factors that the Council deems appropriate.
(c) Notification of Decision.--The Board, in an executive capacity
on behalf of the Council, shall immediately upon the Council's decision
notify the financial company by order, which shall be public, that the
financial company is subject to stricter prudential standards, as
prescribed by the Board in accordance with section 1104.
(d) Periodic Review and Rescission of Findings.--
(1) Submission of assessment.--The Board shall periodically
submit a report to the Council containing an assessment of
whether each company subjected to stricter prudential standards
should continue to be subject to such standards.
(2) Review and rescission.--The Council shall--
(A) review the assessment submitted pursuant to
paragraph (1) and any information or recommendation
submitted by members of the Council regarding whether a
financial holding company subject to stricter standards
continues to merit stricter prudential standards; and
(B) rescind the action subjecting a company to
stricter prudential standards if the Council determines
that the company no longer meets the conditions for
being subjected to stricter prudential standards in
subsections (a) and (b).
(e) Emergency Exception to Majority Vote of Council Requirement.--
If each of the Secretary of the Treasury, the Board, and the Federal
Deposit Insurance Corporation determines that a financial company must
be subjected to stricter prudential standards in accordance with this
section immediately to prevent destabilization of the financial system
or economy, the Secretary, the Board, and the Corporation may, upon
approval by the President, subject such company to stricter prudential
standards under this section.
(f) Appeal.--
(1) Administrative.--The Council and the Board, in an
executive capacity on behalf of the Council, shall establish a
procedure through which a financial company that has been
subjected to stricter prudential standards in accordance with
this section may appeal being subjected to stricter prudential
standards.
(2) Judicial review.--Any financial company which has been
subjected to stricter prudential standards may seek judicial
review by filing a petition for such review in the United
States Court of Appeals for the District of Columbia.
(g) Effect of Council Decision.--
(1) Application of the bank holding company act.--A
financial company that is not a bank holding company as defined
in the Bank Holding Company Act at the time the financial
company is subjected to stricter prudential standards in
accordance with this section, shall--
(A) if such company conducts at the time such
company is subjected to stricter prudential standards
in accordance with this section only activities that
are determined to be financial in nature or incidental
thereto under section 4(k) of the Bank Holding Company
Act of 1956, be treated as a bank holding company that
has elected to be a financial holding company for
purposes of the Bank Holding Company Act of 1956, the
Federal Deposit Insurance Act, and all other Federal
laws and regulations governing bank holding companies
and financial holding companies and be the financial
holding company subject to stricter standards for
purposes of this subtitle; or
(B) if such company conducts at the time that such
company is subjected to stricter prudential standards
in accordance with this section 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, be required to establish and
conduct all its activities that are determined to be
financial in nature or incidental thereto under section
4(k) of the Bank Holding Company Act of 1956 in an
intermediate holding company established under section
6 of the Bank Holding Company Act of 1956, which
intermediate holding company shall be treated as a bank
holding company that has elected to be a financial
holding company for purposes of the Bank Holding
Company Act of 1956, the Federal Deposit Insurance Act,
and all other Federal laws and regulations governing
bank holding companies and financial holding companies,
and such section 6 holding company shall be a financial
holding company subject to stricter standards for
purposes of this title.
(2) Exemptive authority.--Notwithstanding any provision of
the Bank Holding Company Act of 1956, the Board may, if it
determines such action is necessary to ensure appropriate
stricter prudential supervision, issue such exemptions from
that Act as may be necessary with regard to financial holding
companies subject to stricter standards that do not control an
insured depository institution.
(3) Leverage limitation.--The Board shall require each
financial holding company subject to stricter standards to
maintain a debt to equity ratio of no more than 15 to 1, and
the Board shall issue regulations containing procedures and
timelines for how a financial holding company subject to
stricter standards with a debt to equity ratio of more than 15
to 1 at the time such company becomes a financial holding
company subject to stricter standards shall reduce such ratio.
SEC. 1104. STRICTER PRUDENTIAL STANDARDS FOR CERTAIN FINANCIAL HOLDING
COMPANIES FOR FINANCIAL STABILITY PURPOSES.
(a) Stricter Prudential Standards.--
(1) In general.--To mitigate risks to financial stability
and the economy posed by a financial holding company that has
been subjected to stricter prudential standards in accordance
with section 1103, the Board shall impose stricter prudential
standards on such company. Such standards shall be designed to
maximize financial stability taking costs to long-term
financial and economic growth into account, be heightened when
compared to the standards that otherwise would apply to
financial holding companies that are not subjected to stricter
prudential standards pursuant to this subtitle (including by
addressing additional or different types of risks than
otherwise applicable standards), and reflect the potential risk
posed to financial stability by the financial holding company
subject to stricter standards.
(2) Standards.--
(A) Required standards.--The heightened standards
imposed by the Board under this section shall include--
(i) risk-based capital requirements;
(ii) leverage limits;
(iii) liquidity requirements;
(iv) concentration requirements (as
specified in subsection (c));
(v) prompt corrective action requirements
(as specified in subsection (e));
(vi) resolution plan requirements (as
specified in subsection (f));
(vii) overall risk management requirements;
and
(viii) and may establish short-term debt
limits in accordance with subsection (d).
(B) Additional standards.--The heightened standards
imposed by the Board under this section also may
include any other prudential standards that the Board
deems advisable, including taking actions to mitigate
systemic risk.
(C) Consultation with federal financial regulatory
agencies.--The Board, in developing stricter prudential
standards under this subsection, shall consult with
other Federal financial regulatory agencies with
respect to any standard that is likely to have a
significant impact on a functionally regulated
subsidiary, or a subsidiary depository institution, of
a financial holding company that is subject to stricter
prudential standards under this title.
(3) Application of required standards.--In imposing
prudential standards under this subsection, the Board may
differentiate among financial holding companies subject to
stricter standards on an individual basis or by category,
taking into consideration their capital structure, risk,
complexity, financial activities, the financial activities of
their subsidiaries, and any other factors that the Board deems
appropriate.
(4) Well capitalized and well managed.--A financial holding
company subject to stricter standards shall at all times after
it is subject to such standards be well capitalized and well
managed as defined by the Board.
(5) Application to foreign financial companies.--The Board
shall prescribe regulations regarding the application of
stricter prudential standards to financial companies that are
organized or incorporated in a country other than the United
States, and that own or control a Federal or State branch,
subsidiary, or operating entity that is a financial holding
company subject to stricter standards, giving due regard to the
principle of national treatment and equality of competitive
opportunity and taking into account the extent to which such
companies are subject to home country standards comparable to
those applied to financial holding companies in the United
States.
(6) Inclusion of off balance sheet activities in computing
capital requirements.--
(A) In general.--In the case of any financial
holding company subject to stricter standards, the
computation of capital requirements shall take into
account off balance sheet activities for such a
company.
(B) Exemption.--If the Board determines that an
exemption from the requirements under subparagraph (A)
is appropriate, the Board may exempt a financial
holding company subject to stricter standards from the
requirements under subparagraph (A) or any transaction
or transactions engaged in by such a company.
(C) Off balance sheet activities defined.--For
purposes of this paragraph, the term ``off balance
sheet activities'' means a liability 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 they may create a
liability:
(i) Direct credit substitutes in which a
bank substitutes its own credit for a third
party, including standby letters of credit.
(ii) Irrevocable letters of credit that
guarantee repayment of commercial paper or tax-
exempt securities.
(iii) Risk participation in bankers'
acceptances.
(iv) Sale and repurchase agreements.
(v) Asset sales with recourse against the
seller.
(vi) Interest rate swaps.
(vii) Credit swaps.
(viii) Commodity contracts.
(ix) Forward contracts.
(x) Securities contracts.
(xi) Such other activities or transactions
as the Board may, by rule, define.
(b) Prudential Standards at Functionally Regulated Subsidiaries and
Subsidiary Depository Institutions.--
(1) Board authority to recommend standards.--With respect
to a functionally regulated subsidiary (as such term is defined
in section 5 of the Bank Holding Company Act) or a subsidiary
depository institution of a financial holding company subject
to stricter standards, the Board may recommend that the
relevant Federal financial regulatory agency for such
functionally regulated subsidiary or subsidiary depository
institution prescribe stricter prudential standards on such
functionally regulated subsidiary or subsidiary depository
institution. Any standards recommended by the Board under this
section shall be of the same type as those described in
subsection (a)(2) that the Board is required or authorized to
impose directly on the financial holding company subject to
stricter standards.
(2) Agency authority to implement heightened standards and
safeguards.--Each Federal financial regulatory agency that
receives a Board recommendation under paragraph (1) is
authorized to impose, require reports regarding, examine for
compliance with, and enforce standards under this subsection
with respect to the entities such agency regulates, as such
entities are described in section 1006(b)(6). This authority is
in addition to and does not limit any other authority of the
Federal financial regulatory agencies. Compliance by an entity
with actions taken by a Federal financial regulatory agency
under this section shall be enforceable in accordance with the
statutes governing the respective agency's jurisdiction over
the entity as if the agency action were taken under those
statutes.
(3) Imposition of standards.--Standards imposed by a
Federal financial regulatory agency under this subsection shall
be the standards recommended by the Board in accordance with
paragraph (1) or any other similar standards that the Board
deems acceptable after consultation between the Board and the
primary financial regulatory agency.
(4) Federal financial regulatory agency response; notice to
council and board.--A Federal financial regulatory agency shall
notify the Council and the Board in writing on whether and to
what extent the agency has imposed the stricter prudential
standards described in paragraph (3) within 60 days of the
Board's recommendation under paragraph (1). A Federal financial
regulatory agency that fails to impose such standards shall
provide specific justification for such failure to act in the
written notice from the agency to the Council and Board.
(c) Concentration Limits for Financial Holding Companies Subject to
Stricter Standards.--
(1) Standards.--In order to limit the risks that the
failure of any company could pose to a financial holding
company subject to stricter standards and to the stability of
the United States financial system, the Board, by regulation,
shall prescribe standards that limit the risks posed by the
exposure of a financial holding company subject to stricter
standards to any other company.
(2) Limitation on credit exposure.--The regulations
prescribed by the Board shall prohibit each financial holding
company subject to stricter standards from having credit
exposure to any unaffiliated company that exceeds 25 percent of
capital stock and surplus of the financial holding company
subject to stricter standards, or such lower amount as the
Board may determine by regulation to be necessary to mitigate
risks to financial stability.
(3) Credit exposure.--For purposes of this subsection and
with respect to a financial holding company subject to stricter
standards, the term ``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 agreement with the company;
(C) all securities borrowing and lending
transactions with the company to the extent that such
transactions create credit exposure of the financial
holding company subject to stricter standards to the
company;
(D) all guarantees, acceptances, or letters of
credit (including endorsement or standby letters of
credit) issued on behalf of the company;
(E) all purchases of or investment in securities
issued by the company;
(F) counterparty credit exposure to the company in
connection with a derivative transaction between the
financial holding company subject to stricter standards
and the company; and
(G) any other similar transactions that the Board
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 financial holding company subject to stricter
standards with any person is deemed 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 may issue such regulations and
orders, including definitions consistent with this subsection,
as may be necessary to administer and carry out the purpose of
this subsection.
(6) Exemptions.--
(A) In general.--
(i) Federal home loan banks.--This
subsection shall not apply to any Federal home
loan bank, but Federal home loan banks are not
exempt from any other provision of this title.
(ii) Applicability to other entities.--The
Federal National Mortgage Association and the
Federal Home Loan Mortgage Corporation are not
exempt from any provision of this title.
(B) Regulations.--The Board may, by regulation or
order, exempt transactions, in whole or in part, from
the definition of credit exposure if it finds that the
exemption is in the public interest and consistent with
the purpose of this subsection.
(7) Transition period.--This subsection and any regulations
and orders of the Board under the authority of this subsection
shall not take effect until the date that is 3 years from the
date of the enactment of this subsection. The Board may extend
the effective date for up to 2 additional years to promote
financial stability.
(d) Short-term Debt Limits for Certain Financial Holding
Companies.--
(1) In general.--In order to limit the risks that an
overaccumulation of short-term debt could pose to financial
holding companies and to the stability of the United States
financial system, the Board shall by regulation prescribe a
limit on the amount of short-term debt, including off-balance
sheet exposures, that may be accumulated by any financial
holding company subject to stricter standards for purposes of
this title.
(2) Basis of limit.--The limit prescribed under paragraph
(1) shall be based on a financial holding company's short-term
debt as a percentage of its capital stock and surplus or on
such other measure as the Board 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 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 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 may, if it determines such action is
necessary to ensure appropriate heightened prudential
supervision, with respect to a financial holding company that
does not control an insured depository institution, issue to
such company an exemption from or adjustment to the limit
prescribed under paragraph (1).
(6) Transition period.--This subsection and any regulation
or order of the Board under this subsection shall take effect 3
years after the date of the enactment of this title. The Board
may postpone the date when this subsection takes effect by not
more than 2 years in order to promote financial stability.
(e) Prompt Corrective Action for Financial Holding Companies
Subject to Stricter Standards.--
(1) Prompt corrective action required.--The Board shall
take prompt corrective action to resolve the problems of
financial holding companies subject to stricter standards.
Except as specifically provided otherwise, this subsection
shall apply only to financial holding companies that are
incorporated or organized under United States laws.
(2) Definitions.--For purposes of this section--
(A) Capital categories.--
(i) Well capitalized.--A financial holding
company subject to stricter standards is ``well
capitalized'' if it exceeds the required
minimum level for each relevant capital
measure.
(ii) Undercapitalized.--A financial holding
company subject to stricter standards is
``undercapitalized'' if it fails to meet the
required minimum level for any relevant capital
measure.
(iii) Significantly undercapitalized.--A
financial holding company subject to stricter
standards is ``significantly undercapitalized''
if it is significantly below the required
minimum level for any relevant capital measure.
(iv) Critically undercapitalized.--A
financial holding company subject to stricter
standards is ``critically undercapitalized'' if
it fails to meet any level specified in
paragraph (4)(C)(i).
(3) Other definitions.--
(A) Average.--The ``average'' of an accounting item
(such as total assets or tangible equity) during a
given period means the sum of that item at the close of
business on each business day during that period
divided by the total number of business days in that
period.
(B) Capital distribution.--The term ``capital
distribution'' means--
(i) a distribution of cash or other
property by a financial holding company subject
to stricter standards to its owners made on
account of that ownership, but not including
any dividend consisting only of shares of the
financial holding company subject to stricter
standards or rights to purchase such shares;
(ii) a payment by a financial holding
company subject to stricter standards to
repurchase, redeem, retire, or otherwise
acquire any of its shares or other ownership
interests, including any extension of credit to
finance any person's acquisition of those
shares or interests; and
(iii) a transaction that the Board
determines, by order or regulation, to be in
substance a distribution of capital to the
owners of the financial holding company subject
to stricter standards.
(C) Capital restoration plan.--The term ``capital
restoration plan'' means a plan submitted under
paragraph (6)(B).
(D) Compensation.--The term ``compensation''
includes any payment of money or provision of any other
thing of value in consideration of employment.
(E) Relevant capital measure.--The term ``relevant
capital measure'' means the measures described in
paragraph (4).
(F) Required minimum level.--The term ``required
minimum level'' means, with respect to each relevant
capital measure, the minimum acceptable capital level
specified by the Board by regulation.
(G) Senior executive officer.--The term ``senior
executive officer'' has the same meaning as the term
``executive officer'' in section 22(h) of the Federal
Reserve Act (12 U.S.C. 375b).
(4) Capital standards.--
(A) Relevant capital measures.--
(i) In general.--Except as provided in
clause (ii)(II), the capital standards
prescribed by the Board under section
1104(a)(2) shall include--
(I) a leverage limit; and
(II) a risk-based capital
requirement.
(ii) Other capital measures.--The Board may
by regulation--
(I) establish any additional
relevant capital measures to carry out
this section; or
(II) rescind any relevant capital
measure required under clause (i) upon
determining that the measure is no
longer an appropriate means for
carrying out this section.
(B) Capital categories generally.--The Board shall,
by regulation, specify for each relevant capital
measure the levels at which a financial holding company
subject to stricter standards is well capitalized,
undercapitalized, and significantly undercapitalized.
(C) Critical capital.--
(i) Board to specify level.--
(I) Leverage limit.--The Board
shall, by regulation, specify the ratio
of tangible equity to total assets at
which a financial holding company
subject to stricter standards is
critically undercapitalized.
(II) Other relevant capital
measures.--The Board may, by
regulation, specify for 1 or more other
relevant capital measures, the level at
which a financial holding company
subject to stricter standards is
critically undercapitalized.
(ii) Leverage limit range.--The level
specified under clause (i)(I) shall require
tangible equity in an amount--
(I) not less than 2 percent of
total assets; and
(II) except as provided in
subclause (I), not more than 65 percent
of the required minimum level of
capital under the leverage limit.
(5) Capital distributions restricted.--
(A) In general.--A financial holding company
subject to stricter standards shall make no capital
distribution if, after making the distribution, the
financial holding company subject to stricter standards
would be undercapitalized.
(B) Exception.--Notwithstanding subparagraph (A),
the Board may permit a financial holding company
subject to stricter standards to repurchase, redeem,
retire, or otherwise acquire shares or ownership
interests if the repurchase, redemption, retirement, or
other acquisition--
(i) is made in connection with the issuance
of additional shares or obligations of the
financial holding company subject to stricter
standards in at least an equivalent amount; and
(ii) will reduce the financial obligations
of the financial holding company subject to
stricter standards or otherwise improve the
financial condition of the financial holding
company subject to stricter standards.
(6) Provisions applicable to undercapitalized financial
holding company subject to stricter standards.--
(A) Monitoring required.--The Board shall--
(i) closely monitor the condition of any
undercapitalized financial holding company
subject to stricter standards;
(ii) closely monitor compliance by any
undercapitalized financial holding company
subject to stricter standards with capital
restoration plans, restrictions, and
requirements imposed under this section; and
(iii) periodically review the plan,
restrictions, and requirements applicable to
any undercapitalized financial holding company
subject to stricter standards to determine
whether the plan, restrictions, and
requirements are effective.
(B) Capital restoration plan required.--
(i) In general.--Any undercapitalized
financial holding company subject to stricter
standards shall submit an acceptable capital
restoration plan to the Board within the time
allowed by the Board under clause (iv).
(ii) Contents of plan.--The capital
restoration plan shall--
(I) specify--
(aa) the steps the
financial holding company
subject to stricter standards
will take to become well
capitalized;
(bb) the levels of capital
to be attained by the financial
holding company subject to
stricter standards during each
year in which the plan will be
in effect;
(cc) how the financial
holding company subject to
stricter standards will comply
with the restrictions or
requirements then in effect
under this section; and
(dd) the types and levels
of activities in which the
financial holding company
subject to stricter standards
will engage; and
(II) contain such other information
that the Board may require.
(iii) Criteria for accepting plan.--The
Board shall not accept a capital restoration
plan unless it determines that the plan--
(I) complies with clause (ii);
(II) is based on realistic
assumptions, and is likely to succeed
in restoring the capital of the
financial holding company subject to
stricter standards; and
(III) would not appreciably
increase the risk (including credit
risk, interest-rate risk, and other
types of risk) to which the financial
holding company subject to stricter
standards is exposed.
(iv) Deadlines for submission and review of
plans.--The Board shall, by regulation,
establish deadlines that--
(I) provide financial holding
companies subject to stricter standards
with reasonable time to submit capital
restoration plans, and generally
require a financial holding company
subject to stricter standards to submit
a plan not later than 45 days after it
becomes undercapitalized; and
(II) require the Board to act on
capital restoration plans
expeditiously, and generally not later
than 60 days after the plan is
submitted.
(C) Asset growth restricted.--An undercapitalized
financial holding company subject to stricter standards
shall not permit its average total assets during any
calendar quarter to exceed its average total assets
during the preceding calendar quarter unless--
(i) the Board has accepted the capital
restoration plan of the financial holding
company subject to stricter standards;
(ii) any increase in total assets is
consistent with the plan; and
(iii) the ratio of tangible equity to total
assets of the financial holding company subject
to stricter standards increases during the
calendar quarter at a rate sufficient to enable
it to become well capitalized within a
reasonable time.
(D) Prior approval required for acquisitions and
new lines of business.--An undercapitalized financial
holding company subject to stricter standards shall
not, directly or indirectly, acquire any interest in
any company or insured depository institution, or
engage in any new line of business, unless--
(i) the Board has accepted the capital
restoration plan of the financial holding
company subject to stricter standards, the
financial holding company subject to stricter
standards is implementing the plan, and the
Board determines that the proposed action is
consistent with and will further the
achievement of the plan;
(ii) the Board determines that the specific
proposed action is appropriate; or
(iii) the Board has exempted the financial
holding company subject to stricter standards
from the requirements of this paragraph with
respect to the class of acquisitions that
includes the proposed action.
(E) Discretionary safeguards.--The Board may, with
respect to any undercapitalized financial holding
company subject to stricter standards, take actions
described in any clause of paragraph (7)(B) if the
Board determines that those actions are necessary.
(7) Provisions applicable to significantly undercapitalized
financial holding companies subject to stricter standards and
undercapitalized financial holding companies subject to
stricter standards that fail to submit and implement capital
restoration plans.--
(A) In general.--This paragraph shall apply with
respect to any financial holding company subject to
stricter standards that--
(i) is significantly undercapitalized; or
(ii) is undercapitalized and--
(I) fails to submit an acceptable
capital restoration plan within the
time allowed by the Board under
paragraph (6)(B)(iv); or
(II) fails in any material respect
to implement a capital restoration plan
accepted by the Board.
(B) Specific actions authorized.--The Board shall
carry out this paragraph by taking 1 or more of the
following actions--
(i) Requiring recapitalization.--Doing one
or more of the following:
(I) Requiring the financial holding
company subject to stricter standards
to sell enough shares or obligations of
the financial holding company subject
to stricter standards so that the
financial holding company subject to
stricter standards will be well
capitalized after the sale.
(II) Further requiring that
instruments sold under subclause (I) be
voting shares.
(III) Requiring the financial
holding company subject to stricter
standards to be acquired by or combine
with another company.
(ii) Restricting transactions with
affiliates.--
(I) Requiring the financial holding
company subject to stricter standards
to comply with section 23A of the
Federal Reserve Act (12 U.S.C. 371c),
as if it were a member bank.
(II) Further restricting the
transactions of the financial holding
company subject to stricter standards
with affiliates and insiders.
(iii) Restricting asset growth.--
Restricting the asset growth of the financial
holding company subject to stricter standards
more stringently than paragraph (6)(C), or
requiring the financial holding company subject
to stricter standards to reduce its total
assets.
(iv) Restricting activities.--Requiring the
financial holding company subject to stricter
standards or any of its subsidiaries to alter,
reduce, or terminate any activity that the
Board determines poses excessive risk to the
financial holding company subject to stricter
standards.
(v) Improving management.--Doing one or
more of the following:
(I) New election of directors.--
Ordering a new election for the board
of directors of the financial holding
company subject to stricter standards.
(II) Dismissing directors or senior
executive officers.--Requiring the
financial holding company subject to
stricter standards to dismiss from
office any director or senior executive
officer who had held office for more
than 180 days immediately before the
financial holding company subject to
stricter standards became
undercapitalized. Dismissal under this
clause shall not be construed to be a
removal under section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818).
(III) Employing qualified senior
executive officers.--Requiring the
financial holding company subject to
stricter standards to employ qualified
senior executive officers (who, if the
Board so specifies, shall be subject to
approval by the Board).
(vi) Requiring divestiture.--Requiring the
financial holding company subject to stricter
standards to divest itself of or liquidate any
subsidiary if the Board determines that the
subsidiary is in danger of becoming insolvent,
poses a significant risk to the financial
holding company subject to stricter standards,
or is likely to cause a significant dissipation
of the assets or earnings of the financial
holding company subject to stricter standards.
(vii) Requiring other action.--Requiring
the financial holding company subject to
stricter standards to take any other action
that the Board determines will better carry out
the purpose of this section than any of the
actions described in this subparagraph.
(C) Presumption in favor of certain actions.--In
complying with subparagraph (B), the Board shall take
the following actions, unless the Board determines that
the actions would not be appropriate--
(i) The action described in subclause (I)
or (III) of subparagraph (B)(i) (relating to
requiring the sale of shares or obligations, or
requiring the financial holding company subject
to stricter standards to be acquired by or
combine with another company).
(ii) The action described in subparagraph
(B)(ii) (relating to restricting transactions
with affiliates).
(D) Senior executive officers' compensation
restricted.--
(i) In general.--The financial holding
company subject to stricter standards shall not
do any of the following without the prior
written approval of the Board:
(I) Pay any bonus to any senior
executive officer.
(II) Provide compensation to any
senior executive officer at a rate
exceeding that officer's average rate
of compensation (excluding bonuses,
stock options, and profit-sharing)
during the 12 calendar months preceding
the calendar month in which the
financial holding company subject to
stricter standards became
undercapitalized.
(ii) Failing to submit plan.--The Board
shall not grant any approval under clause (i)
with respect to a financial holding company
subject to stricter standards that has failed
to submit an acceptable capital restoration
plan.
(E) Consultation with other regulators.--Before the
Board makes a determination under subparagraph (B)(vi)
with respect to a subsidiary that is a broker, dealer,
government securities broker, government securities
dealer, investment company, or investment adviser, the
Board shall consult with the Securities and Exchange
Commission and, in the case of any other subsidiary
which is subject to any financial responsibility or
capital requirement, any other appropriate regulator of
such subsidiary with respect to the proposed
determination of the Board and actions pursuant to such
determination.
(8) More stringent treatment based on other supervisory
criteria.--
(A) In general.--If the Board determines (after
notice and an opportunity for hearing) that a financial
holding company subject to stricter standards is in an
unsafe or unsound condition or, pursuant to section
8(b)(8) of the Federal Deposit Insurance Act (12 U.S.C.
1818(b)(8)), deems the financial holding company
subject to stricter standards to be engaging in an
unsafe or unsound practice, the Board may--
(i) if the financial holding company
subject to stricter standards is well
capitalized, require the financial holding
company subject to stricter standards to comply
with one or more provisions of paragraphs (6)
and (7), as if the institution were
undercapitalized; or
(ii) if the financial holding company
subject to stricter standards is
undercapitalized, take any one or more actions
authorized under paragraph (7)(B) as if the
financial holding company subject to stricter
standards were significantly undercapitalized.
(B) Contents of plan.--A plan that may be required
pursuant to subparagraph (A)(i) shall specify the steps
that the financial holding company subject to stricter
standards will take to correct the unsafe or unsound
condition or practice.
(9) Implementation.--The Board shall prescribe such
regulations, issue such orders, and take such other actions the
Board determines to be necessary to carry out this subsection.
(10) Other authority not affected.--This section does not
limit any authority of the Board, any other Federal regulatory
agency, or a State to take action in addition to (but not in
derogation of) that required under this section.
(11) Consultation.--The Board and the Secretary of the
Treasury shall consult with their foreign counterparts and
through appropriate multilateral organizations to reach
agreement to extend comprehensive and robust prudential
supervision and regulation to all highly leveraged and
substantially interconnected financial companies.
(12) Administrative review of dismissal orders.--
(A) Timely petition required.--A director or senior
executive officer dismissed pursuant to an order under
paragraph (7)(B)(v)(II) may obtain review of that order
by filing a written petition for reinstatement with the
Board not later than 10 days after receiving notice of
the dismissal.
(B) Procedure.--
(i) Hearing required.--The Board shall give
the petitioner an opportunity to--
(I) submit written materials in
support of the petition; and
(II) appear, personally or through
counsel, before 1 or more members of
the Board or designated employees of
the Board.
(ii) Deadline for hearing.--The Board
shall--
(I) schedule the hearing referred
to in clause (i)(II) promptly after the
petition is filed; and
(II) hold the hearing not later
than 30 days after the petition is
filed, unless the petitioner requests
that the hearing be held at a later
time.
(iii) Deadline for decision.--Not later
than 60 days after the date of the hearing, the
Board shall--
(I) by order, grant or deny the
petition;
(II) if the order is adverse to the
petitioner, set forth the basis for the
order; and
(III) notify the petitioner of the
order.
(C) Standard for review of dismissal orders.--The
petitioner shall bear the burden of proving that the
petitioner's continued employment would materially
strengthen the ability of the financial holding company
subject to stricter standards--
(i) to become well capitalized, to the
extent that the order is based on the capital
level of the financial holding company subject
to stricter standards or such company's failure
to submit or implement a capital restoration
plan; and
(ii) to correct the unsafe or unsound
condition or unsafe or unsound practice, to the
extent that the order is based on paragraph
(8)(A).
(13) Enforcement authority for foreign financial holding
company subject to stricter standards.--
(A) Termination authority.--If the Board believes
that a condition, practice, or activity of a foreign
financial holding company subject to stricter standards
does not comply with this title or the rules or orders
prescribed by the Board under this title or otherwise
poses a threat to financial stability, the Board may,
after notice and opportunity for a hearing, take such
actions as necessary to mitigate such risk, including
ordering a foreign financial holding company subject to
stricter standards in the United States to terminate
the activities of such branch, agency, or subsidiary.
(B) Discretion to deny hearing.--The Board may
issue an order under paragraph (1) without providing
for an opportunity for a hearing if the Board
determines that expeditious action is necessary in
order to protect the public interest.
(f) Reports Regarding Rapid and Orderly Resolution and Credit
Exposure.--
(1) In general.--The Board shall require each financial
holding company subject to stricter standards incorporated or
organized in the United States to report periodically to the
Board on--
(A) its plan for rapid and orderly resolution in
the event of severe financial distress;
(B) the nature and extent to which the financial
holding company subject to stricter standards has
credit exposure to other significant financial
companies; and
(C) the nature and extent to which other
significant financial companies have credit exposure to
the financial holding company subject to stricter
standards.
(2) No limiting effect.--A rapid resolution plan submitted
in accordance with this subsection shall not be binding on a
receiver appointed under subtitle G, a bankruptcy court, or any
other authority that is authorized or required to resolve the
financial holding company subject to stricter standards or any
of its subsidiaries or affiliates.
(3) Reporting triggered by stress test results.--
(A) Financial holding companies subject to stricter
standards.--Each time the results of a quarterly stress
test under baseline or adverse conditions conducted by
a financial holding company subject to stricter
standards under section 1114(a) or the results of a
stress test of that financial holding company subject
to stricter standards conducted by the Board under
subsection (g) indicate that the financial holding
company subject to stricter standards is, in the
determination of the Board, significantly or critically
undercapitalized, that financial holding company
subject to stricter standards shall submit a rapid
resolution plan in accordance with this subsection that
has been revised to address the causes of those
results.
(B) Financial companies that are not financial
holding companies subject to stricter standards.--Each
time the results of a semiannual stress test under
baseline or adverse conditions conducted by a financial
company under section 1114(b) indicate that the
financial company is, in the determination of the
Board, significantly or critically undercapitalized,
that financial company shall be required to report
under this subsection. The Board shall prescribe
regulations establishing expedited procedures for such
reporting.
(C) Transparency.--Any rapid resolution plan
submitted pursuant to this paragraph shall be subject
to any restrictions regarding the disclosure of any
other rapid resolution plan submitted pursuant to this
subsection.
(g) Stress Tests.--
(1) The Board, in coordination with the appropriate primary
financial regulatory agency, shall conduct annual stress tests
of each financial holding company subject to stricter
standards. The Board may, as the Board determines appropriate,
conduct stress tests of financial companies that are not
financial holding companies subject to stricter standards. The
Board shall publish a summary of the results of such stress
tests.
(2) The Board shall issue regulations to define the term
``stress test'' for purposes of this subsection. Such a
definition shall provide for not less than 3 different sets of
conditions under which a stress test should be conducted:
baseline, adverse, and severely adverse scenarios.
(h) Avoiding Duplication.--The Board shall take any action the
Board deems appropriate to avoid imposing duplicative requirements
under this subtitle for financial holding companies subject to stricter
standards that are also bank holding companies.
(i) Resolution Plans Required.--
(1) In general.--The Corporation and the Board, after
consultation with the Council, shall jointly issue regulations
requiring financial holding companies subject to stricter
standards to develop plans designed to assist in the rapid and
orderly resolution of the company.
(2) Standards for resolution plans.--The regulations
required by paragraph (1) shall--
(A) define the scope of financial holding companies
subject to stricter standards covered by these
requirements and may exempt financial holding companies
subject to stricter standards from the requirements of
this subsection if the Corporation and the Board
jointly determine that exemption is consistent with the
purposes of this title;
(B) require each plan to demonstrate that any
insured depository institution affiliated with a
financial holding company subject to stricter standards
is adequately insulated from the activities of any non-
bank subsidiary of the institution or financial holding
companies subject to stricter standards;
(C) require that each plan include information
detailing--
(i) the nature and extent to which the
financial holding company subject to stricter
standards has credit exposure to other
significant financial companies;
(ii) the nature and extent to which other
significant financial companies have credit
exposure to the financial holding company
subject to stricter standards;
(iii) full descriptions of the financial
holding company subject to stricter standards'
ownership structure, assets, liabilities, and
contractual obligations; and
(iv) the cross-guarantees tied to different
securities, a list of major counterparties, and
a process for determining where the financial
holding company subject to stricter standards'
collateral is pledged; and
(D) establish such other standards as the
Corporation and the Board may jointly deem necessary to
carry out this subsection.
(3) Review of plans.--
(A) Submission of plans.--Each financial holding
company subject to stricter standards that is subject
to the requirement under paragraph (1) shall submit its
plan to the Corporation and the Board.
(B) Review.--Upon the submission of a plan pursuant
to subparagraph (A), and not less often than annually
thereafter, the Corporation and the Board, after
consultation with any Federal financial regulatory
agencies with jurisdiction over the financial holding
company subject to stricter standards, shall jointly
review such plan and may require a financial holding
company subject to stricter standards to revise its
plan consistent with the standards established pursuant
to paragraph (2).
(4) Enforcement.--
(A) In general.--The Corporation, after
consultation with the Board, shall have the authority
to take any enforcement action in section 8 of the
Federal Deposit Insurance Act (12 U.S.C. 1818) against
any financial holding company subject to stricter
standards that fails to comply with the requirements of
this section or any regulations issued pursuant to this
section.
(B) No limitation on board authority.--Nothing
under this subsection shall be construed as limiting
any enforcement authority available to the Board under
any other provision of law.
(5) No limiting effect on receiver.--A rapid resolution
plan submitted under this section shall not be binding on a
receiver appointed under subtitle G, a bankruptcy court, or any
other authority that is authorized or required to resolve the
financial holding company subject to stricter standards or any
of its subsidiaries or affiliates.
(6) No private right of action.--No private right of action
may be based on any resolution plan submitted under this
section.
SEC. 1105. MITIGATION OF SYSTEMIC RISK.
(a) Council Authority to Restrict Operations and Activities.--If
the Council determines, after notice and an opportunity for hearing,
that despite the higher prudential standards imposed pursuant to
section 1104(a)(2), the size of a financial holding company subject to
stricter standards or the scope, nature, scale, concentration,
interconnectedness, or mix of activities directly or indirectly
conducted by a financial holding company subject to stricter standards
poses a grave threat to the financial stability or economy of the
United States, the Council shall require the company to undertake 1 or
more mitigatory actions described in subsection (d).
(b) Consultation With Federal Financial Regulatory Agencies.--The
Council, in determining whether to impose any requirement under this
section that is likely to have a significant impact on a functionally
regulated subsidiary, or a subsidiary depository institution, of a
financial company subjected to stricter prudential standards under this
title, shall consult with the Federal financial regulatory agency for
any such subsidiary.
(c) Factors for Consideration.--In reaching a determination
described in subsection (a), the Council shall take into consideration
the following factors, as appropriate--
(1) the amount and nature of the company's financial
assets;
(2) the amount and nature of the company's liabilities,
including the degree of reliance on short-term funding;
(3) the extent and nature of the company's off-balance
sheet exposures;
(4) the company's reliance on leverage;
(5) the extent and nature of the company's transactions,
relationships, and interconnectedness with other financial and
non-financial companies;
(6) 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;
(7) the scope, nature, size, scale, concentration,
interconnectedness and mix of the company's activities;
(8) the extent to which prudential regulations mitigate the
risk posed; and
(9) any other factors identified that the Council
determines appropriate.
(d) Mitigatory Actions.--
(1) In general.--Mitigatory action may include--
(A) modifying the prudential standards imposed
pursuant to section 1104(a);
(B) terminating 1 or more activities;
(C) imposing conditions on the manner in which a
financial holding company subject to stricter standards
conducts 1 or more activities;
(D) limiting the ability to merge with, acquire,
consolidate with, or otherwise become affiliated with
another company;
(E) restricting the ability to offer a financial
product or products; and
(F) in the event the Council deems subparagraphs
(A) through (E) inadequate as a means to address the
identified risks, selling, divesting, or otherwise
transferring business units, branches, assets, or off-
balance sheet items to unaffiliated companies.
(2) International competitiveness considerations.--In
making any decision pursuant to paragraph (1), the Council
shall consider--
(A) the need to maintain the international
competitiveness of the United States financial services
industry; and
(B) the extent to which other countries with a
significant financial services industry have
established corresponding regimes to mitigate threats
to financial stability or the economy posed by
financial companies.
(e) Due Process.--
(1) Notice and hearing.--The Council shall give notice to a
financial company subject to stricter prudential standards, and
opportunity for hearing if requested, that the financial
company is being considered for mitigatory action pursuant to
subsection (a). The hearing shall occur no later than 30 days
after the financial company receives notice of the proposed
action from the Council.
(2) Notice.--The Council shall notify the financial company
subject to stricter prudential standards of the Council's
determination, and, if the Council determines that mitigatory
action is appropriate, require the company to submit a plan to
the Council to implement the required mitigatory action.
(3) Submission of plan.--The financial holding company
subject to stricter standards shall submit its proposed plan to
implement the required mitigatory action or actions to the
Council within 60 days from the date it receives notice under
paragraph (2) or such shorter timeframe as the Council may
require, if the Council determines an emergency situation
merits expeditious implementation.
(4) Approval or amendment of the plan.--The Council shall
review the plan submitted pursuant to paragraph (3) and
determine whether the plan achieves the goal of mitigating a
grave threat to the financial stability or the economy of the
United States. The Council may approve or disapprove the plan
with or without amendment.
(5) Effect of plan approval.--The Council shall--
(A) notify a financial holding company subject to
stricter standards by order, which shall be public,
that the Council has approved the plan with or without
amendment; and
(B) direct the Board to require a financial holding
company subject to stricter standards to comply with
the plan to implement mitigatory action or actions
within a reasonable timeframe after the Council's
approval and in accordance with such deadlines
established in the plan.
(f) Treasury Secretary Concurrence.--Mitigatory action imposed by
the Council involving the sale, divestiture, or transfer of more than
$10,000,000,000 in total assets by a financial holding company subject
to stricter standards shall require the Secretary of the Treasury's
concurrence before the issuance of the notice in subsection (e)(5)(A).
If the sale, divestiture, or transfer of total assets by a financial
holding company subject to stricter standards exceeds $100,000,000,000,
the Secretary of the Treasury shall consult with the President before
concurrence.
(g) Failure to Implement the Plan.--If a financial holding company
subject to stricter standards fails to implement a plan for mitigatory
action imposed pursuant to subsection (e)(5) within a reasonable
timeframe, the Council shall direct the Board to take such actions as
necessary to ensure compliance with the plan.
(h) Judicial Review.--For any plan required under this section, a
financial holding company subject to stricter standards may, not later
than 30 days after receipt of the Council's notice under subsection
(e)(5), bring an action in the United States district court for the
judicial district in which the home office of such company is located,
or in the United States District Court for the District of Columbia,
for an order requiring that the requirement for a mitigatory action be
rescinded. Judicial review under this section shall be limited to the
imposition of a mitigatory action. In reviewing the Council's
imposition of a mitigatory action, the court shall rescind or dismiss
only those mitigatory actions it finds to be imposed in an arbitrary
and capricious manner.
SEC. 1106. SUBJECTING ACTIVITIES OR PRACTICES TO STRICTER PRUDENTIAL
STANDARDS FOR FINANCIAL STABILITY PURPOSES.
(a) In General.--The Council may subject a financial activity or
practice to stricter prudential standards under this subtitle 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 financial institutions or markets and local,
minority, or underserved communities, and thereby threaten the
stability of the financial system or economy.
(b) Periodic Review of Activity Identifications.--
(1) Submission of assessment.--The Board shall periodically
submit a report to the Council containing an assessment of
whether each activity or practice subjected to stricter
prudential standards should continue to be subject to such
standards.
(2) Review and recision.--The Council shall--
(A) review the assessment submitted pursuant to
paragraph (1) and any information or recommendation
submitted by members of the Council regarding whether a
financial activity subjected to stricter prudential
standards continues to merit stricter prudential
standards; and
(B) rescind the action subjecting an activity to
heightened prudential supervision if the Council
determines that the activity no longer meets the
criteria in subsection (a).
(c) Procedure for Subjecting or Ceasing to Subject an Activity or
Practice to Stricter Prudential Standards.--
(1) Council and board coordination.--The Council shall
inform the Board if the Council is considering whether to
subject or cease to subject an activity to stricter prudential
standards in accordance with this section.
(2) Notice and opportunity for consideration of written
materials.--
(A) In general.--The Board shall, in an executive
capacity on behalf of the Council, provide notice to
financial companies that the Council is considering
whether to subject an activity or practice to
heightened prudential regulation, and shall provide a
financial company engaged in such activity or practice
30 days to submit written materials to inform the
Council's decision. The Council shall decide, and the
Board shall provide notice of the Council's decision,
within 60 days of the due date for such written
materials.
(B) Emergency exception.--The Council may waive or
modify the requirements of subparagraph (A) if the
Council determines that such waiver or modification is
necessary or appropriate to prevent or mitigate threats
posed by an activity to financial stability. The Board
shall, in an executive capacity on behalf of the
Council, provide notice of such waiver or modification
to financial companies as soon as practicable, which
shall be no later than 24 hours after the waiver or
modification.
(3) Form of decision.--The Board shall provide all notices
required under this subsection by posting a notice on the
Board's web site and publishing a notice in the Federal
Register.
SEC. 1107. STRICTER REGULATION OF ACTIVITIES AND PRACTICES FOR
FINANCIAL STABILITY PURPOSES.
(a) Prudential Standards.--
(1) Board authority to recommend.--
(A) In general.--To mitigate the risks to United
States financial stability and the United States
economy posed by financial activities and practices
that the Council identifies for stricter prudential
standards under section 1106 the Board shall recommend
prudential standards to the appropriate primary
financial regulatory agencies to apply to such
identified activities and practices.
(B) Consultation with primary financial regulatory
agencies.--The Board, in developing recommendations
under this subsection, shall consult with the relevant
primary financial regulatory agencies with respect to
any standard that is likely to have a significant
effect on entities described in section 1000(b)(6).
(2) Criteria.--The actions recommended under paragraph
(1)--
(A) shall be designed to maximize financial
stability, taking costs to long-term financial and
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, nature, size, scale, concentration,
or interconnectedness, or applying particular capital
or risk-management requirements to the conduct of the
activity) or prohibiting the activity or practice
altogether.
(b) Implementation of Recommended Standards.--
(1) Role of primary financial regulatory agency.--Each
primary financial regulatory agency is authorized to impose,
require reports regarding, examine for compliance with, and
enforce standards in accordance with this section with respect
to those entities described in section 1000(b)(6) for which it
is the primary financial regulatory agency. This authority is
in addition to and does not limit any other authority of the
primary financial regulatory agencies. 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 primary financial regulatory
agency's jurisdiction over the entity as if the agency action
were taken under those statutes.
(2) Imposition of standards.--Standards imposed under this
subsection shall be the standards recommended by the Board in
accordance with subsection (a) or any other similar standards
that the Board deems acceptable after consultation between the
Board and the primary financial regulatory agency.
(3) Primary financial regulatory agency response.--A
primary financial regulatory agency shall notify the Council
and the Board in writing on whether and to what extent the
agency has imposed the stricter prudential standards described
in paragraph (2) within 60 days of the Board's recommendation.
A primary financial regulatory agency that fails to impose such
standards shall provide specific justification for such failure
to act in the written notice from the agency to the Council and
Board.
SEC. 1108. EFFECT OF RESCISSION OF IDENTIFICATION.
(a) Notice.--When the Council determines that a company or activity
or practice no longer is subject to heightened prudential scrutiny, the
Board shall inform the relevant primary financial regulatory agency or
agencies (if different from the Board) of that finding.
(b) Determination of Primary Financial Regulatory Agency to
Continue.--A primary financial regulatory agency that has imposed
stricter prudential standards for financial stability purposes under
this subtitle shall determine whether standards that it has imposed
under this subtitle should remain in effect.
SEC. 1109. EMERGENCY FINANCIAL STABILIZATION.
(a) In General.--Upon the written determination of the Council that
a liquidity event exists that could destabilize the financial system
(which determination shall be made upon a vote of not less than two-
thirds of the members of the Council then serving) and with the written
consent of the Secretary of the Treasury (after certification by the
President that an emergency exists), the Corporation may create a
widely-available program designed to avoid or mitigate adverse effects
on systemic economic conditions or financial stability by guaranteeing
obligations of solvent insured depository institutions or other solvent
companies that are predominantly engaged in activities that are
financial in nature or are incidental thereto pursuant to section 4(k)
of the Bank Holding Company Act, if necessary to prevent systemic
financial instability during times of severe economic distress, except
that a guarantee of obligations under this section may not include
provision of equity in any form.
(b) Policies and Procedures.--Prior to exercising any authority
under this section, the Corporation shall establish policies and
procedures governing the issuance of guarantees. The terms and
conditions of any guarantees issued shall be established by the
Corporation with the approval of the Secretary of the Treasury and the
Financial Stability Oversight Council.
(c) Funding.--
(1) Administrative expenses and cost of guarantees.--A
program established pursuant to this section shall require
funding only for the purposes of paying administrative expenses
and for paying a guarantee in the event that a guaranteed loan
defaults.
(2) Fees and other charges.--The Corporation shall charge
fees or other charges to all participants in such program
established pursuant to this section. To the extent that a
program established pursuant to this section has expenses or
losses, the program will be funded entirely through fees or
other charges assessed on participants in such program.
(3) Excess funds.--If at the conclusion of such program
there are any excess funds collected from the fees associated
with such program, the funds will be deposited into the
Systemic Resolution Fund established pursuant to section
1609(n).
(4) Authority of corporation.--For purposes of conducting a
program established pursuant to this section, the Corporation--
(A) may borrow funds from the Secretary of the
Treasury, which shall be repaid in full with interest
through fees and charges paid by participants in
accordance with paragraph (2), and, to the extent such
additional amounts are necessary, assessments on large
financial companies under paragraph (5), and there
shall be available to the Corporation amounts in the
Treasury not otherwise appropriated, including for the
payment of reasonable administrative expenses;
(B) may not borrow funds from the Deposit Insurance
Fund established pursuant to section 11(a)(4) of the
Federal Deposit Insurance Act; and
(C) may not borrow funds from the Systemic
Resolution Fund established pursuant to section
1609(n).
(5) Back-up special assessment.--To the extent that the
funds collected pursuant to paragraph (2) are insufficient to
cover any losses or expenses (including monies borrowed
pursuant to paragraph (4)) arising from a program established
pursuant to this section, the Corporation shall impose a
special assessment on--
(A) large financial companies subject to
assessments under section 1609(n) (whether or not such
company participated in such program) in the manner
provided in such section 1609(n); and
(B) participants in the program that are not large
financial companies paying assessments pursuant to
section 1609(n).
(d) Plan for Maintenance or Increase of Lending.--In connection
with any application or request to participate in such program
authorized pursuant to this section, a solvent company seeking to
participate in such program shall be required to submit to the
Corporation a plan detailing how the use of such guaranteed funds will
facilitate the increase or maintenance of such solvent company's level
of lending to consumers or small businesses.
(e) Definitions.--For purposes of this section, the following
definitions apply:
(1) Activities that are financial in nature.--The term
``activities that are financial in nature'' means activities
that are determined to be financial in nature, or incidental to
such activities, under section 4(k) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(k)) and activities that are
identified for stricter prudential standards under section
1106.
(2) 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.
(3) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(4) Insured depository institution.--The term ``insured
depository institution'' shall have the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(5) Solvent.--The term ``solvent'' means assets are more
than the obligations to creditors.
(f) Sunset of Corporation's Authority.--The Corporation's authority
under subsections (a) and (c) and the authority to borrow or obligate
funds under section 1609(n) shall expire on December 31, 2013, unless
the President transmits to the Congress a request for renewal of the
authority and there is enacted a joint resolution, as defined in
subsection (g).
(g) Joint Resolution.--
(1) Terms.--For purposes of subsection (f), the term
``joint resolution'' means only a joint resolution which is
introduced within a 2-day period beginning on the date on which
the President transmits the request to the Congress under
subsection (f), and--
(A) which does not have a preamble;
(B) the matter after the resolving clause of which
is as follows: ``That Congress approves the request for
renewal of authority provided under sections 1108 and
1609(n) of the Financial Stability Improvement Act of
2009 as submitted by the President on _______'', the
blank space being filled in with the appropriate date;
and
(C) the title of which is as follows: ``Joint
resolution approving the renewal of financial
stabilization authority.''.
(2) Referral.--A resolution described in paragraph (1) that
is introduced in the House of Representatives shall be referred
to the Committee on Financial Services of the House of
Representatives. A resolution described in paragraph (1)
introduced in the Senate shall be referred to the Committee on
Banking, Housing, and Urban Affairs of the Senate.
(3) Discharge.--If the committee to which a resolution
described in paragraph (1) is referred has not reported such
resolution (or an identical resolution) by the end of the 2-day
period beginning on the date on which the President transmits
the request to the Congress under subsection (f), such
committee shall be, at the end of such period, discharged from
further consideration of such resolution, and such resolution
shall be placed on the appropriate calendar of the House
involved.
(4) Consideration.--
(A) In general.--On or after the day after the date
on which the committee to which such a resolution is
referred has reported, or has been discharged (under
paragraph (3)) from further consideration of, such a
resolution, it is in order (even though a previous
motion to the same effect has been disagreed to) for
any Member of the respective House to move to proceed
to the consideration of the resolution. A Member may
make the motion only on the day after the calendar day
on which the Member announces to the House concerned
the Member's intention to make the motion, except that,
in the case of the House of Representatives, the motion
may be made without such prior announcement if the
motion is made by direction of the committee to which
the resolution was referred. All points of order
against the resolution (and against consideration of
the resolution) are waived. The motion is highly
privileged in the House of Representatives and is
privileged in the Senate and is not debatable. The
motion is not subject to amendment, or to a motion to
postpone, or to a motion to proceed to the
consideration of other business. 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
respective House shall immediately proceed to
consideration of the joint resolution without
intervening motion, order, or other business, and the
resolution shall remain the unfinished business of the
respective House until disposed of.
(B) Debate.--Debate on the resolution, and on all
debatable motions and appeals in connection therewith,
shall be limited to not more than 2 hours, which shall
be divided equally between those favoring and those
opposing the resolution. An amendment to the resolution
is not in order. A motion to limit further debate is in
order and not debatable. A motion to postpone, or a
motion to proceed to the consideration of other
business, or a motion to recommit the resolution is not
in order. A motion to reconsider the vote by which the
resolution is agreed to or disagreed to is not in
order.
(C) Vote.--Immediately following the conclusion of
the debate on a resolution described in paragraph (1)
and a single quorum call at the conclusion of the
debate, if requested in accordance with the rules of
the appropriate House, the vote on final passage of the
resolution shall occur.
(D) Rules appeals.--Appeals of the decisions of the
Chair relating to the application of the rules of the
Senate or the House of Representatives, as the case may
be, to the procedure relating to a resolution described
in paragraph (1) shall be decided without debate.
(5) Consideration by other house.--
(A) In general.--If, before the passage by one
House of a resolution of that House described in
paragraph (1), that House receives from the other House
a resolution described in paragraph (1), then the
following procedures shall apply:
(i) The resolution of the other House shall
not be referred to a committee and may not be
considered in the House receiving it except in
the case of final passage as provided in clause
(ii)(II).
(ii) With respect to a resolution described
in paragraph (1) of the House receiving the
resolution--
(I) the procedure in that House
shall be the same as if no resolution
had been received from the other House;
but
(II) the vote on final passage
shall be on the resolution of the other
House.
(B) Consideration.--Upon disposition of the
resolution received from the other House, it shall no
longer be in order to consider the resolution that
originated in the receiving House.
(6) Rules of the senate and house.--This subsection is
enacted by the Congress--
(A) as an exercise of the rulemaking power of the
Senate and House of Representatives, respectively, and
as such it is deemed a part of the rules of each House,
respectively, but applicable only with respect to the
procedure to be followed in that House in the case of a
resolution described in paragraph (1), and it
supersedes other rules only to the extent that it is
inconsistent with such rules; and
(B) with full recognition of the constitutional
right of either House to change the rules (so far as
relating to the procedure of that House) at any time,
in the same manner, and to the same extent as in the
case of any other rule of that House.
(7) Effective period.--The Presidential request referred to
in paragraph (1) shall specify the period of time that such
authority is extended and the adoption of the joint resolution
shall extend such powers for such period of time.
SEC. 1110. CORPORATION MUST RECEIVE WARRANTS WHEN PAYING OR RISKING
TAXPAYER FUNDS.
(a) In General.--The Federal Deposit Insurance Corporation
(hereinafter in this section referred to as the ``Corporation'') may
not provide any payment, credit extension, or guarantee, or make any
such commitment under the authority of section 1109 or 1604, unless the
Corporation receives from the financial company for which the credit
extension or guarantee is intended, as fair market value consideration
for such payment, credit extension or guarantee--
(1) in the case of a financial company, the securities of
which are traded on a national securities exchange, a warrant
giving the right to the Corporation to receive nonvoting common
stock or preferred stock in such financial institution, or
voting stock with respect to which, the Corporation agrees not
to exercise voting power, as the Corporation determines
appropriate; or
(2) in the case of any financial company other than one
described in paragraph (1), a warrant for common or preferred
stock, or a senior debt instrument from such financial
institution, as described in subsection (b)(3).
(b) Terms and Conditions.--The terms and conditions of any warrant
or senior debt instrument required under subsection (a) shall meet the
following requirements:
(1) Purposes.--Such terms and conditions shall, at a
minimum, be designed--
(A) to provide for reasonable participation by the
Corporation, for the benefit of taxpayers, in equity
appreciation in the case of a warrant or other equity
security, or a reasonable interest rate premium, in the
case of a debt instrument; and
(B) to provide additional protection for the
taxpayer against losses from such payment, extension of
credit, or guarantee by the Corporation under this
title.
(2) Authority to sell, exercise, or surrender.--The
Corporation may sell, exercise, or surrender a warrant or any
senior debt instrument received under this subsection, based on
the conditions established under paragraph (1).
(3) Conversion.--The warrant shall provide that if, after
the warrant is received by the Corporation under this
subsection, the financial company that issued the warrant is no
longer listed or traded on a national securities exchange or
securities association, as described in subsection (a)(1), such
warrants shall convert to senior debt, or contain appropriate
protections for the Corporation to ensure that the Corporation
is appropriately compensated for the value of the warrant, in
an amount determined by the Corporation.
(4) Protections.--Any warrant representing securities to be
received by the Corporation under this subsection shall contain
anti-dilution provisions of the type employed in capital market
transactions, as determined by the Corporation. Such provisions
shall protect the value of the securities from market
transactions such as stock splits, stock distributions,
dividends, and other distributions, mergers, and other forms of
reorganization or recapitalization.
(5) Exercise price.--The exercise price for any warrant
issued pursuant to this subsection shall be set by the
Corporation, in the interest of the taxpayers.
(6) Sufficiency.--The financial company shall guarantee to
the Corporation that it has authorized shares of nonvoting
stock available to fulfill its obligations under this
subsection. Should the financial company not have sufficient
authorized shares, including preferred shares that may carry
dividend rights equal to a multiple number of common shares,
the Corporation may, to the extent necessary, accept a senior
debt note in an amount, and on such terms as will compensate
the Corporation with equivalent value, in the event that a
sufficient shareholder vote to authorize the necessary
additional shares cannot be obtained.
(c) Exceptions.--
(1) The Corporation shall establish an exception to the
requirements of this section and appropriate alternative
requirements for any participating financial company that is
legally prohibited from issuing securities and debt
instruments, so as not to allow circumvention of the
requirements of this section.
(2) If the Corporation is providing a payment, extension of
credit, or guarantee with regard to its authority under section
1604 and the Corporate determines that it is certain that at
the conclusion of the Resolution Process the shareholders of
all classes shall lose their entire investment and receive
nothing therefor, then the requirements of this section shall
not apply.
SEC. 1111. EXAMINATIONS AND ENFORCEMENT ACTIONS FOR INSURANCE AND
RESOLUTIONS PURPOSES.
(a) Examinations for Insurance and Resolutions Purposes.--Section
10(b)(3) of the Federal Deposit Insurance Act (12 U.S.C. 1820(b)(3)) is
amended by striking ``whenever the Board of Directors determines'' and
all that follows through the period and inserting ``or financial
holding company subject to stricter standards (as defined in section
1000(b)(5) of the Financial Stability Improvement Act of 2009) whenever
the Board of Directors determines a special examination of any such
depository institution is necessary to determine the condition of such
depository institution for insurance or such financial holding company
subject to stricter standards for resolution purposes.''.
(b) Enforcement Authority.--Section 8(t) of the Federal Deposit
Insurance Act (12 U.S.C. 1818(t)) is amended--
(1) in paragraph (2)--
(A) at the end of subparagraph (B), by striking
``or'';
(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.''; and
(2) by adding at the end the following new paragraph:
``(6) For purposes of 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.''.
SEC. 1112. STUDY OF THE EFFECTS OF SIZE AND COMPLEXITY OF FINANCIAL
INSTITUTIONS ON CAPITAL MARKET EFFICIENCY AND ECONOMIC
GROWTH.
(a) Study Required.--The Chairman 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 effect on the efficiency of capital markets, costs imposed on the
financial sector, and on national economic growth, of--
(1) explicit or implicit limits on the maximum size of
banks, bank holding companies, and other large financial
institutions;
(2) limits on the organizational complexity and
diversification of large financial institutions;
(3) requirements for operational separation between
business units of large financial institutions in order to
expedite resolution in case of failure;
(4) limits on risk transfer between business units of large
financial institutions;
(5) requirements to carry contingent capital or similar
mechanisms;
(6) limits on commingling of commercial and financial
activities by large financial institutions;
(7) segregation requirements between traditional financial
activities and trading or other high-risk operations in large
financial institutions; and
(8) other limitations on the activities or structure of
large financial institutions that may be useful to limit
systemic risk.
The study shall include recommendations for the optimal structure of
any limits considered in paragraphs (1) through (5) 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 the enactment of this title, the Chairman shall issue a
report to the Congress containing any findings and determinations made
in carrying out the study required under subsection (a).
SEC. 1113. EXERCISE OF FEDERAL RESERVE AUTHORITY.
(a) No Decisions by Federal Reserve Bank Presidents.--No provision
of this title relating to the authority of the Board shall be construed
as conferring any decision-making authority on presidents of Federal
reserve banks.
(b) Voting Decisions by Board.--The Board of Governors of the
Federal Reserve System shall not delegate the authority to make any
voting decision that the Board is authorized or required to make under
this title in contravention of section 11(k) of the Federal Reserve
Act.
SEC. 1114. STRESS TESTS.
(a) A financial holding company subject to stricter standards
shall--
(1) conduct quarterly stress tests; and
(2) submit a report on its quarterly stress test to the
head of the primary financial regulatory agency and to the
Board at such time, in such form, and containing such
information as the head of the primary financial regulatory
agency may require.
(b) A financial company that has more than $10,000,000,000 in total
assets and is not a financial holding company subject to stricter
standards shall--
(1) conduct semiannual stress tests; and
(2) submit a report on its semiannual stress test to the
head of the primary financial regulatory agency and to the
Board at such time, in such form, and containing such
information as the head of the primary financial regulatory
agency may require.
(c) A stress test under this section shall provide for testing
under each of the following sets of conditions:
(1) Baseline.
(2) Adverse.
(3) Severely adverse.
(d) The head of each primary financial regulatory agency, in
coordination with the Board, shall issue regulations to define the term
``stress test'' for purposes of this section.
SEC. 1115. CONTINGENT CAPITAL.
(a) In General.--The Board, in coordination with the appropriate
primary financial regulatory agency, may promulgate regulations that
require a financial holding company subject to stricter standards to
maintain a minimum amount of long-term hybrid debt that is convertible
to equity when--
(1) a specified financial company fails to meet prudential
standards established by the agency; and
(2) the agency has determined that threats to United States
financial system stability make such a conversion necessary.
(b) Factors to Consider.--In establishing regulations under this
section, the Board shall consider--
(1) an appropriate transition period for implementation of
a conversion under this section;
(2) capital requirements applicable to the specified
financial company and its subsidiaries; and
(3) any other factor that the Board deems appropriate.
(c) Study Required.--The Chairman of the Council shall carry out a
study to determine an optimal implementation of contingent capital
requirements to maximize financial stability, minimize the probability
of drawing on the Systemic Resolution Fund established under section
1609(n) in a financial crisis, and minimize costs for financial holding
companies subject to stricter standards. To the extent practicable, the
study shall take place with input from industry participants and
international financial regulators. Such study shall include--
(1) an evaluation of the characteristics and amounts of
convertible debt that should be required, including possible
tranche structure;
(2) an analysis of possible trigger mechanisms for debt
conversion, including violation of regulatory capital
requirements, failure of stress tests, declaration of systemic
emergency by regulators, market-based triggers and other
trigger mechanisms;
(3) an estimate of the costs of carrying contingent
capital;
(4) an estimate of the effectiveness of contingent capital
requirements in reducing losses to the systemic resolution fund
in cases of single-firm or systemic failure; and
(5) recommendations for implementing legislation.
(d) Report.--Not later than the end of the 180-day period beginning
on the date of the enactment of this title, the Chairman of Council
shall issue a report to the Congress containing any findings and
determinations made in carrying out the study required under subsection
(c).
SEC. 1116. RESTRICTION ON PROPRIETARY TRADING BY DESIGNATED FINANCIAL
HOLDING COMPANIES.
(a) In General.--If the Board determines that propriety trading by
a financial holding company subject to stricter standards poses an
existing or foreseeable threat to the safety and soundness of such
company or to the financial stability of the United States, the Board
may prohibit such company from engaging in propriety trading.
(b) Exceptions Permitted.--The Board may exempt from the
prohibition of subsection (a) proprietary trading that the Board
determines to be ancillary to other operations of such company and not
to pose a threat to the safety and soundness of such company or to the
financial stability of the United States, including--
(1) making a market in securities issued by such company;
(2) hedging or managing risk;
(3) determining the market value of assets of such company;
and
(4) propriety trading for such other purposes allowed by
the Board by rule.
(c) Rulemaking Authority.--The primary financial regulatory
agencies of banks and bank holding companies shall jointly issue
regulations to carry out this section.
(d) Effective Date.--The provisions of this section shall take
effect after the end of the 180-day period beginning on the date of the
enactment of this title.
(e) Proprietary Trading Defined.--For purposes of this section and
with respect to a company, the term ``proprietary trading'' means the
trading of stocks, bonds, options, commodities, derivatives, or other
financial instruments with the company's own money and for the
company's own account.
SEC. 1117. RULE OF CONSTRUCTION.
The authorities granted to agencies under this subtitle are in
addition to any rulemaking, report-related, examination, enforcement,
or other authority that such agencies may have under other law and in
no way shall be construed to limit such other authority, except that
any standards imposed for financial stability purposes under this
subtitle shall supersede any conflicting less stringent requirements of
the primary financial regulatory agency but only the extent of the
conflict.
Subtitle C--Improvements to Supervision and Regulation of Federal
Depository Institutions
SEC. 1201. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) Board of governors.--The term ``Board of Governors''
means the Board of Governors of the Federal Reserve System.
(2) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(3) Office of the comptroller of the currency.--The term
``Office of the Comptroller of the Currency'' means the office
established by section 324 of the Revised Statutes (12 U.S.C.
1).
(4) Office of thrift supervision.--The term ``Office of
Thrift Supervision'' means the office established by section 3
of the Home Owners' Loan Act (12 U.S.C. 1462a).
(5) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(6) Transfer date.--The term ``transfer date'' has the
meaning provided in section 1205.
(7) Certain other terms.--The terms ``affiliate'', ``bank
holding company'', ``control'' (when used with respect to a
depository institution), ``depository institution'', ``Federal
banking agency'', ``Federal savings association'',
``including'', ``insured branch'', ``insured depository
institution'', ``savings association'', ``State savings
association'', and ``subsidiary'' have the same meanings as in
section 3 of the Federal Deposit Insurance Act.
SEC. 1202. AMENDMENTS TO THE HOME OWNERS' LOAN ACT RELATING TO TRANSFER
OF FUNCTIONS.
(a) Amendments to Section 2.--Section 2 of the Home Owners' Loan
Act (12 U.S.C. 1462) is amended--
(1) by striking paragraph (1) and inserting the following
new paragraph:
``(1) Board of governors.--The term `Board of Governors'
means the Board of Governors of the Federal Reserve System.'';
and
(2) by striking paragraph (3) and inserting the following
new paragraph:
``(3) [repealed]''.
(b) Amendments to Section 3.--Section 3 of the Home Owners' Loan
Act (12 U.S.C. 1462a) is amended--
(1) by striking subsection (a) and inserting the following
new subsection:
``(a) Establishment of Division of Thrift Supervision.--To carry
out the purposes of this Act, there is hereby established the Division
of Thrift Supervision, which shall be a division within the Office of
the Comptroller of the Currency.'';
(2) in subsection (b)--
(A) by striking paragraph (1) and inserting the
following new paragraph:
``(1) In general.--The Division of Thrift Supervision shall
be headed by a Senior Deputy Comptroller of the Currency who
shall be subject to the general oversight of the Comptroller of
the Currency.'';
(B) in paragraph (2), by striking ``Director'' and
inserting ``Comptroller of the Currency''; and
(C) by striking paragraphs (3) and (4);
(3) by striking subsections (c), (d), and (e) and inserting
the following new subsection:
``(c) Powers of the Comptroller of the Currency.--The Comptroller
of the Currency shall have all the powers, duties, and functions
transferred by the Financial Stability Improvement Act of 2009 to the
Comptroller of the Currency to carry out this Act.'';
(4) by redesignating subsections (f) and (i) as subsections
(d) and (e), respectively;
(5) in subsection (d) (as so redesignated), by striking
``Director'' each place such term appears and inserting
``Comptroller of the Currency'';
(6) by striking subsections (g), (h), and (j); and
(7) in subsection (e) (as so redesignated), by striking
``compensation of the Director and other employees of the
Office and all other expenses thereof'' and inserting
``expenses incurred by the Comptroller of the Currency in
carrying out this Act''.
(c) Amendments to Section 4.--Section 4 of the Home Owners' Loan
Act (12 U.S.C. 1463) is amended by striking ``Director'' each time it
appears and inserting ``Comptroller of the Currency''.
(d) Amendments to Section 5.--
(1) Universal.--Section 5 of the Home Owners' Loan Act (12
U.S.C. 1464) is amended--
(A) by striking ``Director'' and ``Director of the
Office of Thrift Supervision'' each place such terms
appear and inserting ``Comptroller of the Currency'';
and
(B) by striking ``Director's'' each place such term
appears and inserting ``Comptroller of the
Currency's''.
(2) Specific provisions.--
(A) Section 5(d)(2)(E) of the Home Owners' Loan Act
is amended by striking ``or the Resolution Trust
Corporation, as appropriate,'' each place such term
appears.
(B) Section 5(d)(3)(B) of the Home Owners' Loan Act
is amended by striking ``or the Resolution Trust
Corporation''.
(e) Amendments to Sections 8 and 9.--Sections 8 and 9 of the Home
Owners' Loan Act (12 U.S.C. 1466a and 1467) are each amended by
striking ``Director'' each place such term appears and inserting
``Comptroller of the Currency''.
(f) Technical and Conforming Amendments.--
(1) Section 3.--The heading for section 3 of the Home
Owners' Loan Act is amended by striking ``director of the
office of thrift supervision'' and inserting ``division of
thrift supervision''.
(2) Section 5.--The heading for paragraph (2)(E)(ii) of
section 5(d) of the Home Owners' Loan Act and the heading for
paragraph (3)(B) of such section are each amended by striking
``OR RTC''.
(g) Clerical Amendment.--The table of contents section for the Home
Owners' Loan Act is amended by striking the item relating to section 3
and inserting the following new item:
``Sec. 3. Division of Thrift Supervision.''.
SEC. 1203. 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.
``There shall be in the Department of the Treasury a bureau, the
chief officer of which bureau shall be called the Comptroller of the
Currency, and shall perform the duties of the Comptroller of the
Currency under the general direction of the Secretary of the Treasury.
The Comptroller of the Currency shall have the same authority over
matters as were vested in the Director of the Office of Thrift
Supervision or the Office of Thrift Supervision on the day before the
date of enactment of the Financial Stability Improvement Act of 2009
other than those authorities with respect to savings and loan holding
companies and any affiliate of any such company (other than a savings
association) as were vested in the Director of the Office of Thrift
Supervision on such date. 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.''.
(b) Amendments to Section 327.--Section 327 of the Revised Statutes
of the United States (12 U.S.C. 4) is amended to read as follows:
``SEC. 327 DEPUTY COMPTROLLERS.
``(a) Appointment.--The Secretary of the Treasury shall appoint no
more than 5 Deputy Comptrollers of the Currency--
``(1) 1 of whom shall be designated the Senior Deputy
Comptroller for National Banks, who shall oversee the
regulation and supervision of national banks; and
``(2) 1 of whom shall be designated the Senior Deputy
Comptroller for Thrift Supervision, who shall oversee the
regulation and supervision of Federal savings associations.
``(b) Pay.--The Secretary of the Treasury shall fix the
compensation of the Deputy Comptrollers of the Currency and provide
such other benefits as the Secretary may determine to be appropriate.
``(c) Oath of Office; Duties.--Each Deputy Comptroller shall take
the oath of office and shall perform such duties as the Comptroller of
the Currency shall direct.
``(d) Service as Acting Comptroller.--During a vacancy in the
office or during the absence or disability of the Comptroller, each
Deputy Comptroller shall possess the power and perform the duties
attached by law to the Office of the Comptroller under such order of
succession as the Comptroller shall direct.''.
(c) Amendment to Section 329.--Section 329 of the Revised Statutes
of the United States (12 U.S.C. 11) is amended by inserting ``or any
Federal savings association'' before the period at the end.
(d) Amendment to Section 5240.--The fourth sentence of the second
undesignated paragraph of Section 5240 of the Revised Statutes of the
United States (12 U.S.C. 481) is amended by striking ``Secretary of the
Treasury;'' and all that follows through the end of the sentence, and
inserting ``Secretary of the Treasury; the employment and compensation
of examiners, chief examiners, reviewing examiners, assistant
examiners, and of the other employees of the office of the Comptroller
of the Currency whose compensation is and shall be paid from
assessments on banks or affiliates thereof or from other fees or
charges imposed pursuant to this subchapter shall be set and adjusted
pursuant 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.''
(e) Amendment to Section 5240.--The first sentence in the first
undesignated paragraph of Section 5240 of the Revised Statutes of the
United States (12 U.S.C. 482) is amended by inserting ``pursuant to
chapter 71 of title 5, United States Code,'' after ``shall,''.
SEC. 1204. POWER AND DUTIES TRANSFERRED.
(a) Director of the Office of Thrift Supervision.--
(1) Transfer of functions.--Except as otherwise provided in
this subtitle, all functions of the Director of the Office of
Thrift Supervision are transferred to the Office of the
Comptroller of the Currency.
(2) Comptroller's authority.--Except as otherwise provided
in this subtitle, the Comptroller of the Currency shall succeed
to all powers, authorities, rights, and duties that were vested
in the Director of the Office of Thrift Supervision under
Federal law, including the Home Owners' Loan Act, on the day
before the transfer date other than those powers, authorities,
rights, and duties with respect to savings and loan holding
companies and any affiliate of any such company (other than a
savings association) as were vested in the Director of the
Office of Thrift Supervision on such date.
(3) Functions relating to supervision of state savings
associations.--
(A) Transfer of functions.--All functions of the
Director of the Office of Thrift Supervision relating
to the supervision and regulation of State savings
associations are transferred to the Corporation.
(B) Corporation's authority.--The Corporation shall
succeed to all powers, authorities, rights, and duties
that were vested in the Director of the Office of
Thrift Supervision under Federal law, including the
Home Owners' Loan Act, on the day before the transfer
date, relating to the supervision and regulation of
State savings associations.
(b) Appropriate Federal Banking Agency.--Section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813) is amended in subsection (q)--
(1) by amending paragraph (1) to read as follows:
``(1) the Comptroller of the Currency in the case of any
national bank, Federal savings association or any Federal
branch or agency of a foreign bank;'';
(2) in paragraph (2)(F), by adding ``and'' at the end after
the semicolon;
(3) by amending paragraph (3) to read as follows:
``(3) the Federal Deposit Insurance Corporation in the case
of a State nonmember insured bank, a State savings association
or a foreign bank having an insured branch.''; and
(4) by striking paragraph (4).
(c) Transfer of Consumer Financial Protection Functions.--Nothing
in subsection (a) or (b) shall affect any transfer of consumer
financial protection functions of the Comptroller of the Currency and
the Director of the Office of Thrift Supervision to the Consumer
Financial Protection Agency as provided in the Consumer Financial
Protection Agency Act of 2009.
(d) Effective Date.--Subsections (a) and (b) shall become effective
on the transfer date.
SEC. 1205. TRANSFER DATE.
(a) In General.--Except as provided in subsection (b), the date for
the transfer of functions to the Office of the Comptroller of the
Currency and the Corporation under section 1204 shall be 1 year after
the date of enactment of this title.
(b) Extension Permitted.--
(1) Notice required.--The Secretary, in consultation with
the Comptroller of the Currency and the Director of the Office
of Thrift Supervision, may designate a calendar date for the
transfer of functions of the Office of Thrift Supervision to
the Office of the Comptroller of the Currency, and the
Corporation under section 1204 that is later than 1 year after
the date of enactment of this title if the Secretary--
(A) transmits to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives--
(i) a written determination that orderly
implementation of this subtitle is not feasible
on the date that is 1 year after the date of
enactment of this subtitle;
(ii) an explanation of why an extension is
necessary for the orderly implementation of
this subtitle; and
(iii) a description of the steps that will
be taken to effect an orderly and timely
implementation of this subtitle within the
extended time period; and
(B) publishes notice of that designated later date
in the Federal Register.
(2) Extension limited.--In no case shall any date
designated under paragraph (1) be later than 18 months after
the date of enactment of this subtitle.
(3) Effect on references to ``transfer date''.--If the
Secretary takes the actions provided in paragraph (1) for
designating a date for the transfer of functions to the Office
of the Comptroller of the Currency, and the Corporation under
section 1204, references in this title to ``transfer date''
shall mean the date designated by the Secretary.
SEC. 1206. EXPIRATION OF TERM OF COMPTROLLER.
(a) In General.--Notwithstanding section 325 of the Revised
Statutes of the United States, the term of the person serving as
Comptroller on the date of the enactment of this title shall terminate
as of such date.
(b) Acting Comptroller.--Subject to sections 3345, 3346, and 3347
of title 5, United States Code, the President may designate a person to
serve as acting Comptroller and perform the functions and duties of the
Comptroller until a Comptroller has been appointed and qualified in the
manner established in section 325 of the Revised Statutes of the United
States.
SEC. 1207. OFFICE OF THRIFT SUPERVISION ABOLISHED.
Effective 90 days after the transfer date, the position of Director
of the Office of Thrift Supervision and the Office of Thrift
Supervision are abolished.
SEC. 1208. SAVINGS PROVISIONS.
(a) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not
affected.--Sections 1204(a) and 1207 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 subtitle 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 Director of the Office of Thrift
Supervision transferred to the Comptroller of the
Currency by this title, the Comptroller of the Currency
or the Office of the Comptroller of the Currency shall
be substituted for the Director of the Office of Thrift
Supervision or the Office of Thrift Supervision, as the
case may be, as a party to the action or proceeding as
of the transfer date; and
(B) for any action or proceeding arising out of a
function of the Director of the Office of Thrift
Supervision transferred to the Corporation by this
title, the Chairman of the Corporation shall be
substituted for the Director of the Office of Thrift
Supervision as a party to the action or proceeding as
of 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 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 those
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 Office of the Comptroller of the Currency, in the
case of a function of the Director of the Office of Thrift
Supervision transferred to the Comptroller of the Currency,
until modified, terminated, set aside, or superseded in
accordance with applicable law by the Office of the Comptroller
of the Currency, by any court of competent jurisdiction, or by
operation of law; and
(2) the Corporation, in the case of a function of 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) Continuation of Existing OTS Enforcement Actions.--Any formal
or informal enforcement action taken by the Director of the Office of
Thrift Supervision with respect to a savings and loan holding company,
a subsidiary of a savings and loan holding company (other than a
savings association) or an institution-affiliated party of a savings
and loan holding company or such a subsidiary, that is in effect on the
day before the date of the enactment of this title shall continue to be
effective and enforceable against such company, subsidiary, or
institution-affiliated party after such date as if--
(1) such savings and loan holding company, or the savings
and loan holding company related to such subsidiary or
institution-affiliated party, had been a bank holding company
on the effective date of the final enforcement action; and
(2) the action had been taken by the Board, unless
otherwise terminated or modified by the Board.
(d) Identification of Regulations Continued.--
(1) By office of the comptroller of the currency.--Not
later than the transfer date, the Comptroller of the Currency
shall--
(A) after consultation with the Chairperson of 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 such regulations in the
Federal Register.
(2) 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 such regulations in the
Federal Register.
(e) Status of Regulations Proposed or Not Yet Effective.--
(1) Proposed regulations.--Any proposed regulation of the
Office of Thrift Supervision, which that agency, in performing
functions transferred by this title, has proposed before the
transfer date but has not published as a final regulation
before that date, shall be deemed to be a proposed regulation
of the Office of the Comptroller of the Currency, or the
Corporation, as appropriate, according to its terms.
(2) Regulations not yet effective.--Any interim or final
regulation of the Office of Thrift Supervision, which that
agency, 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 Corporation, as appropriate, according to its terms.
SEC. 1209. REGULATIONS AND ORDERS.
In addition to any powers transferred to the Comptroller of the
Currency by this title, the Comptroller of the Currency may prescribe
such regulations and issue such orders as the Comptroller of the
Currency determines to be appropriate to carry out this title and the
powers and duties transferred to the Comptroller of the Currency by
this title.
SEC. 1210. COORDINATION OF TRANSITION ACTIVITIES.
Before the transfer date, the Comptroller of the Currency shall--
(1) consult and cooperate with the Office of Thrift
Supervision to facilitate the orderly transfer of functions to
the Comptroller of the Currency;
(2) determine and redetermine, 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 title and ending on the
transfer date;
(B) what 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 during the period beginning on the date of
enactment of this title and ending on the transfer
date; and
(3) take such actions as may be necessary to provide for
the orderly implementation of this title.
SEC. 1211. INTERIM RESPONSIBILITIES OF OFFICE OF THE COMPTROLLER OF THE
CURRENCY AND OFFICE OF THRIFT SUPERVISION.
(a) In General.--When requested by the Comptroller of the Currency
to do so before the transfer date, the Office of Thrift Supervision
shall--
(1) pay to the Comptroller of the Currency, 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 that
the Comptroller of the Currency determines to be necessary
under section 1210(2)(A);
(2) detail to the Office of the Comptroller of the Currency
such personnel as the Comptroller of the Currency determines to
be appropriate under section 1210(2)(B); and
(3) make available to the Office of the Comptroller of the
Currency such property and provide the Office of the
Comptroller of the Currency such administrative services as the
Comptroller of the Currency determines to be necessary under
section 1210(2)(C).
(b) Notice Required.--The Comptroller of the Currency shall give
the Office of Thrift Supervision reasonable prior notice of any request
that the Office of the Comptroller of the Currency intends to make
under subsection (a).
SEC. 1212. EMPLOYEES TRANSFERRED.
(a) In General.--
(1) OTS employees.--
(A) In general.--All employees of the Office of
Thrift Supervision shall be transferred to either the
Comptroller of the Currency or the Corporation for
employment.
(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--
(I) the functions of the Office of
Thrift Supervision that are transferred
to the Office of the Comptroller of the
Currency by this title; and
(II) the functions of the Office of
Thrift Supervision that are transferred
to the Corporation by this title;
(ii) consistent with the numbers determined
under clause (ii), jointly identify employees
of the Office of Thrift Supervision for
transfer to the Office of the Comptroller of
the Currency or the Corporation in a manner
that the Director of the Office of Thrift
Supervision, the Comptroller of the Currency,
and the Chairperson of the Corporation, in
their discretion, deem equitable.
(2) Transfer of employees performing consumer financial
protection functions.--Nothing in paragraph (1) shall affect
the transfer of employees performing or supporting consumer
financial protection functions of the Comptroller of the
Currency and the Director of the Office of Thrift Supervision
to the Consumer Financial Protection Agency as provided in the
Consumer Financial Protection Agency Act of 2009.
(3) Appointment authority for excepted service
transferred.--
(A) In general.--In the case of employees occupying
positions in the excepted 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.--The Office of the
Comptroller of the Currency and the Corporation may
decline to accept 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.
(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
transfer date; and
(2) receive notice of his or her 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 subtitle.--If any provision of this
subtitle conflicts with any protection provided to transferred
employees under section 3503 of title 5, United States Code,
the provisions of this subtitle shall control.
(d) Employees' Status and Eligibility.--The transfer of functions
and employees under this title, and the abolition of the Office of
Thrift Supervision, 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.--Each employee transferred
from the Office of Thrift Supervision shall be placed in a position at
either the Office of the Comptroller of the Currency or the Corporation
with the same status and tenure as he or she held on the day before the
transfer date.
(f) No Additional Certification Requirements.--Examiners
transferred to the Office of the Comptroller of the Currency or the
Corporation shall not be subject to any additional certification
requirements before being placed in a comparable examiner's position at
the Office of the Comptroller of the Currency or the Corporation
examining the same types of institutions as they examined before they
were transferred.
(g) Personnel Actions Limited.--
(1) 3-year protection.--
(A) In general.--Except as provided in paragraph
(2), each affected employee shall not, during the 3-
year period beginning on the transfer date, be
involuntarily separated, or involuntarily reassigned
outside his or her locality pay area as defined by the
Office of Personnel Management.
(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;
(ii) an employee of the Office of the
Comptroller of the Currency holding a permanent
position on the day before the transfer date;
and
(iii) an employee of 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; or
(B) terminate an appointment to a position excepted
from the competitive service because of its
confidential policy-making, policy-determining, or
policy-advocating character.
(h) Pay.--
(1) 1-year protection.--Except as provided in paragraph
(2), each employee transferred from the Office of Thrift
Supervision shall, during the 1-year period beginning on the
transfer date, receive pay at a rate not less than the basic
rate of pay (including any geographic differential) that the
employee received during the 1-year period immediately before
the transfer.
(2) Exceptions.--Paragraph (1) does not limit the right of
the Office of the Comptroller of the Currency or the
Corporation to reduce a transferred employee's rate of basic
pay--
(A) for cause;
(B) for unacceptable performance; or
(C) with the employee's consent.
(3) Protection only while employed.--Paragraph (1) applies
to a transferred employee only while that employee remains
employed by the Office of the Comptroller of the Currency or
the Corporation.
(4) Pay increases permitted.--Paragraph (1) does not limit
the authority of the Office of the Comptroller of the Currency
or the Corporation to increase a transferred employee's pay.
(i) Benefits.--
(1) Retirement benefits for transferred employees.--
(A) In general.--
(i) Continuation of existing retirement
plan.--Each employee transferred from the
Office of Thrift Supervision may remain
enrolled in his or her existing retirement plan
or plans as long as he or she remains employed
by the Office of the Comptroller of the
Currency or the Corporation.
(ii) Employer's contribution.--The Office
of the Comptroller of the Currency or the
Corporation shall pay any employer
contributions to the existing retirement plan
of each employee transferred from the Office of
Thrift Supervision as required under that plan.
(B) Definition.--For purposes of this paragraph,
the term ``existing retirement plan'' means, with
respect to any employee transferred under this section,
the particular retirement plan (including the Financial
Institutions Retirement Fund) and any associated thrift
savings plan of the agency from which the employee was
transferred, which the employee was enrolled in on the
day before the transfer date.
(2) Benefits other than retirement benefits.--
(A) During 1st year.--
(i) Existing plans continue.--Each
transferred employee may, for 1 year after the
transfer date, retain membership in any other
employee benefit program of the Office of
Thrift Supervision, including a 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 shall pay any employer cost in
continuing to extend coverage in the benefit
program to the employee as required under that
program or negotiated agreements.
(B) Dental, vision, or life 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 decides not to continue
participation in any dental, vision, or life insurance
program of the Office of Thrift Supervision, an
employee transferred from the Office of Thrift
Supervision pursuant to this title who is a member of
such a program may, before the decision of the Office
of the Comptroller of the Currency or the Corporation
takes effect, elect to enroll, without regard to any
regularly scheduled open season, in--
(i) the enhanced dental benefits program
established by chapter 89A of title 5, United
States Code;
(ii) the enhanced vision benefits
established by chapter 89B of title 5, United
States Code; and
(iii) the Federal Employees Group Life
Insurance Program established by 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 decides not to continue participation in
any long term care insurance program of the Office of
Thrift Supervision, an employee transferred from the
Office of Thrift Supervision pursuant to this title who
is a member of such a program may, before the decision
of the Office of the Comptroller of the Currency or the
Corporation takes effect, elect to apply for coverage
under the Federal Long Term Care Insurance Program
established by chapter 90 of title 5, United States
Code, under the underwriting requirements applicable to
a new active workforce member (as defined in Part 875,
title 5, Code of Federal Regulations).
(D) Employee's contribution.--
(i) In general.--Subject to clause (ii), an
individual enrolled in the Federal Employees
Health Benefits program under this subparagraph
shall pay any employee contribution required by
the plan.
(ii) Cost differential.--The difference in
costs between the benefits that the Office of
Thrift Supervision is providing on the date of
enactment of this title and the benefits
provided by this section shall be paid by the
Comptroller of the Currency or the Corporation.
(iii) Funds transfer.--The Office of the
Comptroller of the Currency or the Corporation
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 Office of the Comptroller of the Currency
or the Corporation 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 (i).
(E) 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 the Office of Thrift
Supervision on the day before the 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 Office of the Comptroller of the
Currency or the Corporation, without regard to
any regularly scheduled open season and
requirement of insurability.
(ii) Employee's contribution.--
(I) In general.--Subject to
subclause (II), an individual enrolled
in a life insurance plan under this
clause shall pay any employee
contribution required by the plan.
(II) Cost differential.--The
difference in costs between the
benefits that the Office of Thrift
Supervision is providing on the date of
enactment of this title and the
benefits provided by this section shall
be paid by the Comptroller of the
Currency or the Corporation.
(III) Funds transfer.--The Office
of the Comptroller of the Currency or
the Corporation 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 Office of the
Comptroller of the Currency or the
Corporation 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 subclause
(I).
(IV) Credit for time enrolled in
other plans.--For employees transferred
under this section, enrollment in a
life insurance plan administered by the
Office of the Comptroller of the
Currency, the Office of Thrift
Supervision, or the Corporation
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) Equitable Treatment.--In administering the provisions of this
section, the Office of the Comptroller of the Currency and the
Corporation--
(1) shall take no action that would unfairly disadvantage
transferred employees relative to other employees of the Office
of the Comptroller of the Currency or the Corporation based on
their prior employment by the Office of Thrift Supervision;
(2) may take such action as is appropriate in individual
cases so that employees transferred under this section receive
equitable treatment, with respect to those employees' 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;
(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.
SEC. 1213. PROPERTY TRANSFERRED.
(a) In General.--Not later than 90 days after the transfer date,
all property of the Office of Thrift Supervision shall be transferred
to the Office of the Comptroller of the Currency or the Corporation,
allocated in a manner consistent with section 1212(a).
(b) Contracts Related to Property Transferred.--All contracts,
agreements, leases, licenses, permits, and similar arrangements
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
together with that property.
(c) Preservation of Property.--Property identified for transfer
under this section shall not be altered, destroyed, or deleted before
transfer under this section.
(d) 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).
SEC. 1214. FUNDS TRANSFERRED.
Except to the extent needed to dispose of affairs under section
1215, all funds that, on the day before the transfer date, are
available to the Director of the Office of Thrift Supervision to pay
the expenses of the Office of Thrift Supervision shall be transferred
to the Office of the Comptroller of the Currency or the Corporation,
allocated in a manner consistent with section 1212(a), on the transfer
date.
SEC. 1215. DISPOSITION OF AFFAIRS.
(a) In General.--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 agency related to any function transferred to the Office
of the Comptroller of the Currency or the Corporation by this
subtitle--
(A) manage any employees of the Office of Thrift
Supervision and provide for the payment of the
compensation and benefits of any such employees that
accrue before the transfer date; and
(B) manage any property of the Office of Thrift
Supervision until the property is transferred under
section 1213; and
(2) may take any other action necessary to wind up the
affairs of the Office of Thrift Supervision relating to the
transferred functions.
(b) Authority and Status of Director.--
(1) In general.--Notwithstanding the transfers of functions
under this subtitle, the Director of the Office of Thrift
Supervision shall, during the 90-day period beginning on the
transfer date, retain and may exercise any authority vested in
the Director on the day before the transfer date that is
necessary to carry out the requirements of this subtitle during
that 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 he or she was receiving
on the day before the transfer date.
SEC. 1216. 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 to be transferred to the Office of the Comptroller of the
Currency or the Corporation, shall--
(1) continue to provide those services, subject to
reimbursement, until the transfer of those functions is
complete; and
(2) consult with any such agency to coordinate and
facilitate a prompt and orderly transition.
SEC. 1217. CONTRACTING AND LEASING AUTHORITY.
In addition to any powers transferred to the Comptroller of the
Currency by this subtitle, the Comptroller of the Currency may--
(1) enter into and perform contracts, execute instruments,
and acquire in any lawful manner such goods and services, or
real or personal property, or interest in property, as the
Comptroller of the Currency determines to be necessary or
convenient to carry out the duties and responsibilities of the
Comptroller of the Currency; and
(2) hold, maintain, sell, lease, or otherwise dispose of
any real or personal property or interest in property without
regard to title 40, United States Code, title III of the
Federal Properties and Administrative Services Act of 1949 (41
U.S.C. 251 et seq.), and other Federal laws of a similar type
governing the procurement of goods and services or the
acquisition or disposition of any property or interest in
property by Federal agencies.
SEC. 1218. TREATMENT OF SAVINGS AND LOAN HOLDING COMPANIES.
Section 10 of the Home Owners' Loan Act (12 U.S.C. 1467a) is
amended as follows:
(1) In subsection (m)--
(A) in paragraph (2), by striking ``Director'' and
inserting ``Comptroller'';
(B) in paragraph (2), by striking ``Director may
grant'' and inserting ``Comptroller of the Currency may
grant'';
(C) in paragraph (2), by striking ``the Director
deems'' and inserting ``the Comptroller deems'';
(D) in paragraph (2)(A), by striking ``Director''
and inserting ``Comptroller'';
(E) in paragraph (2)(B), by striking ``Director''
and inserting ``Comptroller'';
(F) in paragraph (2)(B)(iii), by striking
``Director'' and inserting ``Comptroller'';
(G) by striking subparagraph (A) of paragraph (3)
and inserting the following new subparagraph:
``(A) In general.--A savings association that fails
to become or remain a qualified thrift lender shall--
``(i) immediately be subject to the
restrictions in subparagraph (B); and
``(ii) become one or more banks (other than
a savings bank) within one year after the date
on which the savings association should have
become or ceases to be a qualified thrift
lender, except as provided in subparagraph
(C)(i).'';
(H) by striking subclause (III) of paragraph
(3)(B)(i) and inserting the following new subclause:
``(III) Dividends.--The savings
association shall be prohibited from
paying dividends except for such
dividends--
``(aa) as would be
permissible for a national
bank;
``(bb) that are necessary
to meet obligations of a
company that controls such
savings association; and
``(cc) that are
specifically approved by the
Comptroller and the Board of
Governors after prior written
request of at least 30 days to
the Comptroller and the Board
of Governors.'';
(I) by striking clause (ii) of paragraph (3)(B);
(J) by striking subparagraphs (C) and (D) of
paragraph (3) and inserting the following new
subparagraphs:
``(C) 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 and subject to actions
authorized by section 5(d) of the Home Owners' Loan
Act.
``(D) Requalifications.--
``(i) A savings association that should
have become or ceases to be a qualified thrift
lender shall not be subject to subparagraph
(A)(ii) if the savings association becomes a
qualified thrift lender by meeting the
qualified thrift lender requirement in
paragraph (1) on a monthly average basis in 9
out of the preceding 12 months and remains a
qualified thrift lender.
``(ii) If the savings association referred
to in clause (i) (or any savings association
that acquired all or substantially all of its
assets from that savings association) at any
time thereafter ceases to be a qualified thrift
lender it shall immediately be subject to
subparagraph (A)(ii) as if the one-year time
period provided for in subparagraph (A)(ii)
already has expired, and as if the exception in
clause (i) was not applicable or available to
such savings association.'';
(K) in paragraph (4)(D) by striking ``Director''
and inserting ``Comptroller'';
(L) in paragraph (4)(E) by striking ``Director''
and inserting ``Comptroller''; and
(M) in paragraph (7)(B) by striking ``Director''
and inserting ``Comptroller''.
(2) In subsection (o)--
(A) in paragraph (3) in the heading by striking
``Director'' and inserting ``Board'';
(B) in paragraph (3)(A) by striking ``Director''
and inserting ``Board'';
(C) in paragraph (3)(B) by striking ``Director''
and inserting ``Board'';
(D) in paragraph (3)(C) by striking ``Director''
and inserting ``Board'';
(E) in paragraph (3)(D) by striking ``Director''
and inserting ``Comptroller'';
(F) in paragraph (5)(E), by striking ``activities
described in subsection (c)(2) or (c)(9)(A)(ii)'' and
inserting ``activities otherwise permissible for the
company pursuant to, and in accordance with, section 4
of the Bank Holding Company Act of 1956'';
(G) in paragraph (7) by striking ``chartered by the
Director'' and inserting ``chartered by the
Comptroller''; and
(H) in paragraph (7) by striking ``regulations as
the Director may'' and inserting ``regulations as the
Board may''.
SEC. 1219. PRACTICES OF CERTAIN MUTUAL THRIFT HOLDING COMPANIES
PRESERVED.
(a) Treatment of Dividends by Certain Mutual Holding Companies.--
Section 3(g) of the Bank Holding Company Act of 1956 (12 U.S. C.
1842(g)) is amended by adding at the end the following new paragraphs:
``(3) Declaration of dividends.--Every subsidiary savings
association of a mutual holding company shall give the Board
not less than 30 days advance notice of the proposed
declaration by its directors of any dividend on its guaranty,
permanent, or other nonwithdrawable stock. Such notice period
shall commence to run from the date of receipt of such notice
by the Board. Any such dividend declared within such period, or
without the giving of such notice to the Board, shall be
invalid and shall confer no rights or benefits upon the holder
of any such stock.
``(4) Waiver of dividends.--Any mutual thrift holding
company organized under section 10(b) of the Home Owners' Loan
Act shall be permitted to waive such company's right to receive
any dividend declared by a subsidiary, if--
``(A) 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
``(B) the mutual holding company provides the Board
with written notice of its intent to waive its right to
receive dividends 30 days prior to the proposed date of
payment of the dividend and the Board does not object.
``(5) Standards for waiver of dividend.--The Board shall
not object to a notice of intent to waive dividends under
paragraph (4) if--
``(A) the waiver would not be detrimental to the
safe and sound operation of the savings association;
and
``(B) 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 directors' fiduciary duties to the mutual
members of such company.
``(6) Resolution included in waiver notice.--A dividend
waiver notice shall include a copy of the resolution of the
board of directors of the mutual holding company, in form and
substance satisfactory to the Board, together with any
supporting materials relied upon by the board of directors,
concluding that the proposed dividend waiver is consistent with
the board of director's fiduciary duties to the mutual members
of the mutual holding company.
``(7) Valuation.--The Board will not consider waived
dividends in determining an appropriate exchange ratio in the
event of a full conversion to stock form.''.
SEC. 1220. IMPLEMENTATION PLAN AND REPORTS.
(a) Plan Submission.--Within 90 days of the enactment of the
Financial Stability Improvement Act of 2009, the Secretary and the
Corporation, in consultation with the Office of the Comptroller of the
Currency and the Office of Thrift Supervision, shall jointly submit a
plan to the Congress and the Inspectors General of the Department of
the Treasury and of the Corporation detailing the steps the Secretary,
the Corporation, the Office of the Comptroller of the Currency, and the
Office of Thrift Supervision will take to implement the provisions of
sections 1201 through 1216, and the provisions of the amendments made
by such sections.
(b) Inspectors General Review of the Plan.--Within 60 days of the
date on which the Congress receives the plan required under subsection
(a), the Inspectors General of the Department of the Treasury and of
the Corporation shall jointly provide a written report to the Secretary
and the Corporation and shall submit a copy to the Congress detailing
whether the plan conforms with the intent of the provisions of sections
1201 through 1216, 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 Congress 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 and the Corporation shall jointly provide a written report on
the status of the implementation of the plan to the Secretary and the
Corporation and shall submit a copy to the Congress.
SEC. 1221. COMPOSITION OF BOARD OF DIRECTORS OF THE FEDERAL DEPOSIT
INSURANCE CORPORATION.
Section 2 of the Federal Deposit Insurance Act (12 U.S.C. 1812) is
amended--
(1) in subsection (a)(1)--
(A) in subparagraph (B), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Chairman of the Board of Governors of the Federal
Reserve System, or such other member of the Board of
Governors as the Chairman of the Board of Governors
shall designate'';
(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 and
pending the appointment of a successor, or during the absence
or disability of the Comptroller of the Currency, the acting
Comptroller of the Currency shall be a member of the Board of
Directors in the place of the Comptroller of the Currency.'';
and
(3) in subsection (f)(2), by striking ``or of the Office of
Thrift Supervision''.
SEC. 1222. AMENDMENTS TO SECTION 3.
Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) is
amended--
(1) in subsection (b)(1)(C) (relating to the definition of
the term ``savings association''), by striking ``Director of
the Office of Thrift Supervision'' and inserting ``Comptroller
of the Currency'';
(2) in subsection (l)(5) (relating to the definition of the
term ``deposit''), in the introductory text, by striking
``Director of the Office of Thrift Supervision,''; and
(3) in subsection (z) (relating to the definition of the
term ``Federal banking agency''), by striking ``the Director of
the Office of Thrift Supervision,''.
SEC. 1223. AMENDMENTS TO SECTION 7.
Section 7(a) of the Federal Deposit Insurance Act (12 U.S.C. 1817)
is amended--
(1) in paragraph (2)(A)--
(A) in the first sentence, by striking ``the
Director of the Office of Thrift Supervision'';
(B) in the second sentence, by striking ``the
Director of the Office of Thrift Supervision,'';
(2) in paragraph (3), in the first sentence, by striking
``, the 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''; and
(3) in paragraph (7), by striking ``, the Director of the
Office of Thrift Supervision,''.
SEC. 1224. AMENDMENTS TO SECTION 8.
Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) is
amended--
(1) in subsection (a)(8)(B)(ii), in the last sentence--
(A) by striking ``Director of the Office of Thrift
Supervision'' each place it appears and inserting
``Comptroller of the Currency''; and
(B) by inserting ``the Office of Thrift
Supervision, as a successor to'' after ``as a successor
to'';
(2) in subsection (o), by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Comptroller of the
Currency''; and
(3) in subsection (w)(3)(A), by striking ``Office of Thrift
Supervision'' and inserting ``Office of the Comptroller of the
Currency''.
SEC. 1225. AMENDMENTS TO SECTION 11.
Section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821) is
amended--
(1) in subsection (c)(6)--
(A) in the heading, by striking ``director of the
office of thrift supervision'' and inserting
``Comptroller of the currency'';
(B) in subparagraph (A), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(C) in subparagraph (B), by striking ``Director of
the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency'';
(2) in subsection (d)--
(A) in paragraph (17)(A)--
(i) by striking ``, or the Director of the
Office of Thrift Supervision''; and
(ii) by striking ``appropriate''; and
(B) in paragraph (18)(B), by striking ``or the
Director of the Office of Thrift Supervision''; and
(3) in subsection (n)--
(A) in paragraph (1)(A), by striking ``the Director
of the Office of Thrift Supervision, with respect to 1
or more insured''
(B) in paragraph (2)(A), by striking ``the Director
of the Office of Thrift Supervision'';
(C) in paragraph (4)(D), by striking ``and the
Director of the Office of Thrift Supervision, as
appropriate,'';
(D) in paragraph (4)(G), by striking ``and the
Director of the Office of Thrift Supervision, as
appropriate,''; and
(E) in paragraph (12)(B), by striking ``or the
Director of the Office of Thrift Supervision, as
appropriate,''.
SEC. 1226. AMENDMENTS TO SECTION 13.
Section 13(k)(1)(A)(iv) of the Federal Deposit Insurance Act (12
U.S.C. 1823(k)(1)(A)(iv)) is amended by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Comptroller of the
Currency''.
SEC. 1227. AMENDMENTS TO SECTION 18.
Section 18 of the Federal Deposit Insurance Act (12 U.S.C. 1828) is
amended--
(1) in subsection (c)(2)--
(A) in subparagraph (A), by striking ``bank;'' and
inserting ``bank or a savings association; and'';
(B) in subparagraph (B), by inserting ``and'' at
the end after the semicolon;
(C) in subparagraph (C), by striking ``bank (except
a savings bank supervised by the Director of the Office
of Thrift Supervision); and'' and inserting ``bank or
State savings association.''; and
(D) by striking subparagraph (D); and
(2) in subsection (g)(1), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Comptroller of
the Currency'';
(3) in subsection (i)(2)--
(A) by striking subparagraph (B) and inserting the
following new subparagraph:
``(B) the Corporation, if the resulting institution
is to be a State nonmember insured bank or insured
State savings association.''; and
(B) by striking subparagraph (C);
(4) in subsection (m)--
(A) in paragraph (1)--
(i) in subparagraph (A), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(ii) in subparagraph (B), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency'';
(B) in paragraph (2)--
(i) in subparagraph (A), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(ii) in subparagraph (B)--
(I) by striking ``Director of the
Office of Thrift Supervision'' each
place it appears and inserting
``Comptroller of the Currency''; and
(II) by striking ``Director may
deem appropriate'' and inserting
``Comptroller may deem appropriate'';
and
(C) in paragraph (3)--
(i) in subparagraph (A), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(ii) in subparagraph (B), by striking
``Office of Thrift Supervision'' and inserting
``Comptroller of the Currency''.
SEC. 1228. AMENDMENTS TO SECTION 28.
Section 28 of the Federal Deposit Insurance Act (12 U.S.C. 1831e)
is amended--
(1) in subsection (e)--
(A) in paragraph (2)--
(i) in subparagraph (A)(ii), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency'';
(ii) in subparagraph (C), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(iii) in subparagraph (F), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(B) in paragraph (3)--
(i) in subparagraph (A), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(ii) in subparagraph (B), by striking
``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of
the Currency''; and
(2) in subsection (h)(2), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Comptroller of
the Currency''.
SEC. 1229. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY
ACT OF 1982.
(a) Amendments to Section 802.--Section 802(a)(3) of the
Alternative Mortgage Transaction Parity Act of 1982 (12 U.S.C.
3801(a)(3)) is amended--
(1) by striking ``Comptroller of the Currency,'' and
inserting ``Comptroller of the Currency and''; and
(2) by striking ``, and the Director of the Office of
Thrift Supervision''.
(b) Amendments to Section 804.--Section 804(a) of the Alternative
Mortgage Transaction Parity Act of 1982 (12 U.S.C. 3803(a)) is
amended--
(1) by amending paragraph (1) to read as follows:
``(1) with respect to banks, savings associations, mutual
savings banks, and savings banks, only to transactions made in
accordance with regulations governing alternative mortgage
transactions as prescribed by the Comptroller of the Currency
to the extent that such regulations are authorized by
rulemaking authority granted to the Comptroller of the Currency
under laws other than this section; and'';
(2) in paragraph (2), by striking ``; and'' and inserting a
period; and
(3) by striking paragraph (3).
SEC. 1230. AMENDMENTS TO THE BANK HOLDING COMPANY ACT OF 1956.
Section 4(f)(12)(A) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(f)(12)(A)) is amended striking ``the Resolution Trust
Corporation, the Federal Deposit Insurance Corporation, or'' and
inserting ``the Federal Deposit Insurance Corporation or''.
SEC. 1231. AMENDMENTS TO THE BANK PROTECTION ACT OF 1968.
Section 2 of the Bank Protection Act of 1968 (12 U.S.C. 1881) is
amended--
(1) in paragraph (1), by striking ``national banks,'' and
inserting ``national banks and federal savings associations,'';
(2) in paragraph (2), by inserting ``and'' at the end;
(3) in paragraph (3), by striking ``, and'' and inserting a
period; and
(4) by striking paragraph (4).
SEC. 1232. AMENDMENTS TO THE BANK SERVICE COMPANY ACT.
Section 1(b) of the Bank Service Company Act (12 U.S.C. 1861(b)) is
amended--
(1) in paragraph (4), by striking ``insured bank,'' and
inserting ``insured bank or'';
(2) by striking ``Director of the Office of Thrift
Supervision'' and inserting ``Comptroller of the Currency'';
and
(3) by striking ``, the Federal Savings and Loan Insurance
Corporation,''.
SEC. 1233. AMENDMENTS TO THE COMMUNITY REINVESTMENT ACT OF 1977.
Section 803 of the Community Reinvestment Act of 1977 (12 U.S.C.
2902) is amended--
(1) in paragraph (1)--
(A) in subparagraph (A), by striking ``national
banks'' and inserting ``national banks or savings
associations (the deposits of which are insured by the
Federal Deposit Insurance Corporation)''; and
(B) in subparagraph (B), by striking ``and bank
holding companies;'' and inserting ``, bank holding
companies and savings and loan holding companies;'';
and
(2) by striking the first paragraph (2) (relating to
section 8 of the Federal Deposit Insurance Act).
SEC. 1234. AMENDMENTS TO THE DEPOSITORY INSTITUTION MANAGEMENT
INTERLOCKS ACT.
(a) Amendment to Section 207.--Section 207 of the Depository
Institution Management Interlocks Act (12 U.S.C. 3206) is amended--
(1) in paragraph (1), by striking ``national banks,'' and
inserting ``national banks and Federal savings associations
(the deposits of which are insured by the Federal Deposit
Insurance Corporation),'';
(2) in paragraph (2), by striking ``and bank holding
companies,'' and inserting ``, bank holding companies, and
savings and loan holding companies,''
(3) by striking paragraph (4); and
(4) by redesignating paragraphs (5) and (6) as paragraphs
(4) and (5), respectively.
(b) Amendment to Section 209.--Section 209 of the Depository
Institution Management Interlocks Act (12 U.S.C. 3207) is amended--
(1) in paragraph (1), by striking ``national banks,'' and
inserting ``national banks and Federal savings associations
(the deposits of which are insured by the Federal Deposit
Insurance Corporation),'';
(2) in paragraph (2), by striking ``and bank holding
companies,'' and inserting ``, bank holding companies, and
savings and loan holding companies,'';
(3) at the end of paragraph (3), by inserting ``and'' after
the comma;
(4) by striking paragraph (4); and
(5) by redesignating paragraph (5) as paragraph (4).
(c) Amendment to Section 210.--Subsection 210(a) of the Depository
Institution Management Interlocks Act (12 U.S.C. 3208(a)) is amended--
(1) by striking ``his'' and inserting ``the''; and
(2) by inserting ``of the Attorney General'' after
``enforcement functions''.
SEC. 1235. AMENDMENTS TO THE EMERGENCY HOMEOWNERS' RELIEF ACT.
Section 110 of the Emergency Homeowners' Relief Act (12 U.S.C.
2709) is amended--
(1) by striking the ``Federal Home Loan Bank Board'' and
inserting ``Federal Housing Finance Agency''; and
(2) by striking ``the Federal Savings and Loan Insurance
Corporation,''.
SEC. 1236. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.
Section 704(a) of the Equal Credit Opportunity Act (15 U.S.C.
1691c(a)) is amended--
(1) in paragraph (1)(A), by striking ``and Federal branches
and Federal agencies of foreign banks,'' and inserting
``Federal branches and Federal agencies of foreign banks, or a
savings association the deposits of which are insured by the
Federal Deposit Insurance Corporation,'';
(2) by striking paragraph (2); and
(3) by redesignating paragraphs (3) through (9) as
paragraphs (2) through (8).
SEC. 1237. AMENDMENTS TO THE FEDERAL CREDIT UNION ACT.
(a) Amendments to Section 206.--Section 206(g)(7) of the Federal
Credit Union Act (12 U.S.C. 1786(g)(7)) is amended--
(1) in subparagraph (A)--
(A) in clause (v), by inserting ``and'' after the
semicolon;
(B) in clause (vi)--
(i) by striking ``Federal Housing Finance
Board'' and inserting ``Federal Housing Finance
Agency''; and
(ii) by striking ``; and'' and inserting a
period; and
(C) by striking clause (vii); and
(2) in subparagraph (D)--
(A) in clause (iii), by inserting ``and'' after the
semicolon;
(B) in clause (iv), by striking ``; and'' and
inserting a period; and
(C) by striking clause (v).
SEC. 1238. AMENDMENTS TO THE FEDERAL FINANCIAL INSTITUTIONS EXAMINATION
COUNCIL ACT OF 1978.
(a) Amendment to Section 1002.--Section 1002 of the Federal
Financial Institutions Examination Council Act of 1978 (12 U.S.C. 3301)
is amended by striking ``Federal Home Loan Bank Board'' and inserting
``Federal Housing Finance Agency''.
(b) Amendment to Section 1003.--Section 1003(1) of the Federal
Financial Institutions Examination Council Act of 1978 (12 U.S.C.
3302(1)) is amended by striking ``the Office of Thrift Supervision,''.
(c) Amendments to Section 1004.--Section 1004(a) of the Federal
Financial Institutions Examination Council Act of 1978 (12 U.S.C.
3303(a)) is amended--
(1) by striking paragraph (4); and
(2) by redesignating paragraphs (5) and (6) as paragraphs
(4) and (5), respectively.
SEC. 1239. AMENDMENTS TO THE FEDERAL HOME LOAN BANK ACT.
(a) Amendments to Section 18.--Section 18(c) of the Federal Home
Loan Bank Act (12 U.S.C. 1438(c)) is amended--
(1) by striking ``Director of the Office of Thrift
Supervision'' each place it appears and inserting ``Comptroller
of the Currency'';
(2) in paragraph (1)(B), by striking ``and the agencies
under its administration or supervision''; and
(3) in paragraph (5), by striking ``and such agencies''.
(b) Repeal of Section 21A.--Section 21A of the Federal Home Loan
Bank Act (12 U.S.C. 1441a) is hereby repealed.
SEC. 1240. AMENDMENTS TO THE FEDERAL RESERVE ACT.
Section 19(b) of the Federal Reserve Act (12 U.S.C. 461) is
amended--
(1) in paragraph (1)(F), by striking ``the Director of the
Office of Thrift Supervision'' and inserting ``the Comptroller
of the Currency''; and
(2) in paragraph (4)(B), by striking ``the Director of the
Office of Thrift Supervision'' and inserting ``the Comptroller
of the Currency''.
SEC. 1241. AMENDMENTS TO THE FINANCIAL INSTITUTIONS REFORM, RECOVERY,
AND ENFORCEMENT ACT OF 1989.
(a) Amendments to Section 302.--Section 302(1) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 is amended
by striking ``Director of the Office of Thrift Supervision'' and
inserting ``Comptroller of the Currency''.
(b) Amendment to Section 305.--Section 305(b)(1) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 is amended
by striking ``Director of the Office of Thrift Supervision'' and
inserting ``Comptroller of the Currency''.
(c) Amendment to Section 308.--Section 308(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
1463 note) is amended by striking ``Director of the Office of
Supervision'' and inserting ``Comptroller of the Currency''.
(d) Amendments to Section 402.--Section 402 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
1437 note) is amended--
(1) in subsection (a), by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Comptroller of the
Currency'';
(2) in subsection (b), by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Comptroller of the
Currency''; and
(3) in subsection (e)--
(A) in paragraph (1), by striking ``Office of
Thrift Supervision'' and inserting ``Office of the
Comptroller of the Currency'';
(B) in paragraph (2), by striking ``Director of the
Office of Thrift Supervision'' each place it appears
and inserting ``Comptroller of the Currency'';
(C) in paragraph (3), by striking ``Director of the
Office of Thrift Supervision'' and inserting
``Comptroller of the Currency''; and
(D) in paragraph (4), by striking ``Director of the
Office of Thrift Supervision'' and inserting
``Comptroller of the Currency''.
(e) Amendment to Section 1103.--Section 1103(a)(2) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3332(a)(2)) is amended by striking ``and the Resolution Trust
Corporation''.
(f) Amendments to Section 1205.--Subsection 1205(b) of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 1818 note) is amended--
(1) in paragraph (1)--
(A) in subparagraph (B), by striking ``Director of
the Office of Thrift Supervision, or the Director's
designee'' and inserting ``Comptroller of the Currency,
or the Comptroller's designee'';
(B) by striking subparagraph (D); and
(C) by redesignating subparagraphs (E) and (F) as
subparagraphs (D) and (E), respectively;
(2) in paragraph (2), by striking ``paragraph (1)(F)'' and
inserting ``paragraph (1)(E)'';
(3) in paragraph (3), by striking ``paragraph (1)(F)'' and
inserting ``paragraph (1)(E)''; and
(4) in paragraph (5), by striking ``through (E)'' and
inserting ``through (D)''.
(g) Amendments to Section 1206.--Section 1206(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
1833b(a)) is amended--
(1) by striking ``the Oversight Board of the Resolution
Trust Corporation'' and inserting ``and''; and
(2) by striking ``, and the Office of Thrift
Supervision,''.
(h) Amendments to Section 1216.--Section 1216 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
1833e) is amended--
(1) in subsection (a)--
(A) by striking paragraphs (2), (5), and (6);
(B) by redesignating paragraphs (3) and (4) as
paragraphs (2) and (3), respectively; and
(C) in paragraph (2) (as redesignated), by adding
``and'' at the end;
(2) in subsection (c)--
(A) by striking ``the Director of the Office of
Thrift Supervision,'' and inserting ``and''; and
(B) by striking ``, the Oversight Board of the
Resolution Trust Corporation, and the Resolution Trust
Corporation''; and
(3) in subsection (d)--
(A) by striking paragraphs (3), (5) and (6); and
(B) by redesignating paragraphs (4), (7), and (8)
as paragraphs (3), (4), and (5), respectively.
SEC. 1242. AMENDMENTS TO THE HOUSING ACT OF 1948.
Section 502(c) of the Housing Act of 1948 (12 U.S.C. 1701c(c)) is
amended in the introductory text by striking ``Director of the Office
of Thrift Supervision'' and inserting ``Comptroller of the Currency''.
SEC. 1243. AMENDMENTS TO THE HOUSING AND COMMUNITY DEVELOPMENT ACT OF
1992 AND THE FEDERAL HOUSING ENTERPRISES FINANCIAL SAFETY
AND SOUNDNESS ACT OF 1992.
(a) Amendments to Section 543 of the Housing and Community
Development Act of 1992.--Section 543 of the Housing and Community
Development Act of 1992 (12 U.S.C. 1707 note) 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)--
(i) by striking ``the Office of Thrift
Supervision,''; and
(ii) in subparagraph (D), by striking ``the
Office of Thrift Supervision,''; and
(B) in paragraph (3)--
(i) by striking ``the Office of Thrift
Supervision,''; and
(ii) in subparagraph (D), by striking
``Office of Thrift Supervision,'' and inserting
``Comptroller of the Currency,''.
(b) Amendment to Section 1315 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992.--Section 1315(b) of the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(12 U.S.C. 4515(b)) is amended by striking ``the Federal Deposit
Insurance Corporation, and the Office of Thrift Supervision.'' and
inserting ``and the Federal Deposit Insurance Corporation.''.
(c) Amendment to Section 1317 of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992.--Section 1317(c) of the of
the Federal Housing Enterprises Financial Safety and Soundness Act of
1992 (12 U.S.C. 4517(c)) is amended 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. 1244. AMENDMENT TO THE 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. 1245. AMENDMENTS TO THE NATIONAL HOUSING ACT.
Section 202(f) of the National Housing Act is amended--
(1) by amending paragraph (5) to read as follows:
``(5) if the mortgagee is a national bank, a subsidiary or
affiliate of such a 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. 1246. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978.
Section 1101(7) of the Right to Financial Privacy Act of 1978 (12
U.S.C. 3401(7)) is amended by striking subparagraph (B).
SEC. 1247. AMENDMENTS TO THE BALANCED BUDGET AND EMERGENCY DEFICIT
CONTROL ACT OF 1985.
(a) Amendments to Section 255.--Section 255(g)(1)(A) of the
Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C.
905(g)(1)(A)) is amended by striking ``Office of Thrift Supervision
(20-4108-0-3-373);''.
(b) Amendments to Section 256.--Section 256(h)(4) of the Balanced
Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 906(h)(4))
is amended--
(1) by striking subparagraphs (C) and (G); and
(2) by redesignating subparagraphs (D), (E), (F), and (H)
as subparagraphs (C) through (G), respectively.
SEC. 1248. AMENDMENTS TO THE CRIME CONTROL ACT OF 1990.
(a) Amendments to Section 2539.--Section 2539(c)(2) of the Crime
Control Act of 1990 (Public Law 101-647) is amended by striking
subparagraph (F) and redesignating subparagraphs (G) and (H) as
subparagraphs (F) through (G), respectively.
(b) Amendment to Section 2554.--Section 2554(b)(2) of the Crime
Control Act of 1990 (Public Law 101-647) is amended by striking
``Director of the Office of Thrift Supervision'' and inserting
``Comptroller of the Currency''.
SEC. 1249. AMENDMENT TO THE 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. 1250. AMENDMENT TO THE INVESTMENT COMPANY ACT OF 1940.
Section 6(a)(3) of the Investment Company Act of 1940 (15 U.S.C.
80a-6(a)(3)) is amended by striking ``Federal Savings and Loan
Insurance Corporation'' and inserting ``Comptroller of the Currency''.
SEC. 1251. AMENDMENT TO THE NEIGHBORHOOD REINVESTMENT CORPORATION ACT.
Section 606(c)(3) of the Neighborhood Reinvestment Corporation Act
is amended by striking ``Federal Home Loan Bank Board'' and inserting
``Federal Housing Finance Agency''.
SEC. 1252. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) Amendments to Section 3.--Section 3(a)(34) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(34)) is amended--
(1) in subparagraph (A)--
(A) in clause (i), by striking ``bank;'' and
inserting ``bank, or a savings association (as defined
in section 3(b) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(b))), the deposits of which are insured
by the Federal Deposit Insurance Corporation, a
subsidiary or a department or division of any such
savings association, or a savings and loan holding;'';
(B) in clause (iii), by adding ``and'' at the end;
(C) by striking clause (iv); and
(D) by redesignating clause (v) as clause (iv);
(2) in subparagraph (B)--
(A) in clause (i), by striking ``bank;'' and
inserting ``bank, or a savings association (as defined
in section 3(b) of the Federal Deposit Insurance Act
(12 U.S.C. 1813 (b))), the deposits of which are
insured by the Federal Deposit Insurance Corporation, a
subsidiary or a department or division of any such
savings association, or a savings and loan holding;'';
(B) in clause (iii), by adding ``and'' and the end;
(C) by striking clause (iv); and
(D) by redesignating clause (v) as clause (iv);
(3) in subparagraph (C)--
(A) in clause (i), by striking ``bank;'' and
inserting ``bank, or a savings association (as defined
in section 3(b) of the Federal Deposit Insurance Act
(12 U.S.C. 1813 (b))), the deposits of which are
insured by the Federal Deposit Insurance Corporation, a
subsidiary or a department or division of any such
savings association, or a savings and loan holding;'';
(B) in clause (iii), by adding ``and'' at the end;
(C) by striking clause (iv); and
(D) by redesignating clause (v) as clause (iv); and
(4) in subparagraph (F)--
(A) in clause (i), by striking ``bank;'' and
inserting ``or a savings association (as defined in
section 3(b) of the Federal Deposit Insurance Act (12
U.S.C. 1813 (b))), the deposits of which are insured by
the Federal Deposit Insurance Corporation;'';
(B) by striking clause (ii); and
(C) redesignating clauses (iii), (iv), and (v) as
clauses (ii), (iii) and (iv), respectively.
(b) Amendments to Section 15c.--Section 15C of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-5) is amended in subsection (g)(1)
by striking ``the Director of the Office of Thrift Supervision, the
Federal Savings and Loan Insurance Corporation,''.
SEC. 1253. AMENDMENTS TO TITLE 18, UNITED STATES CODE.
(a) Amendment to Section 212.--Section 212(c)(2) of title 18,
United States Code, is amended--
(1) by striking subparagraph (C); and
(2) by redesignating subparagraphs (D) through (H) as
subparagraphs (C) through (G), respectively.
(b) Amendment to Section 657.--Section 657 of title 18, United
States Code, is amended by striking ``Office of Thrift Supervision, the
Resolution Trust Corporation,''.
(c) Amendment to Section 981.--Section 981(a)(1)(D) of title 18,
United States Code, is amended--
(1) by striking ``the Resolution Trust Corporation,''; and
(2) by striking ``or the Office of Thrift Supervision''.
(d) Amendment to Section 982.--Section 982(a)(3) of title 18,
United States Code, is amended--
(1) by striking ``the Resolution Trust Corporation,'';and
(2) by striking ``or the Office of Thrift Supervision''.
(e) Amendment to Section 1006.--Section 1006 of title 18, United
States Code, is amended--
(1) by striking ``Office of Thrift Supervision,''; and
(2) by striking ``the Resolution Trust Corporation,''.
(f) Amendment to Section 1014.--Section 1014 of title 18, United
States Code, is amended--
(1) by striking ``the Office of Thrift Supervision,''; and
(2) by striking ``the Resolution Trust Corporation,''.
(g) Amendment to Section 1032.--Section 1032(1) of title 18, United
States Code, is amended--
(1) by striking ``the Resolution Trust Corporation,''; and
(2) by striking ``or the Director of the Office of Thrift
Supervision''.
SEC. 1254. AMENDMENTS TO TITLE 31, UNITED STATES CODE.
(a) Amendment to Section 309.--Section 309 of title 31, United
States Code, is amended to read as follows:
``Sec. 309. Division of Thrift Supervision
``The Division of Thrift Supervision established under section 3(a)
of the Home Owners' Loan Act shall be a division in the Office of the
Comptroller of the Currency.''.
(b) Amendments to Section 321.--Section 321 of title 31, United
States Code, is amended--
(1) in subsection (c)--
(A) in paragraph (1), by adding ``and'' at the end;
(B) in paragraph (2), by striking ``; and'' and
inserting a period; and
(C) by striking paragraph (3); and
(2) by striking subsection (e).
(c) Amendments to Section 714.--Section 714 of title 31, United
States Code, is amended--
(1) in subsection (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.'';
(2) in subsection (b), by striking all after ``has
consented in writing.'' and inserting the following: ``Audits
of the Federal Reserve Board and Federal reserve banks shall
not include unreleased transcripts or minutes of meetings of
the Board of Governors or of the Federal Open Market Committee.
To the extent that an audit deals with individual market
actions, records related to such actions shall only be released
by the Comptroller General after 180 days have elapsed
following the effective date of such actions.'';
(3) in subsection (c)(1), in the first sentence, by
striking ``subsection,'' and inserting ``subsection or in the
audits or audit reports referring or relating to the Federal
Reserve Board or Reserve Banks,''; and
(4) by adding at the end the following:
``(f) Audit and Report of the Federal Reserve System.--
``(1) In general.--An audit of the Board of Governors of
the Federal Reserve System and the Federal reserve banks under
subsection (b) shall be completed within 12 months of the
enactment of the Financial Stability Improvement Act of 2009.
``(2) Report.--
``(A) Required.--A report on the audit referred to
in 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 made available to--
``(i) the Speaker of the House of
Representatives;
``(ii) the majority and minority leaders of
the House of Representatives;
``(iii) the majority and minority leaders
of the Senate;
``(iv) the Chairman and Ranking Member of
the committee and each subcommittee of
jurisdiction in the House of Representatives
and the Senate; and
``(v) any other Member of Congress who
requests it.
``(B) Contents.--The report under subparagraph (A)
shall include a detailed description of the findings
and conclusion of the Comptroller General with respect
to the audit that is the subject of the report.
``(3) Construction.--Nothing in this subsection shall be
construed--
``(A) as interference in or dictation of monetary
policy to the Federal Reserve System by the Congress or
the Government Accountability Office; or
``(B) to limit the ability of the Government
Accountability Office to perform additional audits of
the Board of Governors of the Federal Reserve System or
of the Federal reserve banks.''.
SEC. 1255. REQUIREMENT FOR COUNTERCYCLICAL CAPITAL REQUIREMENTS.
Section 908(a) of the International Lending Supervision Act of 1983
(12 U.S.C. 3907(a)) is amended by adding at the end the following new
paragraph:
``(3) Each appropriate Federal banking agency shall, in
establishing capital requirements under this Act or other
provisions of Federal law for banking institutions, seek to
make such requirements countercyclical so that the amount of
capital required to be maintained by a banking institution
increases in times of economic expansion and may decrease in
times of economic contraction, consistent with the safety and
soundness of the institution.''.
SEC. 1256. TRANSFER OF AUTHORITY TO THE BOARD WITH RESPECT TO SAVINGS
AND LOAN HOLDING COMPANIES.
(a) Transfer of Functions.--Notwithstanding any other provision of
this subtitle, all functions of the Director of the Office of Thrift
Supervision with respect to savings and loan holding companies that
are, on a consolidated basis, predominantly engaged in the business of
insurance are transferred to the Board.
(b) Board's Authority.--Notwithstanding any other provision of this
subtitle, the Board shall succeed to all powers, authorities, rights,
and duties with respect to savings and loan holding companies that are,
on a consolidated basis, predominantly engaged in the business of
insurance that were vested in the Director of the Office of Thrift
Supervision under Federal law, including the Home Owners' Loan Act, on
the day before the transfer date.
(c) Savings and Loan Holding Company Defined.--The term ``savings
and loan holding company'' shall have the meaning given such term under
section 10 of the Home Owners' Loan Act.
Subtitle D--Further Improvements to the Regulation of Bank Holding
Companies and Depository Institutions
SEC. 1301. TREATMENT OF INDUSTRIAL LOAN COMPANIES, SAVINGS
ASSOCIATIONS, AND CERTAIN OTHER COMPANIES UNDER THE BANK
HOLDING COMPANY ACT.
(a) Definitions.--Section 2 of the Bank Holding Company Act of 1956
(12 U.S.C. 1841) is amended--
(1) by striking subsection (a)(1) and inserting the
following:
``(a) Bank Holding Company.--
``(1) In general.--Except as provided in paragraph (5), the
term `bank holding company' means--
``(A) any company, other than a company described
in section 4(p), which has control over any bank or
over any company that is or becomes a bank holding
company by virtue of this Act; and
``(B) any section 6 holding company established by
a company described in section 6(a)(1)(C).''.
(2) in subsection (a)(5), by adding at the end the
following new subparagraph:
``(G) No company is a bank holding company by
virtue of its ownership or control of a section 6
holding company or any subsidiary of a section 6
holding company, so long as the requirements of
sections 4(p) and 6 of this Act are met, as applicable,
by the section 6 holding company;'';
(3) in subsection (c)(1)(A), by striking ``insured bank''
and inserting ``insured depository institution'', and by
striking ``section 3(h) of the Federal Deposit Insurance Act''
and inserting ``section 3(c)(2) of the Federal Deposit
Insurance Act'';
(4) in subsection (c)(2)--
(A) in subparagraph (B), by inserting before the
period the following: ``that is controlled by a company
that is, on a consolidated basis, predominantly engaged
in the business of insurance''; and
(B) by striking subparagraph (H); and
(5) by adding at the end the following new subsection:
``(r) Section 6 Holding Companies.--The term `section 6 holding
company' means a company that is required to be established as an
intermediate holding company under section 6 of this Act.''.
(b) Nonbanking Activities Exceptions.--Section 4 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843) is amended--
(1) in subsection (f)(1)(B) by striking ``for purposes of
this Act'' and inserting ``for purposes of section 4(a)''; and
(2) in subsection (f)(2)--
(A) in subparagraph (B)(ii), by striking ``; or''
and inserting a semicolon;
(B) in subparagraph (C), by striking the period and
inserting ``; or''; and
(C) by adding at the end the following new
subparagraph:
``(D) such company fails to--
``(i) establish and register a section 6
holding company pursuant to section 6 of this
Act within 180 days after the adoption of rules
required by this section; and
``(ii) conduct such activities which are
permissible for a financial holding company, as
determined under section 4(k), through such
section 6 holding company, other than internal
financial activities conducted for such company
or any affiliate, including, but not limited to
internal treasury, investment, and employee
benefit functions, provided that with respect
to any internal financial activity engaged in
for the company or an affiliate and a
nonaffiliate during the year prior to date of
enactment, the company (or an affiliate not a
subsidiary of the section 6 company) may
continue to engage in that activity so long as
at least two-thirds of the assets or two-thirds
of the revenues generated from the activity are
from or attributable to the company or an
affiliate, subject to review by the Board to
determine whether engaging in such activity
presents undue risk to the section 6 company or
undue systemic risk.''; and
(3) by inserting at the end the following new subsections:
``(p) Certain Companies Not Subject to This Act.--
``(1) In general.--Except as provided in paragraphs (6) and
(7), any company which--
``(A) was--
``(i) a unitary savings and loan holding
company on May 4, 1999, or became a unitary
savings and loan holding company pursuant to an
application pending before the Director of the
Office of Thrift Supervision on of before that
date, and that--
``(I) on June 30, 2009, continued
to control not fewer than 1 savings
association that it controlled on May
4, 1999, or that such company acquired
pursuant to an application pending
before the Director of the Office of
Thrift Supervision on or before such
date, which became a bank for purposes
of the Bank Holding Company Act as a
result of the enactment of section
1301(a)(4)(A); and
``(II) on June 30, 2009, and the
date of enactment of the Financial
Stability Improvement Act of 2009, such
savings association subsidiary was and
remains a qualified thrift lender (as
determined by section 10 of the Home
Owners' Loan Act); or
``(ii) on November 23, 2009--
``(I) controlled an institution
which became a bank as a result of the
enactment of section 1301(a)(3)(B) of
the Financial Stability Improvement Act
of 2009;
``(II) had an application pending,
or approved but not executed, before
the Federal Deposit Insurance
Corporation, that, if approved, would
permit the applicant to control an
industrial loan company, industrial
bank, or other similar institution--
``(aa) that is a federally
insured, State-chartered
depository institution;
``(bb) that is organized
under the laws of a State that
on March 5, 1987, had in
effect, or had under
consideration in the
legislature of such State, a
statute that required such
institution to obtain insurance
under the Federal Deposit
Insurance Act; and
``(cc) that--
``(AA) does not
accept demand deposits
that the depositor may
withdraw by check or
similar means for
payment to third
parties; or
``(BB) maintains
total assets of less
than $100,000,000; or
``(III) controlled an institution
it has continuously controlled since
March 5, 1987, which became a bank as a
result of the enactment of the
Competitive Equality Banking Act of
1987, pursuant to subsection (f);
``(B) was not on June 30, 2009--
``(i) a bank holding company; or
``(ii) subject to the Bank Holding Company
Act of 1956 by reason of section 8(a) of the
International Banking Act of 1978 (12 U.S.C.
3106(a)); and
``(C) on June 30, 2009, directly or indirectly
controlled shares or engaged in activities that did
not, on the day before the date of enactment of the
Financial Stability Act of 2009, comply with the
activity or investment restrictions on financial
holding companies in section 4 in accordance with
regulations prescribed by the Board,
shall not be treated as a bank holding company for purposes of
this Act solely by virtue of such company's control of such
institution and control of a section 6 holding company
established pursuant to section 6.
``(2) Loss of exemption.--A company described in paragraph
(1) shall no longer qualify for the exemption provided under
that paragraph if--
``(A) such company fails to--
``(i) establish and register a section 6
holding company pursuant to section 6 of this
Act within 180 days after adoption of rules
required by this section, unless the Board
grants an extension of such period for
compliance which shall not exceed 180
additional days; and
``(ii) maintain a section 6 holding company
in compliance with all the requirements for a
section 6 holding company under section 6 of
this Act.
``(B) such company directly or indirectly
(including through the section 6 holding company it
must form pursuant to this subsection and section 6 of
this Act) acquires control of an additional bank or
insured depository institution after June 30, 2009,
provided that such company directly or indirectly
(including through the section 6 holding company) may
acquire--
``(i) shares held as a bona fide fiduciary
(whether with or without the sole discretion to
vote such shares);
``(ii) shares held by any person as a bona
fide fiduciary solely for the benefit of
employees of either the company described in
paragraph (1) or any subsidiary of that company
and the beneficiaries of those employees;
``(iii) shares held temporarily pursuant to
an underwriting commitment in the normal course
of an underwriting business;
``(iv) shares held in an account solely for
trading purposes;
``(v) shares over which no control is held
other than control of voting rights acquired in
the normal course of a proxy solicitation;
``(vi) loans or other accounts receivable
acquired from an insured depository institution
in the normal course of business;
``(vii) shares or assets acquired in
securing or collecting a debt previously
contracted in good faith, during the 2-year
period beginning on the date of such
acquisition or for such additional time (not
exceeding 3 years) as the Board may permit if
the Board determines that such an extension
will not be detrimental to the public interest;
``(viii) shares or assets acquired directly
or indirectly by a depository institution
controlled by such company in a transaction
involving an insured depository institution for
which the Federal Deposit Insurance Corporation
has been appointed as receiver or which has
been found to be in danger of default (as
defined in section 3 of the Federal Deposit
Insurance Act) by the appropriate Federal or
State authority;
``(ix) shares or assets of another
industrial loan company meeting the
requirements of this Act if such company
continuously controlled an industrial loan
company since the date of enactment of the
Financial Stability Improvement Act of 2009;
and
``(x) shares or assets of a savings
association acquired directly or indirectly by
the savings association controlled by such
company if such company continuously controlled
a savings association since the date of
enactment of the Financial Stability
Improvement Act of 2009;
``(C)(i) the section 6 holding company required to
be established by such company, or any subsidiary bank
of such company undergoes a change in control after the
date of enactment of the Financial Stability
Improvement Act of 2009, other than--
``(I) the merger or whole acquisition of
such parent company in a bona fide merger or
acquisition (as shall be determined by the
Board, which is authorized to find that a
transaction is not a bona fide merger or
acquisition and thus results in the loss of
exemption), with a company that is
predominantly engaged in activities not
permissible for a financial holding company
pursuant to section 4(k), or
``(II) the acquisition of additional shares
by a company that owned or controlled 7.5
percent or more of any class of such parent
company's outstanding voting stock on or before
June 30, 2009, and continuously owned or
controlled at least such 7.5 percent since June
30, 2009.
``(ii) Nothing in this subparagraph shall be
construed as preventing the Board from requiring
compliance with this subsection, section 6 or the
requirements of the Change in Bank Control Act, as
applicable to a company that is permitted to acquire
control without loss of the exemption in this
subsection 4(p)(2); or
``(D) any subsidiary bank of such company engages
in any activity after the date of enactment of the
Financial Stability Improvement Act of 2009 which would
have caused such institution to be a bank (as defined
in section 2(c) of this Act, as in effect before such
date) if such activities had been engaged in before
such date.
``(3) Divestiture in case of loss of exemption.--If any
company described in paragraph (1) fails to qualify for the
exemption provided under paragraph (1) by operation of
paragraph (2), such exemption shall cease to apply to such
company and such company shall divest control of each bank it
controls before the end of the 180-day period beginning on the
date on which the company receives notice from the Board that
the company has failed to continue to qualify for such
exemption, unless, before the end of such 180-day period, the
company has--
``(A) either--
``(i) corrected the condition or ceased the
activity that caused the company to fail to
continue to qualify for the exemption; or
``(ii) submitted a plan to the Board for
approval to cease the activity or correct the
condition in a timely manner (which shall not
exceed 1 year); and
``(B) implemented procedures that are reasonably
adapted to avoid the reoccurrence of such condition or
activity.
``(4) Subsection ceases to apply under certain
circumstances.--This subsection shall cease to apply to any
company described in paragraph (1) if such company--
``(A) registers as a bank holding company under
section 2(a) of this Act;
``(B) immediately upon such registration, complies
with all of the requirements of this chapter, and
regulations prescribed by the Board pursuant to this
chapter, including the nonbanking restrictions of this
section; and
``(C) does not, at the time of such registration,
control banks in more than one State, the acquisition
of which would be prohibited by section 3(d) of this
Act if an application for such acquisition by such
company were filed under section 3(a) of this Act.
``(5) Information requirement.--Each company described in
paragraph (1) shall, within 60 days after the date of enactment
of the Financial Stability Improvement Act of 2009, provide the
Board with the name and address of such company, the name and
address of each bank such company controls, and a description
of each such bank's activities.
``(6) Examinations and reports.--The Board may, from time
to time, examine a company described in paragraph (1) or a bank
controlled by such a company, and may require reports under
oath from a company described in paragraph (1), and appropriate
officers or directors of such company, in each case solely for
purposes of assuring compliance with the provisions of this
subsection and enforcing such compliance.
``(7) Limited enforcement.--
``(A) In general.--In addition to any other power
of the Board, the Board may enforce compliance with the
provisions of this subsection which are applicable to
any company described in paragraph (1), and any bank
controlled by such company, under section 8 of the
Federal Deposit Insurance Act, and such company or bank
shall be subject to such section (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 described in paragraph
(1) or any bank controlled by such a 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.
``(q) Preservation of Certain Savings and Loan Holding Company
Authorities.--Notwithstanding subsection (a), a company that was a
savings and loan holding company on June 30, 2009, that became a bank
holding company by operation of section 1301 of the Financial Stability
Improvement Act of 2009 may continue to engage in the following
activities in which such company was continuously engaged on June 30,
2009 through the day of enactment of the Financial Stability
Improvement Act of 2009:
``(1) Furnishing or performing management services for a
savings association subsidiary of such company.
``(2) Conducting an insurance agency or escrow business.
``(3) Holding, managing, or liquidating assets owned or
acquired from a savings association subsidiary of such company.
``(4) Holding or managing properties used or occupied by a
savings association subsidiary of such company.
``(5) Acting as trustee under deed of trust.
``(6) Any other activity in which multiple savings and loan
holding companies were authorized (by regulation) to directly
engage on March 5, 1987.''.
(c) Section 6 Holding Companies.--The Bank Holding Company Act of
1956 (12 U.S.C. 1841 et seq.) is amended by inserting after section 5
the following new section:
``SEC. 6. SPECIAL-PURPOSE HOLDING COMPANIES.
``(a) Establishment, Purpose and Requirements of Special Purpose
Holding Companies.--
``(1) Requirement.--A special purpose holding company
(hereafter in this section referred to as a `section 6 holding
company') shall be established and maintained by a company--
``(A) described in section 4(f)(1) as required by
section 4(f)(2)(D) of this Act;
``(B) described in section 4(p)(1) as required by
section 4(p)(2)(A) of this Act; or
``(C) that--
``(i) is subject to stricter prudential
standards under subtitle B of the Financial
Stability Improvement Act of 2009;
``(ii) is not--
``(I) a bank holding company, or
``(II) subject to the Bank Holding
Company Act by reason of section 8(a)
of the International Banking Act of
1978 (12 U.S.C. 3106(a)); and
``(iii) directly or indirectly controlled
shares or engaged in activities that did not,
on the date the company is first subject to
stricter prudential standards pursuant to
subtitle B of the Financial Stability
Improvement Act of 2009, comply with the
activity or investment restrictions on
financial holding companies in section 4 in
accordance with regulations prescribed by the
Board.
``(2) Purpose.--
``(A) The purpose of this section is to provide for
consolidated supervision of certain financial companies
by the Board.
``(B) A company that is required to form a section
6 holding company shall conduct such activities which
are permissible for a financial holding company, as
determined under section 4(k), through such section 6
holding company, other than internal financial
activities conducted for such company or any affiliate,
including, but not limited to internal treasury,
investment, and employee benefit functions, provided
that with respect to any internal financial activity
engaged in for the company or an affiliate and a
nonaffiliate during the year prior to date of
enactment, the company (or an affiliate not a
subsidiary of the section 6 company) may continue to
engage in that activity so long as at least two-thirds
of the assets or two-thirds of the revenues of
generated from the activity are from or attributable to
the company or an affiliate, subject to review by the
Board to determine whether engaging in such activity
presents undue risk to the section 6 company or undue
systemic risk.
``(C) A section 6 holding company shall be
prohibited from conducting any nonbanking activities or
investing in any nonbank companies other than those
permissible for a financial holding company under
sections 3 and 4, unless the Board specifically
determines otherwise in accordance with paragraph (6),
and provided that, for purposes of this paragraph, a
company designated as a section 6 holding company and
described under paragraph (4) (or any permitted
successor) is not prohibited from continuing to engage
in any impermissible activity in which it was engaged
continuously during the 6 months prior to the date of
enactment, from owning any shares or types of assets
related to such activity, or continuing to own such
other shares or assets that it owned on the date of
enactment.
``(3) Registration.--
``(A) A section 6 holding company required to be
established by a company described in paragraph (1)(A)
shall be established, and such company shall register
with the Board as a bank holding company, pursuant to
the requirements in section 4(f).
``(B) A section 6 holding company required to be
established by a company described in paragraph (1)(B)
shall be established, and such company shall register
with the Board as a bank holding company, pursuant to
the requirements in section 4(p).
``(C) A section 6 holding company required to be
established by a company described in paragraph (1)(C)
shall be--
``(i) established, and such company shall
register with the Board, as a bank holding
company within 90 days after such company or
such company's parent holding company has been
notified by the Board that such company is
subject to stricter prudential standards under
subtitle B of the Financial Stability
Improvement Act of 2009, unless the Board
grants an extension of such period for
compliance which shall not exceed 180
additional days;
``(ii) treated as a financial holding
company under this Act; and
``(iii) subject to the authority of the
Board to enforce compliance with the provisions
of this section under section 8 of the Federal
Deposit Insurance Act in the same manner and to
the same extent as if such company were a bank
holding company.
``(4) Rule of construction.--For purposes of this section,
designation of an already established intermediate holding
company that will serve as the section 6 holding company shall
satisfy the requirement to establish a section 6 holding
company, provided that such existing intermediate holding
company complies with all other provisions applicable to a
section 6 holding company.
``(5) Limitations on authority of commercial parent.--A
company that is not a bank holding company or treated as a bank
holding company pursuant to section 8(a) of the International
Bank Act of 1978 that has been notified that it is a financial
holding company subject to stricter standards, pursuant to
subtitle A of the Financial Stability Improvement Act of 2009,
shall--
``(A) not be deemed to be, or treated as, a bank
holding company, solely because of its ownership or
control of a section 6 holding company; and
``(B) not be subject to this Act, except for such
provisions as are explicitly made applicable in this
section.
``(6) Board authority.--
``(A) Rules and exemptions.--In addition to any
other authority of the Board, the Board shall prescribe
rules and regulations or issue orders providing for the
establishment and registration of section 6 holding
companies and shall provide exemptions from the
requirements of this Act (including an order in
response to a request from an affected company),
including, but not limited to, exemptions--
``(i) with respect to the requirement to
conduct such activities which are financial in
nature, as determined under section 4(k), other
than financial activities conducted for such
company or any affiliate, including any
financial activity engaged in for both the
company or an affiliate and a nonaffiliate as
permitted under section 4(f)(2)(D) or section
6(a)(2)(B), through such section 6 holding
company, if the Board makes a finding that such
exemption--
``(I)(aa) would facilitate the
extension of credit to individuals,
households, and businesses; or
``(bb) would allow for greater
efficiency, improved customer service,
or other public benefits in the conduct
of financial activities by affected
companies;
``(II) would not threaten the
safety and soundness of the section 6
holding company, or of any insured
depository institution or other
subsidiary of the section 6 holding
company;
``(III) would not increase systemic
risk or threaten the stability of the
overall financial system;
``(IV) would not, as applied to the
activities that are the subject of the
rule, order or request, result in
substantially lessening competition, or
to tend to create a monopoly, or which
in any other manner would be in
restraint of trade, unless the Board
finds that the anticompetitive effects
are outweighed in the public interest
by the probable effect of the exemption
in meeting the convenience and needs of
the community to be served; and
``(V) would meet the financial and
managerial standards for financial
holding companies described in
subparagraphs (A) and (B) of section
4(j)(4); and
``(ii) from the affiliate transaction
requirements of subsection (b), including but
not limited to exemptions that would facilitate
extensions of credit to unaffiliated persons
for the personal, household, or business
purposes of such unaffiliated persons, unless
the Board makes a finding that such exemption--
``(I) is not consistent with the
purposes of section 23A and section 23B
of the Federal Reserve Act;
``(II) would threaten the safety
and soundness of the section 6 holding
company, or any insured depository
institution or other subsidiary of the
section 6 holding company;
``(III) would increase systemic
risk or threaten the stability of the
overall financial system;
``(IV) would not, as applied to the
activities that are the subject of the
rule, order or request result in
substantially lessening competition, or
to tend to create a monopoly, or which
in any other manner would be in
restraint of trade, unless the Board
finds that the anticompetitive effects
are outweighed in the public interest
by the probable effect of the exemption
in meeting the convenience and needs of
the community to be served; or
``(V) would permit an unfair,
deceptive, abusive, or unsafe-and-
unsound act or practice.
``(B) Parent company reports.--The Board may, from
time to time, require reports under oath from a company
that controls a section 6 holding company, and
appropriate officers or directors of such company,
solely for purposes of ensuring compliance with the
provisions of this section (including assessing the
company's ability to serve as a source of financial
strength pursuant to subsection (g)) and enforcing such
compliance.
``(C) Limited parent company enforcement.--
``(i) In general.--In addition to any other
power of the Board, the Board may enforce
compliance with the provisions of this
subsection which are applicable to any company
described in paragraph (1), and any bank
controlled by such company, under section 8 of
the Federal Deposit Insurance Act and such
company or bank shall be subject to such
section (for such purposes) in the same manner
and to the same extent as if such company were
a bank holding company.
``(ii) Application of other act.--Any
violation of this subsection by any company
that controls a section 6 holding company or
any bank controlled by such a company, may also
be treated as a violation of the Federal
Deposit Insurance Act for purposes of clause
(i).
``(iii) No effect on other authority.--No
provision of this subparagraph shall be
construed as limiting any authority of the
Board or any other Federal agency under any
other provision of law.
``(b) Restrictions on Affiliate Transactions.--
``(1) Section 23a and 23b applicability.--
``(A) In general.--Transactions between a section 6
holding company (or any nonbank subsidiary thereof) and
any affiliate not controlled by the section 6 holding
company shall be subject to the restrictions and
limitations contained in section 23A and section 23B of
the Federal Reserve Act as if the section 6 holding
company were a member bank, provided, that a
transaction that otherwise would be a covered
transaction shall not be a covered transaction if the
transaction is in connection with the bona fide
acquisition or lease by an unaffiliated person of
assets, goods or services but shall be subject to
review under section 23A(f)(1) of such Act.
``(B) Covered transactions.--A depository
institution controlled by a section 6 holding company
may not engage in a covered transaction (as defined in
section 23A(b)(7) of the Federal Reserve Act) with any
affiliate that is not the section 6 holding company or
a subsidiary of the section 6 holding company; provided
that, for purposes of the prohibition, a transaction
that otherwise would be a covered transaction shall not
be a covered transaction if the transaction is in
connection with the bona fide acquisition or lease by
an unaffiliated person of assets, goods or services,
but shall be subject to review under section 23A(f)(1)
of the Federal Reserve Act.
``(2) Rule of construction.--No provision of this
subsection shall be construed as exempting any subsidiary
insured depository institution of a section 6 holding company
from compliance with section 23A or 23B of the Federal Reserve
Act with respect to each affiliate of such institution (as
defined in section 23A or 23B of the Federal Reserve Act),
including any affiliate that is the section 6 holding company
or subsidiary of the section 6 holding company.
``(c) Tying Provisions.--A company that directly or indirectly
controls a section 6 holding company shall be--
``(1) treated as a bank holding company for purposes of
section 106 of the Bank Holding Company Act Amendments of 1970
and section 22(h) of the Federal Reserve Act and any regulation
prescribed under any such section; and
``(2) subject to the restrictions of section 106 of the
Bank Holding Company Act Amendments of 1970, in connection with
any transaction involving the products or services of such
company or affiliate and those of a bank affiliate, as if such
company or affiliate were a bank and such bank were a
subsidiary of a bank holding company.
``(d) Financial Holding Company Requirements.--A section 6 holding
company shall be subject to--
``(1) the conditions for engaging in expanded financial
activities in section 4(l); and
``(2) the provisions applicable to financial holding
companies that fail to meet certain requirements in section
4(m).
``(e) Independence of Section 6 Holding Company.--
``(1) No less than 25 percent of the members of the board
of directors of a section 6 holding company, and each
subsidiary of a section 6 holding company, shall be independent
of the parent company of the section 6 holding company and any
subsidiary of such parent company. For purposes of this
subsection, a director shall be independent of the parent
company if such person is not currently serving, and has not
within the previous two-year period served, as a director,
officer, or employee of any affiliate of the section 6 holding
company that is not a subsidiary of the section 6 holding
company.
``(2) No executive officer of a section 6 holding company
or any subsidiary of a section 6 holding company may serve as a
director, officer, or employee of an affiliate of the section 6
holding company that is not a subsidiary of the section 6
holding company.
``(3) The Board shall issue regulations that require
effective legal and operational separation of the functions of
a section 6 holding company from its affiliates that are not
subsidiaries of such section 6 holding company, provided,
however that such rules shall not require operational
separation of internal functions including, but not limited to,
human resources management, employee benefit plans, and
information technology.
``(f) Source of Strength.--A company that directly or indirectly
controls a section 6 holding company shall serve as a source of
financial strength to its subsidiary section 6 holding company.''.
(d) Conforming Changes.--Section 4(h) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1843(h)), is amended--
(1) in paragraph (1), by striking ``subparagraph (D), (F),
(G), or (H)'' and inserting ``subparagraph (C) or (D)''; and
(2) in paragraph (2), by striking ``subparagraph (D), (F),
(G), or (H)'' and inserting ``subparagraph (C) or (D)''.
SEC. 1302. REGISTRATION OF CERTAIN COMPANIES AS BANK HOLDING COMPANIES.
Section 5 of the Bank Holding Company Act of 1956 (12 U.S.C. 1844)
is amended by inserting at the end the following new subsection:
``(h) Conversion to Bank Holding Company by Operation of Law.--
``(1) Conversion by operation of law.--A company that, on
the day before the date of enactment of the Financial Stability
Improvement Act of 2009, was not a bank holding company but
which, by reason of sections 4(p) and 6 becomes a bank holding
company by operation of law, shall register as a bank holding
company with the Board in accordance with section 5(a) within
90 days of the date of enactment of that Act.
``(2) Compliance with bank holding company act.--With
respect to any company described in paragraph (1), the Board
may grant temporary exemptions or provide other appropriate
temporary relief to permit such company to implement measures
necessary to comply with the requirements under the Bank
Holding Company Act.''.
SEC. 1303. REPORTS AND EXAMINATIONS OF BANK HOLDING COMPANIES;
REGULATION OF FUNCTIONALLY REGULATED SUBSIDIARIES.
(a) Reports of Bank Holding Companies.--Sections 5(c)(1)(A) and (B)
of the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)(A) and
(B)) are amended to read as follows:
``(A) In general.--The Board, from time to time,
may require a bank holding company and any subsidiary
of such company to submit reports under oath that the
Board determines are necessary or appropriate for the
Board to carry out the purposes of this chapter,
prevent evasions thereof, and monitor compliance by the
company or subsidiary with the applicable provisions of
law.
``(B) Use of existing reports.--
``(i) In general.--The Board shall, to the
fullest extent possible, use:
``(I) reports that a bank holding
company or any subsidiary of such
company has been required to provide to
other Federal or State regulatory
agencies;
``(II) information that is
otherwise required to be reported
publicly; and
``(III) externally audited
financial statements.
``(ii) Availability.--A bank holding
company or a subsidiary of such company shall
promptly provide to the Board, at the request
of the Board, a report referred to in clause
(i)(I).''.
(b) Functionally Regulated Subsidiary.--Section 5(c)(1) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) is amended by
inserting at the end the following new subparagraph:
``(C) Definition.--For purposes of this subsection
and section 6, the term `functionally regulated
subsidiary' means any subsidiary (other than a
depository institution) of a bank holding company that
is--
``(i) a broker or dealer registered with
the Securities and Exchange Commission under
the Securities Exchange Act of 1934, for which
the Securities and Exchange Commission is the
Federal regulatory agency;
``(ii) an investment company registered
with the Securities and Exchange Commission
under the Investment Company Act of 1940, for
which the Securities and Exchange Commission is
the Federal regulatory agency;
``(iii) an investment adviser registered
with the Securities and Exchange Commission
under the Investment Advisers Act of 1940, for
which the Securities and Exchange Commission is
the Federal regulatory agency, with respect to
the investment advisory activities of such
investment adviser and activities incidental to
such investment advisory activities; and
``(iv) a futures commission merchant,
commodity trading advisor, and commodity pool
operator registered with the Commodity Futures
Trading Commission under the Commodity Exchange
Act, for which the Commodity Futures Trading
Commission is the Federal regulatory agency,
with respect to the commodities activities of
such entity and activities incidental to such
commodities activities.''.
(c) Examinations of Bank Holding Companies.--Sections 5(c)(2)(A)
and (B) of the Bank Holding Company Act of 1956 (12 U.S.C.
1844(c)(2)(A) and (B)) are amended to read as follows:
``(A) In general.--The Board may make examinations
of a bank holding company and any subsidiary of such a
company to carry out the purposes of this chapter,
prevent evasions thereof, and monitor compliance by the
company or subsidiary with applicable provisions of
law.
``(B) Functionally regulated and depository
institution subsidiaries.--The Board shall, to the
fullest extent possible, use reports of examination of
functionally regulated subsidiaries and subsidiary
depository institutions made by other Federal or State
regulatory authorities.''.
(d) Regulation of Financial Holding Companies.--Section 5(c)(2) of
the Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)) is amended by
striking subparagraphs (C), (D), and (E).
(e) 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 by striking section 10A (12 U.S.C.
1848a).
SEC. 1304. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO REMAIN WELL
CAPITALIZED AND WELL MANAGED.
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'';
(2) by redesignating subparagraph (C) as subparagraph (D);
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) the bank holding company is well capitalized
and well managed; and''; and
(4) in subparagraph (D) (as so redesignated) by amending
clause (ii) to read as follows:
``(ii) a certification that the company
meets the requirements of subparagraphs (A)
through (C).''.
SEC. 1305. STANDARDS FOR INTERSTATE ACQUISITIONS.
(a) Bank Holding Company Act of 1956 Amendment.--Section 3(d)(1)(A)
of the Bank Holding Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is
amended--
(1) by striking ``adequately capitalized'' and inserting
``well capitalized''; and
(2) by striking ``adequately managed'' and inserting ``well
managed''.
(b) Federal Deposit Insurance Act Amendment.--Section 44(b)(4)(B)
of the Federal Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is
amended to read as follows:
``(B) the responsible agency determines that the
resulting bank will be well capitalized and well
managed upon the consummation of the transaction.''.
SEC. 1306. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS WITH
AFFILIATES.
(a) Section 23A of the Federal Reserve Act (12 U.S.C. 371c) is
amended--
(1) in subsection (b)(1), by striking subparagraph (D) and
inserting the following new subparagraph:
``(D) any investment fund with respect to which a
member bank or affiliate thereof is an investment
adviser; and''
(2) in subsection (b)(7)(A), by inserting ``(including a
purchase of assets subject to an agreement to repurchase)''
after ``affiliate'';
(3) in subsection (b)(7)(C), by striking ``, including
assets subject to an agreement to repurchase,'';
(4) in subsection (b)(7)(D)--
(A) by inserting ``or other debt obligations''
after ``acceptance of securities'', and
(B) by striking ``or'' after the semicolon;
(5) in subsection (b)(7), by inserting at the end the
following new subparagraphs:
``(F) any securities borrowing and lending
transactions with an affiliate to the extent that the
transactions create credit exposure of the member bank
to the affiliate; or
``(G) current and potential future credit exposure
to the affiliate on derivative transactions with the
affiliate;'';
(6) in subsection (c)(1), by striking ``at the time of the
transaction,'' and inserting ``at all times'';
(7) in subsection (c)--
(A) by striking paragraph (2);
(B) by redesignating paragraphs (3), (4), and (5)
as paragraphs (2), (3), and (4), respectively;
(8) in subsection (c)(3) (as so redesignated by paragraph
(7)), by inserting ``or other debt obligations'' after
``securities'';
(9) in subsection (f)(2), by inserting at the end the
following: ``The Board may not, by regulation or order, grant
an exemption under this section unless the Board obtains the
concurrence of the Chairman of the Federal Deposit Insurance
Corporation.''; and
(10) in subsection (f)--
(A) by redesignating paragraph (3) as paragraph
(4);
(B) and inserting after paragraph (2) the following
new paragraph:
``(3) Concurrence of the comptroller of the currency.--With
respect to a transaction or relationship involving a national
bank or Federal savings association, the Board may not grant an
exemption under this section unless the Board obtains the
concurrence of the Comptroller of the Currency (in addition to
obtaining the concurrence of the Chairman of the Federal
Deposit Insurance Corporation under paragraph (2)).''.
(b) Technical and Conforming Amendment.--Section 23B(e) of the
Federal Reserve Act (12 U.S.C. 371-1(e)), is amended by inserting at
the end the following new paragraph:
``(3) The Board may not grant an exemption or exclusion
under this section unless the Board obtains the concurrence of
the Chairman of the Federal Deposit Insurance Corporation.''.
SEC. 1307. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL
SUBSIDIARIES.
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).
SEC. 1308. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON DERIVATIVE
TRANSACTIONS, REPURCHASE AGREEMENTS, REVERSE REPURCHASE
AGREEMENTS, AND SECURITIES LENDING AND BORROWING
TRANSACTIONS.
Section 5200 of the Revised Statutes of the United States (12
U.S.C. 84) is amended--
(1) in subsection (b)(1), by striking ``shall include all
direct or indirect'' and all that follows through
``commitment;'' and inserting: ``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, such term shall also include any
liability of a national banking association to advance
funds to or on behalf of a person pursuant to a
contractual commitment; and
``(C) 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 subsection (b)(2) by striking the period at the end
and inserting ``; and'';
(3) in subsection (b), by inserting after paragraph (2) the
following new paragraph:
``(3) the term `derivative transaction' means 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.''; and
(4) in subsection (d), by inserting after paragraph (2) the
following new paragraph:
``(3) The Comptroller of the Currency shall prescribe rules
to administer and carry out the purposes of this section with
respect to credit exposures arising from any derivative
transaction, repurchase agreement, reverse repurchase
agreement, securities lending transaction, or securities
borrowing transaction. Rules required to be prescribed under
this paragraph (3) shall take effect, in final form, not later
than 180 days after the date of enactment of the Financial
Stability Improvement Act of 2009.''.
SEC. 1309. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS AND THRIFTS.
(a) Conversion of a National Banking Association to a State Bank.--
The National Bank Consolidation and Merger Act (12 U.S.C. 215 et seq.)
is amended by redesignating section 7 as section 8 and by inserting
after section 6 the following:
``SEC. 7. PROHIBITION ON CERTAIN CONVERSIONS.
``A national bank may not convert to a State bank during any period
of time in which it is subject to a cease and desist order, memorandum
of understanding, or other enforcement action entered into with or
issued by the Comptroller of the Currency.''
(b) Conversion of a State Bank to a National Bank.--Section 5154 of
the Revised Statutes (12 U.S.C. 35) is amended by adding at the end the
following new sentence: ``The Comptroller of the Currency shall not
approve the conversion of a State bank to a national bank during any
period of time in which the State bank is subject to a cease and desist
order, memorandum of understanding, or other enforcement action entered
into or issued by a State bank supervisor, the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve
System or a Federal Reserve Bank.''.
(c) Conversion Between a Federal Savings Association and a State
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 new
paragraph:
``(6) Prohibition on certain conversions.--A Federal
savings association may not convert to a State savings
association, and a State savings association may not convert to
a Federal savings association, during any period of time in
which such savings association is subject to a cease and desist
order, memorandum of understanding, or other enforcement action
entered into with or issued by the Director of the Office of
Thrift Supervision or a State savings association
supervisor.''.
SEC. 1310. LENDING LIMITS TO INSIDERS.
Section 22(h)(9)(D)(ii) of the Federal Reserve Act (12 U.S.C.
375b(h)(9)(D)(ii)) is amended by inserting ``, except that a member
bank shall be deemed to have extended credit to a person if the member
bank has credit exposure to the person arising from a derivative
transaction, repurchase agreement, reverse repurchase agreement,
securities lending transaction, or securities borrowing transaction
between the member bank and the person'' before the period at the end.
SEC. 1311. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.
(a) Section 18 of the Federal Deposit Insurance Act (12 U.S.C.
1828) is amended by inserting after subsection (y) (as added by section
1408) the following new subsection:
``(z) General Prohibition.--An insured depository institution shall
not purchase an asset from, or sell an asset to, one of its executive
officers, directors, or principal shareholders or any related interest
of such person (as such terms are defined in section 22(h) of Federal
Reserve Act) unless the transaction is on market terms and, if the
transaction represents more than 10 percent of the institution's
capital stock and surplus, the transaction has been approved in advance
by a majority of the institution's board of directors (with interested
directors of the insured depository institution not participating in
the approval of the transaction).''.
(b) FDIC Rulemaking Authority.--The Federal Deposit Insurance
Corporation may prescribe rules to implement the requirements of
subsection (a) and the amendments made by subsection (a).
(c) Amendments to the Federal Reserve Act.--Section 22 of the
Federal Reserve Act (12 U.S.C. 375) is amended by striking subsection
(d).
SEC. 1312. RULES REGARDING 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 by inserting ``, including regulations relating to
the capital levels of bank holding companies'' before the period at the
end.
SEC. 1313. ENHANCEMENTS TO FACTORS TO BE CONSIDERED IN CERTAIN
ACQUISITIONS.
(a) Bank Acquisitions.--Section 3(c) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1842(c)) is amended by inserting at the end the
following new paragraph:
``(7) Financial stability.--
``(A) In general.--In every case, the Board shall
take into consideration the extent to which the
proposed acquisition, merger, or consolidation may pose
risk to the stability of the United States financial
system or the economy of the United States , including
the resulting scope, nature, size, scale,
concentration, or interconnectedness of activities that
are financial in nature.
``(B) Standards for approval.--The Board may in its
sole discretion disapprove any acquisition, merger, or
consolidation of, or by, a financial company subject to
stricter prudential standards if the Board determines
that the resulting concentration of liabilities on a
consolidated basis is likely to pose a greater threat
to financial stability during times of severe economic
distress.''.
(b) Nonbank Acquisitions.--
(1) Section 4(j)(2)(A) of the Bank Holding Company is
amended by--
(A) striking ``or'' before ``unsound banking
practices''; and
(B) inserting before the period at the end the
following: ``, or risk to the stability of the United
States financial system or the economy of the United
States''.
(2) Section 4(k)(6) of the Bank Holding Company Act of 1956
is amended by striking subparagraph (B) and inserting the
following new subparagraph:
``(B) 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,
except--
``(i) for a transaction in which the total
assets to be acquired by the financial holding
company exceed $25 billion; and
``(ii) as provided in subsection (j) with
regard to the acquisition of a savings
association.''.
(c) Bank Merger Act Transactions.--Section 8(c)(5) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended by--
(1) by striking ``and'' before ``the convenience and needs
of the community to be served''; and
(2) by inserting before the period at the end the
following: ``, and the risk to the stability of the United
States financial system and the economy of the United States
based on, among other things, the scope, nature, size, scale,
concentration, or interconnectedness of activities that are
financial in nature''.
SEC. 1314. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING COMPANY
FRAMEWORK.
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.
SEC. 1315. EXAMINATION FEES FOR LARGE BANK HOLDING COMPANIES.
The Bank Holding Company Act of 1956 is amended by inserting after
section 5 the following new section:
``SEC. 5A. EXAMINATION FEES.
``The Board of Governors of the Federal Reserve System or the
Federal Reserve Banks shall assess fees on bank holding companies with
total consolidated assets of $10 billion or more. Such fees shall be
sufficient to defray the cost of the examination of such bank holding
companies.''.
Subtitle E--Improvements to the Federal Deposit Insurance Fund
SEC. 1401. ACCOUNTING FOR ACTUAL RISK TO THE DEPOSIT INSURANCE FUND.
(a) Section 7(b)(1)(C) of the Federal Deposit Insurance Act is
amended to read as follows:
``(C) `Risk-based assessment system' defined.--For
purposes of this paragraph, the term `risk-based
assessment system' means a system for calculating a
depository institution's assessment based on--
``(i) the probability that the Deposit
Insurance Fund will incur a loss with respect
to the institution;
``(ii) the likely amount of any such loss;
``(iii) the risks to the Deposit Insurance
Fund attributable to such depository
institution, including risks posed by its
affiliates to the extent the Corporation
determines appropriate, taking into account--
``(I) the amount, different
categories, and concentrations of
assets of the insured depository
institution and its affiliates,
including both on-balance sheet and
off-balance sheet assets;
``(II) 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 insured depository
institution and its affiliates; and
``(III) any other factors the
Corporation determines are relevant to
assessing the risks; and
``(iv) the revenue needs of the Deposit
Insurance Fund.''.
(b) Section 7(b)(2) of the Federal Deposit Insurance Act is amended
by striking subparagraph (D) and by redesignating subparagraph (E) as
subparagraph (D).
SEC. 1402. CREATING A RISK-FOCUSED ASSESSMENT BASE.
Section 7(b)(2) of such Act, as amended, is further amended by
amending subparagraph (C) to read as follows:
``(C) Assessment.--The assessment of any insured
depository institution imposed under this subsection
shall be an amount equal to the product of--
``(i) an assessment rate established by the
Corporation; and
``(ii) the amount of the insured depository
institution's average total assets during the
assessment period minus the amount of the
insured depository institution's average
tangible equity during the assessment
period.''.
SEC. 1403. 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. 1404. ENHANCED ACCESS TO INFORMATION FOR DEPOSIT INSURANCE
PURPOSES.
(a) Section 7(a)(2)(B) of the Federal Deposit Insurance Act is
amended by striking ``, after agreement with the Comptroller of the
Currency, the Board of Governors of the Federal Reserve ystem, and the
Director of the Office of Thrift Supervision, as appropriate,''.
(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) by striking clause (iii).
SEC. 1405. 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 1.15 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.
Subtitle F--Improvements to the Asset-backed Securitization Process
SEC. 1501. SHORT TITLE.
This subtitle may be cited as the ``Credit Risk Retention Act of
2009''.
SEC. 1502. CREDIT RISK RETENTION.
(a) Amendment.--The Securities Act of 1933 (15 U.S.C. 77a et seq.)
is amended by inserting after section 28 the following new section:
``SEC. 29. CREDIT RISK RETENTION.
``(a) In General.--
``(1) Interest in loans made by creditors.--Within 180 days
of the date of the enactment of this section, the appropriate
agencies shall prescribe regulations to require any creditor
that makes a loan to retain an economic interest in a material
portion of the credit risk of any such loan that the creditor
transfers, sells, or conveys to a third party, including for
the purpose of including such loan in a pool of loans backing
an issuance of asset-backed securities.
``(2) Interest in assets backing asset-backed securities.--
The appropriate agencies shall prescribe regulations to require
any securitizer of asset-backed securities that are backed by
assets not described in paragraph (1) to retain an economic
interest in a material portion of any such asset used to back
an issuance of securities.
``(b) Alternative Risk Retention for Credit Securitizers.--The
appropriate agencies may apply the risk retention requirements of this
section to securitizers of loans or particular types of loans in
addition to or in substitution for any or all of the requirements that
apply to creditors that make such loans or types of loans, if the
agencies determine that applying the requirements to such securitizers
would--
``(1) be consistent with helping to ensure high quality
underwriting standards for creditors, taking into account other
applicable laws, regulations, and standards; and
``(2) facilitate appropriate risk management practices by
such creditors, improve access of consumers to credit on
reasonable terms, or otherwise serve the public interest.
``(c) Standards for Regulation.--Regulations prescribed under
subsections (a) and (b) shall--
``(1) prohibit a creditor or securitizer from directly or
indirectly hedging or otherwise transferring the credit risk
such creditor or securitizer is required to retain under the
regulations;
``(2) require a creditor or securitizer to retain 5 percent
of the credit risk on any loan that is transferred, sold, or
conveyed by such creditor or securitized by such securitizer
except--
``(A) an appropriate agency may specify that the
percentage of risk may be less than 5 percent of the
credit risk, or exempt such creditor or securitizer
from the risk retention requirement, if--
``(i) the credit underwriting by the
creditor or the due diligence by the
securitizer meets such standards as an
appropriate agency prescribes; and
``(ii) the loan that is transferred, sold,
or conveyed by such creditor or securitized by
such securitizer meets terms, conditions, and
characteristics that are determined by an
appropriate agency to reflect loans with
reduced credit risk, such as loans that meet
certain interest rate thresholds, loans that
are fully amortizing, and loans that are
included in a securitization in which a third-
party purchaser specifically negotiates for the
purchase of the first-loss position and
provides due diligence on all individual loans
in the pool prior to the issuance of the asset-
backed securities, and retains a first-loss
position; and
``(B) an appropriate agency may specify that the
percentage of risk may be more than 5 percent of the
credit risk if the underwriting by the creditor or due
diligence by the securitizer is insufficient;
``(3) specify that the credit risk retained must be no less
at risk for loss than the average of the credit risk not so
retained; and
``(4) set the minimum duration of the required risk
retention.
``(d) Exemptions and Adjustments.--
``(1) In general.--The appropriate agencies shall have
authority to provide exemptions or adjustments to the
requirements of this section, including exemptions or
adjustments relating to the percentage of risk retention
required to be held and the hedging prohibition.
``(2) Applicable standards.--Any exemptions or adjustments
provided under paragraph (1) shall--
``(A) be consistent with the purpose of ensuring
high quality underwriting standards for creditors,
taking into account other applicable laws, regulations,
or standards; and
``(B) facilitate appropriate risk management
practices by such creditors, improve access for
consumers to credit on reasonable terms, or otherwise
serve the public interest.
``(e) Appropriate Agency Defined.--For purposes of this section,
the term `appropriate agency' means any of the following agencies with
regard to the respective loans and asset-backed securities:
``(1) Banking agencies.--The Federal banking agencies, the
National Credit Union Administration Board, and the Commission,
with respect to any loan or asset-backed security for which
there is no appropriate agency under paragraph (2).
``(2) Other agencies.--
``(A) With regard to any mortgage insured under
title II of the National Housing Act, the Secretary of
Housing and Urban Development.
``(B) With regard to any loan meeting the
conforming loan standards of the Federal National
Mortgage Corporation or the Federal Home Loan Mortgage
Corporation or any asset-backed security issued by
either such corporation, the Federal Housing Finance
Agency.
``(C) With regard to any loan insured by the Rural
Housing Service, the Rural Housing Service.
``(f) Joint Appropriate Agency Regulations.--All regulations
prescribed by the agencies identified in subsection (e)(1) shall be
prescribed jointly by such agencies.
``(g) Enforcement.--
``(1) Compliance with the requirements imposed under this
section shall be enforced under--
``(A) section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818), in the case of--
``(i) national banks, and Federal branches
and Federal agencies of foreign banks, by the
Office of the Comptroller of the Currency;
``(ii) 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, bank holding companies, and subsidiaries
of bank holding companies (other than insured
depository institutions), by the Board; and
``(iii) banks insured by the Federal
Deposit Insurance Corporation (other than
members of the Federal Reserve System) and
insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit
Insurance Corporation;
``(B) section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818), by the Director of the Office of
Thrift Supervision, in the case of a savings
association the deposits of which are insured by the
Federal Deposit Insurance Corporation and a savings and
loan holding company and to any subsidiary (other than
a bank or subsidiary of that bank); and
``(C) the Federal Credit Union Act (12 U.S.C. 1751
et seq.), by the National Credit Union Administration
Board with respect to any Federal credit union.
``(2) Except to the extent that enforcement of the
requirements imposed under this section is specifically
committed to some other Federal agency under paragraph (1), the
Commission shall enforce such requirements.
``(3) The authority of the Commission under this section
shall be in addition to its existing authority to enforce the
securities laws.
``(h) Exclusions.--Notwithstanding any other provision of this
section, the requirements of this section shall not apply to any loan--
``(1) insured, guaranteed, or administered by the Secretary
of Education, the Secretary of Agriculture, the Secretary of
Veterans Affairs, or the Small Business Administration; or
``(2) made, insured, guaranteed, or purchased by any person
that is subject to the supervision of the Farm Credit
Administration, including the Federal Agricultural Mortgage
Corporation.
``(i) Definitions.--For purposes of this section:
``(1) The term `asset-backed security' has the meaning
given such term in section 229.1101(c) of title 17, Code of
Federal Regulations, or any successor thereto.
``(2) The term `Federal banking agencies' means the Board
of Governors of the Federal Reserve System, the Office of the
Comptroller of the Currency, the Office of Thrift Supervision,
and the Federal Deposit Insurance Corporation.
``(3) The term `insured depository institution' has the
meaning given such term in section 3(c) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(c)).
``(4) The term `securitization vehicle' means a trust,
corporation, partnership, limited liability entity, special
purpose entity, or other structure that--
``(A) is the issuer, or is created by the issuer,
of pass-through certificates, participation
certificates, asset-backed securities, or other similar
securities backed by a pool of assets that includes
loans; and
``(B) holds such loans.
``(5) The term `securitizer' means the person that
transfers, conveys, or assigns, or causes the transfer,
conveyance, or assignment of, loans, including through a
special purpose vehicle, to any securitization vehicle,
excluding any trustee that holds such loans for the benefit of
the securitization vehicle.''.
(b) Study on Risk Retention.--
(1) Study.--The Board, in coordination and consultation
with the Comptroller of the Currency, the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation, and the
Securities and Exchange Commission, shall conduct a study of
the combined impact by each individual class of asset-backed
security of--
(A) the new credit risk retention requirements
contained in the amendment made by subsection (a); 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 title, the Board 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. 1503. PERIODIC AND OTHER REPORTING UNDER THE SECURITIES EXCHANGE
ACT OF 1934 FOR ASSET-BACKED SECURITIES.
Section 15(d) of Securities Exchange Act of 1934 (15 U.S.C. 78o(d))
is amended--
(1) by inserting ``, other than securities of any class of
asset-backed security (as defined in section 229.1101(c) of
title 17, Code of Federal Regulations, or any successor
thereto),'' after ``securities of each class'';
(2) by inserting at the end the following: ``The Commission
may by rules and regulations provide for the suspension or
termination of the duty to file under this subsection for any
class of issuer of asset-backed security upon such terms and
conditions and for such period or periods as it deems necessary
or appropriate in the public interest or for the protection of
investors. The Commission may, for the purposes of this
subsection, classify issuers and prescribe requirements
appropriate for each class of issuer of asset-backed
security.''; and
(3) by inserting after the fifth sentence the following:
``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. In adopting regulations under
this subsection, the Commission shall 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. The Commission shall require issuers of asset-
backed securities at a minimum to disclose asset-level or loan-
level data necessary for investors to independently perform due
diligence. Asset-level or loan-level data shall include data
with unique identifiers relating to loan brokers or
originators, the nature and extent of the compensation of the
broker or originator of the assets backing the security, and
the amount of risk retention of the originator or the
securitizer of such assets.''.
SEC. 1504. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED OFFERINGS.
The Commission shall prescribe regulations on the use of
representations and warranties in the asset-backed securities market
that--
(1) require credit rating agencies to include in reports
accompanying credit ratings a description of the
representations, warranties, and enforcement mechanisms
available to investors and how they differ from
representations, warranties, and enforcement mechanisms in
similar issuances; and
(2) require disclosure on fulfilled repurchase requests
across all trusts aggregated by originator, so that investors
may identify asset originators with clear underwriting
deficiencies.
SEC. 1505. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF 1933.
(a) In General.--Section 4 of the Securities Act of 1933 (15 U.S.C.
77d) is amended--
(1) by striking paragraph (5); and
(2) by redesignating paragraph (6) as paragraph (5).
(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. 1506. 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 G--Enhanced Dissolution Authority
SEC. 1601. SHORT TITLE.
This subtitle may be cited as the ``Dissolution Authority for
Large, Interconnected Financial Companies Act of 2009''.
SEC. 1602. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) Appropriate regulatory agency.--
(A) Corporation and commission.--The term
``appropriate regulatory agency'' means--
(i) the Corporation;
(ii) the Commission, if the financial
company, or an affiliate thereof, 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) (other than an insured
depository institution)); and
(iii) if the financial company or an
affiliate of the financial company is an
insurance company (other than an insured
depository institution), the applicable State
insurance authority of the State in which the
insurance company is domiciled.
(B) Rules of construction.--More than 1 agency may
be an appropriate regulatory agency with respect to any
given financial company. In such instances, the
Commission shall be the appropriate regulatory agency
for purposes of section 1603 if the largest subsidiary
of the financial company is a broker or dealer as
measured by total assets as of the end of the previous
calendar quarter, the applicable State insurance
authority of the State in which the insurance company
is domiciled shall be the appropriate regulatory agency
for purposes of section 1603 if the largest subsidiary
of the financial company is an insurance company as
measured by total assets as of the end of the previous
calendar quarter, and otherwise the Corporation shall
be the appropriate regulatory agency for purposes of
section 1603.
(2) Bridge financial company.--The term ``bridge financial
company'' means a new financial company organized in accordance
with section 1609(h) by the Corporation.
(3) Commission.--The term ``Commission'' means the
Securities and Exchange Commission.
(4) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(5) Covered financial company.--The term ``covered
financial company'' means a financial company for which a
determination has been made pursuant to and in accordance with
section 1603(b).
(6) Covered subsidiary.--The term ``covered subsidiary''
means a subsidiary covered in paragraph (9)(B)(v).
(7) Customer property.--The term ``customer property'' has
the meaning ascribed to it in the Securities Investor
Protection Act of 1970.
(8) Federal reserve board.--The term ``Federal Reserve
Board'' means the Board of Governors of the Federal Reserve
System.
(9) Financial company.--The term ``financial company''
means any company that--
(A) is incorporated or organized under Federal law
or the laws of any State;
(B) is--
(i) any bank holding company as defined in
section 2(a) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(a));
(ii) any company that has been subjected to
stricter prudential regulation under section
1103;
(iii) any insurance company;
(iv) any company predominantly engaged in
activities that 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)) or that have been identified
for stricter prudential standards under section
1103 of this title; or
(v) any subsidiary of companies described
in clauses (i) through (iv) (other than an
insured depository institution or any broker or
dealer registered with the Commission under
section 15(b) of the Securities Exchange Act of
1934 (15 U.S.C. 78o(b)) that is a member of the
Securities Investor Protection Corporation).
(10) Fund.--The term ``Fund'' means the Systemic
Dissolution Fund established in accordance with section
1609(n).
(11) Insurance company.--The term ``insurance company''
includes any person engaged in the business of insurance to the
extent of such activities.
(12) Secretary.--The term ``Secretary'' shall mean the
Secretary of the Treasury.
(13) 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, and the United States Virgin Islands.
(14) Certain other terms.--The terms ``affiliate,''
``company,'' ``control,'' ``deposit,'' ``depository
institution,'' ``foreign bank,'' ``insured depository
institution,'' and ``subsidiary'' have the same meanings as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
SEC. 1603. SYSTEMIC RISK DETERMINATION.
(a) Written Recommendation of the Federal Reserve Board and the
Appropriate Regulatory Agency.--
(1) Vote required.--At the request of the Secretary or the
Chairman of the Federal Reserve Board or, in cases where an
financial company has a broker or dealer as its largest
subsidiary as measured by total assets as of the end of the
previous calendar quarter, the Commission, the Federal Reserve
Board and the appropriate regulatory agency shall; or on their
own initiative, the Federal Reserve Board and the appropriate
regulatory agency may; consider whether to make the written
recommendation provided for in paragraph (2) with respect to a
financial company, which recommendation shall be made upon a
vote of not less than two-thirds of the members of the Federal
Reserve Board then serving and two-thirds of the members of the
board or of the commission then serving of the appropriate
regulatory agency, as applicable.
(2) Recommendation required.--Any written recommendations
made by the Federal Reserve Board and the appropriate
regulatory agency under paragraph (1) shall contain the
following:
(A) A description of the effect that the default of
the financial company would have on economic conditions
or financial stability in the United States.
(B) 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.
(C) A recommendation regarding the nature and the
extent of actions that the Board and the appropriate
regulatory agency recommend be taken under section 1604
regarding the financial holding company subject to
stricter standards.
(b) Determination by the Secretary.--Notwithstanding any other
provision of Federal law or the law of any State, if, upon the written
recommendation of the Federal Reserve Board and the board of directors
or commission of the appropriate regulatory agency as provided for in
subsection (a)(1), the Secretary (in consultation with the President)
determines that--
(1) the financial company is in default or is 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 or economic
conditions in the United States; and
(3) any action under section 1604 would avoid or mitigate
such adverse effects, taking into consideration the
effectiveness of the action in mitigating potential adverse
effects on the financial system or economic conditions, the
cost to the general fund of the Treasury, and the potential to
increase moral hazard on the part of creditors, counterparties,
and shareholders in the financial company,
then the Secretary must take action under section 1604(a), the
Corporation must act in accordance with section 1604(b), and the
Corporation may take 1 or more actions specified in section 1604(c) in
accordance with the requirements of that subsection, except that, prior
to the Secretary or Corporation taking any action under section 1604,
the Federal Reserve Board or the appropriate Federal regulatory agency
shall take action to avoid or mitigate potential adverse effects on
low-income, minority, or underserved communities affected by the
failure of such financial company.
(c) Documentation and Review.--
(1) In general.--The Secretary shall--
(A) document any determination under subsection
(b); and,
(B) retain the documentation for review under
paragraph (2).
(2) GAO review.--The Comptroller General of the United
States shall review and report to the Congress on any
determination under subsection (b), including--
(A) the basis for the determination;
(B) the purpose for which any action was taken
pursuant thereto; and
(C) the likely effect of the determination and such
action on the incentives and conduct of financial
holding companies subject to stricter standards and
their creditors, counterparties, and shareholders.
(3) Report to congress.--Within 48 hours after a
determination is made under subsection (b), the Secretary shall
provide written notice of the determination to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives. The notice shall include a description of the
basis for the determination.
(d) Default or in Danger of Default.--For purposes of subsection
(b), a financial holding company subject to stricter standards shall be
considered to be in default or in danger of default if any of the
following conditions exist, as determined in accordance with that
subsection:
(1) A case has been, or likely will promptly be, commenced
with respect to the financial holding company subject to
stricter standards under title 11, United States Code.
(2) The financial holding company subject to stricter
standards is critically undercapitalized, as such term has been
or may be defined by the Federal Reserve Board.
(3) The financial holding company subject to stricter
standards 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
without assistance under section 1604.
(4) The assets of the financial holding company subject to
stricter standards are, or are likely to be, less than its
obligations to creditors and others.
(5) The financial holding company subject to stricter
standards 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.
SEC. 1604. RESOLUTION; STABILIZATION.
(a) Appointment of Receiver.--
(1) In general.--Upon the Secretary making a determination
in accordance with section 1603(b), the Secretary shall appoint
the Corporation as receiver for the covered financial company.
(2) Time limit on receivership authority.--Any appointment
of the Corporation as receiver under paragraph (1) shall
terminate on the date that is the end of the 1-year period
beginning on the date such appointment is made.
(b) Resolution Limitations.--
(1) In general.--An insolvent financial company may be
resolved under this subtitle only if the failure and resolution
of such company under title 11, United States Code, would be
systemically destabilizing, as determined by the appropriate
Federal regulatory agencies and the Secretary of the Treasury
(in consultation with the President) in accordance with section
1603(b).
(2) Liquidation.--A financial company that comes within
coverage of this subtitle for resolution shall be placed in
liquidation, and the associated liquidation costs shall be paid
from the company's assets and borne by the shareholders and
unsecured creditors of such company.
(3) Assessment for excess liquidation costs.--Any
liquidation costs that exceed the amount of liquidated assets
of the company shall be paid through assessments on large
financial companies.
(c) Consultation.--The Corporation, as receiver--
(1) shall consult with the regulators of the covered
financial company and its covered subsidiaries for purposes of
ensuring an orderly resolution of the covered financial
company;
(2) may consult with, or under section 1609(a)(1)(B)(v) or
section 1609(a)(1)(K) acquire services of, any outside experts
as appropriate to inform and aid the Corporation in the
resolution process; and
(3) shall consult with the primary regulators of any
subsidiaries of the covered financial company that are not
covered subsidiaries as described in section 1602(9)(B)(iv) 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.
(d) Emergency Stabilization After Appointment of Receiver.--Upon
the Secretary appointing the Corporation as receiver under subsection
(a), the Corporation may, in its corporate capacity and as an agency of
the United States, with the approval of the Secretary and subject to
the conditions in subsections (f) through (g), take the following
actions under such terms and conditions that the Corporation and the
Secretary jointly deem appropriate:
(1) Making loans to, or purchasing any debt obligation of,
the covered financial company or any covered subsidiary.
(2) Purchasing 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 one 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 company or any
covered subsidiary to secure repayment of any transactions
conducted under this subsection.
(5) Selling or transferring all, or any part thereof, of
such acquired assets, liabilities, or obligations of the
covered financial company or any covered subsidiary.
(e) Treatment of Certain Insurance Subsidiaries.--
(1) In general.--Notwithstanding subsection (a), if a
covered financial company is an insurance company covered by a
State law designed specifically to deal with the insolvency of
an insurance company, resolution of such company, and any
subsidiary of such company, will be conducted as provided under
such State law.
(2) Exception for covered subsidiaries.--The requirement of
paragraph (1) shall not apply with respect to any covered
subsidiary of such an insurance company.
(3) Backup authority.--Notwithstanding paragraph (1), with
respect to a covered financial company described under
paragraph (1), if, after the end of the 60-day period beginning
on the date a determination is made under section 1603(b) 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 resolution under the
State's laws and requirements, 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 resolution
under the State's laws and requirements.
(f) Mandatory Terms and Conditions for All Stabilization Actions.--
The Corporation as receiver is authorized to take the stabilization
actions listed in subsection (d) only if--
(1) the Secretary and the Corporation determine that such
action is necessary for the purpose of financial stability and
not for the purpose of preserving the covered financial
company;
(2) the Corporation ensures that the shareholders of a
covered financial company do not receive payment until after
all other claims are fully paid;
(3) the Corporation ensures that any funds from taxpayers
shall be repaid as part of the resolution process before
payments are made to creditors;
(4) the Corporation ensures that unsecured creditors bear
losses;
(5) the Corporation ensures 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 the Corporation is appointed as receiver); and
(6) the Corporation ensures 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).
(g) Recoupment of Funds Expended for Systemic Stabilization
Purposes.--Amounts expended from the Fund by the Corporation under this
section shall be repaid in full to the Fund from the following sources:
(1) Resolution process.--Amounts attributable to the
proceeds of the sale of, or income from, the assets of the
covered financial company.
(2) Industry assessments.--If the sources described in
paragraph (1) are insufficient to repay the amount of the
stabilization action in full, the difference shall be recouped
through assessments on financial companies in accordance with
section 1609(o).
SEC. 1605. JUDICIAL REVIEW.
If a receiver is appointed, the covered financial company may, not
later than 30 days thereafter, bring an action in the United States
district court for the judicial district in which the home office of
such covered financial company is located, or in the United States
District Court for the District of Columbia, for an order requiring
that the receiver be removed, and the court shall, upon the merits,
dismiss such action or direct the receiver to be removed. Review of
such an action shall be limited to the appointment of a receiver under
section 1604.
SEC. 1606. 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
covered financial company's shareholders or creditors for acquiescing
in or consenting in good faith to--
(1) the Secretary's appointment of the Corporation as
receiver for the covered financial company under section 1604;
or
(2) an acquisition, combination, or transfer of assets or
liabilities under section 1609.
SEC. 1607. TERMINATION AND EXCLUSION OF OTHER ACTIONS.
The Corporation's acting as receiver for a covered financial
company under this title shall immediately, and by operation of law,
terminate any case commenced with respect to the covered financial
company under title 11, United States Code, or any proceeding under any
State insolvency law with respect to the covered financial company, and
no such case or proceeding may be commenced with respect to the covered
financial company at any time while the Corporation acts as receiver
for the covered financial company.
SEC. 1608. RULEMAKING.
The Corporation may prescribe such regulations as the Corporation
considers necessary or appropriate to implement the provisions of this
title.
SEC. 1609. POWERS AND DUTIES OF 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 section 1604, and by
operation of law, succeed to--
(i) all rights, titles, powers, and
privileges of the covered financial company,
and of any stockholder, member, officer, or
director of such institution with respect to
the covered financial company and the assets of
the covered financial company; and
(ii) title to the books, records, and
assets of any previous receiver or other legal
custodian of such covered financial company.
(B) Operate the covered financial company.--The
Corporation as receiver for a covered financial company
may--
(i) take over the assets of and operate the
covered financial company with all 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 due
the covered financial company;
(iii) perform all functions of the covered
financial company in the name of the covered
financial company;
(iv) preserve and conserve the assets and
property of the covered financial company; 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's
officers, directors, and shareholders.--
(i) In general.--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 section.
(ii) Presumption.--There shall be a strong
presumption that the Corporation, as receiver,
will remove management responsible for the
failed condition of the covered financial
company (if such management has not already
been removed at the time the Corporation is
appointed as receiver).
(D) Additional powers as receiver.--The Corporation
may, as receiver, and subject to all legally
enforceable and perfected security interests, place the
covered financial company in liquidation and proceed 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) Organization of new companies.--The Corporation
as receiver may organize a bridge financial company
under subsection (h).
(F) Merger; transfer of assets and liabilities.--
(i) In general.--Subject to clause (ii),
the Corporation as receiver may--
(I) merge the covered financial
company with another company; or
(II) transfer any asset or
liability of the covered financial
company (including 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.--
(I) In general.--If a transaction
described in clause (i) 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 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
filing is required under the Hart
Scott-Rodino Antitrust Improvements Act
of 1976 with the Department of Justice
or the Federal Trade Commission, the
waiting period shall expire not later
than the 30th day following such filing
notwithstanding any other provision of
Federal law or any attempt by any
Federal agency to extend such waiting
period, and no further request for
information by any Federal agency shall
be permitted.
(II) Emergency.--If the Secretary
in consultation with the Chairman of
the Federal Reserve Board has found
that the Corporation must act
immediately to prevent the probable
failure of 1 or more of the covered
financial companies involved, the
approvals and filings referred to in
subclause (I) shall not be required and
the transactions may be consummated
immediately by the Corporation.
(G) Payment of valid obligations.--The Corporation,
as receiver, shall, to the extent 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.
(H) Subpoena authority.--
(i) In general.--The Corporation may, for
purposes of carrying out any power, authority,
or duty with respect to a 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 covered
financial company were an insured depository
institution.
(ii) Rule of construction.--This section
shall not be construed as limiting any rights
that the Corporation, in any capacity, might
otherwise have to exercise any powers described
in clause (i) under any other provision of law.
(I) Incidental powers.--The Corporation, as
receiver, may--
(i) exercise all powers and authorities
specifically granted to receivers under this
section and such incidental powers as shall be
necessary to carry out such powers; and
(ii) take any action authorized by this
section, which the Corporation determines is in
the best interests of the covered financial
company, its customers, its creditors, its
counterparties, or the stability of the
financial system.
(J) Utilization of private sector.--In carrying out
its responsibilities in the management and disposition
of assets from a covered financial company, the
Corporation, as receiver, 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 utilization of such services
is practicable, efficient, and cost effective.
(K) Shareholders and creditors of covered financial
company.--Notwithstanding any other provision of law,
the Corporation as receiver for a covered financial
company pursuant to this section and its succession, by
operation of law, to the rights, titles, powers, and
privileges described in subparagraph (A) 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 in section 1609(b).
(L) Coordination with foreign financial
authorities.--The Corporation as receiver for a covered
financial company shall coordinate with the appropriate
foreign financial authorities regarding the resolution
of subsidiaries of the covered financial company that
are established in a country other than the United
States.
(2) Authority of corporation to determine claims.--
(A) In general.--The Corporation may, as receiver,
determine claims in accordance with the requirements of
this subsection and regulations prescribed under
paragraph (3).
(B) Notice requirements.--The receiver, 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
covered financial company's creditors to
present their claims, together with proof, to
the receiver by a date specified in the notice
which shall be not less than 90 days after the
publication of such notice; and
(ii) republish such notice approximately 1
month and 2 months, respectively, after the
publication under clause (i).
(C) Mailing required.--The receiver shall mail a
notice similar to the notice published under
subparagraph (B)(i) at the time of such publication to
any creditor shown on the covered financial company's
books--
(i) at the creditor's last address
appearing in such books; or
(ii) upon discovery of the name and address
of a claimant not appearing on the covered
financial company's books, within 30 days after
the discovery of such name and address.
(3) Rulemaking authority relating to determination of
claims.--
(A) In general.--Subject to subsection (b), the
Corporation shall prescribe rules and regulations
regarding the allowance or disallowance of claims by
the Corporation and providing for administrative
determination of claims and review of such
determination.
(B) Existing rules.--The Corporation may elect to
use the regulations adopted pursuant to the provisions
of section 11 of the Federal Deposit Insurance Act with
respect to the determination of claims for a covered
financial company as if the covered financial company
were an insured depository institution.
(4) Procedures for determination of claims.--
(A) Determination period.--
(i) In general.--Before the end of the 180-
day period beginning on the date any claim
against a covered financial company is filed
with the Corporation as receiver, the
Corporation shall determine whether to allow or
disallow the claim and shall notify the
claimant of any determination with respect to
such claim.
(ii) Extension of time.--The period
described in clause (i) may be extended by a
written agreement between the claimant and the
Corporation.
(iii) Mailing of notice sufficient.--The
requirements of clause (i) shall be deemed to
be satisfied if the notice of any determination
with respect to any claim is mailed to the last
address of the claimant which appears--
(I) on the covered financial
company's books;
(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 any claim filed under clause (i) is
disallowed, the notice to the claimant shall
contain--
(I) a statement of each reason for
the disallowance; and
(II) the procedures available for
obtaining agency review of the
determination to disallow the claim or
judicial determination of the claim.
(B) Allowance of proven claim.--The Corporation
shall allow any claim received on or before the date
specified in the notice published under paragraph
(2)(B)(i) by the Corporation from any claimant which is
proved to the satisfaction of the Corporation.
(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
any claimant after the date specified in the
notice published under paragraph (2)(B)(i) and
such claim may be considered by the receiver
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 security, preference, or priority
which is not proved to the satisfaction of the
Corporation.
(ii) Payments to less than fully secured
creditors.--In the case of a claim of a
creditor against a covered financial company
which 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
against the covered financial company;
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 or perfected
security interest in the assets of the
covered financial company securing any
such extension of credit.
(iv) Payments to fully secured creditors.--
Notwithstanding any other provision of law, in
any receivership of a covered financial company
in which amounts realized from the resolution
are insufficient to satisfy completely any
amounts owed to the United States or to the
Fund, as determined in the receiver's sole
discretion, an allowed claim under a legally
enforceable or perfected security interest
(that became a legally enforceable or perfected
security interest after the date of the
enactment of this clause), other than a legally
enforceable or perfected security interest of
the Federal Government, in any of the assets of
the covered financial company in receivership
may be treated as an unsecured claim in the
amount of up to 20 percent as necessary to
satisfy any amounts owed to the United States
or to the Fund. Any balance of such claim that
is treated as an unsecured claim under this
subparagraph shall be paid as a general
liability of the covered financial company.
(E) No judicial review of determination pursuant to
subparagraph (d).--No court may review the Corporation
determination pursuant to subparagraph (D) to disallow
a claim.
(F) Legal effect of filing.--
(i) Statute of limitation tolled.--For
purposes of any applicable statute of
limitations, the filing of a claim with the
Corporation shall constitute a commencement of
an action.
(ii) No prejudice to other actions.--
Subject to paragraph (9), the filing of a claim
with the Corporation 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.
(5) Provision for judicial determination of claims.--
(A) In general.--Before the end of the 60-day
period beginning on the earlier of--
(i) the end of the period described in
paragraph (4)(A)(i) (or, if extended by
agreement of the Corporation and the claimant,
the period described in paragraph (4)(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 (4)(A)(i),
the claimant may file suit on a claim (or continue an
action commenced before the appointment of the
receiver) in the district or territorial court of the
United States for the district within which the covered
financial company's principal place of business is
located or the United States District Court for the
District of Columbia (and such court shall have
jurisdiction to hear such claim).
(B) Statute of limitations.--If any claimant fails
to file suit on such claim (or continue an action
commenced before the appointment of the receiver)
before the end of the 60-day period described in
subparagraph (A), 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.
(6) Expedited determination of claims.--
(A) Establishment required.--The Corporation shall
establish a procedure for expedited relief outside of
the routine claims process established under paragraph
(4) for claimants who--
(i) allege the existence of legally valid
and enforceable or perfected security interests
in assets of any covered financial company for
which the Corporation has been appointed as
receiver; and
(ii) allege that irreparable injury will
occur if the routine claims procedure is
followed.
(B) Determination period.--Before the end of the
90-day period beginning on the date any 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
(II) whether such claim should be
determined pursuant to the procedures
established pursuant to paragraph (4);
and
(ii) notify the claimant of the
determination, and if the claim is disallowed,
provide a statement of each reason for the
disallowance and the procedure for obtaining
judicial determination.
(C) Period for filing or renewing suit.--Any
claimant who files a request for expedited relief shall
be permitted to file a suit, or to continue such a suit
filed before the appointment of the Corporation as
receiver, seeking a determination of the claimant's
rights with respect to such security interest 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 the Corporation denies the
claim.
(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 (B), 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 limitation 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 (9), 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.
(7) 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 is in writing and executed by an authorized
officer or representative of the covered financial company.
(8) Payment of claims.--
(A) In general.--The Corporation as receiver may,
in its discretion and to the extent 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 Corporation pursuant
to a final determination pursuant to paragraph
(6); or
(ii) determined by the final judgment of
any court of competent jurisdiction.
(B) Payment of dividends on claims.--The receiver
may, in the receiver's 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 (in the
Corporation's capacity as receiver), by reason of any
such payment, for failure to pay dividends to a
claimant whose claim is not proved at the time of any
such payment.
(C) Rulemaking authority of corporation.--The
Corporation may prescribe such rules, including
definitions of terms, as it deems appropriate to
establish a single uniform interest rate for, or to
make payments of post insolvency interest to creditors
holding proven claims against the receivership estates
of a covered financial company following satisfaction
by the receiver of the principal amount of all creditor
claims.
(9) 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 for a
period not to exceed 90 days in any noncriminal
judicial action or proceeding to which such covered
financial company is or becomes a party.
(B) Grant of stay by all courts required.--Upon
receipt of a request by the Corporation pursuant to
subparagraph (A) for a stay of any non-criminal
judicial action or proceeding in any court with
jurisdiction of such action or proceeding, the court
shall grant such stay as to all parties.
(10) Additional rights and duties.--
(A) Prior final adjudication.--The Corporation
shall abide by any final unappealable judgment of any
court of competent jurisdiction which 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 appointment of the receiver under
section 1604) and the Corporation, including
but not limited to 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 issue by any court upon assets in the
possession of the receiver.
(D) Limitation on judicial review.--Except as
otherwise provided in this subsection, 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 which--
(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) minimizes the cost to the general
fund of the Treasury;
(iv) mitigates the potential for serious
adverse effects to the financial system and the
U.S. economy;
(v) ensures timely and adequate competition
and fair and consistent treatment of offerors;
and
(vi) prohibits discrimination on the basis
of race, sex, or ethnic groups in the
solicitation and consideration of offers.
(11) 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 shall be--
(i) in the case of any contract claim, the
longer of--
(I) the 6-year period beginning on
the date 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 the claim accrues; or
(II) the period applicable under
State law.
(B) Determination of the 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 such subparagraph 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
statute of limitation applicable under State
law with respect to such claim has expired not
more than 5 years before the appointment of the
Corporation as receiver, the Corporation may
bring an action as receiver on such claim
without regard to the expiration of the statute
of limitation applicable under State law.
(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.
(12) Fraudulent transfers.--
(A) In general.--The Corporation, as receiver for
any covered financial company, may avoid a transfer of
any interest of an institution affiliated party, or any
person who the Corporation determines is a debtor of
the covered financial company, in property, or any
obligation incurred by such party or person, that was
made within 5 years of the date on which the
Corporation was appointed receiver if such party or
person voluntarily or involuntarily made such transfer
or incurred such liability with the intent to hinder,
delay, or defraud the covered financial company or the
Corporation.
(B) Right of recovery.--To the extent a transfer is
avoided under subparagraph (A), 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 institution-affiliated party or person
for whose benefit such transfer was made; or
(ii) any immediate or mediate transferee of
any such initial transferee.
(C) Rights of transferee or obligee.--The
Corporation may not recover under subparagraph (B)--
(i) any transfer that takes for value,
including satisfaction or securing of a present
or antecedent debt, in good faith, or
(ii) any immediate or mediate good faith
transferee of such transferee.
(D) Rights under this subsection.--The rights of
the Corporation as receiver of a covered financial
company under this subsection shall be superior to any
rights of a trustee or any other party (other than any
party which is a Federal agency) under title 11, United
States Code.
(E) Definition.--For purposes of this subsection,
the term ``institution affiliated party'' means--
(i) any director, officer, employee, or
controlling stockholder of, or agent for, a
covered financial company;
(ii) any shareholder, consultant, joint
venture partner, and any other person as
determined by the Corporation (by regulation or
otherwise) who participates in the conduct of
the affairs of a covered financial company; and
(iii) any independent contractor (including
any attorney, appraiser, or accountant) who
knowingly or recklessly participates in--
(I) any violation of any law or
regulation;
(II) any breach of fiduciary duty;
or
(III) any unsafe or unsound
practice,
which caused or is likely to cause more than a
minimal financial loss to, or a significant
adverse effect on, the covered financial
company.
(13) Attachment of assets and other injunctive relief.--
Subject to paragraph (14), any court of competent jurisdiction
may, at the request of the Corporation, 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
of such rule 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
such State provide substantially similar protections to
such party's right to due process as 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 subsection, any final and unappealable
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 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 was
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) shall be made available by
the Corporation upon request to any member of the
public.
(D) Recordkeeping requirement.--
(i) In general.--Except as provided in
clause (ii), after the end of the 6-year period
beginning on the date the Corporation is
appointed as receiver of a covered financial
company the Corporation may destroy any records
of such covered financial company which the
Corporation, in the Corporation's discretion,
determines to be unnecessary unless directed
not to do so by a court of competent
jurisdiction or governmental agency, or
prohibited by law.
(ii) Old records.--Notwithstanding clause
(i), the Corporation may destroy records of a
covered financial company which are at least 10
years old as of the date on which the
Corporation is appointed as the receiver of
such company in accordance with clause (i) at
any time after such appointment is final,
without regard to the 6-year period of
limitation contained in clause (i).
(b) Priority of Expenses and Unsecured Claims.--
(1) In general.--Unsecured claims against a covered
financial company, or the 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) Any other general or senior liability of the
covered financial company (which is not a liability
described under subparagraph (D) or (E)).
(D) Any obligation subordinated to general
creditors (which is not an obligation described under
subparagraph (E)).
(E) 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 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.--Subject to the
priorities established under paragraphs (2) and (3), all
claimants of a covered financial company that are similarly
situated under paragraph (1) shall be treated in a similar
manner, except that the receiver may take any action (including
making payments) that does not comply with this subsection,
if--
(A) the Corporation determines that such action is
necessary to maximize the value of the assets of the
covered financial company, to maximize the present
value return from the sale or other disposition of the
assets of the covered financial company, to minimize
the amount of any loss realized upon the sale or other
disposition of the assets of the covered financial
company, or to contain or address serious adverse
effects on financial stability or the U.S. economy; and
(B) all claimants that are similarly situated under
paragraph (1) receive not less than the amount provided
in subsection (d)(2).
(3) Secured claims unaffected.--This subsection shall not
affect secured claims, 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.
(4) Definitions.--As used in this subsection, the term
``administrative expenses of the receiver'' includes--
(A) the actual, necessary costs and expenses
incurred by the receiver in preserving the assets of a
covered financial company or liquidating or otherwise
resolving the affairs of a covered financial company
for which the Corporation has been appointed as
receiver; and
(B) any obligations that the receiver determines
are necessary and appropriate to facilitate the smooth
and orderly liquidation or other resolution of the
covered financial company.
(c) Provisions Relating to Contracts Entered Into Before
Appointment of Receiver.--
(1) Authority to repudiate contracts.--In addition to any
other rights 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 receiver, in the
receiver's discretion, determines to be burdensome; and
(C) the disaffirmance or repudiation of which the
receiver determines, in the receiver's discretion, will
promote the orderly administration of the covered
financial company's affairs.
(2) Timing of repudiation.--The receiver appointed for any
covered financial company under section 1604 shall determine
whether or not to exercise the rights of repudiation under this
subsection within a reasonable period following such
appointment.
(3) Claims for damages for repudiation.--
(A) In general.--Except as otherwise provided in
subparagraph (C) and paragraphs (4), (5), and (6), the
liability of the receiver 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 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
subsection and subsection (d) except as
otherwise specifically provided in this
subsection.
(4) Leases under which the covered financial company is the
lessee.--
(A) In general.--If the receiver disaffirms or
repudiates a lease under which the covered financial
company was 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 such
subparagraph applies shall--
(i) be entitled to the contractual rent
accruing before the later of the date--
(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
subsection and subsection (d).
(5) Leases under which the covered financial company is the
lessor.--
(A) In general.--If the receiver 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 such subparagraph--
(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;
(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 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)(7)) 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
such subparagraph--
(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 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 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 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
appointment of the receiver 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
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 receiver
accepts performance by the other person before the
receiver makes 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 any receiver of
services referred to in subparagraph (B) in connection
with a contract described in such subparagraph shall
not affect the right of the 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
paragraphs (9) and (10) of this subsection and
notwithstanding any other provision of this section
(other than subsection (a)(7)), any other Federal law,
or the law of any State, no person shall be stayed or
prohibited from exercising--
(i) any right such person has to cause the
termination, liquidation, or acceleration of
any qualified financial contract with a covered
financial company which arises upon the
appointment of the Corporation as receiver for
such covered financial company 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).
(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 and
agreements described in clause (i), including
any master agreement for such contracts or
agreements.
(B) Applicability of other provisions.--Subsection
(a)(9) shall apply in the case of any judicial action
or proceeding brought against any receiver referred to
in subparagraph (A), or the covered financial company
for which such receiver was appointed, by any party to
a contract or agreement described in subparagraph
(A)(i) with such company.
(C) Certain transfers not avoidable.--
(i) In general.--Notwithstanding paragraph
(11), 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 such or as
receiver of 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 Corporation determines
that the transferee had actual intent to
hinder, delay, or defraud such company, the
creditors of such company, or any receiver
appointed for such company.
(D) Certain contacts 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 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 subclause
(I), (III), (IV), (V), (VI), (VII),
(VIII), (IX), or (X), 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 subclause (I),
(III), (IV), (V), (VI), (VII), (VIII),
(IX), or (X); 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 subclause
(I), (II), (III), (IV), (V), (VI),
(VII), or (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 subclause (I),
(II), (III), (IV), (V), (VI), (VII), or
(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 more than 2 days after
the date 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 subclauses
(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 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
shall mean 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 Federal Reserve Board)
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 agreements or
transactions referred to in subclause
(I), (II), (III), (IV), or (V),
including any guarantee or
reimbursement obligation in connection
with any agreement or transaction
referred to in any such subclause.
(vii) Definitions relating to default.--
When used in this paragraph and paragraph
(10)--
(I) The term ``default'' shall
mean, with respect to a covered
financial company, any adjudication or
other official determination by any
court of competent jurisdiction, or
other public authority pursuant to
which a conservator, receiver, or other
legal custodian is appointed; and
(II) The term ``in danger of
default'' shall mean 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
(CC) in the opinion
of the Corporation or
such authority--
(bb) the covered financial
company has incurred or is
likely to incur losses that
will deplete all or
substantially all of its
capital; and
(cc) 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
preceding clause of this subparagraph (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 covered financial company's equity of
redemption.
(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 in accordance with paragraphs (9) and (10) of
this subsection or to disaffirm or repudiate any such
contract in accordance with subsection (c)(1) of this
section.
(F) Walkaway clauses not effective.--
(i) In general.--Notwithstanding the
provisions of subparagraph (A) 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 the receiver is appointed until the
earlier of--
(I) the time 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 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
such party's status 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 a receiver of such
covered financial company, and not as a result
of a party's exercise of any right to offset,
setoff, or net obligations that exist under the
contract, any other contract between those
parties, or applicable law.
(G) Recordkeeping.--The Corporation, in
consultation with the Federal Reserve Board, may
prescribe regulations requiring that the covered
financial company maintain such records with respect to
qualified financial contracts (including market
valuations) as the Corporation determines to be
necessary or appropriate in order to assist the
receiver of the covered financial company in being able
to exercise its rights and fulfill its obligations
under this paragraph or paragraph (9) or (10).
(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 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 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 a receiver
transfers any qualified financial contract and related
claims, property, and credit enhancements 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,
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 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.--If--
(i) the receiver for a covered financial
company in default or in danger of default
transfers any assets and liabilities of the
covered financial company; and
(ii) the transfer includes any qualified
financial contract,
the receiver shall notify any person who is a party to
any such contract of such transfer by 5:00 p.m.
(eastern time) on the business day following the date
of the appointment of the 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) of this subsection solely by reason of
or incidental to the appointment under this
section of a receiver for the covered financial
company (or the insolvency or financial
condition of the covered financial company for
which the receiver has been appointed)--
(I) until 5:00 p.m. (eastern time)
on the business day following the date
of the appointment of the receiver; 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 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 receiver 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 a receiver with respect to any qualified
financial contract to which a covered financial company is a
party, the receiver for such covered financial 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 where such an interest is taken in
contemplation of the company's insolvency or with the
intent to hinder, delay, or defraud the company or the
creditors of such company; or
(B) legally enforceable interest in customer
property.
(13) Authority to enforce contracts.--
(A) In general.--The receiver may enforce any
contract, other than a director's or officer's
liability insurance contract or 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 or the
appointment of or the exercise of rights or powers by a
receiver.
(B) Certain rights not affected.--No provision of
this paragraph may be construed as impairing or
affecting any right of the receiver to enforce or
recover under a director's or officer's liability
insurance contract or financial institution bond under
other applicable law.
(C) Consent requirement.--
(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, 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 receiver,
as appropriate, of the covered financial
company during the 90-day period beginning on
the date of the appointment of the receiver, as
applicable.
(ii) Certain 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 receiver to fail to
comply with otherwise enforceable provisions of
such contract.
(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, but not limited, to 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.
(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 which the Corporation determines to utilize with respect
to a covered financial company, including transactions
authorized under subsection (h), this subsection shall govern
the rights of the creditors of such covered financial company.
(2) Maximum liability.--The maximum liability of the
Corporation, acting as receiver or in any other capacity, to
any person having a claim against the receiver or the covered
financial company for which such receiver is appointed shall
equal the amount such claimant would have received if--
(A) a determination had not been made under section
1603(b) with respect to the covered financial company;
and
(B) the covered financial company had been
liquidated under title 11, United States Code, or any
case related to title 11, United States Code (including
a case initiated by the Securities Investor Protection
Corporation with respect to a financial company subject
to the Securities Investor Protection Act of 1970), or
any State insolvency law.
(3) Additional payments authorized.--
(A) In general.--The Corporation may, as receiver
and with the approval of the Secretary, make additional
payments or credit additional amounts to or with
respect to or for the account of any claimant or
category of claimants of a covered financial company if
the Corporation determines that such payments or
credits are necessary or appropriate to--
(i) minimize losses to the receiver from
the resolution of the covered financial company
under this section; or
(ii) prevent or mitigate serious adverse
effects to financial stability or the United
States economy.
(B) 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 section
or at the request of the receiver appointed for a covered financial
company, no court may take any action to restrain or affect the
exercise of powers or functions of the receiver hereunder.
(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 of such covered financial
company;
(B) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed by such 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 section 1604.
(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
covered financial company's director, officer, employee, agent,
attorney, accountant, appraiser, 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 covered financial company's assets shall include
principal losses and appropriate interest.
(h) Bridge Financial Companies.--
(1) Organization.--
(A) Purpose.--The Corporation, as receiver of 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.--If the Corporation is appointed
as receiver for a covered financial company, the
Corporation 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 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, but not limited to, 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 law or the law of any
State, 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 as 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.
(3) Interests in and assets and obligations of covered
financial company.--Notwithstanding paragraphs (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 a receiver has been
appointed 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) Transfer of assets and liabilities.--The
Corporation, as receiver, 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).
(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)(B).
(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 actions (including making payments) that do
not comply with this subparagraph, if--
(i) the Corporation determines that such
actions are necessary to maximize the value of
the assets of the covered financial company, to
maximize the present value return from the sale
or other disposition of the assets of the
covered financial company, to minimize the
amount of any loss realized upon the sale or
other disposition of the assets of the covered
financial company, or to contain or address
serious adverse effects to financial stability
or the U.S. economy; and
(ii) all creditors that are similarly
situated under subsection (b)(1) receive not
less than the amount provided in subsection
(d)(2).
(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 up to 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 is in writing and executed by an
authorized officer or representative of the covered financial
company.
(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) 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.
(10) Federal agency approval; antitrust review.--
(A) In general.--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 filing is
required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 with the Department of Justice
or the Federal Trade Commission, the waiting period
shall expire not later than the 30th day following such
filing notwithstanding any other provision of Federal
law or any attempt by any Federal agency to extend such
waiting period, and no further request for information
by any Federal agency shall be permitted.
(B) Emergency.--If the Secretary, in consultation
with the Chairman of the Federal Reserve Board, has
found that the Corporation must act immediately to
prevent the probable failure of the covered financial
company involved, the approvals and filings referred to
in subparagraph (A) shall not be required and the
transaction may be consummated immediately by the
Corporation.
(11) Duration of bridge financial company.--Subject to
paragraphs (12), (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 it was granted a charter. The
Corporation may, in its discretion, extend the status of the
bridge financial company as such for 3 additional 1-year
periods.
(12) Termination of bridge financial company status.--The
status of any bridge financial company as such shall terminate
upon the earliest of--
(A) 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 (11), or the earlier dissolution of the
bridge financial company as provided in paragraph (14).
(13) Effect of termination events.--
(A) Merger or consolidation.--A merger or
consolidation as provided in paragraph (12)(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 (12)(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 State or Federal 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 State or Federal 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 (12)(C), the
company shall have all of the rights, powers, and
privileges under its constituent documents and
applicable State or Federal 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 State or Federal 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
(12)(D), at the election of the Corporation the bridge
financial company may retain its status as such for the
period provided in paragraph (11) 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 (12), the charter of
the resulting company shall be amended to reflect the
termination of bridge financial company status, if
appropriate.
(14) Dissolution of bridge financial company.--
(A) In general.--Notwithstanding any other
provision of State or Federal law, if a bridge
financial company's status as such has not previously
been terminated by the occurrence of an event specified
in subparagraph (A), (B), (C), or (D) of paragraph
(12)--
(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 the bridge
financial company was chartered, or any
extension thereof, as provided in paragraph
(11).
(B) Procedures.--The Corporation shall remain the
receiver of a bridge financial company for the purpose
of dissolving the bridge financial company. The
Corporation as such receiver 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. 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 a
receiver of a covered financial company 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.
(15) 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.
(D) Burden of proof.--In any hearing under this
subsection, the Corporation has the burden of proof on
the issue of adequate protection.
(16) 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.--Whenever the Corporation has been appointed
as receiver for a covered financial company, the Federal Reserve Board
and the company's primary appropriate regulatory agency, if any, shall
each make all records relating to the company available to the receiver
which may be used by the receiver in any manner the receiver 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 covered financial
company's director, officer, employee, agent, attorney,
accountant, or appraiser 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.--A court of the United States shall
expedite the consideration of any case brought by the
Corporation against a covered financial company's director,
officer, employee, agent, attorney, accountant, or appraiser 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 of 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.--Notwithstanding any other provision of law (other
than a conflicting provision of this section), 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--
(1) in the case of any covered financial company or bridge
financial company that is or has a subsidiary that is a
stockbroker (as that term is defined in section 101 of title 11
of the United States Code) but is not a member of the
Securities Investor Protection Corporation, apply the
provisions of subchapter III of chapter 7 of title 11 of the
United States Code in respect of the distribution to any
``customer'' of all ``customer name securities'' and ``customer
property'' (as such terms are defined in section 741 of such
title 11) as if such covered financial company or bridge
financial company were a debtor for purposes of such
subchapter; or
(2) in the case of any covered financial company or bridge
financial company that is a commodity broker (as that term is
defined in section 101 of title 11 of the United States Code),
apply the provisions of subchapter IV of chapter 7 of title 11
of the United States Code in respect of the distribution to any
``customer'' of all ``customer property'' (as such terms are
defined in section 761 of such title 11) as if such covered
financial company or bridge financial company were a debtor for
purposes of such subchapter.
(n) Systemic Dissolution Fund.--
(1) Establishment and purpose.--
(A) In general.--There is established in the
Treasury a separate fund to be known as the ``Systemic
Dissolution Fund''--
(i) to facilitate and provide for the
orderly and complete dissolution of any failed
financial company or companies that pose a
systemic threat to the financial markets or
economy, as determined under 1603(b); and
(ii) to ensure that any taxpayer funds
utilized to facilitate such liquidations are
fully repaid from assessments levied on
financial companies that have assets of
$50,000,000,000, adjusted for inflation, or
more.
(B) Adjustment of threshold.--The threshold
referred to in subparagraph (A)(ii) shall be adjusted
on an annual basis, based on the growth of assets owned
or managed by financial companies (as defined in
section 1602(9)).
(2) Authority.--The Systemic Dissolution Fund shall be
administered by the Corporation, which shall have exclusive
authority to--
(A) impose assessments on covered financial
companies in accordance with paragraphs (6) through
(8);
(B) maintain and administer the Fund in a manner so
as to make clear to the general public that such Fund
is unrelated to any other Fund maintained and
administered by the Corporation, including the Deposit
Insurance Fund;
(C) utilize the Fund to facilitate the dissolution
of a covered financial company (as defined by section
1602(5)) as provided in paragraph (3), or take such
other actions as are authorized by this subtitle;
(D) invest the Fund in accordance with section
13(a) of the Federal Deposit Insurance Act; and
(E) exercise borrowing authority as prescribed in
subsection (o).
(3) Uses.--
(A) The Fund shall be available to the Corporation
for use with respect to the dissolution of a covered
financial company to--
(i) cover the costs incurred by the
Corporation, including as receiver, in
exercising its rights, authorities, and powers
and fulfilling its obligations and
responsibilities under this section;
(ii) repay such funds in accordance with
subsection (o)(6); and
(iii) cover the costs of systemic
stabilization actions, pursuant to subsections
(d) and (f) of section 1604.
(B) The Fund shall not be used in any manner to
benefit any officer or director of such company removed
pursuant to section 1604(f)(6).
(4) Deposits to fund.--All amounts assessed against a
financial company under this section shall be deposited into
the Fund.
(5) Size of fund.--The Corporation shall, by rule,
establish the minimum size of the Fund consistent with
subparagraphs (C) and (D) of paragraph (6).
(6) Assessments.--
(A) Assessments to maintain fund.--The Corporation
shall impose risk-based assessments on financial
companies in such amount and manner and subject to such
terms and conditions that the Corporation determines,
by regulation and in consultation with the Council, are
necessary for the amount in the Fund to at least equal
the minimum size established pursuant to paragraph (5).
(B) Assessments to replenish the fund.--If the Fund
falls below the minimum size established pursuant to
paragraph (5), the Corporation shall impose assessments
on financial companies in such amounts and manner and
subject to such terms and conditions as the Corporation
determines, by regulation and in consultation with the
Council, are necessary to replenish the fund subject to
the limitations in subparagraph (D).
(C) Minimum assessment threshold.--
(i) In general.--The Corporation shall not
assess financial companies with less than
$50,000,000,000, adjusted for inflation, of
assets on a consolidated basis, subject to any
differentiation as permitted in paragraph (8)
and shall assess financial companies with
$10,000,000,000, adjusted for inflation or more
in assets in accordance with paragraphs (7) and
(8).
(ii) Hedge funds.--The Corporation shall
not assess financial companies that manage
hedge funds (as defined by the Corporation for
the purpose of this section, in consultation
with the Securities and Exchange Commission)
with less than $10,000,000,000, adjusted for
inflation, of assets, under management on a
consolidated basis, subject to any
differentiation as permitted in paragraph (8)
and shall assess any financial companies that
manage hedge funds with $10,000,000,000 or more
of assets under management in accordance with
paragraphs (7) and (8).
(D) Maximum size of fund via assessments.--
(i) In general.--The Corporation shall
suspend assessments on financial companies on
the day after the date on which the total of
the assessments, excluding interest or other
earnings from investments made pursuant to
paragraph (2)(D), equals $150,000,000,000.
(ii) Exceptions.--Any suspension of
assessments under clause (i)--
(I) may be set aside if the Fund
falls below $150,000,000,000; and
(II) shall be set aside if the Fund
falls below the minimum level
established in subparagraph (C).
(7) Factors.--The Corporation, in consultation with the
Council shall establish a risk matrix to be used in
establishing assessments that takes into account--
(A) the actual or expected risk of losses to the
Fund;
(B) economic conditions generally affecting
financial companies so as to allow assessments and the
Fund to increase during more favorable economic
conditions and to decrease during less favorable
economic conditions;
(C) 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;
(D) 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 dissolution 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 company's liabilities,
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; and
(E) such other factors as the Corporation, in
consultation with the Council, may determine to be
appropriate.
(8) Requirement for equitable treatment in assessments.--In
establishing the assessment system for the Fund, the
Corporation, by regulation and in consultation with the
Council, shall differentiate among financial companies based on
complexity of operations or organization, interconnectedness,
size, direct or indirect activities, and any other factors the
Corporation or the Council may deem appropriate to ensure that
the assessments charged equitably reflect the risk posed to the
Fund by particular classes of financial companies.
(9) Minimum comment period.--In order to ensure sufficient
opportunity for public and congressional review and evaluation
of any assessment system, any proposed regulations regarding
the implementation of the assessment system under this subtitle
shall provide an opportunity for public comment during a period
of not less than 60 days.
(o) Borrowing Authority.--
(1) Borrowing from treasury.--
(A) In general.--Subject to paragraphs (3), (4),
and (5), the Corporation may borrow from the Treasury,
and the Secretary of the Treasury is authorized to lend
to the Corporation on such terms as may be fixed by the
Corporation and the Secretary, such funds as in the
judgment of the Board of Directors of the Corporation
are required, in addition to the funds available in the
Systemic Dissolution Fund, to permit the orderly
dissolution of 1 or more covered systemically
significant financial companies, covered affiliates, or
covered subsidiaries under this title.
(B) Rate of interest.--The rate of interest to be
charged in connection with any loan made pursuant to
this subsection shall not be less than an amount
determined by the Secretary of the Treasury, taking
into consideration current market yields on outstanding
marketable obligations of the United States of
comparable maturities.
(2) Public debt issuances.--For the purposes described in
subsection (1), the Secretary of the Treasury may use as a
public-debt transaction the proceeds of the sale of any
securities hereafter issued under chapter 31 of title 31, and
the purposes for which securities may be issued under chapter
31 of title 31 are extended to include such loans. All loans
and repayments under this subsection shall be treated as
public-debt transactions of the United States.
(3) Borrowing authority when fund assets are less than
$150,000,000,000.--
(A) Subject to paragraph (B), the borrowing
authority granted in paragraph (1) shall be available
to the Corporation where--
(i) the value of the Fund is less than
$150,000,000,000;
(ii) the Corporation determines that the
immediate dissolution of a financial company or
financial companies requires more funds than
are available in the Fund; and
(iii) the Corporation has provided a
specific plan for repayment under paragraph
(7)(A).
(B) The Corporation may borrow, and the Secretary
may lend, any amount of funds that, when added to the
amount available in the Fund on the date the
Corporation makes a request to borrow funds, would not
exceed $150,000,000,000.
(C) For purposes of paragraph (1), the
Corporation's total debt may not exceed
$150,000,000,000 (not including any funds borrowed
pursuant to subsection (s)).
(4) Additional borrowing authority.--
(A) If at any time the Corporation anticipates that
the dissolution of any financial company or financial
companies will require funds in excess of
$150,000,000,000--
(i) the Corporation shall submit to the
Secretary and the President a written request
for additional borrowing authority subject to
the limitation in subparagraph (5), which shall
be accompanied by a certification indicating
the anticipated amount needed, the basis on
which such amount was determined, and any such
information as the Secretary may deem
necessary; and
(ii) the President shall transmit a request
to the House of Representatives and the Senate
requesting the additional borrowing authority,
which shall include the certification referred
to in clause (i) and which includes a repayment
schedule as outlined in paragraph (7).
(B) Any request for borrowing authority under
paragraph (A) shall be effective only if approved by
affirmative vote of the House of Representatives and
the Senate in accordance with subsection (s).
(5) Limitations on additional borrowing authority.--
(A) No request for borrowing authority is permitted
under paragraph (4) unless the President, in
consultation with the Council, certifies to the House
of Representatives and the Senate that the borrowing
authority is necessary to avoid or mitigate an imminent
financial emergency.
(B) The amount of borrowing authority requested
under subparagraph (A)(i) may not exceed
$50,000,000,000.
(6) Proceeds from liquidation, repayment of funds.--
(A) In general.--The Corporation shall take such
measures as may be appropriate to maximize the amount
of funds from any dissolution that may be available for
repayment under subparagraph (B) consistent with
systemic concerns.
(B) Repayment priority.--Amounts realized from the
dissolution of any financial company under this
subtitle that are not otherwise utilized by the
Corporation to dissolve a financial company under
subsection (n)(3)(A) shall be paid--
(i) first, to repay any costs incurred in
exercising the borrowing authority granted in
paragraph (1); and
(ii) second, to recapitalize the Fund to
such level as the Corporation deems necessary,
but not to exceed $150,000,000,000.
(7) Repayment plan and schedules required for any
borrowing.--
(A) In general.--No amount may be provided by the
Secretary of the Treasury to the Corporation under
paragraph (1) unless an agreement is in effect between
the Secretary and the Corporation which--
(i) provides a specific plan and schedule
for assessments under (n)(6) to achieve the
repayment of the outstanding amount of any
borrowing under such subsection; and
(ii) demonstrates that income to the
Corporation from assessments under this section
will be sufficient to amortize the outstanding
balance within the period established in the
repayment schedule and pay the interest
accruing on such balance.
(B) Consultation with and report to congress.--The
Secretary of the Treasury and the Corporation shall--
(i) consult with the Committee on Financial
Services of the House of Representatives and
the Committee on Banking, Housing, and Urban
Affairs of the Senate on the terms of any
repayment schedule agreement; and
(ii) submit a copy of each repayment
schedule agreement to the Committee on
Financial Services of the House of
Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate before
the end of the 30-day period beginning on the
date any amount is provided by the Secretary of
the Treasury to the Corporation under paragraph
(1).
(p) Information Gathering and Verification; Payments .--
(1) In general.--The Corporation may require each financial
company to make available such information as the Corporation
may require--
(A) for purposes of--
(i) determining the financial company's
assessment under this section;
(ii) verifying the accuracy of information;
and
(iii) preparing for resolution, including a
resolution plan as required by this section;
and
(B) for such other purposes as may be appropriate
and necessary to promote the orderly dissolution of the
financial company.
(2) Use of existing reports.--The Corporation shall, to the
fullest extent possible, accept--
(A) reports that a financial company has provided
or been required to provide to other Federal or State
supervisors or to appropriate self-regulatory
organizations;
(B) information that is otherwise required to be
reported publicly; and
(C) externally audited financial statements.
(3) Authority for on-site inspection.--The Corporation may
make on-site inspections of a financial company's books and
records as necessary to carry out the purposes of this
subsection.
(4) Rulemaking.--The Corporation may promulgate such rules
or regulations as are necessary or appropriate to implement
this subsection.
(5) Payments of assessments required .--
(A) In general.--Any financial company subject to
an assessment under this section shall pay to the
Corporation such assessment.
(B) Form of payment.--The payments required under
this section shall be made in such manner and at such
time or times as the Corporation, in consultation with
the Council, shall prescribe by regulation.
(6) Penalty for failure to timely pay assessments.--Any
financial company that fails or refuses to pay any assessment
under this section shall be subject to a penalty under section
18(h) of the Federal Deposit Insurance Act, as if that
financial company were an insured depository institution.
(q) Assessment Actions.--
(1) In general.--The Corporation, in any court of competent
jurisdiction, shall be entitled to recover from any financial
company the amount of any unpaid assessment lawfully payable by
such company.
(2) Statute of limitations.--Notwithstanding any other
provision in Federal law, or the law of any State--
(A) any action by a financial company to recover
from the Corporation the overpaid amount of any
assessment shall be brought within 3 years after the
date the assessment payment was due, subject to
subparagraph (C);
(B) any action by the Corporation to recover from a
financial company the underpaid amount of any
assessment shall be brought within 3 years after the
date the assessment payment was due, subject to
subparagraph (C); and
(C) if a financial company has made a false or
fraudulent statement with intent to evade any or all of
its assessment, the Corporation shall have until 3
years after the date of discovery of the false or
fraudulent statement in which to bring an action to
recover the underpaid amount.
(r) Requirement to Maintain Systemic Dissolution Fund as Separate
Fund.--The Systemic Dissolution Fund shall at all times be administered
in a manner that is separate and distinct from the Deposit Insurance
Fund, and the Corporation shall take such actions as may be necessary
to ensure that such distinction is made with respect to internal
processes and procedures as well as with regard to any public
information, discussion or other communications involving either Fund.
(s) Congressional Approval of Additional Borrowing Authority.--
(1) Introduction.--On the day on which the request of the
President is received by the House of Representatives and the
Senate under subsection (o)(4)(A)(ii), a joint resolution
specified in paragraph (5) shall be introduced in the House by
the majority leader and minority leader of the House and in the
Senate by the majority leader and minority leader of the
Senate. If either House is not in session on the day on which
such a request is received, the joint resolution with respect
to such request shall be introduced in that House, as provided
in the preceding sentence, on the first day thereafter on which
that House is in session.
(2) Consideration in the house of representatives.--
(A) Reporting and discharge.--Any committee of the
House of Representatives to which a joint resolution
introduced under paragraph (1) is referred shall report
such joint resolution to the House not later than 5
calendar days after the applicable date of introduction
of the joint resolution. If a committee fails to report
such joint resolution within that period, the committee
shall be discharged from further consideration of the
joint resolution and the joint resolution shall be
referred to the appropriate calendar.
(B) Proceeding to consideration.--After all
committees authorized to consider a joint resolution
have reported such joint resolution to the House or
have been discharged from its consideration, it shall
be in order, not later than the sixth day after the
applicable date of introduction of the joint
resolution, to move to proceed to consider the joint
resolution in the House. Such a motion shall not be in
order after the House has disposed of a motion to
proceed on the joint resolution and shall not be in
order if the House has received a message from the
Senate under paragraph (4)(C). The previous question
shall be considered as ordered on the motion to its
adoption without intervening motion. A motion to
reconsider the vote by which the motion is disposed of
shall not be in order.
(C) Consideration.--The joint resolution shall be
considered in the House and shall be considered as
read. All points of order against a joint resolution
and against its consideration are waived. The previous
question shall be considered as ordered on the joint
resolution to its passage without intervening motion
except two hours of debate equally divided and
controlled by the proponent and an opponent. A motion
to reconsider the vote on passage of a joint resolution
shall not be in order.
(3) Consideration in the senate.--
(A) Placement on calendar.--Upon introduction in
the Senate, the joint resolution shall be placed
immediately on the calendar.
(B) 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 applicable date of
introduction in the Senate and ending on the
6th day after the applicable date of
introduction in the Senate (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 a 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.
(4) Rules relating to senate and house of
representatives.--
(A) Coordination with action by other house.--If,
before the passage by one House of a joint resolution
of that House, that House receives from the other House
a joint resolution, then the following procedures shall
apply:
(i) The joint resolution of the other House
shall not be referred to a committee.
(ii) With respect to the joint resolution
of the House receiving the resolution, the
procedure in that House shall be the same as if
no such joint resolution had been received from
the other House; but the vote on passage shall
be on the joint resolution of the other House.
(B) Treatment of companion measures.--If, following
passage of a joint resolution in the Senate, the Senate
then receives the companion measure from the House of
Representatives, the companion measure shall not be
debatable.
(C) Failure of joint resolution in the senate.--
(i) If, in the Senate, the motion to
proceed to the consideration of the joint
resolution fails on adoption, the Secretary of
the Senate shall transmit a message to that
effect to the House of Representatives.
(ii) If, in the Senate, the joint
resolution fails on passage, the Secretary of
the Senate shall transmit a message to that
effect to the House of Representatives.
(D) Rules of house of representatives and senate.--
This paragraph and the preceding paragraphs are enacted
by Congress--
(i) as an exercise of the rulemaking power
of the Senate and House of Representatives,
respectively, and as such it is deemed a part
of the rules of each House, respectively, but
applicable only with respect to the procedure
to be followed in that House 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 either House to change
the rules (so far as relating to the procedure
of that House) at any time, in the same manner,
and to the same extent as in the case of any
other rule of that House.
(5) Definition.--In this section, the term ``joint
resolution'' means only a joint resolution--
(A) which does not have a preamble;
(B) the title of which is as follows: ``Joint
resolution relating to the approval of request for
borrowing authority under the Financial Stability
Improvement Act of 2009.''; and
(C) the sole matter after the resolving clause of
which is as follows: ``That the Congress approves the
request for additional borrowing authority transmitted
to the Congress on ___ by the President under section
1609(o)(4)(A)(ii) of the Financial Stability
Improvement Act of 2009.'', the blank space being
filled with the appropriate date.
(t) No Federal Status.--
(1) Agency status.--A covered financial company (or any
covered subsidiary thereof) that is placed into receivership is
not a department, agency, or instrumentality of the United
States for purposes of statutes that confer powers on or impose
obligations on government entities.
(2) Employee status.--Interim directors, directors,
officers, employees, or agents of a covered financial company
that is placed into receivership are not, solely by virtue of
service in any such capacity, officers or employees of the
United States. Any employee of the Corporation, acting as
receiver or of any Federal agency who serves at the request of
the receiver as an interim director, director, officer,
employee, or agent of a covered financial company that is
placed into receivership shall not--
(A) 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;
(B) receive any salary or benefits for service in
any such capacity with respect to a covered financial
company that is placed into receivership in addition to
such salary or benefits as are obtained through
employment with the Corporation or other Federal
agency.
SEC. 1610. CLARIFICATION OF PROHIBITION REGARDING CONCEALMENT OF ASSETS
FROM RECEIVER OR LIQUIDATING AGENT.
(a) In General.--Section 1032 of title 18, United States Code, is
amended in paragraph (1) by deleting ``or'' before ``the National
Credit Union Administration Board,'' and by inserting immediately
thereafter ``or the Corporation, as defined in section 1602 of the
Resolution Authority for Large, Interconnected Financial Companies Act
of 2009,''.
(b) Conforming Change.--The heading of section 1032 of title 18,
United States Code, is amended by striking ``of financial
institution''.
SEC. 1611. OFFICE OF RESOLUTION.
(a) Trigger of and Plan for Establishment.--
(1) Trigger.--If the Secretary appoints the Corporation as
receiver for a financial company under section 1604, the
Inspector General of the Corporation shall, as soon as possible
after such appointment, establish in accordance with this
section the Office of Resolution as an office within the Office
of the Inspector General of the Corporation.
(2) Plan.--The Inspector General of the Corporation shall,
in consultation with the Council of Inspectors General on
Financial Oversight established under section 1702, formulate
and maintain a plan to allow for the timely establishment of an
Office of Resolution in accordance with paragraph (1). The
Inspector General of the Corporation shall make such plan
available to the Financial Services Oversight Council
established under section 1001.
(b) Special Deputy Inspector General.--The head of the Office of
Resolution is the Special Deputy Inspector General for Resolution (in
this section referred to as the ``Special Deputy Inspector General''),
who shall be appointed by and report to the Inspector General of the
Corporation.
(c) Duties.--
(1) Audits and investigations.--It shall be the duty of the
Special Deputy Inspector General, in consultation with and
subject to the approval of the Inspector General of the
Corporation, to conduct, supervise, and coordinate audits and
investigations of the activities of the Corporation in its
capacity as receiver for a financial company under section
1604, including by collecting the following information:
(A) A description of each financial company for
which the Corporation has been appointed as receiver
under section 1604.
(B) A description of the activities and future
plans of the Corporation with respect to each financial
company for which it has been appointed as receiver,
and an analysis of whether such activities and plans
conform to the requirements of this subtitle and other
applicable law and are in the best interest of the
overall stability of the financial system.
(C) Such other information as the Special Deputy
Inspector General considers appropriate, in
consultation with and subject to the approval of the
Inspector General of the Corporation.
(2) Additional duties.--
(A) Systems, procedures, and controls.--The Special
Deputy Inspector General shall establish, maintain, and
oversee such systems, procedures, and controls as the
Special Deputy Inspector General considers appropriate,
in consultation with and subject to the approval of the
Inspector General of the Corporation, to discharge the
duties under paragraph (1).
(B) Reporting of criminal violations to attorney
general.--If the Special Deputy Inspector General, in
carrying out this section, discovers facts that give
the Special Deputy Inspector General reasonable grounds
to believe there has been a violation of Federal
criminal law, the Special Deputy Inspector General
shall expeditiously report such facts to the Attorney
General.
(C) Minimizing duplication of effort.--The
Inspector General of the Corporation and the Special
Deputy Inspector General shall coordinate to minimize
duplication of effort in the oversight of the
Corporation's activities as receiver for financial
companies under section 1604.
(3) Duties under the inspector general act of 1978.--In
addition to the duties specified in paragraphs (1) and (2), the
Special Deputy Inspector General shall assist the Inspector
General of the Corporation in carrying out such duties and
responsibilities of inspectors general under the Inspector
General Act of 1978 as the Inspector General of the Corporation
considers appropriate.
(d) Authorities Under the Inspector General Act of 1978.--The
Inspector General of the Corporation may confer on the Special Deputy
Inspector General such authorities provided to the Inspector General of
the Corporation in section 6 of the Inspector General Act of 1978 as
the Inspector General of the Corporation considers necessary to enable
the Special Deputy Inspector General to carry out the duties specified
in subsection (c).
(e) Personnel, Facilities, and Other Resources.--
(1) In general.--The Special Deputy Inspector General may,
in consultation with and subject to the approval of the
Inspector General of the Corporation, expend such amounts from
the fund established under section 1609(n) as are necessary to
carry out the duties described in subsection (c) and to submit
the reports required by subsection (h).
(2) Additional funds.--If the fund established under
section 1609(n) is insufficient to enable the Special Deputy
Inspector General to begin carrying out the duties of the
Special Deputy Inspector General in a timely fashion or later
becomes insufficient to enable the Special Deputy Inspector
General to carry out such duties, the Inspector General of the
Corporation shall detail the necessary personnel, facilities,
or other resources to the Special Deputy Inspector General.
(f) Corrective Responses to Audit Problems.--The Chairman of the
Corporation shall--
(1) take action to address deficiencies identified by a
report or investigation of the Special Deputy Inspector
General; or
(2) certify to the appropriate committees of Congress that
no action is necessary or appropriate.
(g) Cooperation and Coordination With Other Entities.--In carrying
out the duties, responsibilities, and authorities of the Special Deputy
Inspector General under this section, the Special Deputy Inspector
General shall work with each of the inspectors general who is a member
of the Council of Inspectors General on Financial Oversight established
under section 1703(a)(1), in order to avoid duplication of effort and
ensure comprehensive oversight of the Corporation's activities as a
receiver appointed under section 1604.
(h) Reports.--
(1) In general.--In lieu of the semiannual reports required
by section 5(a) of the Inspector General Act of 1978, the
Special Deputy Inspector General shall submit to the
appropriate committees of Congress at the following times a
report prepared in consultation with and approved by the
Inspector General of the Corporation:
(A) Not later than 30 days after the appointment of
the Special Deputy Inspector General.
(B) During the first 3 years after such
appointment, not later than 30 days after the end of
each fiscal quarter during which the Corporation acts
as receiver for a financial company under section 1604.
(C) During the 4th year after such appointment and
each year thereafter, not later than 30 days after the
end of the 2nd and the 4th fiscal quarters, if the
Corporation acts as receiver for a financial company
under section 1604 during such semiannual period.
(2) Content of reports.--Each report required by paragraph
(1) shall include a summary, for the period since the last
required report (or, in the case of the first report, for the
period since the Corporation was first appointed as a receiver
under section 1604) of--
(A) the activities of the Special Deputy Inspector
General; and
(B) the activities and future plans of the
Corporation with respect to each financial company for
which it served as receiver.
(i) Termination.--The Office of Resolution shall terminate 6 months
after the Corporation ceases to serve as a receiver for any financial
company under section 1604, subject to reestablishment pursuant to
subsection (a)(1).
SEC. 1612. MISCELLANEOUS PROVISIONS.
(a) Bankruptcy Code Amendments.--Section 109(b)(2) of title 11 of
the United States Code is amended by inserting ``covered financial
company (as that term is defined in section 1602(5) of the Dissolution
Authority for Large, Interconnected Financial Companies Act of 2009),''
after ``a domestic insurance company,''.
(b) Federal Deposit Insurance Act and Federal Deposit Insurance
Corporation Improvement Act of 1991.--
(1) Section 18(c)(4)(G)(i) of the Federal Deposit Insurance
Act (12 U.S.C. 1823(c)(4)(G)(i)) is amended by inserting at the
end the following new sentence: ``The determination with regard
to the Corporation's exercise of authority under this
subparagraph shall apply to only an insured depository
institution except when severe financial conditions exist which
threaten the stability of a significant number of insured
depository institutions.''.
(2) Section 403(a) of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4403(a)) is
amended by inserting ``section 1609(c) of the Resolution
Authority for Large, Interconnected Financial Companies Act of
2009, 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,''.
SEC. 1613. AMENDMENT TO FEDERAL DEPOSIT INSURANCE ACT.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is
amended by inserting after section 11A the following new section:
``SEC. 11B. SYSTEMIC DISSOLUTION AUTHORITY AND FUND.
``(a) Systemic Dissolution Authority.--The Corporation shall
establish a Systemic Dissolution Authority, which shall function as a
subsidiary of the Corporation.
``(b) Systemic Dissolution Fund.--Any fund established for the
purpose of facilitating the dissolution of a financial company under
subtitle G of the Financial Stability Improvement Act shall be called
the Systemic Dissolution Fund, which shall be managed by the
Corporation, through the Systemic Dissolution Authority.
``(c) Management of Fund.--
``(1) Separate maintenance.--The Systemic Dissolution Fund
shall be separately maintained and not commingled with any
other fund of the Corporation.
``(2) Treatment of and accounting for assets.--The assets
and liabilities of the Systemic Dissolution Fund--
``(A) shall be the assets and liabilities of the
Fund and not of the Corporation; and
``(B) shall not be consolidated with the assets and
liabilities of the Deposit Insurance Fund or the
Corporation for accounting, reporting, or any other
purpose.
``(d) Rights, Powers, and Duties.--
``(1) In general.--The Corporation, in addition to any
rights, powers, and duties under this Act or any other law,
shall, through the Systemic Dissolution Authority, have all
rights, powers, and duties necessary to implement and maintain
the Systemic Dissolution Fund in accordance with subtitle G of
the Financial Stability Improvement Act of 2009.
``(2) Powers as receiver for covered financial company.--
When acting as receiver with respect to any covered financial
company, as defined in subtitle G of the Financial Stability
Improvement Act of 2009, the Corporation, through the Systemic
Dissolution Authority, shall have all rights, powers, and
duties that the Corporation has as receiver under such
subtitle.
``(3) Specific and incidental powers.--The Corporation,
through the Systemic Dissolution Authority, or any duly
authorized officer or agent of the Authority, may exercise all
powers specifically granted by the provisions of this Act and
subtitle G of the Financial Stability Improvement Act and such
incidental powers as shall be necessary to carry out the powers
so granted and accomplish the purposes of subtitle G of the
Financial Stability Improvement Act.
``(e) Staff and Resources.--
``(1) In general.--The Corporation shall assign such staff,
and provide such administrative and other support services to
the Systemic Dissolution Authority as is necessary to fulfill
the statutory responsibilities of the Authority.
``(2) Administrative expenses.-- The cost of all personnel,
services, and resources provided on behalf of the Systemic
Dissolution Authority shall be paid from the Systemic
Dissolution Fund.''.
SEC. 1614. APPLICATION OF EXECUTIVE COMPENSATION LIMITATIONS.
The provisions of section 111 of the Emergency Economic
Stabilization Act of 2008 shall apply to a covered financial
institution for which a receiver has been appointed pursuant to section
1604. Such covered financial institution shall be considered a TARP
recipient for purposes of such section 111 for so long as such
institution is in receivership.
Subtitle H--Additional Improvements for Financial Crisis Management
SEC. 1701. ADDITIONAL IMPROVEMENTS FOR FINANCIAL CRISIS MANAGEMENT.
Section 13 of the Federal Reserve Act (12 U.S.C. 343) is amended by
striking the 3rd undesignated paragraph and inserting the following new
subsection:
``(c) Financial Crisis Management.--
``(1) In general.--In unusual and exigent circumstances,
the Board of Governors of the Federal Reserve System, upon the
written determination, pursuant to section 1109 of the
Financial Stability Improvement Act of 2009, of the Financial
Stability Oversight Council, that a liquidity event exists that
could destabilize the financial system (which determination
shall be made upon a vote of not less than two-thirds of the
members of such Council then serving), and with the written
consent of the Secretary of the Treasury (after certification
by the President that an emergency exists), may authorize any
Federal reserve bank, during such periods as the Board may
determine and at rates established in accordance with the
provision designated as (d) of section 14, to discount for an
individual, partnership, or corporation, notes, drafts, and
bills of exchange when such notes, drafts, and bills of
exchange are indorsed or otherwise secured to the satisfaction
of the Federal reserve bank and in conformance with regulations
or guidelines issued by the Board of Governors regarding the
quality of notes, drafts, and bills of exchange available for
discount and of the security for those notes, drafts and bills
of exchange, unless a joint resolution (as defined in paragraph
(5)) is adopted. Upon making any determination under this
paragraph, with the consent of the Secretary of the Treasury,
the Financial Stability Oversight Council shall promptly submit
a notice of such determination to the Congress. The amounts
made available under this subsection shall not exceed
$4,000,000,000,000.
``(2) Clarification of `secured to the satisfaction of the
federal reserve bank'.--No member of the Board of Governors of
the Federal Reserve System shall vote to authorize any action
permitted under paragraph (1) and the Secretary of the Treasury
shall not provide the written consent required by paragraph (1)
unless that member believes and the Secretary of the Treasury
believes:
``(A) that there is at least a 99 percent
likelihood that all funds disbursed or put at risk by
such action will be repaid to the Federal Reserve
System; and
``(B) that there is at least a 99 percent
likelihood that all interest due on any funds disbursed
will also be paid to the Federal Reserve System.
``(3) Low quality assets excluded.--The notes, drafts, and
bills of exchange available for discount for purposes of
paragraph (1), and the security for those notes, drafts and
bills of exchange may only include any of the following assets
if such asset is used to further enhance the security for those
notes, drafts and bills of exchange which shall be fully
secured with assets that are not any of the following assets:
``(A) An asset (including a security) that would be
classified as ``substandard,'' ``doubtful,'' or
``loss,'' or treated as ``special mention'' or ``other
transfer risk problems,'' in a report of examination or
inspection of bank or an affiliate of a bank prepared
by either a Federal or State supervisory agency or in
any internal classification system used by such
individual, partnership or corporation.
``(B) An asset in a nonaccrual status.
``(C) An asset on which principal or interest
payments are more than 30 days past due.
``(D) An asset whose terms have been renegotiated
or compromised due to the deteriorating financial
condition of the obligor unless such asset has been
performing for at least 6 months since the
renegotiation.
``(4) No single or specific beneficiaries.--The Board of
Governors of the Federal Reserve System may authorize a Federal
reserve bank to discount notes, drafts, or bills of exchange
under this section only as part of a broadly available credit
or other facility and may not authorize a Federal Reserve bank
to discount notes, drafts, or bills of exchange for only a
single and specific individual, partnership, or corporation.
``(5) Evidence of unavailability of credit.--Before
discounting any note, draft, or bill of exchange under this
subsection for an individual, a partnership or corporation as
part of a broadly available credit or other facility the
Federal reserve bank shall obtain evidence that such
individual, partnership, or corporation is unable to secure
adequate credit accommodations from other banking institutions.
All discounts under this subsection for individuals,
partnerships, or corporations shall be subject to such
limitations, restrictions, and regulations as the Board of
Governors of the Federal Reserve System may prescribe.
``(6) Congressional disapproval of additional borrowing
authority.--
``(A) Introduction.--Within 90 days of the day on
which notice from the Financial Stability Oversight
Council is received by the House of Representatives and
the Senate under paragraph (1), a joint resolution
specified in subparagraph (E) may be introduced in the
House by the majority leader and minority leader of the
House and in the Senate by the majority leader and
minority leader of the Senate.
``(B) Consideration in the house of
representatives.--
``(i) Reporting and discharge.--Any
committee of the House of Representatives to
which a joint resolution introduced under
subparagraph (A) is referred shall report such
joint resolution to the House not later than 5
calendar days after the applicable date of
introduction of the joint resolution. If a
committee fails to report such joint resolution
within that period, the committee shall be
discharged from further consideration of the
joint resolution and the joint resolution shall
be referred to the appropriate calendar.
``(ii) Proceeding to consideration.--After
each committee authorized to consider a joint
resolution reports such joint resolution to the
House or has been discharged from its
consideration, it shall be in order, not later
than the sixth day after the applicable date of
introduction of the joint resolution, to move
to proceed to consider the joint resolution in
the House. Such a motion shall not be in order
after the House has disposed of a motion to
proceed on the joint resolution and shall not
be in order if the House has received a message
from the Senate under subparagraph (D)(iii)(I).
The previous question shall be considered as
ordered on the motion to its adoption without
intervening motion. A motion to reconsider the
vote by which the motion is disposed of shall
not be in order.
``(iii) Consideration.--The joint
resolution shall be considered in the House and
shall be considered as read. All points of
order against a joint resolution and against
its consideration are waived. The previous
question shall be considered as ordered on the
joint resolution to its passage without
intervening motion except two hours of debate
equally divided and controlled by the proponent
and an opponent. A motion to reconsider the
vote on passage of a joint resolution shall not
be in order.
``(C) Consideration in the senate.--
``(i) Placement on calendar.--Upon
introduction in the Senate, the joint
resolution shall be placed immediately on the
calendar.
``(ii) 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 applicable date of
introduction of the joint resolution
and ending on the 6th day after the
applicable date of introduction (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 a 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.
``(D) Rules relating to senate and house of
representatives.--
``(i) Coordination with action by other
house.--If, before the passage by one House of
a joint resolution of that House, that House
receives from the other House a joint
resolution, then the following procedures shall
apply:
``(I) The joint resolution of the
other House shall not be referred to a
committee.
``(II) With respect to the joint
resolution of the House receiving the
resolution, the procedure in that House
shall be the same as if no such joint
resolution had been received from the
other House; but the vote on passage
shall be on the joint resolution of the
other House.
``(ii) Treatment of companion measures.--
If, following passage of a joint resolution in
the Senate, the Senate then receives the
companion measure from the House of
Representatives, the companion measure shall
not be debatable.
``(iii) Failure of joint resolution in the
senate.--
``(I) If, in the Senate, the motion
to proceed to the consideration of the
joint resolution fails, the Secretary
of the Senate shall transmit a message
to that effect to the House of
Representatives.
``(II) If, in the Senate, the joint
resolution fails on passage, the
Secretary of the Senate shall transmit
a message to that effect to the House
of Representatives.
``(iv) Rules of house of representatives
and senate.--This paragraph and the preceding
paragraphs are enacted by Congress--
``(I) as an exercise of the
rulemaking power of the Senate and
House of Representatives, respectively,
and as such it is deemed a part of the
rules of each House, respectively, but
applicable only with respect to the
procedure to be followed in that House
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 either House to
change the rules (so far as relating to
the procedure of that House) at any
time, in the same manner, and to the
same extent as in the case of any other
rule of that House.
``(E) Definition.--In this paragraph, the term
`joint resolution' means only a joint resolution--
``(i) which does not have a preamble;
``(ii) the title of which is as follows:
`Joint resolution relating to the use of
authority relevant to section 13(c) of the
Federal Reserve Act under the Financial
Stability Improvement Act of 2009.'; and
``(iii) the sole matter after the resolving
clause of which is as follows: `That the
Congress disapproves the use of authority
pursuant to use of authority relevant to
section 13(c) of the Federal Reserve Act
transmitted to the Congress on ___ by the Board
of Governors of the Federal Reserve System',
the blank space being filled with the
appropriate date.
``(F) Nonscoring of joint resolutions of
disapproval.--A joint resolution of disapproval shall
be treated as having no budgetary effect by the
Congressional Budget Office and the Office of
Management and Budget for any purpose under the Rules
of the House of Representatives, the Standing Rules of
the Senate, the Congressional Budget Act of 1974, or
any statutory pay-as-you-go requirement.''.
SEC. 1702. CERTAIN RESTRICTIONS RELATED TO FOREIGN CURRENCY SWAP
AUTHORITY.
Section 14 of the Federal Reserve Act is amended by adding at the
end the following new subsection:
``(h) Certain Restrictions Related to Foreign Currency Swap
Authority.--A Federal reserve bank may not take any action pursuant to
the authority provided under this section with respect to foreign
currency swaps unless--
``(1) such action is approved in advance by the affirmative
vote of not less than five members of the Board of Governors of
the Federal Reserve System; and
``(2) such action is taken with the written concurrence of
the Secretary of the Treasury.''.
SEC. 1703. 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(h) of the
Emergency Economic Stabilization Act of 2008 (12 U.S.C.
5231(h))).
(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.--The Council of Inspectors
General shall, each year within a timeframe that
permits consideration by the Financial Services
Oversight Council (in this section referred to as the
``Oversight Council'') prior to the submission of its
report for such year under section 1006, submit to the
Oversight 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) Council of inspectors general working groups.--
(A) Working groups to evaluate oversight council.--
(i) 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 Oversight Council.
(ii) 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
subparagraph to enable it to carry out its
duties.
(iii) Reports.--A Council of Inspectors
General Working Group established under this
subparagraph shall submit regular reports to
the Oversight Council and to Congress on its
evaluations pursuant to this subparagraph.
(B) Working groups for financial companies
undergoing resolution.--
(i) Convening a working group.--The Council
of Inspectors General shall convene a Council
of Inspectors General Working Group for each
financial company for which the Secretary of
the Treasury appoints the Federal Deposit
Insurance Corporation as receiver under section
1604.
(ii) 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
subparagraph to enable it to carry out its
duties.
(iii) Reports.--Not later than 270 days
after the appointment of the Federal Deposit
Insurance Corporation as receiver for the
financial company for which a Council of
Inspectors General Working Group is convened
under clause (i), such Working Group shall
submit to the primary financial regulatory
agency and to Congress a report that includes--
(I) the reasons for such financial
company's failure;
(II) the reasons for the Secretary
of the Treasury's appointment of the
Federal Deposit Insurance Corporation
as receiver for such financial company;
and
(III) recommendations for
preventing future failures of financial
companies.
(b) Response to Report by Oversight Council.--The Oversight Council
shall include in its annual report under section 1006 responses to the
concerns raised in the report of the Council of Inspectors General
under subsection (a)(2)(B) for such year.
Subtitle I--Miscellaneous
SEC. 1801. INCLUSION OF MINORITIES AND WOMEN; DIVERSITY IN AGENCY
WORKFORCE.
(a) Office of Minority and Women Inclusion.--
(1) Establishment.--Not later than 180 days following the
enactment of this title, each agency shall establish an Office
of Minority and Women Inclusion (hereinafter in this section
referred to as the ``Office'') that shall advise the agency
administrator of the impact of policies and regulations of the
agency on minority-owned and women-owned businesses, and shall
be responsible for all matters of the agency relating to
diversity in management, employment, and business activities,
including the coordination of technical assistance, in
accordance with such standards and requirements as the Director
of the Office shall establish.
(2) Consolidation.--Each agency that has assigned these or
comparable responsibilities to existing offices shall ensure
that such responsibilities are consolidated within the Office.
(b) Director.--
(1) In general.--For each Office, the President shall
appoint, by and with the advice and consent of the Senate, a
Director of Minority and Women Inclusion (hereinafter in this
section referred to as the ``Director''), who shall also hold a
title within such agency comparable to that of other senior
level staff who are, as applicable, either appointed by the
President, by and with the advice and consent of the Senate, or
act in a managerial capacity that requires reporting directly
to the agency administrator.
(2) Duties.--Each Director shall--
(A) ensure equal employment opportunity and the
racial, ethnic and gender diversity of the agency's
workforce and senior management;
(B) increase the participation of minority-owned
and women-owned businesses in the programs and
contracts of the agency;
(C) provide guidance to the agency administrator to
ensure that the policies and regulations of the agency
strengthen minority-owned and women-owned businesses;
and
(D) conduct an assessment, as part of the
examination process for the entities regulated or
monitored by the agency of the diversity and inclusion
efforts by such entities.
(c) Inclusion in All Levels of Business Activities.--
(1) In general.--Each Director shall develop and implement
standards and procedures to ensure, to the maximum extent
possible, the inclusion and utilization of 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)), women, and minority-owned and women-owned
businesses (as such terms are defined in section 21A(r)(4) of
the Federal Home Loan Bank Act (12 U.S.C. 1441a(r)(4))
(including financial institutions, investment banking firms,
mortgage banking firms, asset management firms, broker-dealers,
financial services firms, underwriters, accountants, brokers,
investment consultants, and providers of legal services) in all
business and activities of the agency at all levels, including
in procurement, insurance, and all types of contracts
(including, as applicable, contracts for the issuance or
guarantee of any debt, equity, or security, the sale of assets,
the management of its assets, the making of its equity
investments, and the implementation of programs to address
economic recovery).
(2) Contracts.--The processes established by each agency
for review and evaluation for contract proposals and to hire
service providers shall include a component that gives
consideration to the diversity of the applicant.
(3) Written assurance.--All such contract proposals,
provided such proposals are of an amount greater than $50,000
and the contractor employs more than 50 employees, shall
include a written assurance, in a form and substance that the
Director shall prescribe, that the contractor shall ensure, to
the maximum extent possible, the inclusion of minorities and
women in its workforce and, as applicable, by its
subcontractors.
(4) Termination.--A Director may terminate any contract
upon a finding that the contractor has failed to make a good
faith effort to comply with paragraph (3), except that a
contractor may appeal such finding and termination to the
agency administrator within a reasonable amount of time as
determined by the Director.
(d) Applicability.--This section shall apply to all contracts of an
agency for services of any kind, including services that require the
services of investment banking, asset management entities, broker-
dealers, financial services entities, underwriters, accountants,
investment consultants, and providers of legal services.
(e) Reports.--Not later than 90 days before the end of each Federal
fiscal year, each Director shall report to the Congress detailed
information describing the actions taken by the agency and the Director
pursuant to this section, which shall--
(1) to the extent contracts exceed the contract amount and
employment levels established in subsection (c)(3), include a
statement of the total amounts paid by the agency to third
party contractors since the last such report;
(2) the percentage of such amounts paid to businesses
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) such other information, findings, conclusions, and
recommendations for legislative or agency action, as the
Director may determine to be appropriate to include in such
report.
(f) Diversity in Agency Workforce.--Each agency shall take
affirmative steps to seek diversity in its workforce at all levels of
the agency consistent with the demographic diversity of the United
States and the Federal government, which shall include--
(1) heavily 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, and placing employment advertisements in
newspapers and magazines oriented toward women and people of
color;
(3) 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;
(4) 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
(5) such other mass media communications that the Director
determines are necessary.
(g) Definitions.--For purposes of this section:
(1) Agency.--The term ``agency'' means--
(A) the Department of the Treasury,
(B) the Federal Deposit Insurance 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 Office of Thrift Supervision,
(I) the Securities and Exchange Commission,
(J) the Federal department or agency that the
President has identified as the main department or
agency responsible for consumer financial protection,
(K) the Federal department or agency that the
President has identified as the main department or
agency responsible for insurance information,
and any successors to such entities.
(2) Agency administrator.--The term ``agency
administrator'' means the head of an agency.
Subtitle J--International Policy Coordination
SEC. 1901. INTERNATIONAL POLICY COORDINATION.
The President of the United States, or a designee of the President,
shall coordinate through all available international policy channels
similar policies as found in United States law related to limiting the
scope, nature, size, scale, concentration, and interconnectedness of
financial companies in order to protect financial stability and the
global economy.
Subtitle K--International Financial Provisions
SEC. 1951. ACCESS TO UNITED STATES FINANCIAL MARKET BY FOREIGN
INSTITUTIONS.
(a) Establishment of Foreign Bank Offices in the United States.--
Subsection 7(d)(3) of the International Banking Act of 1978 ( U.S.C.
3105(d)(3)) is amended--
(1) by striking ``and'' at the end of subparagraph (C);
(2) by striking the period at the end of subparagraph (D)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(E) for a foreign bank that presents a systemic
risk to the United States (as determined in accordance
with section 1603 of the Financial Stability
Improvement Act of 2009), 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 systemic risk.''.
(b) Termination of Foreign Bank Offices in the United States.--
Subsection 7(e)(1) of the International Banking Act of 1978 ( U.S.C.
3105(e)(1)) is amended--
(1) by striking ``or'' at the end of subparagraph (A);
(2) by striking the period at the end of subparagraph (B)
and inserting ``; or''; and
(3) by inserting after subparagraph (B), the following new
subparagraph:
``(C) for a foreign bank that presents a systemic
risk to the United States (as determined in accordance
with section 1603 of the Financial Stability
Improvement Act of 2009), 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 systemic risk.''.
(c) Registration or Succession to United States Brokerage 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 Securities and Exchange Commission may consider whether,
for a foreign person, or an affiliate of a foreign person that presents
a systemic risk to the United States (as determined in accordance with
section 1603 of the Financial Stability Improvement Act of 2009), the
home country of the foreign person has adopted or made demonstrable
progress toward adopting an appropriate system of financial regulation
to mitigate such systemic 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
systemic risk to the United States, the Securities and Exchange
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 systemic risk.''.
TITLE II--CORPORATE AND FINANCIAL INSTITUTION COMPENSATION FAIRNESS ACT
SEC. 2001. SHORT TITLE.
This title may be cited as the ``Corporate and Financial
Institution Compensation Fairness Act of 2009''.
SEC. 2002. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION DISCLOSURES.
Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n)
is amended by adding at the end the following new subsection:
``(i) Annual Shareholder Approval of Executive Compensation.--
``(1) Annual vote.--Any proxy or consent or authorization
(the solicitation of which is subject to the rules of the
Commission pursuant to subsection (a)) for an annual meeting of
the shareholders to elect directors (or a special meeting in
lieu of such meeting) where proxies are solicited in respect of
any security registered under section 12 occurring on or after
the date that is 6 months after the date on which final rules
are issued under paragraph (4), shall provide for a separate
shareholder vote to approve the compensation of executives as
disclosed pursuant to the Commission's compensation disclosure
rules for named executive officers (which disclosure shall
include the compensation committee report, the compensation
discussion and analysis, the compensation tables, and any
related materials, to the extent required by such rules). The
shareholder vote shall not be binding on the issuer or the
board of directors and shall not be construed as overruling a
decision by such board, nor to create or imply any additional
fiduciary duty by such board, nor shall such vote be construed
to restrict or limit the ability of shareholders to make
proposals for inclusion in such proxy materials related to
executive compensation.
``(2) Shareholder approval of golden parachute
compensation.--
``(A) 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 on or after the date that is 6 months after
the date on which final rules are issued under
paragraph (4), 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.
``(B) Shareholder approval.--Any proxy or consent
or authorization relating to the proxy or consent
solicitation material containing the disclosure
required by subparagraph (A) shall provide for a
separate 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 paragraph (1). A vote by the
shareholders shall not be binding on the issuer or the
board of directors of the issuer or the person making
the solicitation and shall not be construed as
overruling a decision by any such person or issuer, nor
to create or imply any additional fiduciary duty by any
such person or issuer.
``(3) 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 paragraphs (1)
or (2) of this section, unless such vote is otherwise required
to be reported publicly by rule or regulation of the
Commission.
``(4) Rulemaking.--Not later than 6 months after the date
of the enactment of the Corporate and Financial Institution
Compensation Fairness Act of 2009, the Commission shall issue
final rules to implement this subsection.
``(5) Exemption authority.--The Commission may exempt
certain categories of issuers from the requirements of this
subsection, where appropriate in view of the purpose of this
subsection. In determining appropriate exemptions, the
Commission shall take into account, among other considerations,
the potential impact on smaller reporting issuers.''.
SEC. 2003. COMPENSATION COMMITTEE INDEPENDENCE.
(a) Standards Relating to Compensation Committees.--The Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by inserting
after section 10A the following new section:
``SEC. 10B. STANDARDS RELATING TO COMPENSATION COMMITTEES.
``(a) Commission Rules.--
``(1) In general.--Effective not later than 9 months after
the date of enactment of the Corporate and Financial
Institution Compensation Fairness Act of 2009, the Commission
shall, by rule, direct the national securities exchanges and
national securities associations to prohibit the listing of any
class of equity security of an issuer that is not in compliance
with the requirements of any portion of subsections (b) through
(f).
``(2) Opportunity to cure defects.--The rules of the
Commission under paragraph (1) shall provide for appropriate
procedures for an issuer to have an opportunity to cure any
defects that would be the basis for a prohibition under
paragraph (1) before the imposition of such prohibition.
``(3) Exemption authority.--The Commission may exempt
certain categories of issuers from the requirements of
subsections (b) through (f), where appropriate in view of the
purpose of this section. In determining appropriate exemptions,
the Commission shall take into account, among other
considerations, the potential impact on smaller reporting
issuers.
``(b) Independence of Compensation Committees.--
``(1) In general.--Each member of the compensation
committee of the board of directors of the issuer shall be
independent.
``(2) Criteria.--In order to be considered to be
independent for purposes of this subsection, a member of a
compensation committee of an issuer may not, other than in his
or her capacity as a member of the compensation committee, the
board of directors, or any other board committee accept any
consulting, advisory, or other compensatory fee from the
issuer.
``(3) Exemption authority.--The Commission may exempt from
the requirements of paragraph (2) a particular relationship
with respect to compensation committee members, where
appropriate in view of the purpose of this section.
``(4) Definition.--As used in this section, the term
`compensation committee' means--
``(A) a committee (or equivalent body) established
by and amongst the board of directors of an issuer for
the purpose of determining and approving the
compensation arrangements for the executive officers of
the issuer; and
``(B) if no such committee exists with respect to
an issuer, the independent members of the entire board
of directors.
``(c) Independence Standards for Compensation Consultants and Other
Committee Advisors.--Any compensation consultant or other similar
adviser to the compensation committee of any issuer shall meet
standards for independence established by the Commission by regulation.
``(d) Compensation Committee Authority Relating to Compensation
Consultants.--
``(1) In general.--The compensation committee of each
issuer, in its capacity as a committee of the board of
directors, shall have the authority, in its sole discretion, to
retain and obtain the advice of a compensation consultant
meeting the standards for independence promulgated pursuant to
subsection (c), and the compensation committee shall be
directly responsible for the appointment, compensation, and
oversight of the work of such independent compensation
consultant. This provision shall not be construed to require
the compensation committee to implement or act consistently
with the advice or recommendations of the compensation
consultant, and shall not otherwise affect the compensation
committee's ability or obligation to exercise its own judgment
in fulfillment of its duties.
``(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
the Corporate and Financial Institution Compensation Fairness
Act of 2009, each issuer shall disclose in the proxy or consent
material, in accordance with regulations to be promulgated by
the Commission whether the compensation committee of the issuer
retained and obtained the advice of a compensation consultant
meeting the standards for independence promulgated pursuant to
subsection (c).
``(3) Regulations.--In promulgating regulations under this
subsection or any other provision of law with respect to
compensation consultants, the Commission shall ensure that such
regulations are competitively neutral among categories of
consultants and preserve the ability of compensation committees
to retain the services of members of any such category.
``(e) Authority To Engage Independent Counsel and Other Advisors.--
The compensation committee of each issuer, in its capacity as a
committee of the board of directors, shall have the authority, in its
sole discretion, to retain and obtain the advice of independent counsel
and other advisers meeting the standards for independence promulgated
pursuant to subsection (c), and the compensation committee shall be
directly responsible for the appointment, compensation, and oversight
of the work of such independent counsel and other advisers. This
provision shall not be construed to require the compensation committee
to implement or act consistently with the advice or recommendations of
such independent counsel and other advisers, and shall not otherwise
affect the compensation committee's ability or obligation to exercise
its own judgment in fulfillment of its duties.
``(f) Funding.--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 compensation--
``(1) to any compensation consultant to the compensation
committee that meets the standards for independence promulgated
pursuant to subsection (c), and
``(2) to any independent counsel or other adviser to the
compensation committee.''.
(b) Study and Review Required.--
(1) In general.--The Securities and Exchange Commission
shall conduct a study and review of the use of compensation
consultants meeting the standards for independence promulgated
pursuant to section 10B(c) of the Securities Exchange Act of
1934 (as added by subsection (a)), and the effects of such use.
(2) Report to congress.--Not later than 2 years after the
rules required by the amendment made by this section take
effect, the Commission shall submit a report to the Congress on
the results of the study and review required by this paragraph.
SEC. 2004. ENHANCED COMPENSATION STRUCTURE REPORTING TO REDUCE PERVERSE
INCENTIVES.
(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 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) is aligned with sound risk management;
(B) is structured to account for the time horizon
of risks; and
(C) meets such other criteria as the appropriate
Federal regulators jointly may determine to be
appropriate to reduce unreasonable incentives offered
by such institutions for employees to take undue risks
that--
(i) could threaten the safety and soundness
of covered financial institutions; or
(ii) could have serious adverse effects on
economic conditions or financial stability.
(2) Rules of construction.--Nothing in this subsection
shall be construed as requiring the reporting of the actual
compensation of particular individuals. Nothing in this
subsection 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, and taking
into account the factors described in subparagraphs (A), (B), and (C)
of subsection (a)(1), the appropriate Federal regulators shall jointly
prescribe regulations that prohibit any incentive-based payment
arrangement, or any feature of any such arrangement, that the
regulators determine encourages inappropriate risks by covered
financial institutions that--
(1) could threaten the safety and soundness of covered
financial institutions; or
(2) could have serious adverse effects on economic
conditions or financial stability.
(c) Enforcement.--The provisions of 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 shall be treated as a
violation of subtitle A of title V of such Act.
(d) Definitions.--As used in this section--
(1) the term ``appropriate Federal regulator'' means--
(A) the Board of Governors of the Federal Reserve
System;
(B) the Office of the Comptroller of the Currency;
(C) the Board of Directors of the Federal Deposit
Insurance Corporation;
(D) the Director of the Office of Thrift
Supervision;
(E) the National Credit Union Administration Board;
(F) the Securities and Exchange Commission; and
(G) 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.
(e) 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.
(f) Limitation.--No regulation promulgated pursuant to this section
shall be allowed to require the recovery of incentive-based
compensation under compensation arrangements in effect on the date of
enactment of this title, provided such compensation agreements are for
a period of no more than 24 months. Nothing in this title shall prevent
or limit the recovery of incentive-based compensation under any other
applicable law.
(g) GAO Study.--
(1) Study required.--
(A) In general.--The Comptroller General of the
United States shall carry out a study to determine
whether there is a correlation between compensation
structures and excessive risk taking.
(B) Factors to consider.--In carrying out the study
required under subparagraph (A), the Comptroller
General shall--
(i) consider compensation structures used
by companies from 2000 to 2008; and
(ii) compare companies that failed, or
nearly failed but for government assistance, to
companies that remained viable throughout the
housing and credit market crisis of 2007 and
2008, including the compensation practices of
all such companies.
(C) Determining companies that failed or nearly
failed.--In determining whether a company failed, or
nearly failed but for government assistance, for
purposes of subparagraph (B)(ii), the Comptroller
General shall focus on--
(i) companies that received exceptional
assistance under the Troubled Asset Relief
Program under title I of the Emergency Economic
Stabilization Act of 2009 (12 U.S.C. 5211 et
seq.) or other forms of significant government
assistance, including under the Automotive
Industry Financing Program, the Targeted
Investment Program, the Asset Guarantee
Program, and the Systemically Significant
Failing Institutions Program;
(ii) the Federal National Mortgage
Association;
(iii) the Federal Home Loan Mortgage
Corporation; and
(iv) companies that participated in the
Security and Exchange Commission's Consolidated
Supervised Entities Program as of January 2008.
(2) Report.--Not later than the end of the 1-year period
beginning on the date of the enactment of this title, the
Comptroller General shall issue a report to the Congress
containing the results of the study required under paragraph
(1).
TITLE III--OVER-THE-COUNTER DERIVATIVES MARKETS ACT
SEC. 3001. SHORT TITLE.
This title may be cited as the ``Over-the-Counter Derivatives
Markets Act of 2009''.
Subtitle A--Regulation of Swap Markets
SEC. 3101. DEFINITIONS.
(a) Amendments to Definitions in the Commodity Exchange Act.--
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--
(1) by redesignating paragraphs (9) through (34) as
paragraphs (10) through (35), respectively;
(2) by adding after paragraph (8) the following:
``(9) Derivative.--The term `derivative' means--
``(A) a contract of sale of a commodity for future
delivery; or
``(B) a swap.'';
(3) by redesignating paragraph (35) (as redesignated by
paragraph (1)) as paragraph (36);
(4) by adding after paragraph (34) (as redesignated by
paragraph (1)) the following:
``(35) Swap.--
``(A) In general.--Except as provided in
subparagraph (B), the term `swap' means any agreement,
contract, or transaction that--
``(i) is a put, call, cap, floor, collar,
or similar option of any kind for the purchase
or sale of, or based on the value of, one 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) provides for any purchase, sale,
payment, or delivery (other than a dividend on
an equity security) that is dependent on the
occurrence, non-occurrence, or the extent of
the occurrence of an event or contingency
associated with a potential financial,
economic, or commercial consequence;
``(iii) provides on an executory basis for
the exchange, on a fixed or contingent basis,
of one or more payments based on the value or
level of one 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 an interest rate swap, a rate floor,
rate cap, rate collar, cross-currency rate
swap, basis swap, currency swap, total return
swap, equity index swap, equity swap, debt
index swap, debt swap, credit spread, credit
default swap, credit swap, weather swap, energy
swap, metal swap, agricultural swap, emissions
swap, or commodity swap;
``(iv) is an agreement, contract, or
transaction that is, or in the future becomes,
commonly known to the trade as a swap; or
``(v) is any combination or permutation of,
or option on, any agreement, contract, or
transaction described in any of clauses (i)
through (iv).
``(B) Exclusions.--The term `swap' does not
include:
``(i) any contract of sale of a commodity
for future delivery or security futures product
traded on or subject to the rules of any board
of trade designated as a contract market under
section 5 or 5f;
``(ii) any sale of a nonfinancial commodity
for deferred shipment or delivery, so long as
such transaction is 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 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.);
``(iv) any put, call, straddle, option, or
privilege relating to 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 one or more securities on a fixed 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.);
``(vi) any agreement, contract, or
transaction providing for the purchase or sale
of one 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 such agreement, contract, or transaction
predicates such 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
such agreement, contract, or
transaction is entered into to manage a
risk associated with capital raising;
``(ix) any foreign exchange swap;
``(x) any foreign exchange forward;
``(xi) any agreement, contract, or
transaction a counterparty of which is a
Federal Reserve bank or the United States
Government, or an agency of the United States
Government that is expressly backed by the full
faith and credit of the United States; and
``(xii) any security-based swap, other than
a security-based swap as described in paragraph
(38)(C).
``(C) Rule of construction regarding master
agreements.--The term `swap' shall be construed to
include a master agreement that provides for an
agreement, contract, or transaction that is a 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 swap
pursuant to subparagraph (A), except that the master
agreement shall be considered to be a swap only with
respect to each agreement, contract, or transaction
under the master agreement that is a swap pursuant to
subparagraph (A).'';
(5) in paragraph (13) (as redesignated by paragraph (1))--
(A) in subparagraph (A)--
(i) in clause (vii), by striking
``$25,000,000'' and inserting ``$50,000,000'';
and
(ii) in clause (xi), by striking ``total
assets in an amount'' and inserting ``amounts
invested on a discretionary basis''; and
(B) in subparagraph (C), by striking ``determines''
and inserting ``and the Securities and Exchange
Commission may jointly determine'';
(6) in paragraph (30) (as redesignated by paragraph (1)),
by--
(A) redesignating subparagraph (E) as subparagraph
(G);
(B) in subparagraph (D), by striking ``and''; and
(C) inserting after subparagraph (D) the following:
``(E) a swap execution facility registered under
section 5h;
``(F) a swap repository; and'';
(7) by adding after paragraph (36) (as redesignated by
paragraph (3)) the following:
``(37) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.'';
(8) by adding after paragraph (37) the following:
``(38) Security-based swap.--
``(A) In general.--Except as provided in
subparagraph (B), the term `security-based swap' means
any agreement, contract, or transaction that would be a
swap under paragraph (35) (without regard to paragraph
(35)(B)(xii)), and that--
``(i) is based on an index that is a
narrow-based security index, including any
interest therein or based on the value thereof;
``(ii) is based on a single security or
loan, including any interest therein or based
on the value thereof; or
``(iii) is based on the occurrence, non-
occurrence, 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 must
directly affect the financial statements,
financial condition, or financial obligations
of the issuer.
``(B) Exclusion.--The term `security-based swap'
does not include any agreement, contract, or
transaction that meets the definition of security-based
swap only because it references or is based upon a
government security.
``(C) 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 one 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)).
``(D) 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).'';
(9) by adding after paragraph (38) the following:
``(39) Swap dealer.--
``(A) In general.--The term `swap dealer' means any
person engaged in the business of buying and selling
swaps for such person's own account, through a broker
or otherwise.
``(B) Exception.--The term `swap dealer' does not
include a person that buys or sells swaps for such
person's own account, either individually or in a
fiduciary capacity, but not as a part of a regular
business.'';
(10) by adding after paragraph (39) the following:
``(40) Major swap participant.--
``(A) In general.--The term `major swap
participant' means any person who is not a swap dealer
and--
``(i) who maintains a substantial net
position in outstanding swaps, excluding
positions held primarily for hedging, reducing,
or otherwise mitigating commercial risk; or
``(ii) whose outstanding swaps create
substantial net counterparty exposure (current
and potential future) that would expose
counterparties to significant credit losses
that could have a material adverse effect on
capital of the counterparties.
``(B) Definitions.--The Commission and the
Securities and Exchange Commission shall jointly define
by rule or regulation the term `substantial net
position' and `substantial net counterparty exposure'
at a threshold that the Commissions determine prudent
for the effective monitoring of, management and
oversight of the financial system. In the event the
Commissions are unable to agree upon a level within 60
days of the commencement of such consultations, the
Secretary of the Treasury shall make such
determination, which shall be binding on and adopted by
such Commissions.
``(41) Major security-based swap participant.--
``(A) In general.--The term `major security-based
swap participant' means any person who is not a swap
dealer and--
``(i) who maintains a substantial net
position in outstanding security-based swaps,
excluding positions held primarily for hedging,
reducing, or otherwise mitigating commercial
risk; or
``(ii) whose outstanding security-based
swaps create substantial net counterparty
exposure (current and potential future) that
would expose counterparties to significant
credit losses that could have a material
adverse effect on capital of the
counterparties.
``(B) Definitions.--The Commission and the
Securities and Exchange Commission shall jointly define
by rule or regulation the term `substantial net
position' and `substantial net counterparty exposure'
at a threshold that the Commissions determine prudent
for the effective monitoring of, management and
oversight of the financial system. In the event the
Commissions are unable to agree upon a level within 60
days of the commencement of such consultations, the
Secretary of the Treasury shall make such
determination, which shall be binding on and adopted by
such Commissions.'';
(11) by adding after paragraph (41) the following:
``(42) 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)).'';
(12) by adding after paragraph (42) the following:
``(43) 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; or
``(ii) a State-chartered branch or agency
of a foreign bank;
``(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; or
``(ii) a federally chartered branch or
agency of a foreign bank; and
``(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 a State-chartered bank that is not
a member of the Federal Reserve System.'';
(13) by adding after paragraph (43) the following:
``(44) Security-based swap dealer.--
``(A) In general.--The term `security-based swap
dealer' means any person engaged in the business of
buying and selling security-based swaps for such
person's own account, through a broker or otherwise.
``(B) Exception.--The term `security-based swap
dealer' does not include a person that buys or sells
security-based swaps for such person's own account,
either individually or in a fiduciary capacity, but not
as a part of a regular business.'';
(14) by adding after paragraph (44) the following:
``(45) Government security.--The term `government security'
has the same meaning as in section 3(a)(42) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(42)).'';
(15) by adding after paragraph (45) the following:
``(46) 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 at the inception of the contract.'';
(16) by adding after paragraph (46) the following:
``(47) Foreign exchange swap.--The term `foreign exchange
swap' means a transaction that solely involves the exchange of
2 different currencies on a specific date at a fixed rate
agreed at the inception of the contract, and a reverse exchange
of the same 2 currencies at a date further in the future and at
a fixed rate agreed at the inception of the contract.'';
(17) by adding after paragraph (47) the following:
``(48) Person associated with a security-based swap dealer
or major security-based swap participant.--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 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), 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 any employee of such security-based swap
dealer or major security-based swap participant, except that
any person associated with a security-based swap dealer or
major security-based swap participant whose functions are
solely clerical or ministerial shall not be included in the
meaning of such term other than for purposes of section
15F(e)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
78o-10).'';
(18) by adding after paragraph (48) the following:
``(49) Person associated with a swap dealer or major swap
participant.--The term `person associated with a swap dealer or
major swap participant' or `associated person of a swap dealer
or major swap participant' means any partner, officer,
director, or branch manager of such swap dealer or major swap
participant (or any person occupying a similar status or
performing similar functions), any person directly or
indirectly controlling, controlled by, or under common control
with such swap dealer or major swap participant, or any
employee of such swap dealer or major swap participant, except
that any person associated with a swap dealer or major swap
participant whose functions are solely clerical or ministerial
shall not be included in the meaning of such term other than
for purposes of section 4s(b)(6).''; and
(19) by adding after paragraph (49) the following:
``(50) Swap repository.--The term `swap repository' means
an entity that collects and maintains the records of the terms
and conditions of swaps or security-based swaps entered into by
third parties.
``(51) Restricted owner.--The term `restricted owner' means
any swap dealer, security-based swap dealer, major swap
participant, major security-based swap participant, person
associated with a swap dealer or major swap participant, or
person associated with a security-based swap dealer or major
security-based swap participant.''.
(b) Joint Rulemaking on Further Definition of Terms.--
(1) In general.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly adopt
a rule further defining the terms ``swap'', ``security-based
swap'', ``swap dealer'', ``security-based swap dealer'',
``major swap participant'',``major security-based swap
participant'', and ``eligible contract participant'' no later
than 180 days after the effective date of this title.
(2) Prevention of evasions.--The Commodity Futures Trading
Commission and the Securities and Exchange Commission may
prescribe rules defining the term ``swap'' or ``security-based
swap'' to include transactions that have been structured to
evade this title.
(c) Joint Rulemaking Under This Title.--
(1) Uniform rules.--Rules and regulations prescribed
jointly under this title by the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall be
uniform.
(2) Treasury department.--In the event that the Commodity
Futures Trading Commission and the Securities and Exchange
Commission fail to jointly prescribe uniform rules and
regulations under any provision of this title in a timely
manner, the Secretary of the Treasury, in consultation with the
Commodity Futures Trading Commission and the Securities and
Exchange Commission, shall prescribe rules and regulations
under such provision. A rule prescribed by the Secretary of the
Treasury shall be enforced as if prescribed jointly by the
Commodity Futures Trading Commission and the Securities and
Exchange Commission and shall remain in effect until the
Secretary rescinds the rule or until the effective date of a
corresponding rule prescribed jointly by the Commodity Futures
Trading Commission and the Securities and Exchange Commission
in accordance with this section, whichever is later.
(3) Deadline.--The Secretary of the Treasury shall adopt
rules and regulations under paragraph (2) within 180 days of
the time that the Commodity Futures Trading Commission and the
Securities and Exchange Commission failed to adopt uniform
rules and regulations.
(4) Treatment of similar products.--In adopting joint rules
and regulations under this title, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
prescribe requirements to treat functionally or economically
similar products similarly.
(5) Treatment of dissimilar products.--Nothing in this
title shall be construed to require the Commodity Futures
Trading Commission and the Securities and Exchange Commission
to adopt joint rules that treat functionally or economically
different products identically.
(6) Joint interpretation.--Any interpretation of, or
guidance 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
if this title requires the Commodity Futures Trading Commission
and the Securities and Exchange Commission to issue joint
regulations to implement the provision.
SEC. 3102. JURISDICTION.
(a) Exclusive Jurisdiction.--The first sentence of section
2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is
amended--
(1) by striking ``(C) and (D)'' and inserting ``(C), (D),
and (G)'';
(2) by striking ``subsections (c) through (i)'' and
inserting ``subsections (c) and (f)''; and
(3) by striking ``involving contracts of sale'' and
inserting ``involving swaps or contracts of sale''.
(b) No Limitation.--Section 2(a)(1) of the Commodity Exchange Act
(7 U.S.C. 2(a)(1)) is amended by inserting after subparagraph (F) the
following:
``(G) Nothing contained in this paragraph shall
supersede or limit the jurisdiction conferred on the
Securities and Exchange Commission or other regulatory
authority by, or otherwise restrict the authority of
the Securities and Exchange Commission or other
regulatory authority under, the Over-the-Counter
Derivatives Markets Act of 2009, including with respect
to a security-based swap as described in section
1a(38)(C) of this Act.''.
(c) Additions.--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''.
SEC. 3103. CLEARING.
(a) Clearing Requirement.--
(1) Sections 2(d), 2(e), 2(g), and 2(h) of the Commodity
Exchange Act (7 U.S.C. 2(d), 2(e), 2(g), and 2(h)) are
repealed.
(2) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is
further amended by inserting after subsection (c) the
following:
``(d) Swaps.--Nothing in this Act (other than subsections
(a)(1)(A), (a)(1)(B), (f), and (j), sections 4a, 4b, 4b-1, 4c(a),
4c(b), 4o, 4r, 4s, 4t, 4u, 5b, 5c, 5h, 6(c), 6(d), 6c, 6d, 8, 8a, 9,
12(e)(2), 12(f), 13(a), 13(b), 21, and 22(a)(4) and such other
provisions of this Act as are applicable by their terms to registered
entities and 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) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is
further amended by inserting after subsection (i) the
following:
``(j) Clearing of Swaps.--
``(1) In general.--
``(A) Presumption of clearing.--A swap shall be
submitted for clearing if a derivatives clearing
organization that is registered under this Act will
accept the swap for clearing.
``(B) Open access.--The rules of a derivatives
clearing organization described in subparagraph (A)
shall--
``(i) prescribe that all swaps submitted to
the derivatives clearing organization with the
same terms and conditions are economically
equivalent and may be offset with each other
within the derivatives clearing organization;
and
``(ii) provide for non-discriminatory
clearing of a swap executed on or through the
rules of an unaffiliated designated contract
market or swap execution facility.
``(2) Commission approval.--
``(A) In general.--A derivatives clearing
organization shall submit to the Commission for prior
approval each swap, or any group, category, type, or
class of swaps, that it seeks to accept for clearing,
which submission the Commission shall make available to
the public.
``(B) Deadline.--The Commission shall take final
action on a request submitted pursuant to subparagraph
(A) not later than 90 days after submission of the
request, unless the derivatives clearing organization
submitting the request agrees to an extension of the
time limitation established under this subparagraph. A
request on which the Commission fails to take final
action within the time limitation established under
this subparagraph is deemed approved.
``(C) Approval.--The Commission shall approve,
unconditionally or subject to such terms and conditions
as the Commission determines to be appropriate, any
request submitted pursuant to subparagraph (A) if the
Commission finds that the request is consistent with
section 5b(c)(2).
``(D) Rules.--Not later than 180 days after the
date of the enactment of the Over-the-Counter
Derivatives Markets Act of 2009, the Commission shall
adopt rules for a derivatives clearing organization's
submission for approval, pursuant to this paragraph, of
a swap, or a group, category, type or class of swaps,
that it seeks to accept for clearing.
``(3) Stay of clearing requirement.--At any time after
issuance of an approval pursuant to paragraph (2):
``(A) Review process.--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
section 5b(c)(2); 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 180 days after the
date of the enactment of the Over-the-Counter
Derivatives Markets Act of 2009, 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.--The Commission and the
Securities and Exchange Commission shall have authority to
prescribe rules under this subsection, or issue interpretations
of such rules, as necessary to prevent evasions of this Act
provided that any such rules or interpretations must be issued
jointly to be effective.
``(5) Required reporting.--
``(A) In general.--All swap transactions that are
not accepted for clearing by any derivatives clearing
organization shall be reported to either a swap
repository described in section 21 or, if there is no
repository that would accept the swap, to the
Commission pursuant to section 4r within such time
period as the Commission may by rule or regulation
prescribe.
``(B) Authority of swap dealer to report.--
Counterparties may agree which counterparty will report
the swap transaction. In transactions where only 1
counterparty is a swap dealer, the swap dealer will
report the transaction.
``(6) Transition rules.--Rules adopted by the Commission
under this section shall provide for the reporting of data, as
follows:
``(A) Swaps that were entered into before the date
of enactment of the Over-the-Counter Derivatives
Markets Act of 2009 shall be reported to a registered
swap repository or the Commission no later than 180
days after the effective date of the Over-the-Counter
Derivatives Markets Act of 2009.
``(B) Swaps that were entered into on or after the
date of enactment of the Over-the-Counter Derivatives
Markets Act of 2009 shall be reported to a registered
swap repository or the Commission no later than the
later of--
``(i) 90 days after the effective date of
the Over-the-Counter Derivatives Markets Act of
2009; or
``(ii) such other time after entering into
the swap as the Commission may prescribe by
rule or regulation.
``(7) Trade execution.--
``(A) In general.--With respect to transactions
involving swaps subject to the clearing requirement of
paragraph (1) and where both counterparties are either
swap dealers or major swap participants, such
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 with the
Commission.
``(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.
``(C) Required reporting.--If the exception of
subparagraph (B) applies and there is no facility that
makes the swap available to trade, the counterparties
shall comply with any recordkeeping and transaction
reporting requirements as may be prescribed by the
Commission with respect to swaps subject to the
requirements of paragraph (1).
``(8) Exchange trading.--In adopting rules and regulations,
the Commission shall endeavor to eliminate unnecessary
impediments to the trading on boards of trade designated as
contract markets under section 5 of contracts, agreements or
transactions that would be security-based swaps but for the
trading of such contracts, agreements or transactions on such a
designated contract market.
``(9) Exceptions.--The requirements of paragraph (1) shall
not apply to a swap if--
``(A) no derivatives clearing organization
registered under this Act will accept the swap for
clearing; or
``(B) one of the counterparties to the swap is not
a swap dealer or major swap participant.
``(10) Exclusion.--Paragraph (1) shall not apply to a swap
1 party to which is not a swap dealer or major swap
participant, and which is entered into before the end of the
90-day period that begins with the effective date of this
paragraph.''.
(b) Derivatives Clearing Organizations.--
(1) Subsections (a) and (b) of section 5b of the Commodity
Exchange Act (7 U.S.C. 7a-1) are amended to read as follows:
``(a) Registration Requirement.--It shall be unlawful for a
derivatives clearing organization, 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 derivatives clearing organization described in section
1a(10) of this Act with respect to--
``(1) a contract of sale of a commodity for future delivery
(or option on such a contract) or option on a commodity, in
each case unless the contract or option is--
``(A) excluded from this Act by section
2(a)(1)(C)(i), 2(c), or 2(f); or
``(B) 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
``(2) a swap.
``(b) Voluntary Registration.--
``(1) Derivatives clearing organizations.--A person that
clears agreements, contracts, or transactions that are not
required to be cleared under this Act may register with the
Commission as a derivatives clearing organization.
``(2) Clearing agencies.--A derivatives clearing
organization may clear security-based swaps that are required
to be cleared by a person who is registered as a clearing
agency under the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.).''.
(2) Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-
1) is amended by adding at the end the following:
``(g) Required Registration for Banks and Clearing Agencies.--A
person that is required to be registered as a derivatives clearing
organization under this section shall register with the Commission
regardless of whether the person is also a bank or a clearing agency
registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(h) Harmonization of Rules.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act of 2009,
the Commission and the Securities and Exchange Commission shall jointly
adopt uniform rules governing persons that are registered as
derivatives clearing organizations for swaps under this subsection and
persons that are registered as clearing agencies for security-based
swaps under the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.).
``(i) Consultation.--The Commission and the Securities and Exchange
Commission shall consult with the appropriate Federal banking agencies
prior to adopting rules under this section with respect to swaps.
``(j) 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 finds
that such derivatives clearing organization 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 organization's home
country.
``(k) Designation of Compliance Officer.--
``(1) In general.--Each derivatives clearing organization
shall designate an individual to serve as a compliance officer.
``(2) Duties.--The compliance officer--
``(A) shall report directly to the board or to the
senior officer of the derivatives clearing
organization;
``(B) shall--
``(i) review compliance with the core
principles in section 5b(c)(2);
``(ii) in consultation with the board of
the derivatives clearing organization, a body
performing a function similar to that of a
board, or the senior officer of the derivatives
clearing organization, resolve any conflicts of
interest that may arise;
``(iii) be responsible for administering
the policies and procedures required to be
established pursuant to this section; and
``(iv) ensure compliance with commodity
laws and the rules and regulations issued
thereunder, including rules prescribed by the
Commission pursuant to this section; and
``(C) shall establish procedures for remediation of
noncompliance issues found during compliance office
reviews, lookbacks, internal or external audit
findings, self-reported errors, or through validated
complaints. Procedures will establish the handling,
management response, remediation, retesting, and
closing of noncompliant issues.
``(3) Annual reports required.--The compliance officer
shall annually prepare and sign a report on the compliance of
the derivatives clearing organization with the commodity laws
and its policies and procedures, including its code of ethics
and conflict of interest policies, in accordance with rules
prescribed by the Commission. Such compliance report shall
accompany the financial reports of the derivatives clearing
organization that are required to be furnished to the
Commission pursuant to this section and shall include a
certification that, under penalty of law, the report is
accurate and complete.''.
(3) Section 5b(c)(2) of the Commodity Exchange Act (7
U.S.C. 7a-1(c)(2)) is amended to read as follows:
``(2) Core principles for derivatives clearing
organizations.--To be registered and to maintain registration
as a derivatives clearing organization, a derivatives clearing
organization shall comply with the core principles specified in
subparagraphs (B) through (N) this paragraph. The Commission
may conform the core principles to reflect evolving United
States and international standards.''.
(4) Section 5b of the Commodity Exchange Act (7 U.S.C. 7a-
1) is further amended by adding after subsection (k), as added
by paragraph (2), the following:
``(l) Reporting.--
``(1) In general.--A derivatives clearing organization that
clears swaps shall provide to the Commission and any designated
swap repository all information determined by the Commission to
be necessary to perform its responsibilities under this Act.
The Commission shall adopt data collection and maintenance
requirements for swaps cleared by derivatives clearing
organizations that are comparable to the corresponding
requirements for swaps accepted by swap repositories and swaps
traded on swap execution facilities. A derivatives clearing
organization that clears security-based swap agreements (as
defined in section 3(a)(76) of the Securities Exchange Act of
1934) shall, upon request, make available to the Securities and
Exchange Commission all information (including information on a
real-time basis) relating to such security-based swap
agreements. Subject to section 8, the Commission shall share
such information, upon request, with the Board, the Securities
and Exchange Commission (with respect to swaps other than
security-based swap agreements), the appropriate Federal
banking agencies, the Financial Services Oversight Council, and
the Department of Justice or to other persons the Commission
deems appropriate, including foreign financial supervisors
(including foreign futures authorities), foreign central banks,
and foreign ministries.
``(2) Public information.--A derivatives clearing
organization that clears swaps shall provide to the Commission,
or its designee, such information as is required by, and in a
form and at a frequency to be determined by, the Commission, in
order to comply with the public reporting requirements
contained in section 8(j).''.
(5) Section 8(e) of the Commodity Exchange Act (7 U.S.C.
12(e)) is amended in the last sentence by adding ``central bank
and ministries'' after ``department'' each place it appears.
(c) Legal Certainty for Identified Banking Products.--
(1) Repeal.--Sections 402(d), 404, 407, 408(b), and
408(c)(2) of the Legal Certainty for Bank Products Act of 2000
(7 U.S.C. 27(d), 27b, 27e, 27f(b), and 27f(c)(2)) are repealed.
(2) Legal certainty.--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), no
provisions of the Commodity Exchange Act (7 U.S.C. 1 et seq.) shall
apply to, and the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall not exercise regulatory
authority under the Commodity Exchange Act with respect to, an
identified banking product.
``(b) Exception.--An appropriate Federal banking agency may except
an identified banking product or 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 swap in section 1a(35)
of the Commodity Exchange Act (7 U.S.C. 1a(35)) or security-
based swap in section 1a(38) of the Commodity Exchange Act (7
U.S.C. 1a(38)); 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) Additional Exception.--The exclusion in subsection (a) shall
not apply to an identified banking 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(35) of the
Commodity Exchange Act or security-based swap in section
3(a)(68) of the Securities and Exchange Act of 1934; and
``(3) has become known to the trade as a swap or security-
based swap, or 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.).''.
SEC. 3104. PUBLIC REPORTING OF AGGREGATE SWAP DATA.
Section 8 of the Commodity Exchange Act (7 U.S.C. 12) is amended by
adding after subsection (i) the following:
``(j) Public Reporting of Aggregate Swap Data.--
``(1) In general.--The Commission, or a person designated
by the Commission pursuant to paragraph (2), shall make
available to the public, in a manner that does not disclose the
business transactions and market positions of any person,
aggregate data on swap trading volumes and positions from the
sources set forth in paragraph (3).
``(2) Designee of the commission.--The Commission may
designate a derivatives clearing organization or a swap
repository to carry out the public reporting described in
paragraph (1).
``(3) Sources of information.--The sources of the
information to be publicly reported as described in paragraph
(1) are--
``(A) derivatives clearing organizations pursuant
to section 5b(k)(2);
``(B) swap repositories pursuant to section
21(c)(3); and
``(C) reports received by the Commission pursuant
to section 4r.''.
SEC. 3105. SWAP REPOSITORIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 20 the following:
``SEC. 21. SWAP REPOSITORIES.
``(a) Registration Requirement.--
``(1) 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
repository.
``(2) Inspection and examination.--Registered swap
repositories shall be subject to inspection and examination by
any representative of the Commission.
``(b) Standard Setting.--
``(1) Data identification.--The Commission shall prescribe
standards that specify the data elements for each swap that
shall be collected and maintained by each registered swap
repository.
``(2) Data collection and maintenance.--The Commission
shall prescribe data collection and data maintenance standards
for swap 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 that clear swaps.
``(c) Duties.--A swap repository shall--
``(1) accept data prescribed by the Commission for each
swap under subsection (b);
``(2) maintain such data in such form and manner and for
such period as may be required by the Commission;
``(3) provide to the Commission, or its designee, such
information as is required by, and in a form and at a frequency
to be determined by, the Commission, in order to comply with
the public reporting requirements contained in section 8(j);
and
``(4) make available, on a confidential basis pursuant to
section 8, all data obtained by the swap repository, including
individual counterparty trade and position data, to the
Commission, the appropriate Federal banking agencies, the
Financial Services Oversight Council, the Securities and
Exchange Commission, and the Department of Justice or to other
persons the Commission deems appropriate, including foreign
financial supervisors (including foreign futures authorities),
foreign central banks, and foreign ministries.
``(d) Required Registration for Security-based Swap Repositories.--
Any person that is required to be registered as a swap repository under
this section shall register with the Commission regardless of whether
that person also is registered with the Securities and Exchange
Commission as a security-based swap repository.
``(e) Harmonization of Rules.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act of 2009,
the Commission and the Securities and Exchange Commission shall jointly
adopt uniform rules governing persons that are registered under this
section and persons that are registered as security-based swap
repositories under the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.), including uniform rules that specify the data elements that
shall be collected and maintained by each repository.
``(f) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap repository from the requirements of this
section if the Commission finds that such swap repository 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 organization's home
country.''.
SEC. 3106. REPORTING AND RECORDKEEPING.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4q the following:
``SEC. 4R. REPORTING AND RECORDKEEPING FOR CERTAIN SWAPS.
``(a) In General.--Any person who enters into a swap and--
``(1) did not clear the swap in accordance with section
2(j)(1); and
``(2) did not have data regarding the swap accepted by a
swap repository in accordance with rules (including time
frames) adopted by the Commission under section 21,
shall meet the requirements in subsection (b).
``(b) Reports.--Any person described in subsection (a) shall--
``(1) make such reports in such form and manner and for
such period as the Commission shall prescribe by rule or
regulation regarding the swaps held by the person; and
``(2) keep books and records pertaining to the swaps held
by the person in such form and manner and for such period as
may be required by the Commission, which books and records
shall be open to inspection by any representative of the
Commission, an appropriate Federal banking agency, the
Securities and Exchange Commission, the Financial Services
Oversight Council, and the Department of Justice.
``(c) Identical Data.--In adopting rules under this section, the
Commission shall require persons described in subsection (a) to report
the same or a more comprehensive set of data than the Commission
requires swap repositories to collect under section 21.''.
SEC. 3107. 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 3106) the following:
``SEC. 4S. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP
PARTICIPANTS.
``(a) Registration.--
``(1) It shall be unlawful for any person to act as a swap
dealer unless such person is registered as a swap dealer with
the Commission.
``(2) It shall be unlawful for any person to act as a major
swap participant unless such person shall have 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.--The application shall be made in such form
and manner as prescribed by the Commission, giving any
information and facts as the Commission may deem necessary
concerning the business in which the applicant is or will be
engaged. Such person, when registered as a swap dealer or major
swap participant, shall continue to report and furnish to the
Commission such information pertaining to such person's
business as the Commission may require.
``(3) Expiration.--Each registration shall expire at such
time as the Commission may by rule or regulation prescribe.
``(4) Rules.--Except as provided in subsections (c), (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 adopted under this section shall
provide for the registration of swap dealers and major swap
participants no later than one year after the effective date of
the Over-the-Counter Derivatives Markets Act of 2009.
``(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 such swap dealer or major swap participant, if such
swap dealer or major swap participant knew, or in the exercise
of reasonable care should have known, of such 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 that person also is a
bank 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 that
person also is a bank or is registered with the Securities and
Exchange Commission as a major security-based swap participant.
``(d) Joint Rules.--
``(1) In general.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act
of 2009, the Commission and the Securities and Exchange
Commission shall jointly adopt uniform rules for persons that
are registered as swap dealers or major swap participants under
this section and persons that are registered as security-based
swap dealers or major security-based swap participants under
the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(2) Exception for prudential requirements.--The
Commission and the Securities and Exchange Commission shall not
prescribe rules imposing prudential requirements (including
activity restrictions) on swap dealers, major swap
participants, security-based swap dealers, or major security-
based swap participants for which there is a Prudential
Regulator. This provision shall not be construed as limiting
the authority of the Commission and the Securities and Exchange
Commission to prescribe appropriate business conduct,
reporting, and recordkeeping requirements to protect investors.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Bank swap dealers and major swap
participants.--Each registered swap dealer and major
swap participant for which there is a Prudential
Regulator shall meet such minimum capital requirements
and minimum margin requirements as the Prudential
Regulators shall by rule or regulation jointly
prescribe to help ensure the safety and soundness of
the swap dealer or major swap participant.
``(B) Nonbank swap dealers and major swap
participants.--Each registered swap dealer and major
swap participant for which there is not a Prudential
Regulator shall meet such minimum capital requirements
and minimum margin requirements as the Commission and
the Securities and Exchange Commission shall by rule or
regulation jointly prescribe to help ensure the safety
and soundness of the swap dealer or major swap
participant.
``(2) Joint rules.--
``(A) Bank swap dealers and major swap
participants.--Within 180 days of the enactment of the
Over-the-Counter Derivatives Markets Act of 2009, the
Prudential Regulators, in consultation with the
Commission and the Securities and Exchange Commission,
shall jointly adopt rules imposing capital and margin
requirements under this subsection for swap dealers and
major swap participants.
``(B) Nonbank swap dealers and major swap
participants.--Within 180 days of the enactment of the
Over-the-Counter Derivatives Markets Act of 2009, the
Commission and the Securities and Exchange Commission,
in consultation with the Prudential Regulators, shall
jointly adopt rules imposing capital and margin
requirements under this subsection for swap dealers and
major swap participants for which there is no
Prudential Regulator.
``(3) Capital.--
``(A) Bank swap dealers and major swap
participants.--In setting capital requirements under
this subsection, the Prudential Regulators shall
impose:
``(i) a capital requirement that is greater
than zero for swaps that are cleared by a
derivatives clearing organization; and
``(ii) to offset the greater risk to the
swap dealer or major swap participant and to
the financial system arising from the use of
swaps that are not centrally cleared, higher
capital requirements for swaps that are not
cleared by a registered derivatives clearing
organization than for swaps that are centrally
cleared.
``(B) Exclusion.--Subparagraph (A) shall not apply
to a swap 1 party to which is not a swap dealer or
major swap participant, and which is entered into
before the end of the 90-day period that begins with
the effective date of this subparagraph.
``(C) Nonbank swap dealers and major swap
participants.--Capital requirements set by the
Commission and the Securities and Exchange Commission
under this subsection shall be as strict as or stricter
than the capital requirements set by the Prudential
Regulators under this subsection.
``(D) Bank holding companies.--Capital requirements
set by the Board for swaps of bank holding companies on
a consolidated basis shall be as strict as or stricter
than the capital requirements set by the Prudential
Regulators under this subsection.
``(E) 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 it is subject.
``(4) Margin.--
``(A) Bank swap dealers and major swap
participants.--The Prudential Regulators shall impose
margin requirements under this subsection on all swaps
that are not cleared by a registered derivatives
clearing organization.
``(B) Non-swap dealers or major swap
participants.--The Prudential Regulators may, but are
not required to, impose margin requirements with
respect to swaps in which one of the counterparties is
neither a swap dealer, major swap participant,
security-based swap dealer nor a major security-based
swap participant. Any such margin requirements for
swaps shall provide for the use of non-cash collateral.
``(C) Exclusion.--Subparagraph (B) shall not apply
to a swap 1 party to which is not a swap dealer or
major swap participant, and which is entered into
before the end of the 90-day period that begins with
the effective date of this subparagraph.
``(D) Nonbank swap dealers and major swap
participants.--Margin requirements for swaps set by the
Commission and the Securities and Exchange Commission
under this subsection shall be as strict as or stricter
than margin requirements for swaps set by the
Prudential Regulators.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered swap dealer and major
swap participant--
``(A) shall make such reports as are prescribed by
the Commission by rule or regulation regarding the
transactions and positions and financial condition of
such person;
``(B) for which--
``(i) there is a Prudential Regulator shall
keep books and records of all activities
related to its 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;
``(ii) 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 such books and records open to
inspection and examination by any representative of the
Commission; and
``(D) shall keep any such books and records
relating to transactions in swaps based on one or more
securities open to inspection and examination by the
Securities and Exchange Commission.
``(2) Rules.--Within 365 days of the enactment of the Over-
the-Counter Derivatives Markets Act of 2009, the Commission and
the Securities and Exchange Commission, in consultation with
the appropriate Federal banking agencies, shall jointly adopt
rules governing reporting and recordkeeping for swap dealers,
major swap participants, security-based swap dealers, and major
security-based swap participants.
``(g) Daily Trading Records.--
``(1) In general.--Each registered swap dealer and major
swap participant shall maintain daily trading records of its
swaps and all related records (including related cash or
forward transactions) and recorded communications including but
not limited to electronic mail, instant messages, and
recordings of telephone calls, for such period as may be
prescribed by the Commission by rule or regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall
prescribe by rule or regulation.
``(3) Customer records.--Each registered swap dealer and
major swap participant shall maintain daily trading records for
each customer or counterparty in such manner and form as to be
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.--Within 365 days of the enactment of the Over-
the-Counter Derivatives Markets Act of 2009, the Commission and
the Securities and Exchange Commission, in consultation with
the appropriate Federal banking agencies, shall jointly adopt
rules governing daily trading records for swap dealers, major
swap participants, security-based swap dealers, and major
security-based swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered swap dealer and major
swap participant shall conform with business conduct standards
as may be prescribed by the Commission by rule or regulation
addressing--
``(A) fraud, manipulation, and other abusive
practices involving swaps (including swaps that are
offered but not entered into);
``(B) diligent supervision of its business as a
swap dealer;
``(C) adherence to all applicable position limits;
``(D) the prevention of self-dealing, by limiting
the extent to which such a swap dealer or major swap
participant may conduct business with a derivatives
clearing organization, a board of trade, or an
alternative swap execution facility that clears or
trades swaps and in which such a swap dealer or major
swap participant has a material debt or equity
investment; and
``(D) such other matters as the Commission shall
determine to be necessary or appropriate.
``(2) Business conduct requirements.--Business conduct
requirements adopted by the Commission shall--
``(A) establish the standard of care 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) for cleared swaps, upon the request
of the counterparty, the daily mark from the
appropriate clearinghouse and for non-cleared
swaps, upon the request of the counterparty,
the daily mark of the swap dealer or major swap
participant; and
``(iii) any other material incentives or
conflicts of interest that the swap dealer or
major swap participant may have in connection
with the swap; and
``(C) establish such other standards and
requirements as the Commission may determine are
necessary or appropriate in the public interest, for
the protection of investors, or otherwise in
furtherance of the purposes of this Act.
``(3) Rules.--The Commission and the Securities and
Exchange Commission, in consultation with the appropriate
Federal banking agencies, shall jointly prescribe rules under
this subsection governing business conduct standards for swap
dealers, major swap participants, security-based swap dealers,
and major security-based swap participants within 365 days of
the enactment of the Over-the-Counter Derivatives Markets Act
of 2009.
``(i) Documentation and Back Office Standards.--
``(1) In general.--Each registered swap dealer and major
swap participant shall conform with standards, as may be
prescribed by the Commission by rule or regulation, addressing
timely and accurate confirmation, processing, netting,
documentation, and valuation of all swaps.
``(2) Rules.--Within 365 days of the enactment of the Over-
the-Counter Derivatives Markets Act of 2009, the Commission and
the Securities and Exchange Commission, in consultation with
the appropriate Federal banking agencies, shall adopt rules
governing documentation and back office standards for swap
dealers, major swap participants, security-based swap dealers,
and major security-based swap participants.
``(j) Dealer Responsibilities.--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) Disclosure of general information.--The swap dealer
or major swap participant shall disclose to the Commission and
to the Prudential Regulator for such 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.
``(3) 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 such swap dealer or
major swap participant, as applicable, upon request.
``(4) 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 assure 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 those whose
involvement in trading or clearing activities might
potentially bias their judgment or supervision; and
``(B) address such other issues as the Commission
determines appropriate.
``(5) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the swap
dealer or major swap participant shall avoid--
``(A) adopting any processes or taking any actions
that result in any unreasonable restraints of trade; or
``(B) imposing any material anticompetitive burden
on trading.
``(k) Rules.--The Commission, the Securities and Exchange
Commission, and the Prudential Regulators shall consult with each other
prior to adopting any rules under the Over-the-Counter Derivatives
Markets Act of 2009.
``(l) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap dealer or major swap participant from the
prudential requirements of the Over-the-Counter Derivatives Markets Act
of 2009 if the Commission finds that such swap dealer or major swap
participant 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 organization's home country.
``(m) Exemptive Authority.--
``(1) In general.--The Commission, by rule or regulation,
may conditionally or unconditionally exempt any person,
derivative, or transaction, or any class or classes of persons,
derivatives, or transactions, from any provision of this Act
that was added by an amendment in the Over-the-Counter
Derivatives Markets Act of 2009, to the extent that such
exemption is necessary or appropriate in the public interest,
and is consistent with the purposes of such Act.
``(2) Procedures.--The Commission shall, by rule or
regulation, determine the procedures under which an exemptive
order under this subsection shall be granted and may, in its
sole discretion, decline to entertain any application for an
order of exemption under this subsection.''.
SEC. 3108. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SWAP
TRANSACTIONS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is further amended
by inserting after section 4s the following:
``SEC. 4T. SEGREGATION OF ASSETS HELD AS COLLATERAL IN OVER-THE-COUNTER
SWAP TRANSACTIONS.
``(a) Segregation.--At the request of a swap counterparty who
provides funds or other property to a swap dealer as variation or
initial margin or collateral to secure the obligations of the
counterparty under a swap between the counterparty and the swap dealer
that is not submitted for clearing to a derivatives clearing
organization, the swap dealer shall segregate the funds or other
property for the benefit of the counterparty, and maintain the
variation or initial margin or collateral in an account which is
carried by an independent third-party custodian and designated as a
segregated account for the counterparty, in accordance with such rules
and regulations as the Commission or Prudential Regulator may
prescribe. If a swap counterparty is a swap dealer or major swap
participant who owns more than 20 percent of, or has more than 50
percent representation on the board of directors of, a custodian, the
custodian shall not be considered independent from the swap
counterparties for purposes of the preceding sentence. This subsection
shall not be interpreted to preclude commercial arrangements regarding
the investment of the segregated funds or other property and the
related allocation of gains and losses resulting from any such
investment.
``(b) Back Office Audit Reporting.--If a swap dealer does not
segregate funds at the request of a swap counterparty in accordance
with subsection (a), the swap dealer shall report to its counterparty
on a quarterly basis that its back office procedures relating to margin
and collateral requirements are in compliance with the agreement of the
counterparties.''.
SEC. 3109. CONFLICTS OF INTEREST.
Section 4d of the Commodity Exchange Act (7 U.S.C. 6d) is amended
by--
(1) redesignating subsection (c) as subsection (d); and
(2) 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
assure 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
those whose involvement in trading or clearing activities might
potentially bias their judgment or supervision; and
``(2) address such other issues as the Commission
determines appropriate.''.
SEC. 3110. SWAP EXECUTION FACILITIES.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 5g the following:
``SEC. 5H. SWAP EXECUTION FACILITIES.
``(a) Registration.--
``(1) In general.--
``(A) No person may operate a swap execution
facility unless the facility is registered under this
section.
``(B) The term `swap execution facility' means an
entity that facilitates the execution of swaps between
two persons through any means of interstate commerce
but which is not a designated contract market.
``(2) Dual registration.--Any person that is required to be
registered as a swap execution facility under this section
shall register with the Commission regardless of whether that
person also is registered with the Securities and Exchange
Commission as a swap execution facility.
``(b) Requirements for Trading.--A swap execution facility that is
registered under subsection (a) may trade any swap.
``(c) Trading 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 trading on the contract market and the swap
execution facility, identify whether the electronic trading is taking
place on the contract market or the swap execution facility.
``(d) Criteria for Registration.--
``(1) In general.--To be registered as a swap execution
facility, the facility shall be required to demonstrate to the
Commission that it meets the criteria specified herein.
``(2) Deterrence of abuses.--The swap execution facility
shall establish and enforce trading and participation rules
that will deter abuses and have the capacity to detect,
investigate, and enforce those rules, including means to--
``(A) obtain information necessary to perform the
functions required under this section; or
``(B) use means to--
``(i) provide market participants with
impartial access to the market; and
``(ii) capture information that may be used
in establishing whether rule violations have
occurred.
``(3) Trading procedures.--The swap execution facility
shall establish and enforce rules or terms and conditions
defining, or specifications detailing, trading procedures to be
used in entering and executing orders traded on or through its
facilities.
``(4) 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 its facilities, including the clearance
and settlement of the swaps pursuant to section 2(j)(1).
``(e) Core Principles for Swap Execution Facilities.--
``(1) In general.--To maintain its registration as a swap
execution facility, the facility shall comply with the core
principles specified in this subsection and any requirement
that the Commission may impose by rule or regulation pursuant
to section 8a(5). Except where the Commission determines
otherwise by rule or regulation, the facility shall have
reasonable discretion in establishing the manner in which it
complies with these core principles.
``(2) Compliance with rules.--The swap execution facility
shall monitor and enforce compliance with any of the rules of
the facility, including the terms and conditions of the swaps
traded on or through the facility and any limitations on access
to the facility.
``(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.--The swap execution facility
shall 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
subsection;
``(B) provide the information to the Commission
upon request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(6) Emergency authority.--The swap execution facility
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission,
where necessary and appropriate, including the authority to
liquidate or transfer open positions in any swap or to suspend
or curtail trading in a swap.
``(7) Timely publication of trading information.--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.
``(8) Recordkeeping and reporting.--The swap execution
facility shall maintain records of all activities related 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 report to the Commission all information
determined by the Commission to be necessary or appropriate for
the Commission to perform its responsibilities under this Act
in a form and manner acceptable to the Commission. The swap
execution facility shall, upon request, make available to the
Securities and Exchange Commission all information (including
information on a real-time basis) relating to transactions in
security-based swap agreements (as defined in section 3(a)(76)
of the Securities Exchange Act of 1934). 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
repositories.
``(9) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the swap
execution facility shall avoid--
``(A) adopting any rules or taking any actions that
result in any unreasonable restraints of trade; or
``(B) imposing any material anticompetitive burden
on trading on the swap execution facility.
``(10) Conflicts of interest.--
``(A) The swap execution facility shall establish
and enforce rules to minimize conflicts of interest in
its decision-making process, and establish a process
for resolving any such conflicts of interest.
``(B) The rules of the swap execution facility
shall provide that a restricted owner shall not be
permitted directly or indirectly to acquire beneficial
ownership of interests in the facility or in persons
with a controlling interest in the facility, to the
extent that such an acquisition would result in
restricted owners controlling more than 20 percent of
the votes entitled to be cast on any matter by the
holders of the ownership interests.
``(C) The rules of the swap execution facility
shall provide that a majority of the directors of the
facility shall not be associated with a restricted
owner.
``(11) Designation of compliance officer.--
``(A) In general.--Each swap execution facility
shall designate an individual to serve as a compliance
officer.
``(B) Duties.--The compliance officer shall--
``(i) report directly to the board or to
the senior officer of the facility;
``(ii) shall--
``(I) review compliance with the
core principles in this subsection;
``(II) 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;
``(III) be responsible for
administering the policies and
procedures required to be established
pursuant to this section; and
``(IV) ensure compliance with
commodity laws and the rules and
regulations issued thereunder,
including rules prescribed by the
Commission pursuant to this section;
and
``(iii) establish procedures for
remediation of non-compliance issues found
during compliance office reviews, lookbacks,
internal or external audit findings, self-
reported errors, or through validated
complaints. Procedures will establish the
handling, management response, remediation, re-
testing, and closing of non-compliant issues.
``(C) Annual reports required.--The compliance
officer shall annually prepare and sign a report on the
compliance of the facility with the commodity laws and
its policies and procedures, including its code of
ethics and conflict of interest policies, in accordance
with rules prescribed by the Commission. Such
compliance report shall accompany the financial reports
of the facility that are required to be furnished to
the Commission pursuant to this section and shall
include a certification that, under penalty of law, the
report is accurate and complete.
``(f) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap execution facility from registration under this
section if the Commission finds that such 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 organization's home
country.
``(g) Harmonization of Rules.--Within 180 days of the enactment of
the Over-the-Counter Derivatives Markets Act of 2009, the Commission
and the Securities and Exchange Commission shall jointly prescribe
rules governing the regulation of swap execution facilities under this
section and section 3B of the Securities Exchange Act of 1934 (15
U.S.C. 78c-2).''.
SEC. 3111. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND EXEMPT
BOARDS OF TRADE.
Sections 5a and 5d of the Commodity Exchange Act (7 U.S.C. 7 and
7a-3) are repealed.
SEC. 3112. DESIGNATED CONTRACT MARKETS.
(a) Section 5(d) of the Commodity Exchange Act (7 U.S.C. 7(d)) is
amended by striking paragraph (9) and inserting the following:
``(9) Execution of transactions.--
``(A) 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 board of trade's
centralized market.
``(B) The rules 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.''.
(b) Section 5(d) of the Commodity Exchange Act (7 U.S.C. 7(d)) is
amended by striking paragraph (15) and inserting the following:
``(15) Conflicts of interest.--
``(A) The board of trade shall establish and
enforce rules to minimize conflicts of interest in the
decisionmaking process of the contract market, and
establish a process for resolving any such conflicts of
interest.
``(B) The rules of a board of trade that trades
swaps shall provide that a restricted owner shall not
be permitted directly or indirectly to acquire
beneficial ownership of interests in the board of trade
or in persons with a controlling interest in the board
of trade, to the extent that such an acquisition would
result in restricted owners controlling more than 20
percent of the votes entitled to be cast on any matter
by the holders of the ownership interests.
``(C) The rules of a board of trade that trades
swaps shall provide that a majority of the directors of
the board of trade shall not be associated with a
restricted owner.''.
(c) Section 5(d) of the Commodity Exchange Act (7 U.S.C. 7(d)) is
amended by adding after paragraph (18) the following:
``(19) Financial resources.--The board of trade shall
demonstrate that it has adequate financial, operational, and
managerial resources to discharge the responsibilities of a
contract market. For the board of trade's financial resources
to be considered adequate, their value shall exceed the total
amount that would enable the contract market to cover its
operating costs for a period of one year, calculated on a
rolling basis.
``(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 give 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 board of trade's
responsibilities and obligations; and
``(C) periodically conduct tests to verify that
back-up resources are sufficient to ensure continued
order processing and trade matching, price reporting,
market surveillance, and maintenance of a comprehensive
and accurate audit trail.''.
SEC. 3113. POSITION LIMITS.
(a) Section 4a(a) of the Commodity Exchange Act (7 U.S.C. 6a(a)) is
amended by--
(1) inserting ``(1)'' after ``(a)'';
(2) striking ``on electronic trading facilities with
respect to a significant price discovery contract'' in the
first sentence and inserting ``swaps that perform or affect a
significant price discovery function with respect to regulated
markets'';
(3) inserting ``, including any group or class of
traders,'' in the second sentence after ``held by any person'';
(4) striking ``on an electronic trading facility with
respect to a significant price discovery contract,'' in the
second sentence and inserting ``swaps that perform or affect a
significant price discovery function with respect to regulated
markets,''; and
(5) inserting at the end the following:
``(2) Aggregate position limits.--The Commission may, 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) 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 markets.
``(3) 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.
``(4) 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, or any
transaction or class of transactions from any requirement it
may establish under this section with respect to position
limits.''.
(b) 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 electronic trading facility''
and inserting ``or swap execution facility''.
SEC. 3114. ENHANCED AUTHORITY OVER REGISTERED ENTITIES.
(a) Section 5(d)(1) of the Commodity Exchange Act (7 U.S.C.
7(d)(1)) is amended by striking ``The board of trade shall have'' and
inserting ``Except where the Commission otherwise determines by rule or
regulation pursuant to section 8a(5), the board of trade shall have''.
(b) Section 5c(c) of the Commodity Exchange Act (7 U.S.C. 7a-2(c))
is amended to read as follows:
``(c) New Contracts, New Rules, and Rule Amendments.--
``(1) In general.--Subject to paragraph (2), 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) 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 under subparagraph (A) 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 (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 for
which there is 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.
``(3) Approval.--The Commission shall approve any such new
contract or instrument, new rule, or rule amendment unless the
Commission finds that the new contract or instrument, new rule,
or rule amendment would violate this Act.''.
SEC. 3115. FOREIGN BOARDS OF TRADE.
(a) Section 4(b) of the Commodity Exchange Act (7 U.S.C. 6(b)) is
amended by striking ``No rule or regulation'' and inserting ``Except as
provided in paragraphs (1) and (2), no rule or regulation''.
(b) Section 4(b) of the Commodity Exchange Act (7 U.S.C. 6(b)) is
further amended by inserting before ``The Commission'' the following:
``(1) 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 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.
``(2) It shall be unlawful for 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--
``(A) 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
``(B) 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--
``(I) the information that the foreign
board of trade will make publicly available;
``(II) the position limits that the foreign
board of trade or foreign futures authority
will adopt and enforce;
``(III) 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
``(IV) 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 with information
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.
``(3) Paragraphs (1) and (2) shall not be effective with respect to
any foreign board of trade to which the Commission has granted direct
access permission before the date of the enactment of this subsection
until the date that is 180 days after such date of enactment.
``(4)''.
(c) Liability of Registered Persons Trading on a Foreign Board of
Trade.--
(1) Section 4(a) of the Commodity Exchange Act (7. U.S.C.
6(a)) is amended by inserting ``or by subsection (f)'' after
``Unless exempted by the Commission pursuant to subsection
(c)''; and
(2) Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is
further amended by adding at the end the following:
``(f) 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 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 has complied with subsections (b)(1) and (b)(2).''.
(d) Contract Enforcement for Foreign Futures Contracts.--Section
22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) is amended by
adding at the end the following:
``(5) 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. 3116. LEGAL CERTAINTY FOR SWAPS.
Section 22(a)(4) of the Commodity Exchange Act (7 U.S.C. 25(a)(4))
is amended to read as follows:
``(4) Contract enforcement between eligible
counterparties.--
``(A) No hybrid instrument sold to any investor
shall be void, voidable, or unenforceable, and no party
to such hybrid instrument shall be entitled to rescind,
or recover any payment made with respect to, such a
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) 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 thereto shall be entitled to rescind, or
recover any payment made with respect to, such
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 to meet the definition of a swap set forth
in section 1a or to be cleared pursuant to section
2(j)(1).''.
SEC. 3117. MULTILATERAL CLEARING ORGANIZATIONS.
(a) Section 408(2)(C) of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4421(2)(C)) is amended by striking
``section 2(c), 2(d), 2(f), or 2(g) of such Act, or exempted under
section 2(h) or 4(c) of such Act'' and inserting ``section 2(c) or 2(f)
of such Act''.
(b) Section 408 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4421) is further amended by
inserting at the end the following:
``(4) The term `over-the-counter derivative instrument'
does not include a swap or a security-based swap as defined in
sections 1a(35) and 1a(38) of the Commodity Exchange Act (7
U.S.C. 1a(35) and 1a(38)).''.
SEC. 3118. PRIMARY ENFORCEMENT AUTHORITY.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
adding the following new section after section 4b:
``SEC. 4B-1. PRIMARY ENFORCEMENT AUTHORITY.
``(a) CFTC.--Except as provided in subsections (b), (c), and (d),
the Commission shall have primary authority to enforce the provisions
of Subtitle A of the Over-the-Counter Derivatives Markets Act of 2009
with respect to any person.
``(b) Prudential Regulators.--The Prudential Regulators shall have
exclusive authority to enforce the provisions of section 4s(e) and
other prudential requirements of this Act with respect to banks, and
branches or agencies of foreign banks that are swap dealers or major
swap participants.
``(c) Referral.--If the Prudential Regulator for a swap dealer or
major swap participant has cause to believe that such swap dealer or
major swap participant may have engaged in conduct that constitutes a
violation of the nonprudential requirements of section 4s or rules
adopted by the Commission thereunder, that Prudential Regulator may
recommend in writing to the Commission that the Commission initiate an
enforcement proceeding as authorized under this Act. The recommendation
shall be accompanied by a written explanation of the concerns giving
rise to the recommendation.
``(d) Backstop Enforcement Authority.--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 recommendation
under subsection (c), the Prudential Regulator may initiate an
enforcement proceeding as permitted under Federal law.''.
SEC. 3119. ENFORCEMENT.
(a) Section 4b(a)(2) of the Commodity Exchange Act (7 U.S.C.
6b(a)(2)) is amended by striking ``or other agreement, contract, or
transaction subject to paragraphs (1) and (2) of section 5a(g),'' and
inserting ``or swap,''.
(b) Section 4b(b) of the Commodity Exchange Act (7 U.S.C. 6b(b)) is
amended by striking ``or other agreement, contract or transaction
subject to paragraphs (1) and (2) of section 5a(g),'' and inserting
``or swap,''.
(c) Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
amended by inserting ``or swap'' before ``if the transaction is used or
may be used''.
(d) Section 9(a)(2) of the Commodity Exchange Act (7 U.S.C.
13(a)(2)) is amended by inserting ``or of any swap,'' before ``or to
corner''.
(e) Section 9(a)(4) of the Commodity Exchange Act (7 U.S.C.
13(a)(4)) is amended by inserting ``swap repository,'' before ``or
futures association''.
(f) Section 9(e)(1) of the Commodity Exchange Act (7 U.S.C.
13(e)(1)) is amended by inserting ``swap repository,'' before ``or
registered futures association'' and by inserting ``, or swaps,''
before ``on the basis''.
(g) Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C.
1818(b)) is amended by redesignating paragraphs (6) through (10) as
paragraphs (7) through (11), respectively, and by inserting after
paragraph (5) the following:
``(6) This section shall apply to any swap dealer, major
swap participant, security-based swap dealer, major security-
based swap participant, derivatives clearing organization, swap
repository or swap execution facility, whether or not it is an
insured depository institution, for which the Board, the
Corporation, or the Office of the Comptroller of the Currency
is the appropriate Federal banking agency or Prudential
Regulator for purposes of the Over-the-Counter Derivatives
Markets Act of 2009.''.
SEC. 3120. RETAIL COMMODITY TRANSACTIONS.
Section 2(c) of the Commodity Exchange Act (7 U.S.C. 2(c)) is
amended--
(1) in paragraph (1), by striking ``(to the extent provided
in section 5a(g)), 5b, 5d, or 12(e)(2)(B))'' and inserting ``,
5b, or 12(e)(2)(B))'';
(2) in paragraph (2), by inserting after subparagraph (C)
the following:
``(D) Retail commodity transactions.--
``(i) 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) Clause (i) 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 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 their line of business;
``(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) Sections 4(a), 4(b) and 4b shall
apply to any agreement, contract or transaction
described in clause (i), that is not excluded
from clause (i) by clause (ii), as if the
agreement, contract, or transaction were a
contract of sale of a commodity for future
delivery.
``(iv) This subparagraph shall not be
construed to limit any jurisdiction that the
Commission may otherwise have under any other
provision of this Act over an agreement,
contract, or transaction that is a contract of
sale of a commodity for future delivery.
``(v) This subparagraph shall not be
construed to limit any jurisdiction that the
Commission or the Securities and Exchange
Commission may otherwise have under any other
provisions of this Act with respect to security
futures products and persons effecting
transactions in security futures products.
``(vi) For the purposes of this
subparagraph, an agricultural producer, packer,
or handler shall be considered an eligible
commercial entity for any agreement, contract,
or transaction for a commodity in connection
with its line of business.''.
SEC. 3121. LARGE SWAP TRADER REPORTING.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
adding after section 4t (as added by section 3108) the following:
``SEC. 4U. LARGE SWAP TRADER REPORTING.
``(a) It shall be unlawful for any person to enter into any swap
that performs or affects a significant price discovery function with
respect to regulated markets if--
``(1) such person shall directly or indirectly enter into
such swaps during any one day in an amount equal to or in
excess of such amount as shall be fixed from time to time by
the Commission; and
``(2) such person shall directly or indirectly have or
obtain a position in such swaps equal to or in excess of such
amount as shall be fixed from time to time by the Commission,
unless such person files or causes to be filed with the properly
designated officer of the Commission such reports regarding any
transactions or positions described in paragraphs (1) and (2) as the
Commission may by rule or regulation require and unless, in accordance
with the rules and regulations of the Commission, such person shall
keep 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 board of trade, and of cash or spot transactions in, inventories
of, and purchase and sale commitments of, such a commodity.
``(b) Such books and records shall show complete details concerning
all transactions and positions as the Commission may by rule or
regulation prescribe.
``(c) Such books and records shall be open at all times to
inspection and examination by any representative of the Commission.
``(d) Any such books and records relating to transactions in
security-based swap agreements (as defined in section 3(a)(76) of the
Securities Exchange Act of 1934) shall be open at all times to
inspection and examination by the Securities and Exchange Commission.
``(e) For the purpose of this section, the swaps, futures and cash
or spot transactions and positions of any person shall include such
transactions and positions of any persons directly or indirectly
controlled by such person.
``(f) In making a determination whether a swap performs or affects
a significant price discovery function with respect to regulated
markets, the Commission shall consider the factors set forth in section
4a(a)(3).''.
SEC. 3122. AUTHORITY TO BAN ABUSIVE SWAPS.
The Commodity Futures Trading Commission and the Securities and
Exchange Commission may, by rule or order, jointly collect information
as may be necessary concerning the markets for any types of swap (as
defined in section 1a(35) of the Commodity Exchange Act) or security-
based swap (as defined in section 1a(38) of the such Act) and jointly
issue a report with respect to any types of swaps or security-based
swaps which the Commodity Futures Trading Commission and the Securities
and Exchange Commission find are detrimental to the stability of a
financial market or of participants in a financial market.
SEC. 3123. INTERNATIONAL HARMONIZATION.
In order to promote effective and consistent global regulation of
swaps, the Securities and Exchange Commission, the Commodity Futures
Trading Commission, the Prudential Regulators (as defined in section
1a(43) of the Commodity Exchange Act), and the financial stability
regulator, shall consult and coordinate with foreign regulatory
authorities on the establishment of consistent international standards
with respect to the regulation of swaps, 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
and swap counterparties.
SEC. 3124. AUTHORITY TO BAN ACCESS TO THE UNITED STATES FINANCIAL
SYSTEM.
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 U.S. financial system, either Commission, in
consultation with the Secretary of the Treasury, may prohibit an entity
domiciled in that country from participating in the United States in
any swap or security-based swap activities.
SEC. 3125. OTHER AUTHORITY.
Unless otherwise provided by its terms, this title does not divest
any appropriate Federal banking agency, the Commission, the Securities
and Exchange Commission, or other Federal or State agency, of any
authority derived from any other applicable law.
SEC. 3126. ANTITRUST.
Nothing in the amendments made by this title shall be construed to
modify, impair, or supersede the operation of any of the antitrust
laws. For purposes of this subtitle, the term ``antitrust laws'' has
the same meaning given such term 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.
SEC. 3127. EFFECTIVE DATE.
This subtitle is effective 270 days after the date of enactment.
Subtitle B--Regulation of Security-Based Swap Markets
SEC. 3201. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)) is amended--
(1) in paragraph (5)(A) and (B), by inserting ``(but not
security-based swaps, other than security-based swaps with or
for persons that are not eligible contract participants)''
after ``securities'' in each place it appears;
(2) in paragraph (10) by inserting ``security-based swaps''
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) by striking ``or government securities dealer''
and inserting ``government securities dealer, security-
based swap dealer or major security-based swap
participant'' in subparagraph (B)(i)(I);
(B) by inserting ``security-based swap dealer,
major security-based swap participant,'' after
``government securities dealer,'' in subparagraph
(B)(i)(II);
(C) by striking ``or government securities dealer''
and inserting ``government securities dealer, security-
based swap dealer or major security-based swap
participant'' in subparagraph (C); and
(D) by inserting ``security-based swap dealer,
major security-based swap participant,'' after
``government securities dealer,'' in subparagraph (D);
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(13)
of the Commodity Exchange Act (7 U.S.C. 1a(13)).
``(66) Major swap participant.--The term `major swap
participant' has the same meaning as in section 1a(40) of the
Commodity Exchange Act (7 U.S.C. 1a(40)).
``(67) Major security-based swap participant.--The term
`major security-based swap participant' has the same meaning as
in section 1a(41) of the Commodity Exchange Act (7 U.S.C.
1a(41)).
``(68) Security-based swap.--The term `security-based swap'
has the same meaning as in section 1a(38) of the Commodity
Exchange Act (7 U.S.C. 1a(38)).
``(69) Swap.--The term `swap' has the same meaning as in
section 1a(35) of the Commodity Exchange Act (7 U.S.C. 1a(35)).
``(70) Person associated with a security-based swap dealer
or major security-based swap participant.--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' has
the same meaning as in section 1a(48) of the Commodity Exchange
Act (7 U.S.C. 1a(48)).
``(71) Security-based swap dealer.--The term `security-
based swap dealer' has the same meaning as in section 1a(44) of
the Commodity Exchange Act (7 U.S.C. 1a(44)).
``(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(43) of the
Commodity Exchange Act (7 U.S.C. 1a(43)).
``(75) Swap dealer.--The term `swap dealer' has the same
meaning as in section 1a(39) of the Commodity Exchange Act (7
U.S.C. 1a(39)).
``(76) Security-based swap agreement.--
``(A) In general.--For purposes of sections 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.
``(77) Restricted owner.--The term `restricted owner' has
the same meaning as in section 1a(51) of the Commodity Exchange
Act.''.
SEC. 3202. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-BASED SWAPS.
(a) Repeal of Law.--Section 206B of the Gramm-Leach-Bliley Act (15
U.S.C. 78c note) is repealed.
(b) Conforming Amendments to the Securities Act of 1933.--
(1) Section 2A(b) of the Securities Act of 1933 (15 U.S.C.
77b-1) is amended by striking ``(as defined in section 206B of
the Gramm-Leach-Bliley Act)'' each place that such term
appears.
(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 ``206B of the Gramm-Leach-
Bliley Act'' and inserting ``3(a)(76) of the
Securities Exchange Act of 1934''; and
(B) in subsection (d), by striking ``206B of the
Gramm-Leach-Bliley Act'' and inserting ``3(a)(76) of
the Securities Exchange Act of 1934''.
(c) Conforming Amendments to the Securities Exchange Act of 1934.--
The Securities Exchange Act of 1934 (15 U.S.C. 78a, et seq.) is amended
as follows:
(1) Section 3A (15 U.S.C. 78c-1) is amended by striking
``(as defined in section 206B of the Gramm-Leach-Bliley Act)''
each place that the term appears.
(2) Section 9(a) (15 U.S.C. 78i(a)) is amended by striking
paragraphs (2) through (5) and inserting:
``(2) To effect, alone or with one or more other persons, a series
of transactions in any security registered on a national securities
exchange 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, or a security-
based swap or security-based swap agreement with respect to such
security, to induce the purchase or sale of any security registered on
a national securities exchange or any security-based swap or 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 one 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, or 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 or any security-based swap or security-based swap
agreement with respect to such security, for the purpose of inducing
the purchase or sale of such security or such security-based swap or
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 he knew or had
reasonable ground to believe was so false or misleading.
``(5) For a consideration, received directly or indirectly from 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, or 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 or any security-based swap or 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 one
or more persons conducted for the purpose of raising or depressing the
price of such security.''.
(3) Section 9(i) (15 U.S.C. 78i(i)) is amended by striking
``(as defined in section 206B of the Gramm-Leach-Bliley Act)'';
(4) Section 10 (15 U.S.C. 78j) is amended by striking ``(as
defined in section 206B of the Gramm-Leach-Bliley Act)'' each
place that the term appears.
(5) Section 15(c)(1) is amended--
(A) in subparagraph (A), by striking ``, or any
security-based swap agreement (as defined in section
206B of the Gramm-Leach-Bliley Act),''; and
(B) in subparagraphs (B) and (C), by striking
``agreement (as defined in section 206B of the Gramm-
Leach-Bliley Act)'' in each place that the term
appears.
(6) Section 15(i) (15 U.S.C. 78o(i), as added by section
303(f) of the Commodity Futures Modernization Act of 2000
(Public Law 106-554; 114 Stat. 2763A-455) is amended by
striking ``(as defined in section 206B of the Gramm-Leach-
Bliley Act)''.
(7) Section 16 (15 U.S.C. 78p) is amended--
(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 (b), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)'' in each
place that the term appears; and
(C) in subsection (g), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)'';
(8) Section 20 (15 U.S.C. 78t) is amended--
(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
(9) Section 21A (15 U.S.C. 78u-1) is amended--
(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. 3203. 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 adding the following
section after section 3A:
``SEC. 3B. CLEARING OF SECURITY-BASED SWAPS.
``(a) Clearing Requirement.--
``(1) In general.--
``(A) Presumption of clearing.--A security-based
swap shall be submitted for clearing if a clearing
agency that is registered under this Act will accept
the security-based swap for clearing;
``(B) Open access.--The rules of a clearing agency
described in subparagraph (A) shall--
``(i) prescribe that all security-based
swaps submitted to the clearing agency with the
same terms and conditions are fungible and may
be offset with each other; and
``(ii) provide for non-discriminatory
clearing of a security-based swap executed on
or through the rules of an unaffiliated
exchange or alternative swap execution
facility.
``(2) Commission approval.--
``(A) In general.--A clearing agency shall submit
to the Commission for prior approval each security-
based swap, or any group, category, type or class of
security-based swaps, that it seeks to accept for
clearing, which submission the Commission shall make
available to the public.
``(B) Deadline.--The Commission shall take final
action on a request submitted pursuant to subparagraph
(A) not later than 90 days after submission of the
request, unless the clearing agency submitting the
request agrees to an extension of the time limitation
established under this subparagraph. A request on which
the Commission fails to take final action within the
time limitation established under this subparagraph
shall be deemed approved.
``(C) Approval.--The Commission shall approve,
unconditionally or subject to such terms and conditions
as the Commission determines to be appropriate, any
request submitted pursuant to subparagraph (A) if it
finds that the request is consistent with the core
principles specified under subsection (l).
``(D) Rules.--Not later than 180 days after the
date of enactment of the Over-the-Counter Derivatives
Markets Act of 2009, the Commission shall adopt rules
for a clearing agency's submission for approval,
pursuant to this paragraph, of a security-based swap,
or a group, category, type or class of security-based
swaps, that it seeks to accept for clearing.
``(3) Stay of clearing requirement.--At any time after
issuance of an approval pursuant to paragraph (2)--
``(A) Review process.--The Commission, on
application of a counterparty to a security-based 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 security-based
swap (or the group, category, type or class of
security-based 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 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 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
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 the
securities laws; or
``(ii) determine that the clearing
requirement of paragraph (1) shall not apply to
the security-based swap, or group, category,
type or class of security-based swaps.
``(D) Rules.--Not later than 180 days after the
date of enactment of the Over-the-Counter Derivatives
Markets Act of 2009, the Commission shall adopt rules
for reviewing, pursuant to this paragraph, 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.
``(4) Prevention of evasion.--The Commission and the
Commodities Futures Trading Commission shall have authority to
prescribe rules under this section, or issue interpretations of
such rules, as necessary to prevent evasions of this Act. Any
such rules or interpretations of rules shall be prescribed and
issued jointly by both Commissions.
``(5) Required reporting.--
``(A) In general.--Any security-based swap that is
not accepted for clearing by any clearing agency shall
be reported to either a security-based swap repository
described in section 13(n) or, if there is no
repository that would accept the security-based swap,
to the Commission pursuant to section 13A within such
time period as the Commission may by rule prescribe.
``(B) Reporting by security-based swap dealers and
major security-based swap participants.--In
transactions where 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
transaction. In transactions where neither counterparty
is a security-based swap dealer or major security-based
swap participant, only 1 counterparty shall be required
to report the transaction and the counterparties shall
determine the reporting party by contract or otherwise.
``(6) Transition rules.--Rules adopted by the Commission
under this section shall provide for the reporting of data, as
follows:
``(A) Security-based swaps that were entered into
before the date of enactment of the Over-the-Counter
Derivatives Markets Act of 2009 shall be reported to a
registered security-based swap repository or the
Commission no later than 180 days after the effective
date of such Act.
``(B) Security-based swaps that were entered into
on or after the date of enactment of the Over-the-
Counter Derivatives Markets Act of 2009 shall be
reported to a registered security-based swap repository
or the Commission no later than the later of--
``(i) 90 days after the effective date of
such Act; or
``(ii) such other time after entering into
the swap as the Commission may prescribe by
rule or regulation.
``(7) Exception.--The requirements of paragraph (1) shall
not apply to a security-based swap if--
``(A) no clearing agency registered under this Act
will accept the security-based swap for clearing; or
``(B) one of the counterparties to the security-
based swap is not a security-based swap dealer or major
security-based swap participant.
``(8) Exclusion.--Paragraph (1) shall not apply to a
security-based swap one party to which is not a security-based
swap dealer or major security-based swap participant, and which
is entered into before the end of the 180-day period that
begins with the effective date of this paragraph.
``(b) Consultation.--The Commission and the Commodity Futures
Trading Commission shall consult with the appropriate Federal banking
agencies and each other prior to adopting rules under this section.''.
(b) Clearing Agency Requirements.--Section 17A of the Securities
Exchange Act of 1934 (15 U.S.C. 78q) is amended by adding at the end
the following new subsections:
``(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 swap.
``(h) Voluntary Registration.--
``(1) Clearing agencies.--A person that clears agreements,
contracts, or transactions that are not required to be cleared
under this Act may register with the Commission as a clearing
agency.
``(2) Derivatives clearing organizations.--A clearing
agency may clear swaps that are required to be cleared by a
person who is registered as a derivatives clearing organization
under the Commodity Exchange Act (7 U.S.C. 1, et seq.).
``(i) Required Registration for Banks and Clearing Agencies.--A
person that is required to be registered as a clearing agency under
this section shall register with the Commission regardless of whether
the person is also a bank or a derivatives clearing organization
registered with the Commodity Futures Trading Commission under the
Commodity Exchange Act (7 U.S.C. 1, et seq.).
``(j) Reporting.--
``(1) In general.--A clearing agency that clears security-
based swaps shall provide to the Commission and any designated
swap repository all information determined by the Commission to
be necessary to perform its responsibilities under this Act.
The Commission shall adopt data collection and maintenance
requirements for security-based swaps cleared by clearing
agencies that are comparable to the corresponding requirements
for security-based swaps accepted by security-based swap
repositories and security-based swaps traded on swap execution
facilities. The Commission shall share such information, upon
request, with the Board, the Commodity Futures Trading
Commission, the appropriate Federal banking agencies, the
Financial Services Oversight Council, and the Department of
Justice or to other persons the Commission deems appropriate,
including foreign financial supervisors (including foreign
futures authorities), foreign central banks, and foreign
ministries.
``(2) Public information.--A clearing agency that clears
security-based swaps shall provide to the Commission, or its
designee, such information as is required by, and in a form and
at a frequency to be determined by, the Commission, in order to
comply with the public reporting requirements contained in
section 13.
``(k) Designation of Compliance Officer.--
``(1) In general.--Each clearing agency that clears
security-based swaps shall designate an individual to serve as
a compliance officer.
``(2) Duties.--The compliance officer shall--
``(A) report directly to the board or to the senior
officer of the clearing agency;
``(B) in consultation with the board of the
clearing agency, a body performing a function similar
to that of a board, or the senior officer of the
clearing agency, resolve any conflicts of interest that
may arise;
``(C) be responsible for administering the policies
and procedures required to be established pursuant to
this section;
``(D) ensure compliance with securities laws and
the rules and regulations issued thereunder, including
rules prescribed by the Commission pursuant to this
section; and
``(E) establish procedures for remediation of
noncompliance issues found during compliance office
reviews, lookbacks, internal or external audit
findings, self-reported errors, or through validated
complaints which will establish the handling,
management response, remediation, retesting, and
closing of noncompliance issues.
``(3) Annual reports required.--The compliance officer
shall annually prepare and sign a report on the compliance of
the clearing agency with the securities laws and its policies
and procedures, including its code of ethics and conflict of
interest policies, in accordance with rules prescribed by the
Commission. Such compliance report shall accompany the
financial reports of the clearing agency that are required to
be furnished to the Commission pursuant to this section and
shall include a certification that, under penalty of law, the
report is accurate and complete.
``(l) Standards for Clearing Agencies Clearing Swap Transactions.--
To be registered and to maintain registration as a clearing agency that
clears 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.
``(m) Consultation.--The Commission and the Commodity Futures
Trading Commission shall consult with the appropriate Federal banking
agencies and each other prior to adopting rules under this section.
``(n) Harmonization of Rules.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act of 2009,
the Commission and the Commodity Futures Trading Commission shall
jointly adopt uniform rules governing persons that are registered as
derivatives clearing organizations for swaps under the Commodity
Exchange Act (7 U.S.C. 1, et seq.) and persons that are registered as
clearing agencies for security-based swaps under the Securities
Exchange Act of 1934 (15 U.S.C. 78a, et seq.).''.
(c) Execution of Security-based Swaps.--The Securities Exchange Act
of 1934 (15 U.S.C. 78a, et seq.) is amended by inserting after section
5 the following:
``SEC. 5A. EXECUTION OF SECURITY-BASED SWAPS.
``(a) Trade Execution.--
``(1) In general.--With respect to transactions involving
security-based swaps subject to the clearing requirement of
section 3B and where both counterparties are either security-
based swap dealers or major security-based swap participants,
such counterparties shall--
``(A) execute the transaction on a national
securities exchange registered pursuant to section 6(a)
(in which event such transaction shall be subject to
regulation under this title as a transaction in a
security); or
``(B) execute the transaction on a swap execution
facility registered with the Commission.
``(2) Exception.--The requirements of subparagraphs (A) or
(B) of paragraph (1) shall not apply if no board of trade or
swap execution facility makes the swap available to trade.
``(3) Required reporting.--If the exception of paragraph
(2) applies and there is no facility that makes the swap
available to trade, the counterparties shall comply with any
recordkeeping and transaction reporting requirements as may be
prescribed by the Commission with respect to security-based
swaps subject to the requirements of section 3B and where both
counterparties are either security-based swap dealers or major
security-based swap participants.
``(b) Exchange Trading.--In adopting rules and regulations, the
Commission shall endeavor to eliminate unnecessary impediments to the
trading on national securities exchanges or swap execution facilities,
agreements or transactions that would be commodity swaps but for the
trading of such contracts, agreements or transactions on such a
designated contract market.''.
(d) Swap Execution Facilities.--The Securities Exchange Act of 1934
(15 U.S.C. 78a, et seq.) is further amended by adding after section 3B
(as added by subsection (a)) the following:
``SEC. 3C. SWAP EXECUTION FACILITIES.
``(a) Registration.--
``(1) In general.--
``(A) No person may operate a swap execution
facility unless such facility is registered under this
section.
``(B) For purposes of this section, the term `swap
execution facility' means an entity that facilitates
the execution of swaps between 2 persons through any
means of interstate commerce but which is not a
designated contract market.
``(2) Dual registration.--Any person that is required to be
registered as a swap execution facility under this section
shall register with the Commission regardless of whether that
person also is registered with the Commodity Futures Trading
Commission as a swap execution facility.
``(b) Requirements for Trading.--A swap execution facility that is
registered under subsection (a) may trade any security-based swap.
``(c) Trading by Exchanges.--An exchange shall, to the extent that
the exchange also operates a swap execution facility and uses the same
electronic trade execution system for trading on the exchange and the
swap execution facility, identify whether the electronic trading is
taking place on the exchange or the swap execution facility.
``(d) Criteria for Registration.--
``(1) In general.--To be registered as a swap execution
facility, the facility shall be required to demonstrate to the
Commission that it meets the criteria specified herein.
``(2) Deterrence of abuses.--The swap execution facility
shall establish and enforce trading and participation rules
that will deter abuses and have the capacity to detect,
investigate, and enforce those rules, including means to--
``(A) obtain information necessary to perform the
functions required under this section; or
``(B) use means to--
``(i) provide market participants with
impartial access to the market; and
``(ii) capture information that may be used
in establishing whether rule violations have
occurred.
``(3) Trading procedures.--The swap execution facility
shall establish and enforce rules or terms and conditions
defining, or specifications detailing, trading procedures to be
used in entering and executing orders traded on or through its
facilities.
``(4) Financial integrity of transactions.--The swap
execution facility shall establish and enforce rules and
procedures for ensuring the financial integrity of security-
based swaps entered on or through its facilities, including the
clearance and settlement of the security-based swaps.
``(e) Core Principles for Swap Execution Facilities.--
``(1) In general.--To maintain its registration as a swap
execution facility, the facility shall comply with the core
principles specified in this subsection and any requirement
that the Commission may impose by rule or regulation. Except
where the Commission determines otherwise by rule or
regulation, the facility shall have reasonable discretion in
establishing the manner in which it complies with these core
principles.
``(2) Compliance with rules.--The swap execution facility
shall monitor and enforce compliance with any of the rules of
the facility, including the terms and conditions of the
security-based swaps traded on or through the facility and any
limitations on access to the facility.
``(3) Security-based swaps not readily susceptible to
manipulation.--The swap execution facility shall permit trading
only in security-based swaps that are not readily susceptible
to manipulation.
``(4) Monitoring of trading.--The swap execution facility
shall monitor trading in security-based swaps to prevent
manipulation and price distortion 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
subsection;
``(B) provide the information to the Commission
upon request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(6) Emergency authority.--The swap execution facility
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission,
where necessary and appropriate, including the authority to
suspend or curtail trading in a security-based swap.
``(7) Timely publication of trading information.--The swap
execution facility shall make public timely information on
price, trading volume, and other trading data to the extent
prescribed by the Commission.
``(8) Recordkeeping and reporting.--The swap execution
facility shall maintain records of all activities related 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 report to the Commission all information
determined by the Commission to be necessary or appropriate for
the Commission to perform its responsibilities under this Act
in a form and manner acceptable to the Commission. The
Commission shall adopt data collection and reporting
requirements for swap execution facilities that are comparable
to corresponding requirements for clearing agencies and
security-based swap repositories.
``(9) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the swap
execution facility shall avoid--
``(A) adopting any rules or taking any actions that
result in any unreasonable restraints of trade; or
``(B) imposing any material anticompetitive burden
on trading on the swap execution facility.
``(10) Conflicts of interest.--
``(A) In general.--The swap execution facility
shall establish and enforce rules to minimize conflicts
of interest in its decision-making process and
establish a process for resolving such conflicts of
interest.
``(B) Beneficial ownership by a restricted owner.--
The rules of the swap execution facility shall provide
that a restricted owner shall not be permitted directly
or indirectly to acquire beneficial ownership of
interests in the facility or in persons with a
controlling interest in the facility, to the extent
that such an acquisition would result in restricted
owners controlling more than 20 percent of the votes
entitled to be cast on any matter by the holders of the
ownership interests.
``(C) Association with a restricted owner.--The
rules of the swap execution facility shall provide that
a majority of the directors of the facility shall not
be associated with a restricted owner.
``(11) Designation of compliance officer.--
``(A) In general.--Each swap execution facility
shall designate an individual to serve as a compliance
officer.
``(B) Duties.--The compliance officer--
``(i) shall report directly to the board or
to the senior officer of the facility;
``(ii) shall--
``(I) review compliance with the
core principles in section 3B(e);
``(II) 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;
``(III) be responsible for
administering the policies and
procedures required to be established
pursuant to this section; and
``(IV) ensure compliance with
securities laws and the rules and
regulations issued thereunder,
including rules prescribed by the
Commission pursuant to this section;
and
``(iii) shall establish procedures for
remediation of non-compliance issues found
during compliance office reviews, lookbacks,
internal or external audit findings, self-
reported errors, or through validated
complaints. Procedures will establish the
handling, management response, remediation,
retesting, and closing of noncompliant issues.
``(C) Annual reports required.--The compliance
officer shall annually prepare and sign a report on the
compliance of the facility with the securities laws and
its policies and procedures, including its code of
ethics and conflict of interest policies, in accordance
with rules prescribed by the Commission. Such
compliance report shall accompany the financial reports
of the facility that are required to be furnished to
the Commission pursuant to this section and shall
include a certification that, under penalty of law, the
report is accurate and complete.
``(f) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap execution facility from registration under this
section if the Commission finds that such organization is subject to
comparable, comprehensive supervision and regulation on a consolidated
basis by the Commodity Futures Trading Commission, a Prudential
Regulator or the appropriate governmental authorities in the
organization's home country.
``(g) Harmonization of Rules.--Not later than 180 days after the
date of enactment of the Over-the-Counter Derivatives Markets Act of
2009, the Commission and the Commodity Futures Trading Commission shall
jointly prescribe rules governing the regulation of swap execution
facilities under this section and section 5h of the Commodity Exchange
Act (7 U.S.C. 7b-3).''.
(e) Segregation of Assets Held as Collateral in Swap
Transactions.--The Securities Exchange Act of 1934 (15 U.S.C. 78a, et
seq.) is further amended by adding after section 3C (as added by
subsection (b)) the following:
``SEC. 3D. SEGREGATION OF ASSETS HELD AS COLLATERAL IN OVER-THE-COUNTER
SWAP TRANSACTIONS.
``(a) Segregation.--At the request of a counterparty to a security-
based swap who provides funds or other property to a swap dealer as
variation or initial margin or collateral to secure the obligations of
the counterparty under a security-based swap between the counterparty
and the swap dealer that is not submitted for clearing to a derivatives
clearing agency, the swap dealer shall segregate the variation or
initial margin or collateral for the benefit of the counterparty, and
maintain the variation or initial margin or collateral in an account
which is carried by an independent third-party custodian and designated
as a segregated account for the counterparty, in accordance with such
rules and regulations as the Commission or Prudential Regulator may
prescribe. If a securities-based swap counterparty is a swap dealer or
major securities-based swap participant who owns more than 20 percent
of, or has more than 50 percent representation on the board of
directors of, a custodian, the custodian shall not be considered
independent from the securities-based swap counterparties for purposes
of the preceding sentence. This subsection shall not be interpreted to
preclude commercial arrangements regarding the investment of the
segregated funds or other property and the related allocation of gains
and losses resulting from any such investment.
``(b) Back Office Audit Reporting.--If a security-based swap dealer
does not segregate funds at the request of a security-based swap
counterparty in accordance with subsection (a), the security-based swap
dealer shall report to its counterparty on a quarterly basis that its
back office procedures relating to margin and collateral requirements
are in compliance with the agreement of the counterparties.''.
(f) Trading in Security-based Swap Agreements.--Section 6 of the
Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding at
the end the following:
``(l) 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).''.
(g) Additions of Security-based Swaps to Certain Enforcement
Provisions.--Paragraphs (1) through (3) of section 9(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78i(b)(1)-(3)) are amended
to read as follows:
``(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 he 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 he has reason to believe has, and who actually
has, directly or indirectly, any interest in (A) any 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.''.
(h) Rulemaking Authority To Prevent Fraud, Manipulation, and
Deceptive Conduct in Security-based Swaps and Security-based Swap
Agreements.--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 or any security-based swap
agreement, 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.''.
(i) Position Limits and Position Accountability for Security-based
Swaps.--The Securities Exchange Act of 1934 is further amended by
inserting after section 10B (15 U.S.C. 78j-1) (as added by section
2003(a)) the following new section:
``SEC. 10C. 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 may, 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 or
security-based swap agreement 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 or 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 security-based swap agreement 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
section 3(a)(76) and (B) any security-based swap and any other
instrument relating to the same security or group or index of
securities.
``(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 it 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 or
other security-based swap agreement; and
``(B) to adopt rules reasonably designed to ensure
compliance with requirements prescribed by the
Commission under subparagraph (A).
``(2) Requirement to aggregate positions.--In establishing
such limits, 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 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 security-based swap agreement and any other
instrument relating to such security or loan or group
or index of securities or loans; or
``(B)(i) any security-based swap;
``(ii) 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 section 3(a)(76); and
``(iii) any security-based swap and any other
instrument relating to the same security or group or
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 security-based swap agreement and any security or loan or group
or index of securities or loans as set forth in paragraphs (1) and (2)
of subsection (a) to report such information as the Commission may
prescribe regarding any position or positions in any security-based
swap or security-based swap agreement and any security or loan or group
or index of securities or loans and any other instrument relating to
such security or loan or group or index of securities or loans as set
forth in paragraphs (1) and (2) of subsection (a).''.
(j) Public Reporting and Repositories for Security-based Swap
Agreements.--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 Reporting of Aggregate Security-based Swap Data.--
``(1) In general.--The Commission, or a person designated
by the Commission pursuant to paragraph (2), shall make
available to the public, in a manner that does not disclose the
business transactions and market positions of any person,
aggregate data on security-based swap trading volumes and
positions from the sources set forth in paragraph (3).
``(2) Designee of the commission.--The Commission may
designate a clearing agency or a security-based swap repository
to carry out the public reporting described in paragraph (1).
``(3) Sources of information.--The sources of the
information to be publicly reported as described in paragraph
(1) are--
``(A) clearing agencies pursuant to section 3A;
``(B) security-based swap repositories pursuant to
subsection (n); and
``(C) reports received by the Commission pursuant
to section 13A.
``(n) Security-based Swap Repositories.--
``(1) Registration requirement.--
``(A) In general.--It shall be unlawful for a
security-based swap repository, 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 repository.
``(B) Inspection and examination.--Registered
security-based swap repositories shall be subject to
inspection and examination by any representatives of
the Commission.
``(2) Standard setting.--
``(A) Data identification.--The Commission shall
prescribe standards that specify the data elements for
each security-based swap that shall be collected and
maintained by each security-based swap repository.
``(B) Data collection and maintenance.--The
Commission shall prescribe data collection and data
maintenance standards for security-based swap
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 that clear security-
based swaps.
``(3) Duties.--A security-based swap repository shall--
``(A) accept data prescribed by the Commission for
each security-based swap under this paragraph (2);
``(B) maintain such data in such form and manner
and for such period as may be required by the
Commission;
``(C) provide to the Commission, or its designee,
such information as is required by, and in a form and
at a frequency to be determined by, the Commission, in
order to comply with the public reporting requirements
contained in subsection (m); and
``(D) make available, on a confidential basis, all
data obtained by the security-based swap repository,
including individual counterparty trade and position
data, to the Commission, the appropriate Federal
banking agencies, the Commodity Futures Trading
Commission, the Financial Services Oversight Council,
and the Department of Justice or to other persons the
Commission deems appropriate, including foreign
financial supervisors (including foreign futures
authorities), foreign central banks, and foreign
ministries.
``(4) Required registration for security-based swap
repositories.--Any person that is required to be registered as
a securities-based swap repository under this subsection shall
register with the Commission, regardless of whether that person
also is registered with the Commodity Futures Trading
Commission as a swap repository.
``(5) Harmonization of rules.--Not later than 180 days
after the date of enactment of the Over-the-Counter Derivatives
Markets Act of 2009, the Commission and the Commodity Futures
Trading Commission shall jointly adopt uniform rules governing
persons that are registered under this section and persons that
are registered as swap repositories under the Commodity
Exchange Act (7 U.S.C. 1, et seq.), including uniform rules
that specify the data elements that shall be collected and
maintained by each repository.
``(6) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a security-based swap repository from the
requirements of this section if the Commission finds that such
security-based swap repository is subject to comparable,
comprehensive supervision or regulation on a consolidated basis
by the Commodity Futures Trading Commission, a Prudential
Regulator or the appropriate governmental authorities in the
organization's home country.''.
SEC. 3204. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP
PARTICIPANTS.
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) It shall be unlawful for any person to act as a
security-based swap dealer unless such person is registered as
a security-based swap dealer with the Commission.
``(2) It shall be unlawful for any person to act as a major
security-based swap participant unless such 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.--The application shall be made in such form
and manner as prescribed by the Commission, giving any
information and facts as the Commission may deem necessary
concerning the business in which the applicant is or will be
engaged. Such person, when registered as a security-based swap
dealer or major security-based swap participant, shall continue
to report and furnish to the Commission such information
pertaining to such person's business as the Commission may
require.
``(3) Expiration.--Each registration shall expire at such
time as the Commission may by rule or regulation prescribe.
``(4) Rules.--Except as provided in subsections (c), (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
security-based swap dealers and major security-based swap
participants. Except as provided in subsections (c) and (e),
the Commission may provide conditional or unconditional
exemptions from rules prescribed under this section for
security-based swap dealers and major security-based swap
participants that are subject to substantially similar
requirements as brokers or dealers.
``(5) Transition.--Rules adopted under this section shall
provide for the registration of security-based swap dealers and
major security-based swap participants no later than 1 year
after the effective date of the Over-the-Counter Derivatives
Markets Act of 2009.
``(c) Dual Registration.--
``(1) Security-based swap dealers.--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 that person also is a bank or is registered with the
Commodity Futures Trading Commission as a swap dealer.
``(2) Major security-based swap participants.--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 that person also is a bank or
is registered with the Commodity Futures Trading Commission as
a major swap participant.
``(d) Joint Rules.--
``(1) In general.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act
of 2009, the Commission and the Commodity Futures Trading
Commission shall jointly adopt uniform rules for persons that
are registered as security-based swap dealers or major
security-based swap participants under this Act and persons
that are registered as swap dealers or major swap participants
under the Commodity Exchange Act (7 U.S.C. 1, et seq.).
``(2) Exception for prudential requirements.--The
Commission and the Commodity Futures Trading Commission shall
not prescribe rules imposing prudential requirements (including
activity restrictions) on security-based swap dealers or major
security-based swap participants for which there is a
Prudential Regulator. This provision shall not be construed as
limiting the authority of the Commission and the Commodity
Futures Trading Commission to prescribe appropriate business
conduct, reporting, and recordkeeping requirements to protect
investors.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Bank security-based swap dealers and major
security-based swap participants.--Each registered
security-based swap dealer and major security-based
swap participant for which there is a Prudential
Regulator shall meet such minimum capital requirements
and minimum margin requirements as the Prudential
Regulators shall by rule or regulation jointly
prescribe to help ensure the safety and soundness of
the security-based swap dealer or major security-based
swap participant.
``(B) Nonbank security-based swap dealers and major
security-based swap participants.--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 margin requirements as the Commission and
the Commodity Futures Trading Commission shall by rule
or regulation jointly prescribe to help ensure the
safety and soundness of the security-based swap dealer
or major security-based swap participant.
``(2) Joint rules.--
``(A) Bank security-based swap dealers and major
security-based swap participants.--Within 180 days of
the enactment of the Over-the-Counter Derivatives
Markets Act of 2009, the Prudential Regulators, in
consultation with the Commission and the Commodity
Futures Trading Commission, shall jointly adopt rules
imposing capital and margin requirements under this
subsection for security-based swap dealers and major
security-based swap participants.
``(B) Nonbank security-based swap dealers and major
security-based swap participants.--Within 180 days of
the enactment of the Over-the-Counter Derivatives
Markets Act of 2009, the Commission and the Commodity
Futures Trading Commission, in consultation with the
Prudential Regulators, shall jointly adopt rules
imposing capital and margin requirements under this
subsection for security-based swap dealers and major
security-based swap participants for which there is no
Prudential Regulator.
``(3) Capital.--
``(A) Bank security-based swap dealers and major
security-based swap participants.--In setting capital
requirements under this subsection, the Prudential
Regulators shall impose--
``(i) a capital requirement that is greater
than zero for security-based swaps that are
cleared by a clearing agency; and
``(ii) to offset the greater risk to the
security-based swap dealer or major security-
based swap participant and to the financial
system arising from the use of security-based
swaps that are not centrally cleared, higher
capital requirements for security-based swaps
that are not cleared by a clearing agency than
for security-based swaps that are centrally
cleared.
``(B) Exclusion.--Subparagraph (A) shall not apply
to a security-based swap one party to which is not a
security-based swap dealer or major security-based swap
participant, and which is entered into before the end
of the 90-day period that begins with the effective
date of this subparagraph.
``(C) Nonbank security-based swap dealers and major
security-based swap participants.--Capital requirements
set by the Commission and the Commodity Futures Trading
Commission under this subsection shall be as strict as
or stricter than the capital requirements set by the
Prudential Regulators under this subsection.
``(D) Bank holding companies.--Capital requirements
set by the Board for security-based swaps of bank
holding companies on a consolidated basis shall be as
strict as or stricter than the capital requirements set
by the Prudential Regulators under this subsection.
``(4) Margin.--
``(A) Bank security-based swap dealers and major
security-based swap participants.--The Prudential
Regulators shall impose margin requirements under this
subsection on all security-based swaps that are not
cleared by a registered clearing agency.
``(B) Non-swap dealers and major market
participants.--The Prudential Regulators may, but are
not required to, impose margin requirements with
respect to security-based swaps in which one of the
counterparties is not a swap dealer, major swap
participant, security-based swap dealer or major
security-based swap participant. Margin requirements
for swaps set by the Commission and the Commodity
Futures Trading Commission shall provide for the use of
non-cash assets as collateral.
``(C) Exclusion.--Subparagraph (B) shall not apply
to a security-based swap one party to which is not a
security-based swap dealer or major security-based swap
participant, and which is entered into before the end
of the 90-day period that begins with the effective
date of this subparagraph.
``(D) Nonbank security-based swap dealers and major
security-based swap participants.--Margin requirements
for security-based swaps set by the Commission and the
Commodity Futures Trading Commission under this
subsection shall be as strict as or stricter than
margin requirements for security-based swaps set by the
Prudential Regulators.
``(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 prescribed by
the Commission by rule or regulation regarding the
transactions and positions and financial condition of
such person;
``(B) for which--
``(i) there is a Prudential Regulator,
shall keep books and records of all activities
related to its 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; or
``(ii) 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 such books and records open to
inspection and examination by any representative of the
Commission; and
``(D) shall keep any such books and records
relating to transactions in swaps based on 1 or more
securities open to inspection and examination by the
Commission.
``(2) Rules.--Not later than 1 year after the date of
enactment of the Over-the-Counter Derivatives Markets Act of
2009, the Commission and the Commodity Futures Trading
Commission, in consultation with the appropriate Federal
banking agencies, shall jointly adopt rules governing reporting
and recordkeeping for swap dealers, major swap participants,
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 its security-based swaps and all
related records (including related transactions) and recorded
communications including but not limited to electronic mail,
instant messages, and recordings of telephone calls, for such
period as may be prescribed by the Commission by rule or
regulation.
``(2) Information requirements.--The daily trading records
shall include such information as the Commission shall
prescribe by rule or regulation.
``(3) Customer records.--Each registered security-based
swap dealer or major security-based swap participant shall
maintain daily trading records for each customer or
counterparty in such manner and form as to be identifiable with
each security-based swap transaction.
``(4) Audit trail.--Each registered security-based swap
dealer or major security-based swap participant shall maintain
a complete audit trail for conducting comprehensive and
accurate trade reconstructions.
``(5) Rules.--Not later than 1 year after the date of
enactment of the Over-the-Counter Derivatives Markets Act of
2009, the Commission and the Commodity Futures Trading
Commission, in consultation with the appropriate Federal
banking agencies, shall jointly adopt rules governing daily
trading records for swap dealers, major swap participants,
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 business conduct standards as may be prescribed by the
Commission by rule or regulation addressing--
``(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 its business as a
security-based swap dealer;
``(C) adherence to all applicable position limits;
``(D) the prevention of self-dealing by limiting
the extent to which a security-based swap dealer or
major security-based swap participant may conduct
business with a clearing agency, an exchange, or an
alternative swap execution facility that clears or
trades security-based swaps and in which such a dealer
or participant has a material debt or equity
investment; and
``(E) such other matters as the Commission shall
determine to be necessary or appropriate.
``(2) Business conduct requirements.--Business conduct
requirements adopted by the Commission shall--
``(A) establish the standard of care for a
security-based swap dealer or major security-based swap
participant to verify that any security-based swap
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 security-based swap (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 security-based swap;
``(ii) for cleared swaps, upon the request
of the counterparty, the daily mark from the
appropriate clearinghouse and for non-cleared
swaps, upon the request of the counterparty,
the daily mark of the security-based swap
dealer or major security-based swap
participant; and
``(iii) any other 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
``(C) establish such other standards and
requirements as the Commission may determine are
necessary or appropriate in the public interest, for
the protection of investors, or otherwise in
furtherance of the purposes of this title.
``(3) Rules.--Not later than 1 year after the date of
enactment of the Over-the-Counter Derivatives Markets Act of
2009, the Commission and the Commodity Futures Trading
Commission, in consultation with the appropriate Federal
banking agencies, shall jointly prescribe rules under this
subsection governing business conduct standards for swap
dealers, major swap participants, security-based swap dealers,
and major security-based swap participants.
``(i) Documentation and Back Office Standards.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall conform
with standards, as may be prescribed by the Commission by rule
or regulation, addressing timely and accurate confirmation,
processing, netting, documentation, and valuation of all
security-based swaps.
``(2) Rules.--Not later than 1 year after the date of
enactment of the Over-the-Counter Derivatives Markets Act of
2009, the Commission and the Commodity Futures Trading
Commission, in consultation with the appropriate Federal
banking agencies, shall jointly adopt rules governing
documentation and back office standards for swap dealers, major
swap participants, security-based swap dealers, and major
security-based swap participants.
``(j) Dealer Responsibilities.--Each registered security-based swap
dealer and major security-based swap participant at all times shall
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) 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 such 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.
``(3) Ability to obtain information.--The security-based
swap dealer or major swap security-based 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 such security-based
swap dealer or major security-based swap participant,
as applicable, upon request.
``(4) 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 assure that the activities of any person
within the firm relating to research or analysis of the
price or market for any security are separated by
appropriate informational partitions within the firm
from the review, pressure, or oversight of those whose
involvement in trading or clearing activities might
potentially bias their judgment or supervision; and
``(B) address such other issues as the Commission
determines appropriate.
``(5) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, the security-
based swap dealer or major security-based swap participant
shall avoid--
``(A) adopting any processes or taking any actions
that result in any unreasonable restraints of trade; or
``(B) imposing any material anticompetitive burden
on trading.
``(k) Rules.--The Commission, the Commodity Futures Trading
Commission, and the Prudential Regulators shall consult with each other
prior to adopting any rules under the Over-the-Counter Derivatives
Markets Act of 2009.
``(l) 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 such security-based swap
dealer or major security-based swap participant, 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 statutory
disqualification.
``(m) Enforcement and Administrative Proceeding Authority.--
``(1) Primary enforcement authority.--
``(A) SEC.--Except as provided in subsection (b),
the Commission shall have primary authority to enforce
the provisions of the amendments made by subtitle B of
the Over-the-Counter Derivatives Markets Act of 2009
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 Act with respect to banks, and
branches or agencies of foreign banks that are
security-based swap dealers or major security-based
swap participants.
``(C) Referral.--If the Prudential Regulator for a
security-based swap dealer or major security-based swap
participant 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 section 15F or rules adopted by the
Commission thereunder, that Prudential Regulator may
recommend in writing to the Commission that the
Commission initiate an enforcement proceeding as
authorized under this Act. The recommendation shall be
accompanied by a written explanation of the concerns
giving rise to the recommendation.
``(D) Backstop enforcement authority.--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 recommendation
under subparagraph (C), the Prudential Regulator may
initiate an enforcement proceeding as permitted under
Federal law.
``(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 it 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) 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) 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.
``(5) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a security-based swap dealer or major
security-based swap participant from the prudential
requirements of the Over-the-Counter Derivatives Markets Act of
2009 if the Commission finds that such security-based swap
dealer or major security-based swap participant is subject to
comparable, comprehensive supervision and regulation on a
consolidated basis by the Commodity Futures Trading Commission,
a Prudential Regulator or the appropriate governmental
authorities in the organization's home country.
``(n) Exemptive Authority.--
``(1) In general.--The Commission, by rule or regulation,
may conditionally or unconditionally exempt any person,
derivative, or transaction, or any class or classes of persons,
derivatives, or transactions, from any provision of this Act
that was added by an amendment in the Over-the-Counter
Derivatives Markets Act of 2009, to the extent that such
exemption is necessary or appropriate in the public interest,
and is consistent with the purposes of such Act.
``(2) Procedures.--The Commission shall, by rule or
regulation, determine the procedures under which an exemptive
order under this subsection shall be granted and may, in its
sole discretion, decline to entertain any application for an
order of exemption under this subsection.''.
SEC. 3205. NATIONAL SECURITY EXCHANGE REGISTRATION REQUIREMENTS.
Section 6(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78f(b)) is amended by adding at the end the following new paragraphs:
``(10) The rules of the exchange minimize conflicts of
interest in its decision-making process and establish a process
for resolving such conflicts of interest.
``(11) The rules of an exchange that trades security-based
swaps provide that a majority of the directors of the exchange
shall not be associated with a restricted owner.
``(12) The rules of an exchange that trades security-based
swaps provide that a restricted owner shall not be permitted
directly or indirectly to acquire beneficial ownership of
interests in the exchange or in persons with a controlling
interest in the exchange, to the extent that such an
acquisition would result in restricted owners controlling more
than 20 percent of the votes entitled to be cast on any matter
by the holders of the ownership interests.''.
SEC. 3206. 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
section:
``SEC. 13A. REPORTING AND RECORDKEEPING FOR CERTAIN SECURITY-BASED
SWAPS.
``(a) In General.--Any person who enters into a security-based swap
and--
``(1) did not clear the security-based swap in accordance
with section 3A; and
``(2) did not have data regarding the security-based swap
accepted by a security-based swap repository in accordance with
rules adopted by the Commission under section 13(n),
shall meet the requirements in subsection (b).
``(b) Reports.--Any person described in subsection (a) shall--
``(1) make such reports in such form and manner and for
such period as the Commission shall prescribe by rule or
regulation regarding the security-based swaps held by the
person; and
``(2) keep books and records pertaining to the security-
based swaps held by the person in such form and manner and for
such period as may be required by the Commission, which books
and records shall be open to inspection by any representative
of the Commission, an appropriate Federal banking agency, the
Commodity Futures Trading Commission, the Financial Services
Oversight Council, and the Department of Justice.
``(c) Identical Data.--In adopting rules under this section, the
Commission shall require persons described in subsection (a) to report
the same or more comprehensive data than the Commission requires
security-based swap repositories to collect under subsection (n).''.
(b) Beneficial Ownership Reporting.--
(1) Section 13(d)(1) of the Securities Exchange Act of 1934
(15 U.S.C. 78m(d)(1)) is amended 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 or
other derivative instrument as the Commission may define by
rule, and'' after ``Alaska Native Claims Settlement Act,''.
(2) Section 13(g)(1) of the Securities Exchange Act of 1934
(15 U.S.C. 78m(g)(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 or other derivative
instrument, as 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 striking ``section 13(d)(1) of this title'' and inserting
``subsection (d)(1), 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 or other
derivative instrument, as the Commission may define by rule,''.
(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 inserting ``, or security-based
swap dealer, or a major security-based swap participant'' after
``or dealer''.
(e) Derivatives 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 or other derivative instrument 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 other derivative instrument, or class of
security-based swaps or other derivative instruments, 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
instrument, or class of security-based swap or instruments, be deemed
the acquisition of beneficial ownership of the equity security.''.
SEC. 3207. 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) 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; but no person
permitted to maintain a suit for damages under the provisions of this
title shall recover, through satisfaction of judgment in one or more
actions, a total amount in excess of his actual damages 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 thereunder. 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 (1) any put, call, straddle, option, privilege, or other
security subject to this title (except a security-based swap agreement
and 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, (2) any security-based
swap between eligible contract participants, or (3) any security-based
swap effected on a national securities exchange registered pursuant to
section 6(b). 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
sentence shall not be construed as limiting any State antifraud law of
general applicability.''.
SEC. 3208. 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 provided in sections 1a(35) and (38) of the
Commodity Exchange Act (7 U.S.C. 1a(35) and (38)).
``(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) Exemption From Registration.--Section 3(a) of the Securities
Act of 1933 is amended by adding at the end the following:
``(15) Any security-based swap, as defined in section
2(a)(17) that is not otherwise a security as defined in section
2(a)(1) and that satisfies such conditions as established by
rule or regulation by the Commission consistent with the
provisions of the Over-the-Counter Derivatives Markets Act of
2009. The Commission shall promulgate rules implementing this
exemption.''.
(c) 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 section 4,
unless a registration statement meeting the requirements of subsection
(a) of section 10 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(13) of the Commodity
Exchange Act (7 U.S.C. 1a(13)).''.
SEC. 3209. OTHER AUTHORITY.
Unless otherwise provided by its terms, this subtitle does not
divest any appropriate Federal banking agency, the Commission, the
Commodity Futures Trading Commission, or other Federal or State agency,
of any authority derived from any other applicable law.
SEC. 3210. JURISDICTION.
Section 36 of the Securities Exchange Act of 1934 (15 U.S.C. 78mm)
is amended by adding at the end the following new subsection:
``(c) Exemptive Authority.--The Commission may use its authority
under subsection (a) to exempt any person, security, or transaction, or
any class of persons, securities, or transactions from any provision or
provisions of this title or of any rule or regulation thereunder that
applies to such person, security, or transaction solely because a
security-based swap is a security, as such term is defined in section
3(a) of this title.''.
SEC. 3211. EFFECTIVE DATE.
This subtitle is effective 270 days after the date of enactment.
Subtitle C--Miscellaneous
SEC. 3301. STUDY ON FEASIBILITY OF REQUIRING USE OF STANDARDIZED
ALGORITHMIC DESCRIPTIONS FOR FINANCIAL DERIVATIVES.
(a) 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.
(b) 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:
(1) commercial users and traders of derivatives;
(2) derivative clearing houses, exchanges and electronic
trading platforms;
(3) trade repositories and regulator investigations of
market activities; and
(4) 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.
(c) 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.
(d) Report.--Within 8 months after the date of the enactment of
this title, 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 subsections (a)
through (c).
SEC. 3302. STUDY OF DESIRABILITY AND FEASIBILITY OF ESTABLISHING SINGLE
REGULATOR FOR ALL TRANSACTIONS INVOLVING FINANCIAL
DERIVATIVES.
(a) In General.--The Secretary of the Treasury, the Commodity
Futures Trading Commission, and the Securities and Exchange Commission
shall conduct a joint study of the desirability and feasibility of
establishing, by January 1, 2012, a single regulator for all
transactions involving financial derivatives.
(b) Report to the Congress.--Not later than December 1, 2010,
Secretary of the Treasury, the Commodity Futures Trading Commission,
and the Securities and Exchange 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 that contains the results of the study required by
subsection (a).
SEC. 3303. RECOMMENDATIONS FOR CHANGES TO INSOLVENCY LAWS.
Not later than 180 days after the date of enactment of this title,
the Securities and Exchange Commission, the Commodity Futures Trading
Commission, and the Prudential Regulators (as defined in section 1a of
the Commodity Exchange Act, as amended by section 3101 of this title)
shall transmit to Congress recommendations for legislative changes to
the Federal insolvency laws--
(1) in order to enhance the legal certainty with respect to
swap participants clearing non-proprietary swap positions with
a swap clearinghouse, including--
(A) customer rights to recover margin deposits or
custodial property held at or through an insolvent swap
clearinghouse, or clearing participant; and
(B) the enforceability of clearing rules relating
to the portability of customer swap positions (and
associated margin) upon the insolvency of a clearing
participant;
(2) to clarify and harmonize the insolvency law framework
applicable to entities that are both commodity brokers (as
defined in section 101(6) of title 11, United States Code) and
registered brokers or dealers (as defined in section 3(a) of
the Securities Exchange Act of 1934 (15 U.S.C. 78c(a))); and
(3) to facilitate the portfolio margining of securities and
commodity futures and options positions held through entities
that are both futures commission merchants (as defined in
section 1a of the Commodity Exchange Act) and registered
brokers or dealers (as defined in section 3 of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a))).
SEC. 3304. PROHIBITION AGAINST GOVERNMENT ASSISTANCE.
(a) In General.--No provision of this title shall be construed to
authorize Federal assistance to support the clearing operations or
liquidation of a derivatives clearing organization described in the
Commodity Exchange Act, except where explicitly authorized by an Act of
Congress.
(b) Definition.--For the purposes of this section, the term
``Federal assistance'' shall be defined as the use of public funds for
the purposes of--
(1) making loans to, or purchasing any debt obligation of,
a derivatives clearing organization or a subsidiary;
(2) purchasing assets of a derivatives clearing
organization or a subsidiary;
(3) assuming or guaranteeing the obligations of a
derivatives clearing organization or a subsidiary; or
(4) acquiring any type of equity interest or security of a
derivatives clearing organization or a subsidiary.
TITLE IV--CONSUMER FINANCIAL PROTECTION AGENCY ACT
SEC. 4001. SHORT TITLE.
This title may be cited as the ``Consumer Financial Protection
Agency Act of 2009''.
SEC. 4002. DEFINITIONS.
For the purposes of subtitles A through F 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) Agency.--The term ``Agency'' means the Consumer
Financial Protection Agency.
(3) Bank holding company.--The term ``bank holding
company'' has the same meaning as in section 2(a) of the Bank
Holding Company Act of 1956.
(4) Board.--Except when used in connection with the term
``Board of Governors'', the term ``Board'' means the Consumer
Financial Protection Oversight Board.
(5) Board of governors.--The term ``Board of Governors''
means the Board of Governors of the Federal Reserve System.
(6) 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.
(7) Consumer.--The term ``consumer'' means an individual or
an agent, trustee, or representative acting on behalf of an
individual.
(8) Consumer financial product or service.--The term
``consumer financial product or service'' means any financial
product, other than a Federal tax return, or service to be used
by a consumer primarily for personal, family, or household
purposes.
(9) Covered person.--
(A) In general.--The term ``covered person'' means
any person who engages directly or indirectly in a
financial activity, in connection with the provision of
a consumer financial product or service.
(B) Exclusion.--The term ``covered person'' shall
not include the Secretary, the Department of the
Treasury, any agency or bureau under the jurisdiction
of the Secretary, or any person collecting Federal
taxes for the United States to the extent such person
is acting in such capacity.
(10) 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.
(11) Credit union.--The term ``credit union'' means a
Federal credit union or a State credit union as defined in
section 101 of the Federal Credit Union Act.
(12) Deposit.--The term ``deposit''--
(A) has the same meaning as in section 3(l) of the
Federal Deposit Insurance Act; and
(B) includes a share in a member account (as
defined in section 101(5) of the Federal Credit Union
Act) at a credit union.
(13) Deposit-taking activity.--The term ``deposit-taking
activity'' means--
(A) the acceptance of deposits, the maintenance of
deposit accounts, or the provision of services related
to the acceptance of deposits;
(B) the acceptance of money, the provision of other
services related to the acceptance of money, or the
maintenance of members' share accounts by a credit
union; or
(C) the receipt of money or its equivalent, as the
Director may determine by regulation or order, received
or held by the covered person (or an agent for the
person) for the purpose of facilitating a payment or
transferring funds or value of funds by a consumer to a
third party.
(14) Designated transfer date.--The term ``designated
transfer date'' has the meaning provided in section 4602.
(15) Director.--The term ``Director'' means the Director of
the Agency.
(16) Enumerated consumer laws.--The term ``enumerated
consumer laws'' means each of the following:
(A) The Alternative Mortgage Transaction Parity Act
(12 U.S.C. 3801 et seq.).
(B) The Electronic Funds Transfer Act (15 U.S.C.
1693 et seq.)
(C) The Equal Credit Opportunity Act (15 U.S.C.
1691 et seq.).
(D) The Fair Credit Reporting Act (15 U.S.C. 1681
et seq.), except with respect to sections 615(e) and
628 of such Act.
(E) The Fair Debt Collection Practices Act (15
U.S.C. 1692 et seq.).
(F) Subsections (c), (d), (e), and (f) of section
43 of the Federal Deposit Insurance Act (12 U.S.C.
1831t).
(G) Sections 502, 503, 504, 505, 506, 507, 508, and
509 of the Gramm-Leach-Bliley Act (15 U.S.C. 6802 et
seq.).
(H) The Homeowners Protection Act of 1998.
(I) The Home Mortgage Disclosure Act (12 U.S.C.
2801 et seq.).
(J) The Real Estate Settlement Procedures Act (12
U.S.C. 2601 et seq.).
(K) The Secure and Fair Enforcement for Mortgage
Licensing Act (12 U.S.C. 5101 et seq.).
(L) The Truth in Lending Act (15 U.S.C. 1601 et
seq.).
(M) The Truth in Savings Act (12 U.S.C. 4301 et
seq.).
(17) Federal banking agency.--The term ``Federal banking
agency'' means the Board of Governors, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the
Federal Deposit Insurance Corporation, or the National Credit
Union Administration and the term ``Federal banking agencies''
means all of such agencies.
(18) Fair lending.--The term ``fair lending'' means fair,
equitable, and nondiscriminatory access to credit for both
individuals and communities.
(19) Financial activity.--
(A) In general.--The term ``financial activity''
means any of the following activities:
(i) Deposit-taking activities.
(ii) Extending credit and servicing loans,
including--
(I) acquiring, purchasing, selling,
brokering, or servicing loans or other
extensions of credit;
(II) engaging in any other activity
usual in connection with extensions of
credit or servicing loans, including
performing appraisals of real estate
and personal property.
(iii) Check cashing and check-guaranty
services, including--
(I) authorizing a subscribing
merchant to accept personal checks
tendered by the merchant's customers in
payment for goods and services; and
(II) purchasing from a subscribing
merchant validly authorized checks that
are subsequently dishonored.
(iv) Collecting, analyzing, maintaining,
and providing consumer report information or
other account information by covered persons,
including information relating to the credit
history of consumers and providing the
information to a credit grantor who is
considering a consumer application for credit
or who has extended credit to the borrower.
(v) Collection of debt related to any
consumer financial product or service.
(vi) Providing real estate settlement
services.
(vii) Leasing personal or real property or
acting as agent, broker, or adviser in leasing
such property 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 leases
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 Director.
(viii) Acting as an investment adviser to
any person (excluding an investment adviser
that is a person regulated by the Commodity
Futures Trading Commission, the Securities and
Exchange Commission, or any securities
commission (or any agency or office performing
like functions) of any State).
(ix) Acting as financial adviser to any
person (excluding an investment adviser that is
a person regulated by the Commodity Futures
Trading Commission, the Securities and Exchange
Commission, or any securities commission (or
any agency or office performing like functions)
of any State), including--
(I) providing financial and other
related advisory services;
(II) providing educational courses,
and instructional materials to
consumers on individual financial
management matters;
(III) providing credit counseling
or tax planning services to any person
(excluding the preparation of returns,
or claims for refund, of tax imposed by
the Internal Revenue Code or advice
with respect to positions taken
therein, or services regulated by the
Secretary of the Treasury under section
330 of title 31, United States Code);
or
(IV) providing services to assist a
consumer with debt management or debt
settlement, with modifying the terms of
any extension of credit, or with
avoiding foreclosure.
(x) For purposes of this title, the
following shall not be considered acting as
financial adviser:
(I) 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.
(II) Providing advice, analyses, or
reports that do not relate to any
securities other than securities which
are direct obligations of or
obligations guaranteed as to principal
or interest by the United States, or
securities issued or guaranteed by
corporations in which the United States
has a direct or indirect interest which
shall have been designated by the
Secretary of the Treasury, pursuant to
section 3(a)(12) of the Securities
Exchange Act of 1934, as exempted
securities for the purposes of that
Act.
(xi) Financial data processing by any
technological means, including providing data
processing, access to or use of databases or
facilities, or advice regarding processing or
archiving, if the data to be processed,
furnished, stored, or archived are financial,
banking, or economic, except that it shall not
be considered a ``financial activity'' if with
respect to financial data processing the
person--
(I) unknowingly or incidentally
transmits, processes, or stores
financial data in a manner that such
data is undifferentiated from other
types of data that the person
transmits, processes, or stores;
(II) does not provide to any
consumer a consumer financial product
or service in connection with or
relating to in any manner financial
data processing; and
(III) does not provide a material
service to any covered person in
connection with the provision of a
consumer financial product or service.
(xii) Money transmitting.
(xiii) Sale, provision or issuance of
stored value, except that, in the case of a
sale, only if the seller influences the terms
or conditions of the stored value provided to
the consumer.
(xiv) Acting as a money services business.
(xv) Acting as a custodian of money or any
financial instrument.
(xvi)(I) Any other activity that the
Director defines, by regulation, as a financial
activity after finding that--
(aa) the activity has, or
there is a substantial
likelihood that the activity
will have, a material adverse
impact on the creditworthiness
or financial well being of
consumers;
(bb) the activity is
incidental or complementary to
any other financial activity
regulated by the Agency; or
(cc) the activity is
entered into or conducted as a
subterfuge or with a purpose to
evade any requirement under
this title, the enumerated
consumer laws, and the
authorities transferred under
subtitles F and H.
(II) For purposes of subclause (I)(bb), the
following activities provided to a covered
person shall not be ``incidental or
complementary'':
(aa) Providing information products
or services to a covered person for
identity authentication.
(bb) Providing information products
or services for fraud or identify theft
detection, prevention, or
investigation.
(cc) Providing document retrieval
or delivery services.
(dd) Providing public records
information retrieval.
(ee) Providing information products
or services for anti-money laundering
activities.
(B) Business of insurance exception.--The term
``financial activity'' shall not include the business
of insurance.
(20) Financial product or service.--The term ``financial
product or service'' means any product or service that,
directly or indirectly, results from or is related to engaging
in 1 or more financial activities.
(21) 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.
(22) Insured credit union.--The term ``insured credit
union'' has the same meaning as in section 101 of the National
Credit Union Act.
(23) Insured depository institution.--The term ``insured
depository institution'' has the same meaning as in section 3
of the Federal Deposit Insurance Act.
(24) Money services business.--The term ``money services
business'' means a person that--
(A) receives currency, monetary value, or payment
instruments 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 other businesses that facilitate third-
party transfers within the United States or to or from
the United States; or
(B) issues payment instruments or stored value.
(25) Money transmitting.--The term ``money transmitting''
means the receipt by a covered person of currency, monetary
value, or payment instruments for the purpose of transmitting
the same to any third-party by any means, including
transmission by wire, facsimile, electronic transfer, courier,
the Internet, or through bill payment services.
(26) Payment instrument.--The term ``payment instrument''
means a check, draft, warrant, money order, traveler's check,
electronic instrument, or other instrument, payment of money,
or monetary value (other than currency).
(27) Person.--The term ``person'' means an individual,
partnership, company, corporation, association (incorporated or
unincorporated), trust, estate, cooperative organization, or
other entity.
(28) Person regulated by a state insurance regulator.--The
term ``person regulated by a State insurance regulator'' means
any person who is--
(A) engaged in the business of insurance, and
(B) subject to regulation by any State insurance
regulator,
but only to the extent that such person acts in such capacity.
(29) Person regulated by the commodity futures trading
commission.--The term ``person regulated by the Commodity
Futures Trading Commission'' means any futures commission
merchant, commodity trading adviser, commodity pool operator,
introducing broker, boards of trade, derivatives clearing
organizations, or multilateral clearing organizations to the
extent that such person's actions are subject to the
jurisdiction of the Commodity Futures Trading Commission under
the Commodity Exchange Act and any agent, employee, or
contractor acting on behalf of, registered with, or providing
services to such person but only to the extent the person, or
the employee, agent, or contractor of such person, acts in a
registered capacity.
(30) Person regulated by the securities and exchange
commission.--The term ``person regulated by the Securities and
Exchange Commission'' means--
(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;
(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 municipal securities dealer that is
registered with the Securities and Exchange Commission;
(H) any self-regulatory organization that is
registered with the Securities and Exchange Commission;
(I) any national securities exchange or other
entity that is required to be registered under the
Securities Exchange Act of 1934; and
(J) the Municipal Securities Rulemaking Board,
and any employee, agent, or contractor acting on behalf of,
registered with, or providing services to, any such person, but
only to the extent that the person, or the employee agent, or
contractor of such person, acts in a registered capacity.
(31) Provision of a consumer financial product or
service.--The terms ``provision of a consumer financial product
or service'' and ``providing a consumer financial product or
service'' mean the advertisement, marketing, solicitation,
sale, disclosure, delivery, or account maintenance or servicing
of a consumer financial product or service.
(32) 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 of the
Treasury 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.
(33) Related person.--
(A) In general.--The term ``related person'', when
used in connection with a covered person that is not a
bank holding company, credit union, depository
institution, means--
(i) any director, officer, employee charged
with managerial responsibility, or controlling
stockholder of, or agent for, such covered
person;
(ii) any shareholder, consultant, joint
venture partner, and any other person as
determined by the Director (by regulation 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), with
respect to such covered person, who knowingly
or recklessly participates in any--
(I) violation of any law or
regulation; or
(II) breach of fiduciary duty.
(B) Treatment of a related person as a covered
person.--Any person who is a related person under
subparagraph (A) shall be deemed to be a covered person
for all purposes of this title, any enumerated consumer
law, and any law for which authorities were transferred
by subtitles F and H.
(34) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(35) Service provider.--
(A) In general.--The term ``service provider''
means any person who provides a material service to a
covered person in the provision of a consumer financial
product or service, including a person who--
(i) facilitates the design of, or
operations relating to the provision of, the
consumer financial product or service;
(ii) has direct interaction with a consumer
(whether in person or via telecommunication
device or other similar technology) regarding
the consumer financial product or service; or
(iii) processes transactions relating to
the consumer financial product or service.
(B) Exceptions.--The term ``service provider''
shall not apply to a person solely by virtue of such
person providing or selling to a covered person--
(i) a support service of a type provided to
businesses generally or a similar ministerial
service;
(ii) a service that does not materially
affect the terms or conditions of the consumer
financial product or service, its performance
or operation, or the propensity of a consumer
to obtain or use such product or service; or
(iii) time or space for an advertisement
for a consumer financial product or service
through print, newspaper, or electronic media.
(36) State.--The term ``State'' means any State, territory,
or possession of the United States, the District of Columbia,
Commonwealth of Puerto Rico, Commonwealth of the Northern
Mariana Islands, Guam, American Samoa, or the United States
Virgin Islands.
(37) Stored value.--The term ``stored value''--
(A) 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
(B) includes a prepaid debit card or product (other
than a card or product used solely for telephone
services) or any other similar product,
regardless of whether the amount of the funds or monetary value
may be increased or reloaded.
Subtitle A--Establishment of the Agency
SEC. 4101. ESTABLISHMENT OF THE CONSUMER FINANCIAL PROTECTION AGENCY.
(a) Agency Established.--There is established the Consumer
Financial Protection Agency as an independent agency to regulate the
provision of consumer financial products or services under this title,
the enumerated consumer laws, and the authorities transferred under
subtitles F and H.
(b) Principal Office.--The principal office of the Agency shall be
located in the city of Washington, District of Columbia, at 1 or more
sites.
SEC. 4102. DIRECTOR.
(a) Establishment of Position.--
(1) In general.--There is hereby established the position
of the Director of the Agency who shall be the head of the
Agency.
(2) Authority to prescribe regulations.--The Director may
prescribe such regulations and issue such orders in accordance
with this title as the Director may determine to be necessary
for carrying out this title and all other laws within the
Director's jurisdiction.
(b) Appointment; Term.--
(1) Appointment.--The Director shall be appointed by the
President, by and with the advice and consent of the Senate,
from among individuals who are citizens of the United States.
(2) Term.--The Director shall be appointed for a term of 5
years.
(3) Removal.--The Director may be removed before the end of
a term only for cause.
(4) Vacancy.--
(A) In general.--A vacancy in the position of
Director which occurs before the expiration of the term
for which a Director was appointed shall be filled in
the manner established in paragraph (1) and the
Director appointed to fill such vacancy shall be
appointed only for the remainder of such term.
(B) Acting director.--
(i) In general.--In the event of a vacancy
in the position of Director or during the
absence or disability of the Director, an
Acting Director shall be appointed in the
manner provided in section 3345, of title 5,
United States Code.
(ii) Authority of acting director.--Any
individual serving as Acting Director under
this subparagraph shall be vested with all
authority, duties, and privileges of the
Director.
(5) Service after end of term.--An individual may serve as
Director after the expiration of the term for which appointed
until a successor Director has been appointed and qualified.
(c) Prohibition on Financial Interests.--The Director shall not
have a direct or indirect financial interest in any covered person.
(d) Compensation.--The Director shall receive compensation at the
rate prescribed for Level I of the Executive Schedule under section
5313 of title 5, United States Code.
SEC. 4103. CONSUMER FINANCIAL PROTECTION OVERSIGHT BOARD.
(a) Established.--There is hereby established the Consumer
Financial Protection Oversight Board as an instrumentality of the
United States.
(b) Duties and Powers.--
(1) Duty to advise director.--The Board shall advise the
Director on--
(A) the consistency of a proposed regulation of the
Director with prudential, market, or systemic
objectives administered by the agencies that comprise
the Board;
(B) the overall strategies and policies in carrying
out the duties of the Director under this title; and
(C) actions the Director can take to enhance and
ensure that all consumers are subject to robust
financial protection.
(2) Limitation on powers.--The Board may not exercise any
executive authority, and the Director may not delegate to the
Board any of the functions, powers, or duties of the Director.
(c) Composition.--The Board shall be comprised of 7 members as
follows:
(1) The Chairman of the Board of Governors.
(2) The head of the agency responsible for chartering and
regulating national banks.
(3) The Chairperson of the Federal Deposit Insurance
Corporation.
(4) The Chairman of the National Credit Union
Administration.
(5) The Chairman of the Federal Trade Commission.
(6) The Secretary of Housing and Urban Development.
(7) The Chairman of the liaison committee of
representatives of State agencies to the Financial Institutions
Examination Council.
(d) Representative of Additional Interests.--
(1) Composition.--Notwithstanding subsection (c), the
President, by and with the advice and consent of the Senate,
shall appoint 5 additional members of the Board from among
experts in the fields of consumer protection, fair lending and
civil rights, representatives of depository institutions that
primarily serve underserved communities, or representatives of
communities that have been significantly impacted by higher-
priced mortgage loans, as such communities are identified by
the Director through an analysis of data received by reason of
the provisions of the Home Mortgage Disclosure Act of 1975 or
other data on lending patterns.
(2) Affiliation.--With respect to members appointed
pursuant to paragraph (1), not more than 3 shall be members of
any one political party.
(e) Meetings.--
(1) In general.--The Board shall meet upon notice by the
Director, but in no event shall the Board meet less frequently
than once every 3 months.
(2) Special meetings.--Any member of the Board may, upon
giving written notice to the Director, require a special
meeting of the Board.
(f) Prohibition on Additional Compensation.--Members of the Board
may not receive additional pay, allowances, or benefits by reason of
their service on the Board.
(g) Complaints Related to Required Offering of Specific Financial
Products or Services.--The Board shall establish procedures to receive
and analyze complaints from any person claiming that the Director is
not in compliance with the requirements under section 4311.
SEC. 4104. EXECUTIVE AND ADMINISTRATIVE POWERS.
The Director may exercise all executive and administrative
functions of the Agency, including to--
(1) establish regulations for conducting the Agency's
general business in a manner not inconsistent with this title;
(2) bind the Agency and enter into contracts;
(3) direct the establishment of and maintain divisions or
other offices within the Agency in order to fulfill the
responsibilities of this title, the enumerated consumer laws,
and the authorities transferred under subtitles F and H, and to
satisfy the requirements of other applicable law;
(4) coordinate and oversee the operation of all
administrative, enforcement, and research activities of the
Agency;
(5) adopt and use a seal;
(6) determine the character of and the necessity for the
Agency's obligations and expenditures, and the manner in which
they shall be incurred, allowed, and paid;
(7) delegate authority, at the Director's discretion, to
any officer or employee of the Agency to take action under any
provision of this title or under other applicable law;
(8) to implement this title and the Agency's authorities
under the enumerated consumer laws and under subtitles F and H
through regulations, orders, guidance, interpretations,
statements of policy, examinations, and enforcement actions;
and
(9) perform such other functions as may be authorized or
required by law.
SEC. 4105. ADMINISTRATION.
(a) Officers.--The Director shall appoint the following officials:
(1) A secretary, who shall be charged with maintaining the
records of the Agency and performing such other activities as
the Director directs.
(2) A general counsel, who shall be charged with overseeing
the legal affairs of the Agency and performing such other
activities as the Director directs.
(3) An inspector general, who shall have the authority and
functions of an inspector general of a designated Federal
entity under the Inspector General Act of 1978 (5 U.S.C. App.
3).
(4) An Ombudsperson, who shall--
(A) develop and maintain expertise in and
understanding of the law relating to consumer financial
products;
(B) at the request of a Federal agency or a State
agency, and with the prior approval of the Director,
advise such agency with respect to actions that may
affect consumers;
(C) advise consumers who may have a legitimate
potential or actual claim against a Federal agency
involving the provision of consumer financial products
regarding their rights under this title;
(D) identify Federal agency actions that have
potential implications for consumers and, if
appropriate, and with the prior approval of the
Director, advise the relevant Federal agencies with
respect to those implications;
(E) provide information to private citizens, civic
groups, Federal agencies, State agencies, and other
interested parties regarding the rights of those
parties under this title;
(F) develop, maintain, and provide expertise
designed to assist covered persons, especially smaller
depository institutions and other smaller entities to
comply with regulations and other requirements issued
to implement the provisions of this title, and where
such assistance for smaller depository institutions
shall be provided jointly by the Agency and the
appropriate Federal banking agency;
(G) develop procedures to assist covered persons,
especially smaller depository institutions and other
smaller entities, in responding to or challenging
actions taken by the Director or the Agency to
implement the provisions of this title and to ensure
that safeguards exist to preserve the confidentiality
of covered persons using those procedures; and
(H) perform such other duties as the Director may
delegate to the Ombudsperson.
(b) Personnel.--
(1) Appointment.--
(A) In general.--The Director may fix the number
of, and appoint and direct, all employees of the
Agency.
(B) Expedited hiring.--The Director may appoint,
without regard to the provisions of sections 3309
through 3318, of title 5, United States Code,
candidates directly to positions for which public
notice has been given.
(C) Hiring veterans.--In hiring employees of the
Agency, the Director shall establish appropriate
targets, including timetables, to hire veterans (as
defined in paragraphs (1) and (2) of section 2108 of
title 5, United States Code) as employees of the
Agency. In establishing appropriate targets under this
paragraph, the Director may consider, among other
relevant factors, the proportion of veterans hired by
Federal agencies with comparable functions or types of
occupations and their experiences in hiring veterans.
(2) Compensation.--
(A) Pay.--The Director shall fix, adjust, and
administer the pay for all employees of the Agency
without regard to the provisions of chapter 51 or
subchapter III of chapter 53 of title 5, United States
Code.
(B) Benefits.--The Director may provide additional
benefits to Agency employees if the same type of
benefits are then being provided by the Board of
Governors or, if not then being provided, could be
provided by the Board of Governors under applicable
provisions of law or regulations.
(C) Minimum standard.--The Director shall at all
times provide compensation and benefits to classes of
employees that, at a minimum, are equivalent to the
compensation and benefits provided by the Board of
Governors for the corresponding class of employees in
any fiscal year.
(c) Specific Functional Units.--
(1) Research.--The Agency shall establish a unit whose
functions shall include--
(A) conducting research on consumer financial
counseling and education, including--
(i) on the topics of debt, credit, savings,
financial product usage, and financial
planning;
(ii) exploring effective methods, tools,
and approaches; and
(iii) identifying ways to incorporate new
technology for the delivery and evaluation of
financial counseling and education efforts;
(B) researching, analyzing, and reporting on--
(i) current and prospective developments in
markets for consumer financial products or
services, including market areas of alternative
consumer financial products or services with
high growth rates;
(ii) consumer awareness, understanding, and
use of disclosures and communications regarding
consumer financial products or services;
(iii) consumer awareness and understanding
of costs, risks, and benefits of consumer
financial products or services;
(iv) consumer behavior with respect to
consumer financial products or services,
including performance on mortgage loan; and
(v) experiences of traditionally
underserved consumers, including un-banked and
under-banked consumers, regarding consumer
financial products or services;
(C) identifying priorities for consumer financial
education efforts, based on consumer complaints,
research or analysis conducted pursuant to subparagraph
(A), or other information; and
(D) testing and identifying methods of educating
consumers to determine which methods are most
effective.
(2) Community affairs.--The Director shall establish a unit
whose functions shall include providing information, guidance,
and technical assistance regarding the provision of consumer
financial products or services to traditionally underserved
consumers and communities.
(3) Consumer complaints.--
(A) In general.--The Director shall establish a
unit whose functions shall include establishing a
central database, or utilizing an existing database,
for collecting and tracking information on consumer
complaints about consumer financial products or
services and resolution of complaints.
(B) Coordination.--In performing the functions
described in subparagraph (A), the Director shall
coordinate with the Federal banking agencies, other
Federal agencies, and other regulatory agencies or
enforcement authorities.
(C) Data sharing required.--To the extent permitted
by law and the regulations prescribed by the Director
regarding the confidential treatment of information,
the Director shall share data relating to consumer
complaints with Federal banking agencies, other Federal
agencies, and State regulators. To the extent permitted
by law and the regulations prescribed by the Federal
banking agencies and other Federal agencies regarding
the confidential treatment of information, the Federal
banking agencies and other Federal agencies,
respectively, shall share data relating to consumer
complaints with the Director and the Agency.
(4) Consumer financial education.--
(A) In general.--The Agency shall establish a unit
to be named the Office of Financial Literacy, whose
functions shall include activities designed to
facilitate the education of consumers on consumer
financial products and services, including through the
dissemination of materials to consumers on such topics.
(B) Director.--The Office of Financial Literacy
shall be headed by a director.
(C) Duties.--Such unit shall--
(i) develop goals for programs to be
provided by persons that provide consumer
financial education and counseling, including
programs through which such persons--
(I) provide one-on-one financial
counseling;
(II) help individuals understand
basic banking and savings tools;
(III) help individuals understand
their credit history and credit score;
(IV) assist individuals in efforts
to plan for major purchases, reduce
their debt, and improve their financial
stability; and
(V) work with individuals to design
plans for long-term savings;
(ii) develop recommendations regarding
effective certification of persons providing
programs, or performing the activities,
described in clause (i), including
recommendations regarding--
(I) certification processes and
standards for certification;
(II) appropriate certifying bodies;
and
(III) mechanisms for funding the
certification processes;
(iii) develop a technology tool to collect
data on financial education and counseling
outcomes; and
(iv) conduct research to identify effective
methods, tools, technoloy, and strategies to
educate and counsel consumers about personal
finance management, including on the topics of
debt, credit, savings, financial product usage,
and financial planning.
(D) Coordination.--Such unit shall coordinate with
other units within the Agency in carrying out its
functions, including--
(i) working with the unit established under
paragraph (2) to--
(I) provide information and
resources to community organizations,
nonprofit organizations, and other
entities to assist in helping educate
consumers about consumer financial
products and services; and
(II) develop a marketing strategy
to promote financial education and one-
on-one counseling; and
(ii) working with the unit established
under paragraph (1) to conduct research related
to consumer financial education and counseling.
(d) Single Toll-free Telephone Number for Consumer Complaints and
Inquiries.--
(1) Call intake system.--The Consumer Financial Protection
Agency shall establish a single, toll-free telephone number for
consumer complaints and inquiries concerning institutions
regulated by such agencies and a system for collecting and
monitoring complaints and, as soon as practicable, a system for
routing such calls to the Federal financial institution
regulatory agency that primarily supervises the financial
institution, or that is otherwise the appropriate Federal
agency to address the subject of the complaint or inquiry.
(2) Routing calls to states.--To the extent practicable,
State agencies may receive appropriate call transfers from the
system established under paragraph (1) if--
(A) the State agency's system has the functional
capacity to receive calls routed by the system; and
(B) the State agency has satisfied any conditions
of participation in the system that the Council,
coordinating with State agencies through the
chairperson of the State Liaison Committee, may
establish.
(e) Report to the Congress.--Before the end of the 6-month period
beginning on the date of the enactment of this title, the Federal
financial institution regulatory agencies shall submit 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 agencies' efforts to establish--
(1) a public interagency Web site for directing and
referring Internet consumer complaints and inquiries concerning
any financial institution to the Consumer Financial Protection
Agency for purposes of collecting, monitoring, and responding
to such complaints and, where appropriate, a system for
referring complaints to the Federal financial institution
regulatory agency, other Federal agency, or State agency that
is otherwise the appropriate agency to address the subject of
the complaint or inquiry; and
(2) a system to expedite the prompt and effective rerouting
of any misdirected consumer complaint or inquiry documents
between or among the agencies, with prompt referral of any
complaint or inquiry to the appropriate Federal financial
institution regulatory agency, and to participating State
agencies.
(f) Office of Fair Lending and Equal Opportunity.--
(1) Establishment.--Before the end of the 180-day period
beginning on the date of the enactment of this title, the
Director shall establish within the Agency 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 the Office which shall include the following
functions:
(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 Agency,
including the Equal Credit Opportunity Act and the Home
Mortgage Disclosure Act.
(B) Coordinating fair lending enforcement efforts
of the Agency 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.
(D) Providing annual reports to the Congress on the
Agency's efforts to fulfill its fair lending mandate.
(3) Administration of office.--There is hereby established
the position of Assistant Director of the Agency for Fair
Lending and Equal Opportunity who--
(A) shall be appointed by the Director;
(B) shall carry out such duties as the Director may
delegate to such Assistant Director; and
(C) shall serve as the Director of the Office of
Fair Lending and Equal Opportunity.
(4) Prohibitions on participation in programs with respect
to certain indicted organizations.--
(A) Prohibition.--The Director of the Office of
Fair Lending and Equal Opportunity may not allow a
covered organization to participate in any program
established by such Director.
(B) Covered organization.--In this paragraph, the
term ``covered organization'' means any of the
following:
(i) Any organization that has been indicted
for a violation under any Federal or State law
governing the financing of a campaign for
election for public office or any law governing
the administration of an election for public
office, including a law relating to voter
registration.
(ii) Any organization that had its State
corporate charter terminated due to its failure
to comply with Federal or State lobbying
disclosure requirements.
(iii) Any organization that has filed a
fraudulent form with any Federal or State
regulatory agency.
(iv) Any organization that--
(I) employs any applicable
individual, in a permanent or temporary
capacity;
(II) has under contract or retains
any applicable individual; or
(III) has any applicable individual
acting on the organization's behalf or
with the express or apparent authority
of the organization.
(C) Additional definitions.--In this paragraph:
(i) The term ``organization'' includes the
Association of Community Organizations for
Reform Now (in this paragraph referred to as
``ACORN'') and any ACORN-related affiliate.
(ii) The term ``ACORN-related affiliate''
means any of the following:
(I) Any State chapter of ACORN
registered with the Secretary of
State's office in that State.
(II) Any organization that shares
directors, employees, or independent
contractors with ACORN.
(III) Any organization that has a
financial stake in ACORN.
(IV) Any organization whose
finances, whether federally funded,
donor-funded, or raised through
organizational goods and services, are
shared or controlled by ACORN.
(iii) The term ``applicable individual''
means an individual who has been indicted for a
violation under Federal or State law relating
to an election for Federal or State office.
(D) Revision of federal acquisition regulation.--
The Federal Acquisition Regulation shall be revised to
carry out the provisions of this paragraph relating to
contracts.
(E) Severability.--If any provision of this section
or any application of such provision to any person or
circumstance is held to be unconstitutional, the
remainder of this section and the application of the
provision to any other person or circumstance shall not
be affected.
SEC. 4106. CONSUMER ADVISORY BOARD.
(a) Establishment Required.--The Director shall establish a
Consumer Advisory Board to advise and consult with the Director in the
exercise of the functions of the Director and the Agency under this
title, the enumerated consumer laws, and to provide information on
emerging practices in the consumer financial products or services
industry.
(b) Membership.--
(1) In general.--In appointing the members of the Consumer
Advisory Board, the Director shall seek--
(A) to assemble experts in financial services,
community development, fair lending and civil rights,
consumer protection, and consumer financial products or
services; and
(B) to represent the interests of covered persons
and consumers.
(2) Prohibition on membership with respect to certain
indicted organizations.--The director may not appoint an
employee of a covered organization (as defined in section
4105(f)(4)(B)) to the Consumer Advisory Board.
(c) Political Affiliation.--Not more than 1 more than half of the
members of the Consumer Advisory Board may be members of the same
political party.
(d) 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.
(e) 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. 4107. COORDINATION.
(a) Coordination With Other Federal Agencies and State
Regulators.--The Director shall coordinate with the Securities and
Exchange Commission, the Commodity Futures Trading Commission, the
Secretary of the Treasury, and other Federal agencies and State
regulators, as appropriate, to promote consistent regulatory treatment
of, and enforcement related to, consumer and investment products,
services, and laws.
(b) Coordination of Consumer Education Initiatives.--
(1) In general.--The Director shall coordinate with each
agency that is a member of the Financial Literacy and Education
Commission established by the Financial Literacy and Education
Improvement Act (20 U.S.C. 9701 et seq.) to assist each agency
in enhancing its existing financial literacy and education
initiatives to better achieve the goals in paragraph (2) and to
ensure the consistency of such initiatives across Federal
agencies.
(2) Goals of coordination.--In coordinating with the
agencies described in paragraph (1), the Director shall seek to
improve efforts to educate consumers about financial matters
generally, the management of their own financial affairs, and
their judgments about the appropriateness of certain financial
products.
(c) Coordination.--The Agency may coordinate investigations,
compliance examinations, information sharing, and related activities in
support of activities undertaken pursuant to the Fair Housing Act by
other Federal agencies.
SEC. 4108. REPORTS TO THE CONGRESS.
(a) Reports Required.--The Director shall prepare and submit to the
President and the appropriate committees of the Congress a report at
the beginning of each regular session of the Congress, beginning with
the session following the designated transfer date.
(b) Contents.--The reports required by subsection (a) shall
include--
(1) a list of the significant regulations and orders
adopted by the Director, as well as other significant
initiatives conducted by the Director, during the preceding
year and the Director's plan for regulations, orders, or other
initiatives to be undertaken during the upcoming period;
(2) an analysis of complaints about consumer financial
products or services that the Agency has received and collected
in its central database on complaints during the preceding
year;
(3) a list, with a brief statement of the issues, of the
public supervisory and enforcement actions to which the Agency
is a party (including adjudication proceedings conducted under
subtitle E) during the preceding year;
(4) the actions taken regarding regulations, orders, and
supervisory actions with respect to covered persons which are
not credit unions or depository institutions, including
descriptions of the types of such covered persons, financial
activities, and consumer financial products or services
affected by such regulations, orders, and supervisory actions;
(5) an appraisal of significant actions, including actions
under Federal or State law, by State attorneys general or State
regulators relating to this title, the authorities transferred
under subtitles F and H, and the enumerated consumer laws;
(6) an analysis of the Agency's efforts to fulfill the fair
lending mission of the Agency; and
(7) an appraisal of the regulatory and legal difficulties
encountered by the Agency in carrying out the mission and
duties of the Agency with respect to consumer protection,
including a description of--
(A) the difficulties and hardships encountered with
respect to coordinating with other Federal and State
government entities;
(B) the regulatory and enforcement limitations
placed on the Agency by this title;
(C) the practices of persons, covered and uncovered
under this title, that allow such persons to harm
consumers and escape regulation or enforcement,
including any trends identified; and
(D) legislative and administrative recommendations
with respect to solving or alleviating identified
difficulties.
(c) Annual Appearance Before the Congress.--The Director shall
appear before the House Committee on Financial Services at an annual
hearing, after the report is submitted under subsection (a)--
(1) to discuss the efforts, activities, objectives and
plans of the Agency; and
(2) discuss and answer questions concerning such report.
SEC. 4109. FUNDING; FEES AND ASSESSMENTS; PENALTIES AND FINES.
(a) Transfer of Funds From the Board of Governors.--
(1) Transfer required.--Each year, beginning on the
designated transfer date, the Board of Governors shall transfer
funds in an amount equaling 10 percent of the Federal Reserve
System's total system expenses (as reported in the Budget
Review of the Board of Governors most recent Annual Report to
Congress) to the Director for the purposes of carrying out the
authorities granted in this title, under the enumerated
consumer laws, and transferred under subtitles F and H.
(2) Procedures.--The Board of Governors, in consultation
with the Agency, shall make appropriate arrangements to
transfer funds to the Director in accordance with this
subsection.
(b) Fees and Assessments.--
(1) Assessment required.--
(A) In general.--Taking into account such other
sums available to the Agency and subject to the
provisions of this subsection and subsection (d), the
Director shall assess fees on covered persons to meet
the Agency's expenses for carrying out the duties and
responsibilities of the Agency, including supervising
such covered persons.
(B) Basis for assessment.--The Agency shall assess
fees on covered persons pursuant to this subsection
based on the size and complexity of the covered person,
and the compliance record of the covered person under
the enumerated consumer laws, the laws and authorities
transferred under subtitles F and H, and this title.
(2) Regulations.--
(A) In general.--The Director shall prescribe
regulations to govern the imposition and collection of
fees and assessments.
(B) Factors required to be addressed.--Regulations
prescribed by the Director under this subsection shall
specify and define--
(i) the basis of fees or assessments (such
as the outstanding number of consumer credit
accounts, off-balance sheet receivables
attributable to the covered person, total
consolidated assets, total assets under
management, or volume of consumer financial
transactions or use of service providers);
(ii) the amount and frequency of fees or
assessments; and
(iii) such other factors that the Director
determines are appropriate, which shall include
a covered person's compliance record under the
enumerated consumer laws, the authorities
transferred under subtitles F and H, and this
title.
(3) Assessments on depository institution covered
persons.--
(A) Depository institution covered person
defined.--For purposes of this section, the term
``depository institution covered person'' means a
covered person that is an insured depository
institution or credit union.
(B) Assessments.--
(i) Fees required.--The Director shall
assess fees for supervision as are appropriate
on depository institution covered persons,
taking into account the size and complexity of
the covered person, and the compliance record
of the covered person under the enumerated
consumer laws, the laws and authorities
transferred under subtitles F and H, and this
title.
(ii) Limitation on certain fees.--The
Agency shall not assess examination fees on an
institution referred to in section 4203(a), or
an institution whose examination
responsibilities have been delegated to an
appropriate agency, pursuant to section
4202(c)(11).
(iii) Basis for fee amounts.--Fees assessed
by the Director under this subparagraph may be
established at levels necessary to meet the
Agency's expenses for carrying out the duties
and responsibilities of the Director and the
Agency under this title with regard to
depository institution covered persons.
(C) Coordination during implementation period.--The
Director and the agencies responsible for chartering
and or supervising depository institution covered
persons shall coordinate on the levels of fees assessed
on depository institution covered persons under this
paragraph, so that levels of assessments under this
subparagraph combined with levels of assessments by
agencies responsible for chartering and or supervising
depository institution covered persons shall be no more
than the assessments such depository institution
covered person was required to pay for the 12-month
period ending on December 31, 2009.
(D) Marginal assessment rate.--
(i) In general.--In setting assessment
rates for depository institution covered
persons, the Director shall not impose
assessments that result in higher marginal
assessment rates for depository institution
covered persons with assets of less than
$25,000,000,000 than the marginal rates for
depository institutions covered persons with
assets that exceed that amount.
(ii) Rule of construction.--Clause (i)
shall not be construed as limiting or impairing
the authority of the Director to set
assessments that would result in higher
marginal assessment rates on the larger
depository institution covered persons.
(E) Limitations on assessments.--
(i) Assessments for administrative costs.--
Notwithstanding any provision in this title, no
depository institution covered person shall be
charged an assessment to be used for the
supervision, examination, enforcement or
regulation by the Agency of nondepository
covered persons.
(ii) Amounts paid for consumer compliance
supervision.--Notwithstanding any provision in
this title, no depository institution covered
person shall pay more for consumer compliance
supervision than it paid before the date of
enactment of this title.
(4) Assessments on nondepository covered persons.--
(A) Nondepository covered person defined.--For
purposes of this section, the term ``nondepository
covered person''--
(i) means a covered person that is not a
credit union or insured depository institution;
and
(ii) includes any bank holding company.
(B) Assessments.--
(i) Fees required.--The Director shall
assess fees for registration, examination, and
supervision of nondepository covered persons.
(ii) Basis for fee amounts.--Fees assessed
by the Director under this subparagraph may be
established at levels necessary to meet the
Agency's expenses for carrying out the duties
and responsibilities of the Director and the
Agency, including supervising such covered
persons, taking into account such other sums
available to the Agency.
(iii) Registration fee minimums.--
Registration fees imposed on a nondepository
covered person under this paragraph shall, at a
minimum, be imposed on such covered person at
the time the person registers (or periodically
renews any such registration) with the Agency,
in accordance with regulations prescribed by
the Director.
(C) Nondepository covered person assessment not
less than for depository covered persons.--Assessment
rates levied by the Director under this section on a
nondepository institution covered persons shall be no
less than assessments levied by the Agency under this
section on a depository institution covered person with
similar characteristics.
(c) Authorization of Appropriations.--
(1) In general.--For the purposes of carrying out the
authorities granted in this title, under the enumerated
consumer laws, and the laws and authorities transferred under
subtitles F and H, there are authorized to be appropriated to
the Director such sums as may be necessary for any fiscal year.
(2) Apportionment.--Notwithstanding any other provision of
law, such amounts 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.
(3) Other available funds taken into account.--Sums
appropriated under this subsection shall take into account such
other sums available to the Agency under this section.
(d) Consumer Financial Protection Agency Depository Institution
Fund.--
(1) Establishment.--
(A) In general.--There is established in the
Treasury a separate fund to be known as the ``Consumer
Financial Protection Agency Depository Institution
Fund'' (hereafter in this section referred to as the
``CFPA Depository Fund'').
(B) Amounts in fund not available for certain
purposes.--Other than pursuant to subsection (f),
amounts on deposit in the CFPA Depository Fund shall
not be used in the supervision and examination of
nondepository institution covered persons.
(2) All transferred funds deposited.--All amounts
transferred to the Agency under subsection (a) shall be
deposited into the CFPA Depository Fund.
(3) All applicable supervisory fees and assessments
deposited.--The Director shall deposit all amounts received
from assessments under subsection (b)(3) in the CFPA Depository
Fund.
(e) Consumer Financial Protection Agency Nondepository Institution
Fund.--
(1) Establishment.--
(A) In general.--There is established in the
Treasury a separate fund called the Consumer Financial
Protection Agency Nondepository Institution Fund
(hereafter in this section referred to as the ``CFPA
Nondepository Fund'').
(B) Amounts in fund not available for certain
purposes.--Other than pursuant to subsection (f),
amounts on deposit in the CFPA Nondepository Fund shall
not be used for the supervision and examination of
depository institution covered persons.
(2) All applicable supervisory fees and assessments
deposited.--The Director shall deposit all amounts received
from assessments under subsection (b)(4) in the CFPA
Nondepository Fund.
(f) General Provisions Relating to Funds.--
(1) Maintenance of funds.--
(A) Agency funds maintained by treasury.--The
Consumer Financial Protection Agency Depository
Institution Fund established under subsection (d) and
the Consumer Financial Protection Agency Nondepository
Institution Fund established under subsection (e) shall
each be--
(i) maintained and administered by the
Secretary; and
(ii) maintained separately and not
commingled.
(B) Agency's authority.--Any provision of this
title forbidding the commingling or use of the CFPA
Depository Fund and the CFPA Nondepository Fund shall
not be construed as limiting or impairing the authority
of the Agency to use the same facilities and resources
in the course of conducting supervisory and regulatory
functions with respect to depository institutions and
nondepository institutions, or to integrate such
functions.
(C) Accounting requirements.--
(i) Accounting for use of facilities and
resources.--The Agency shall keep a full and
complete accounting of all costs and expenses
associated with the use of any facility or
resource used in the course of any function
specified in subparagraph (B) and shall
allocate, in the manner provided in
subparagraph (D), any such costs and expenses
incurred by the Agency--
(I) with respect to depository
institution covered persons, to the
CFPA Depository Fund; and
(II) with respect to nondepository
covered persons, to the CFPA
Nondepository fund.
(D) Allocation of administrative expenses.--Any
personnel, administrative, or other overhead expense of
the Agency shall be allocated--
(i) fully to the CFPA Depository Fund if
the expense was incurred directly as a result
of the Agency's responsibilities solely with
respect to depository institution covered
persons;
(ii) fully to the CFPA Nondepository Fund,
if the expense was incurred directly as a
result of the Agency's responsibilities solely
with respect to nondepository covered persons;
(iii) between the CFPA Depository Fund and
the CFPA Nondepository Fund, in amounts
reflecting the relative degree to which the
expense was incurred as a result of the
activities of depository institution covered
persons, and nondepository covered persons; and
(iv) if the Director is unable to make a
complete allocation under clause (i), (ii), or
(iii), between the CFPA Depository Fund and the
CFPA Nondepository Fund, in amounts reflecting
the relative proportion that, as of the end of
the preceding year--
(I) the aggregate assets of all
depository institution covered persons
bears to the aggregate assets of all
covered persons; and
(II) the aggregate assets of all
nondepository covered persons bears to
the aggregate assets of all covered
persons.
(E) Agency fund.--The ``Agency fund'' means the
Consumer Financial Protection Agency Depository
Institution Fund established under subsection (d), and,
the Consumer Financial Protection Agency Nondepository
Institution Fund established under subsection (e), and
the Consumer Financial Protection Agency Civil Penalty
Fund established under subsection (g).
(2) Investment.--
(A) Amounts in funds may be invested.--The Director
may request the Secretary to invest the portion of any
Agency fund that, in the Director's judgment, is not
required to meet the current needs of such fund.
(B) Eligible investments.--Investments pursuant to
subparagraph (A) 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 Agency fund involved, as determined by the
Director.
(C) Interest and proceeds credited.--The interest
on, and the proceeds from the sale or redemption of,
any obligations held in the respective Agency Fund
shall be credited to and form a part of the respective
Agency Fund.
(3) Use of funds.--Funds obtained by, transferred to, or
credited to any Agency fund shall be immediately available to
the Agency, and remain available until expended, to pay the
expenses of the Agency in carrying out the duties and
responsibilities of the Director and the Agency, including the
payment of compensation of the Director and officers and
employees of the Agency.
(2) Fees, assessments and other funds not government
funds.--Funds obtained by or transferred to any Agency 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 any Agency fund shall
not be subject to apportionment for purposes of chapter 15 of
title 31, United States Code, or under any other authority.
(g) Penalties and Fines.--
(1) Establishment of victims relief fund.--There is
established in the Treasury of the United States a fund to be
known as the ``Consumer Financial Protection Agency Civil
Penalty Fund'' (hereafter in this section referred to as the
``Civil Penalty Fund'').
(2) Deposits.--If the Agency obtains a civil penalty
against any person in any judicial or administrative action
under this title, any law or authority transferred under
subtitles F and H, or any enumerated consumer law, the Agency
shall deposit into the Civil Penalty Fund the amount of the
penalty collected.
(3) Payment to victims.--Amounts in the Civil Penalty Fund
shall be available to the Director, without fiscal year
limitation, for payments to the victims of activities for which
civil penalties have been imposed under this title, the law and
authorities transferred under subtitles F and H, or any
enumerated consumer law.
SEC. 4110. AMENDMENTS RELATING TO OTHER ADMINISTRATIVE PROVISIONS.
(a) Act of October 28, 1974.--Section 111 of Public Law 93-495 (12
U.S.C. 250) is amended by inserting ``the Consumer Financial Protection
Agency,'' after ``Federal Deposit Insurance Corporation,''.
(b) Paperwork Reduction Act.--Section 2(5) of the Paperwork
Reduction Act (44 U.S.C. 3502(5)) by inserting ``the Consumer Financial
Protection Agency,'' after ``the Securities and Exchange Commission,''.
SEC. 4111. EFFECTIVE DATE.
This subtitle shall take effect on the date of the enactment of
this title.
Subtitle B--General Powers of the Director and Agency
SEC. 4201. MANDATE AND OBJECTIVES.
(a) Mandate.--The Director shall seek to promote transparency,
simplicity, fairness, accountability, and equal access in the market
for consumer financial products or services.
(b) Objectives.--The Director may exercise the authorities granted
in this title, in the enumerated consumer laws, and transferred under
subtitles F and H for the purposes of ensuring that, with respect to
consumer financial products or services--
(1) consumers have and can use the information they need to
make responsible decisions about consumer financial products or
services;
(2) consumers are protected from abuse, unfairness,
deception, and discrimination;
(3) markets for consumer financial products or services
operate fairly and efficiently with ample room for sustainable
growth and innovation; and
(4) traditionally underserved consumers and communities
have equal access to responsible financial services.
SEC. 4202. AUTHORITIES.
(a) In General.--The Director may exercise the authorities granted
in this title, in the enumerated consumer laws, and transferred under
subtitles F and H, to administer, enforce, and otherwise implement the
provisions of this title, the authorities transferred in subtitles F
and H, and the enumerated consumer laws.
(b) Rulemaking, Orders, and Guidance.--
(1) In general.--The Director may prescribe regulations and
issue orders and guidance as may be necessary or appropriate to
enable it to administer and carry out the purposes and
objectives of this title, the authorities transferred under
subtitles F and H, and the enumerated consumer laws, and to
prevent evasions of this title, any such authority, and any
such law.
(2) Standards for rulemaking.--In prescribing a regulation
under this title or pursuant to the authorities transferred
under subtitles F and H or the enumerated consumer laws, the
Director shall--
(A) consider the potential benefits and costs to
consumers and covered persons, including the potential
reduction of consumers' access to consumer financial
products or services, resulting from such regulation;
and
(B) consult with the Federal banking agencies,
State bank supervisors, the Federal Trade Commission,
or other Federal agencies, as appropriate, regarding
the consistency of a proposed regulation with
prudential, consumer protection, civil rights, market,
or systemic objectives administered by such agencies or
supervisors.
(3) Exemptions.--
(A) In general.--The Director, by regulation or
order, may conditionally or unconditionally exempt any
covered person, service provider, or any consumer
financial product or service or any class of covered
persons, class of service providers, or consumer
financial products or services, from any provision of
this title, any enumerated consumer law, or from any
regulation under any such provision or law, as the
Director deems 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 by regulation
or order as permitted in subparagraph (A), the Director
shall as appropriate take into consideration the
following:
(i) The total assets of the covered person.
(ii) The volume of transactions involving
consumer financial products or services in
which the covered person engages.
(iii) The extent to which the covered
person engages in 1 or more financial
activities.
(iv) Existing laws or regulations which are
applicable to the consumer financial product or
service and the extent to which such laws or
regulations provide consumers with adequate
protections.
(C) Rule of construction.--No provision of this
section shall be construed as altering, amending, or
affecting any authority under sections 304(a), 304(i),
305(a), and 306(b) of the Home Mortgage Disclosure Act
of 1975 and sections 703(a)(1), 703(a)(2), 703(a)(3),
705(f), and 705(g) of the Equal Credit Opportunity Act
for determining whether a covered person should be
provided an exemption.
(c) Examinations and Reports.--
(1) In general.--Except as provided under section 4203, the
Director may on a periodic basis examine a covered person or
service provider, with respect to any consumer financial
product or service, for purposes of ensuring compliance with
the requirements of this title, the enumerated consumer laws,
and any regulations prescribed by the Director under this title
or pursuant to the authorities transferred under subtitles F
and H, and enforcing compliance with such requirements.
(2) Examination program.--The Director shall exercise any
authority of the Director under paragraph (1) in a manner
designed to ensure that such authorities are exercised with
respect to covered persons or service providers, without regard
to charter or corporate form, based on the Director's
assessment of the risks posed to consumers in the relevant
product markets and geographic markets, and taking into
consideration, as applicable, the following factors:
(A) The asset size of the covered persons.
(B) The volume of transactions involving consumer
financial products or services in which the covered
persons engage.
(C) The risks to consumers created by the provision
of such consumer financial products or services.
(D) In the case of State-chartered institutions,
the extent to which such institutions are subject to
oversight by State authorities for consumer protection.
(3) Coordination.--The Director shall coordinate the
Agency's supervisory activities with the supervisory activities
conducted by the Federal banking agencies and the State bank
supervisors, including establishing their respective schedules
for examining covered persons and requirements regarding
reports to be submitted by covered persons.
(4) Reports.--The Director may require reports from a
covered person for purposes of ensuring compliance with the
requirements of this title, the enumerated consumers laws, and
any regulation prescribed by the Director under this title or
pursuant to the authorities transferred under subtitles F and
H, and enforcing compliance with such requirements.
(5) Content of reports.--The reports authorized in
paragraph (4) may include such information as necessary to keep
the Agency informed as to--
(A) the compliance systems or procedures of the
covered person or any affiliate thereof, with
applicable provisions of this title or any other law
that the Agency has jurisdiction to enforce; and
(B) matters related to the provision of consumer
financial products or services including the servicing
or maintenance of accounts or extensions of credit.
(6) Use of existing reports.--In general, the Agency shall,
to the fullest extent possible, use--
(A) reports that a covered person, or any affiliate
thereof, or any service provider to such covered person
or affiliate, has provided or been required to provide
to a Federal or State agency; and
(B) information that has been reported publicly.
(7) Access by the agency to reports of other regulators.--
(A) Examination and financial condition reports.--
Upon providing reasonable assurances of
confidentiality, the Agency shall have access to any
report of examination or financial condition, including
a report containing data regarding consumer complaints,
made by a Federal banking agency or other Federal
agency having supervision of a covered person, or a
service provider, (other than returns and return
information described in section 6103 of the Internal
Revenue Code of 1986) and to all revisions made to any
such report.
(B) Provision of other reports to agency.--In
addition to the reports described in subparagraph (A),
a Federal banking agency may, in its discretion,
furnish to the Agency any other report or other
confidential supervisory information concerning any
insured depository institution, any credit union, or
other entity examined by such agency under authority of
any Federal law.
(8) Access by other regulators to reports of the agency.--
(A) Examination reports.--Upon providing reasonable
assurances of confidentiality, a Federal banking
agency, a State regulator, or any other Federal agency
having supervision of a covered person shall have
access to any report of examination made by the Agency
with respect to the covered person or service provider,
and to all revisions made to any such report.
(B) Provision of other reports to other
regulators.--In addition to the reports described in
paragraph (A), the Agency may, in the discretion of the
Agency, furnish to a Federal banking agency any other
report or other confidential supervisory information
concerning any insured depository institution, any
credit union, or other entity examined by the Agency
under authority of any Federal law.
(9) Preservation of authority.--No provision in paragraph
(3) shall be construed as preventing the Agency from conducting
an examination authorized by this title or under the
authorities transferred under subtitles F and H or pursuant to
any enumerated consumer law. No provision of this title shall
be construed as limiting the authority of the Director to
require reports from a covered person, as permitted under
paragraph (4), regarding information owned or under the control
of the covered person, regardless of whether such information
is maintained, stored, or processed by another person.
(10) Reports of tax law noncompliance.--The Director shall
provide the Commissioner of Internal Revenue with any report of
examination or related information identifying possible tax law
noncompliance.
(11) Delegation.--
(A) In general.--The Director may delegate the
examination authorities of the Agency under this title
to any appropriate agency, as defined in section 4203,
for any insured depository institution or insured
credit union that is not subject to section 4203 upon a
petition by an appropriate agency.
(B) Standard for delegation.--The Director shall
provide such delegation if, in the Director's sole
discretion, the Director determines that--
(i) the delegation is consistent with the
public interest;
(ii) the appropriate agency is capable of
enforcing compliance with this title, and with
any regulation prescribed under this title; and
(iii) such capability is comparable to or
superior to the capability of the Agency, in
terms of expertise, demonstrated commitment,
and overall effectiveness, in enforcing such
compliance.
(C) Effect of delegation.--The insured depository
institution or insured credit union shall be subject to
the examination process described in section 4203(b).
(D) No effect on enforcement.--The Director's
delegation authority under this paragraph shall not
apply to the Director's enforcement responsibilities
under subsection (e).
(d) Exclusive Rulemaking and Examination Authority.--
Notwithstanding any other provision of Federal law other than section
4203 and subsections (f) and (h) of this section, to the extent that a
Federal law authorizes the Director and another Federal agency to
prescribe regulations, issue guidance, conduct examinations, or require
reports under that law for purposes of assuring compliance with this
title, any enumerated consumer law, the laws for which authorities were
transferred under subtitles F and H, and any regulations prescribed
under this title or pursuant to any such authority, the Director shall
have the exclusive authority to prescribe regulations, issue guidance,
conduct examinations, require reports, or issue exemptions with regard
to any person subject to that law and with respect to any activity
regulated under any enumerated consumer law.
(e) Primary Enforcement Authority.--
(1) The agency to have primary enforcement authority.--To
the extent that a Federal law authorizes the Agency and another
Federal agency to enforce that law, the Agency shall have
primary authority to enforce that Federal law with respect to
any person in accordance with this subsection.
(2) Coordination with federal trade commission.--
(A) Notice.--If the Commission is authorized to
enforce any Federal law described in paragraph (1), or
a regulation prescribed under any such Federal law, the
Commission shall serve written notice to the Director
of any enforcement action at least 30 days prior to
initiating such an enforcement action, except that if
exigent circumstances are present, the Commission may
provide notice immediately upon initiating such
enforcement action.
(B) Intervention by the director.--Upon receiving
any notice under subparagraph (A) with respect to an
enforcement action, the Director may intervene in such
enforcement action and upon intervening--
(i) be heard on all matters arising in such
enforcement action; and
(ii) file petitions for appeal in such
enforcement action.
(C) Pendency of agency action.--Whenever a civil
action has been instituted by or on behalf of the
Agency for any violation of any Federal law described
in paragraph (1), or a regulation prescribed under any
such Federal law, the Commission may not, during the
pendency of that action instituted by or on behalf of
the Agency, institute a civil action under such law or
regulation against any defendant named in the Agency
complaint in such action for any violation alleged in
the Agency complaint.
(D) Agreements between agencies.--
(i) Negotiations authorized.--The Director
may negotiate an agreement with the Commission
to establish procedures to ensure that the
enforcement actions of the 2 agencies are
appropriately coordinated.
(ii) Scope of negotiated agreement.--The
terms of any agreement negotiated pursuant to
clause (i) may modify or supersede the
provisions of subparagraphs (A), (B), and (C).
(3) Coordination with other federal agency.--
(A) Referral.--Any Federal agency (other than the
Federal Trade Commission) that is authorized to enforce
a Federal law described in paragraph (1) may recommend
in writing to the Director that the Agency initiate an
enforcement proceeding to the extent the Agency is
authorized by that Federal law or by this title. The
recommendation shall be accompanied by a written
explanation of the concerns giving rise to the
recommendation.
(B) Backstop enforcement authority of other federal
agency.--If the Agency does not, before the end of the
120-day period beginning on the date on which the
Director receives a recommendation under subparagraph
(A), initiate an enforcement proceeding, the other
agency referred to in subparagraph (A) may initiate an
enforcement proceeding as permitted by that Federal
law.
(4) Institutions subject to special examination and
enforcement procedures.--This subsection shall not apply to
institutions subject to section 4203.
(f) Preservation of Other Authority.--
(1) Attorney general.--No provision of this title shall be
construed as affecting any authority of the Attorney General.
(2) Secretary of the treasury.--No provision of this title
shall be construed as affecting any authority of the Secretary
of the Treasury, including with respect to prescribing
regulations, initiating enforcement proceedings, or taking
other actions with respect to a person providing tax planning
or tax preparation services.
(3) Fair housing act.--No provision of this title shall be
construed as affecting any authority arising under the Fair
Housing Act.
(g) Effect on Other Authority.--No provision of this section or
section 4203 shall be construed as modifying or limiting the authority
of any appropriate Federal banking agency or the Director or Agency to
interpret, or take enforcement action under, any law or regulation the
interpretation or enforcement of which is committed to the banking
agency or the Director or Agency, which shall include, in the case of
the Director and the Agency, this title, the enumerated consumer laws,
and the regulations prescribed under this title or such laws.
(h) Preservation of Federal Trade Commission Authority.--No
provision of this title shall be construed as modifying, limiting, or
otherwise affecting the authority of the Federal Trade Commission under
the Federal Trade Commission Act or other laws other than the
enumerated consumer laws.
SEC. 4203. EXAMINATION AND ENFORCEMENT FOR SMALL BANKS, THRIFTS, AND
CREDIT UNIONS.
(a) Scope of Institutions Subject to This Section.--
(1) Institutions covered.--This section shall apply to--
(A) any insured depository institution with total
assets of $10,000,000,000 or less; or
(B) any insured credit union with total assets of
$1,500,000,000 or less.
(2) Appropriate agency.--For purposes of this title, the
term ``appropriate agency'' means--
(A) in the case of an insured depository
institution, the appropriate Federal banking agency as
such 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.
(b) Examinations.--
(1) In general.--The appropriate agency shall on a periodic
basis examine, or require reports from, an institution referred
to in subsection (a) for purposes of ensuring compliance with
the requirements of this title, the enumerated consumer laws,
and any regulation prescribed by the Director under this title
or pursuant to the authorities transferred under subtitles F
and H, and enforcing compliance with such requirements.
(2) Agency role in examinations.--
(A) The appropriate agency shall provide all
reports, records, and documentation related to the
examination process to the Agency on a timely and
ongoing basis.
(B) The Director and Agency may, at its discretion,
include an examiner on any examination conducted under
paragraph (1). The appropriate agency shall involve
such Agency examiner in the entire examination process,
including setting the scope of an examination,
participating in the examination, and providing input
on the examination report, matters requiring attention
and examination ratings.
(c) Enforcement.--
(1) In general.--Notwithstanding any other provision of
this title other than this subsection, the appropriate agency
shall have primary authority to enforce violations identified
at institutions referred to in subsection (a) of any of the
requirements of this title, the enumerated consumers laws, and
any regulation prescribed by the Director under this title or
pursuant to the authorities transferred under subtitles F and
H.
(2) Coordination with appropriate agency.--
(A) Referral.--
(i) In general.--The Agency may recommend
in writing to the appropriate agency that the
appropriate agency initiate an enforcement
proceeding to the extent the appropriate agency
is authorized by that Federal law or by this
title.
(ii) Explanation.--Any recommendation under
clause (i) shall be accompanied by a written
explanation of the concerns giving rise to the
recommendation.
(B) Backstop enforcement authority of agency.--If
the appropriate agency does not, before the end of the
120-day period beginning on the date on which the
appropriate agency receives a recommendation under
subparagraph (A), initiate an enforcement proceeding,
the Agency may initiate an enforcement proceeding as
permitted by Federal law.
(d) Actions Arising Out of Consumer Complaint System.--
Notwithstanding any provision of this section, if through the consumer
complaint system administered by the Agency under section 4105(c)(3),
the Director has reasonable cause to believe that an institution
referred to in subsection (a) demonstrates noncompliance with any
provision of this title, the enumerated consumer laws, or any
regulation prescribed by the Director under this title or pursuant to
the authorities transferred under subtitles F and H, the Director may
directly investigate such institution for such noncompliance and take
any action permitted under subtitle E that the Director deems
appropriate.
(e) Removal of Appropriate Agency for Particular Institution.--
(1) Heightened supervision.--The Director--
(A) may provide notice to an appropriate agency
that the Director is considering issuing a removal
order under paragraph (2); and
(B) shall have an Agency examiner participate in
the examination process under subsection (b) for at
least 1 examination cycle.
(2) Removal by order.--If, after the completion of at least
1 examination cycle following the provision of notice to an
appropriate agency under paragraph (1), the Director determines
in writing that the appropriate agency has failed to adequately
conduct consumer compliance examinations or bring appropriate
enforcement actions against an institution referred to in
subsection (a), the Director may order the removal of the
appropriate agency from its responsibilities under this section
for such institution.
(3) Agency authority upon removal.--Upon removal pursuant
to paragraph (2), the Agency shall examine and enforce against
such institution as if the institution were subject to section
4202.
(4) Effective date.--An order under paragraph (2) shall
take effect 30 days after a determination by the Secretary of
the Treasury pursuant to paragraphs (5) and (6).
(5) Automatic appeal.--An order issued by the Director
pursuant to paragraph (2) shall be automatically appealed to
the Secretary.
(6) Decision by the secretary of the treasury.--
(A) Determination.--The order issued pursuant to
paragraph (2) shall be deemed affirmed unless the
Secretary of the Treasury denies the determination of
the Director within 120 days of the issuance of the
order pursuant to paragraph (2).
(B) Rule of construction.--Nothing in subparagraph
(A) shall be construed as prohibiting the Secretary of
the Treasury from making a determination to either
affirm or deny an order issued pursuant to paragraph
(2) prior to the passage of the time period in
subparagraph (A).
(7) Regulations.--By the transfer date, the Secretary shall
issue regulations that establish the standards the Director
shall apply in making a determination to remove an appropriate
agency and the process, procedures, and standards for an
appeal. Such standards shall require the Director to consider
at least the following in issuing an order removing an
appropriate agency for an institution referred to in subsection
(a)(1):
(A) Reports of examination of such institution.
(B) Any enforcement actions taken by an appropriate
agency against such institution and the results of
those actions.
(C) Consumer complaints issued against such
institution.
(D) Actions taken by State attorneys general and
private rights of action against such institution.
(f) Policies and Procedures.--Within 180 days after the designated
transfer date, the Agency and the appropriate agency shall develop
policies and procedures for implementing this section.
(g) Assessments.--
(1) Limitation on certain fees.--The Agency shall not
assess examination fees on an institution referred to in
subsection (a).
(2) Rule of construction.--No provision of this section
shall be construed as preventing the appropriate agency from
assessing fees on an institution referred to in paragraph (1)
to meet the appropriate agency's expenses for carrying out such
examination and supervision responsibilities pursuant to this
section.
SEC. 4204. SIMULTANEOUS AND COORDINATED SUPERVISORY ACTION.
(a) Examinations.--A Federal banking agency and the Agency shall,
with respect to each insured depository institution, credit union, or
other covered person supervised by the Federal banking agency and the
Agency, respectively--
(1) coordinate the scheduling of examinations of the
insured depository institution, and credit union, or other
covered person;
(2) conduct simultaneous examinations of each insured
depository institution, credit union or other covered person,
unless such institution requests examinations to be conducted
separately;
(3) 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
(4) prior to issuing a final report of examination or
taking supervisory action, an agency shall take into
consideration concerns, if any, raised in the comments made by
the other agency.
(b) Coordination With State Bank Supervisors.--The Agency shall
pursue arrangements and agreements with State bank supervisors to
coordinate examinations consistent with subsection (a).
(c) Resolution of Conflict in Supervision.--
(1) Request of depository institution.--
(A) In general.--If the proposed material
supervisory determinations of the Agency and a Federal
banking agency are conflicting, an insured depository
institution, credit union, or other covered person may
request the agencies to coordinate and present a joint
statement of coordinated supervisory action.
(B) Limitation.--A request of an insured depository
institution, credit union, or other covered person
shall not be used to appeal a supervisory rating or
determination by the Agency or a Federal banking
agency.
(2) Joint statement.--The agencies receiving a request from
an insured depository institution, credit union, or covered
person under paragraph (1) shall provide a joint statement
resolving the conflict under such subparagraph before the end
of the 30-day period beginning on the date the agencies receive
such request.
(d) Appeals to Governing Panel.--
(1) In general.--If the agencies receiving a request from
an insured depository institution, credit union, or covered
person under subsection (c)(1) do not issue a joint statement
under subsection (c)(2), or if either agency takes or attempts
to take any supervisory action relating to the request for the
joint statement without the consent of the other agency, the
insured depository institution, credit union, or other covered
person may institute an appeal to a governing panel under this
subsection.
(2) Timetable.--Any appeal under paragraph (1) with regard
to a failure of agencies to issue a joint statement shall be
filed before the end of the 30-day period beginning at the end
of the 30-day period during which such joint statement was due
under subsection (c)(2).
(e) Composition of Governing Panel.--The governing panel for an
appeal under this section shall be composed of--
(1) 2 individuals--
(A) 1 of whom is a representative from the Agency;
(B) 1 of whom is a representative of the Federal
banking agency which received the request to which the
appeal relates; and
(C) neither of whom--
(i) have participated in the material
supervisory determinations under appeal; and
(ii) report directly or indirectly to the
individual who made the supervisory
determinations under appeal; and
(2) 1 individual who is a representative from--
(A) the Federal banking agency that heads the
Financial Institution Examination Council; or
(B) if the Financial Institutions Examination
Council is headed by a Federal banking agency that is a
party to the appeal, the Federal banking agency that is
next scheduled to head the Financial Institutions
Examination Council.
(f) Conduct of Appeal.--
(1) Content of filing appeal.--The insured depository
institution, credit union, or other covered person which
institutes an appeal under subsection (d)(1) shall include in
the filing of such appeal all the facts and legal arguments
pertaining to the matter appealed.
(2) Appearance.--The insured depository institution, credit
union, or other covered person which institutes an appeal under
this section may appear before the governing panel in person or
by telephone, through counsel, employees, or representatives
of, or for, such institution, credit union, or other covered
person.
(3) Requests for additional information.--Any governing
panel convened under this section may request the insured
depository institution, credit union, or other covered person,
the Agency, or the Federal banking agency to produce additional
information relevant to the appeal.
(4) Final written determinations .--Any governing panel
convened under this section, by a majority vote of the members
of the panel, shall provide a final determination, in writing,
within 30 days of the filing of an informationally complete
appeal, or such longer period as the panel and the insured
depository institution, credit union, or other covered person
may jointly agree.
(5) Public information.--A redacted copy of any
determination by a governing panel convened under this section
shall be made public upon the issuance of such determination.
(g) Prohibition Against Retaliation.--The Director and the Federal
banking agencies shall prescribe regulations to provide safeguards from
retaliation against any insured depository institution, credit union,
or other covered person which institutes an appeal under this section,
as well as against any officer or and employee of any such institution,
credit union, or other person.
(h) Material Supervisory Determination Defined.--For purposes of
this section, the term ``material supervisory determination''--
(1) includes any action relating to any supervision or
examinations; and
(2) does not include--
(A) a determination by any Federal banking agency
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 or section 212 of the Federal
Credit Union Act, as the case may be; or
(B) any regulation or guidance, or order of general
applicability.
SEC. 4205. LIMITATIONS ON AUTHORITY OF AGENCY AND DIRECTOR.
(a) Exclusion for Merchants, Retailers, and Sellers of
Nonfinancial Services.--
(1) In general.--Notwithstanding any provision of this
title (other than paragraph (4)) and subject to paragraph (2),
the Director and the Agency may not exercise any rulemaking,
supervisory, enforcement or other authority, including
authority to order assessments, under this title with respect
to--
(A) credit extended directly by a merchant,
retailer, or seller of nonfinancial services to a
consumer, in a case in which the good or service being
provided is not itself a consumer financial product or
service, exclusively for the purpose of enabling that
consumer to purchase goods or services directly from
the merchant, retailer, or seller of nonfinancial
services; or
(B) collection of debt, directly by the merchant,
retailer, or seller of nonfinancial services, arising
from such credit extended.
(2) Exception for existing authority.--The Director may
exercise any rulemaking authority regarding an extension of
credit described in paragraph (1)(A) or the collection of debt
arising from such extension, as may be authorized by the
enumerated consumer laws or any law or authority transferred
under subtitle F or H.
(3) Rule of construction.--No provision of this title shall
be construed as modifying, limiting, or superseding the
authority of the Federal Trade Commission or any other agency
with respect to credit extended, or the collection of debt
arising from such extension, directly by a merchant, retailer,
or seller of nonfinancial services to a consumer exclusively
for the purpose of enabling that consumer to purchase goods or
services directly from the merchant, retailer, or seller of
nonfinancial services.
(4) Exclusion not applicable to certain credit
transactions.--Paragraph (1) shall not apply to--
(A) any credit transaction, including the
collection of the debt arising from such extension, in
which the merchant, retailer, or seller of nonfinancial
services assigns, sells, or otherwise conveys such debt
owed by the consumer to another person; or
(B) any credit transaction--
(i) in which the credit provided
significantly exceeds the market value of the
product or service provided, and
(ii) with respect to which the Director
finds that the sale of the product or service
is done as a subterfuge so as to evade or
circumvent the provisions of this title.
(b) Exclusion for Persons Regulated by the Securities and Exchange
Commission.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
the Securities and Exchange Commission or 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
the Securities and Exchange Commission or any securities
commission (or any agency or office performing like functions)
of any State. The Director and Agency shall have no authority
to exercise any power to enforce this title with respect to a
person regulated by the Securities and Exchange Commission or
any securities commission (or any agency or office performing
like functions) of any State.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Securities and Exchange Commission shall
consult and coordinate with the Director 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 Agency under this title or under any other
law.
(c) 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 Director and the Agency 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 Director 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
Agency under this title or under any other law.
(d) 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 any State insurance regulator. Except
as provided in paragraphs (2) and (3), the Agency shall have no
authority to exercise any power to enforce this title with
respect to a person regulated by any State insurance regulator.
(2) Description of activities.--Paragraph (1) shall not
apply to any person described in such paragraph to the extent
such person is engaged in any financial activity described in
any subparagraph of section 4002(19) or is otherwise subject to
any of the enumerated consumer laws or the authorities
transferred under subtitle F or H.
(3) Preservation of certain authorities.--Nothing in this
title shall be construed as limiting the authority of the
Director and the Agency from exercising powers under this title
with respect to the provision by a covered person of a product
or service, not otherwise subject to this title, for or on
behalf of a person regulated by a State insurance regulator, in
connection with a financial activity.
(e) Exclusion for Persons Regulated by the Federal Housing Finance
Agency.--No provision of this title shall be construed as altering,
amending, or affecting the authority of the Federal Housing Finance
Agency to adopt rules, initiate enforcement proceedings, or take any
other action with respect to a person regulated by the Federal Housing
Finance Agency. The Director and Agency shall have no authority to
exercise any power to enforce this title with respect to a person
regulated by the Federal Housing Agency. For purposes of this
subsection, the term ``person regulated by the Federal Housing Finance
Agency'' means any Federal home loan bank, and any joint office of 1 or
more Federal home loan banks.
(f) Exclusion for Qualified Retirement or Eligible Deferred
Compensation Plans and Arrangements.--
(1) In general.--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--
(A) any retirement or eligible deferred
compensation plan or arrangement qualified under or
meeting the requirements of section 401(a), 403(a),
403(b), 457(b), 408 or 408A of the Internal Revenue
Code; or
(B) any educational savings arrangement under
section 529 of such Code.
(2) Limitation on agency authority.--
(A) In general.--The Director and the Agency may
not exercise any power to enforce this title with
respect to services provided directly (or indirectly if
the services relate to the operation of such plan or
arrangement) to--
(i) any retirement or eligible deferred
compensation plan or arrangement qualified
under or meeting the requirements of section
401(a), 403(a), 403(b), 457(b), 408, or 408A of
the Internal Revenue Code; or
(ii) any educational savings arrangement
under section 529 of such Code.
(B) Services defined.--For purposes subparagraph
(A), the term ``services'' shall include, for example,
services for custody and investment of assets,
administration, compliance, and participant assistance.
(g) Exclusion for Accountants, Tax Preparers, and Attorneys.--
(1) In general.--Except as permitted in paragraph (2), the
Director and the Agency may not exercise any rulemaking,
supervisory, enforcement or other authority, including
authority to order assessments, 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 customary and
usual accounting activities, including the provision of
accounting, tax, advisory, other services that are
subject to the regulatory authority of a state board of
accountancy or a federal authority, or other services
that are incidental to such customary and usual
accounting activities, to the extent that such
incidental services are not offered or provided by the
person separate and apart from such customary and usual
accounting activities and are not offered or provided
to consumers who are not receiving such customary and
usual accounting activities;
(B) any person other than a person described in
subparagraph (A) that performs income tax preparation
activities for consumers; or
(C) any individual who is providing legal advice or
services for which a license to practice law is
required under the law of the State in which the advice
or services are provided and which are performed within
the scope of an attorney-client relationship
established by an agreement, but only to the extent of
such legal advice or services.
(2) No exclusion with respect to registration of most
attorneys.--Notwithstanding paragraph (1), this subsection
shall not apply to any authority granted to the Director or the
Agency under section 4209 with respect to a licensed attorney,
except to the extent a licensed attorney is solely providing
legal services in connection with--
(A) the preparation and filing of a bankruptcy
petition; or
(B) court proceedings to avoid a foreclosure.
(3) Description of activities.--Paragraph (1) shall not
apply to--
(A) any person described in paragraph (1)(A) to the
extent 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
a financial activity described in any subparagraph of
section 4002(19);
(B) any person described in paragraph (1)(B) or
(1)(C) to the extent such person is engaged in any
activity which is a financial activity described in any
subparagraph of section 4002(19); or
(C) any person described in paragraph (1)(A),
(1)(B) or (1)(C) that is otherwise subject to any of
the enumerated consumer laws or the authorities
transferred under subtitle F or H.
(h) Exclusion for Real Estate Licensees.--
(1) In general.--Except as permitted in paragraph (2), the
Director and the Agency may not exercise any rulemaking,
supervisory, enforcement or other authority, including
authority to order assessments, over a person that is licensed
or registered as a real estate broker, real estate agent, in
accordance with State law, but only 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 providing financing with respect to any
such transaction);
(D) engages in any activity for which a person
engaged in the activity is required to be registered or
licensed as a real estate agent or real estate broker
under any applicable law; or
(E) offers to engage in any activity, or act in any
capacity, described in subparagraph (A), (B), (C), or
(D).
(2) Description of activities.--Paragraph (1) shall not
apply to any person described in such paragraph to the extent
such person is engaged in any financial activity described in
any subparagraph of section 4002(19) or is otherwise subject to
any of the enumerated consumer laws or the authorities
transferred under subtitle F or H.
(i) Exclusion for Auto Dealers.--
(1) In general.--The Director and the Agency may not
exercise any rulemaking, supervisory, enforcement or any other
authority, including authority to order assessments, over--
(A) a motor vehicle dealer that is primarily
engaged in the sale and servicing of motor vehicles,
the leasing and servicing of motor vehicles, or both;
or
(B) a person that--
(i) is controlled by, or is under common
control with, one or more motor vehicle
dealers; and
(ii) primarily engages in the extension of,
or arranging for the extension of, retail
credit or retail leases involving motor
vehicles, where 90 percent of such extension,
or arranging for such extension, is made with
respect to customers of one or more motor
vehicle dealers that control such person or
with which such person is under common control.
(2) Certain functions excepted.--The provisions of
paragraph (1) shall not apply to any person to the extent that
person--
(A) provides consumers with any services related to
residential mortgages; or
(B) operates a line of business that involves the
extension of retail credit or retail leases involving
motor vehicles, and in which--
(i) the extension of retail credit or
retail leases is routinely provided directly to
consumers; and
(ii) the contract governing such extension
of retail credit or retail leases is not
routinely assigned to a third party finance or
leasing source.
(3) No impact on prior authority.--Nothing in this
subsection shall be construed to modify, limit, or supersede
the rulemaking or enforcement authority over motor vehicle
dealers that could be exercised by any Federal department or
agency on the day prior to the enactment of this title.
(4) No transfer of certain authority.--Notwithstanding
subtitle F or any other provision of law under this title, the
consumer financial protection functions of the Board of
Governors and the Federal Trade Commission shall not be
transferred to the Director or the Agency to the extent such
functions are with respect to a person described under
paragraph (1).
(5) Definitions.--For purposes of this subsection:
(A) Motor vehicle.--The term ``motor vehicle''
means any self-propelled vehicle designed for
transporting persons or property on a street, highway,
or other road.
(B) Motor vehicle dealer.--The term ``motor vehicle
dealer'' means any person resident in the United States
or any territory of the United States, and licensed by
a State, a territory of the United States, or the
District of Columbia to engage in the sale of motor
vehicles.
(j) No Authority to Impose Usury Limit.--No provision of this title
shall be construed as conferring authority on the Director or the
Agency 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.
(k) Exclusion for Manufactured Home Retailers and Modular Home
Retailers.--
(1) In general.--The Director and the Agency may not
exercise any rulemaking, supervisory, enforcement or other
authority, including authority to order assessments, over a
person to the extent such person--
(A) acts as an agent or broker for a buyer or
seller of a manufactured home or a modular home;
(B) 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
(C) offers to engage in any activity described in
subparagraphs (A) or (B).
(2) Description of activities.--Paragraph (1) shall not
apply to any person described in such paragraph to the extent
such person is engaged in any financial activity described in
any subparagraph of section 4002(19) or is otherwise subject to
any of the enumerated consumer laws or the authorities
transferred under subtitle F or H.
(3) Definitions.--For purposes of this subsection:
(A) Manufactured home.--The term ``manufactured
home'' has the meaning given such term 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 two 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.
SEC. 4206. COLLECTION OF INFORMATION; CONFIDENTIALITY REGULATIONS.
(a) Collection of Information.--
(1) In general.--In conducting research on the provision of
consumer financial products or services, the Director shall
have the power to gather information from time to time
regarding the organization, business conduct, and practices of
covered persons or service providers.
(2) Specific authority.--In order to gather such
information, the Director shall have the power--
(A) to gather and compile information;
(B) to require persons to file with the Agency, in
such form and within such reasonable period of time as
the Director may prescribe, by regulation or order,
annual or special reports, or answers in writing to
specific questions, furnishing information the Director
may require; and
(C) to make public such information obtained by it
under this section as is in the public interest in
reports or otherwise in the manner best suited for
public information and use.
(b) Confidentiality Regulations.--The Director shall prescribe
regulations regarding the confidential treatment of information
obtained from persons in connection with the exercise of any authority
of the Agency or Director under this title and the enumerated consumer
laws and the authorities transferred under subtitles F and H.
(c) Privacy Considerations.--In collecting information from any
person, publicly releasing information held by the Agency, or requiring
covered persons to publicly report information, the Director and the
Agency shall take steps to ensure that proprietary, personal or
confidential consumer information that are protected from public
disclosure under section 552(b) or 552a of title 5, United States Code,
or any other provision of law are not made public under this title.
SEC. 4207. MONITORING; ASSESSMENTS OF SIGNIFICANT REGULATIONS; REPORTS.
(a) Monitoring.--
(1) In general.--The Agency shall monitor for risks to
consumers in the provision of consumer financial products or
services, including developments in markets for such products
or services.
(2) Means of monitoring.--Such monitoring may be conducted
by examinations of covered persons or service providers,
analysis of reports obtained from covered persons or service
providers, assessment of consumer complaints, surveys and
interviews of covered persons, service providers, and
consumers, and review of available databases.
(3) Considerations.--In allocating the resources of the
Agency to perform the monitoring required by this section, the
Director 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) consumers' understanding of the risks of a type
of consumer financial product or service;
(C) the state of the law that applies to the
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 provision of a consumer
financial product or service;
(E) extent, if any, to which the risks of a
consumer financial product or service may
disproportionately affect traditionally underserved
consumers, if any; or
(F) types, number, and other pertinent
characteristics of covered persons that provide the
product or service.
(4) Reports.--The Agency shall publish at least 1 report of
significant findings of the monitoring required by paragraph
(1) in each calendar year, beginning in the calendar year that
is 1 year after the designated transfer date.
(b) Assessment of Significant Regulations.--
(1) In general.--The Agency shall conduct an assessment of
each significant regulation prescribed or order issued by the
Director under this title, under the authorities transferred
under subtitles F and H or pursuant to any enumerated consumer
law that addresses, among other relevant factors, the
effectiveness of the regulation in meeting the purposes and
objectives of this title and the specific goals stated by the
Director.
(2) Basis for assessment.--The assessment shall reflect
available evidence and any data that the Agency reasonably may
collect.
(3) Reports.--The Agency shall publish a report of an
assessment under this subsection not later than 3 years after
the effective date of the regulation or order, unless the
Director determines that 3 years is not sufficient time to
study or review the impact of the regulation, but in no event
shall the Agency publish a report of such assessment more than
5 years after the effective date of the regulation or order.
(4) Public commented required.--Before publishing a report
of its assessment, the Agency shall invite, with sufficient
time allotted, public comment on, and may hold public hearings
on, recommendations for modifying, expanding, or eliminating
the newly adopted significant regulation or order.
(c) Information Gathering.--In conducting any monitoring or
assessment required by this section, the Agency may gather information
through a variety of methods, including by conducting surveys or
interviews of consumers.
SEC. 4208. AUTHORITY TO RESTRICT MANDATORY PREDISPUTE ARBITRATION.
(a) In General.--The Director, by regulation, may prohibit or
impose conditions or limitations on the use of any 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 Director finds that such a prohibition or imposition of
conditions or limitations are in the public interest and for the
protection of consumers.
(b) Effective Date.--Notwithstanding any other provision of law,
any regulation prescribed by the Director under subsection (a) 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 Director.
SEC. 4209. REGISTRATION AND SUPERVISION OF NONDEPOSITORY COVERED
PERSONS.
(a) Risk-based Programs.--
(1) In general.--The Agency shall develop risk-based
programs to supervise covered persons that are not credit
unions, depository institutions, or persons excluded under
section 4205 by prescribing registration requirements,
reporting requirements, and examination standards and
procedures.
(2) Basis for programs.--The risk-based supervisory
programs established pursuant to paragraph (1) shall be based
on--
(A) relevant registration and reporting information
about such covered persons, as determined by the
Agency; and
(B) the Agency's assessment of risks posed to
consumers in the relevant geographic markets and
markets for consumer financial products and services.
(b) Registration.--
(1) In general.--The Director shall prescribe regulations
regarding registration requirements for covered persons that
are not credit unions or depository institutions.
(2) Consultation with state agencies.--In developing and
implementing registration requirements under this subsection,
the Agency shall consult with State agencies regarding
requirements or systems for registration (including coordinated
or combined systems), where appropriate.
(3) Exception for related persons.--The Agency shall not
impose requirements regarding the registration of a related
person.
(4) Registration information.--Subject to regulations
prescribed by the Director, the Agency shall publicly disclose
the registration information about a covered person which is
not a bank holding company, credit union, or depository
institution for the purposes of facilitating the ability of
consumers to identify the covered person as registered with the
Agency.
(c) Reporting Requirements.--
(1) In general.--The Agency may require reports from
covered persons that are not credit unions or depository
institutions, or service providers thereto, for the purposes of
facilitating supervision of such covered persons or service
providers.
(2) Consistency of reporting requirements and risk-based
standards.--The Agency shall impose reporting requirements
under this subsection that are consistent with the risk-based
standards developed and implemented under this section and the
registration information pertaining to the relevant types or
classes of covered persons.
(3) Contents of reports.--Reporting requirements imposed
under this paragraph may include information regarding--
(A) the nature of the covered person's business;
(B) the covered person's name, legal form,
ownership and management structure, and related
persons;
(C) the covered person's locations of operation;
(D) the covered person's types and number of
consumer financial products and services provided by
the covered person;
(E) compliance with any requirement imposed or
enforced by the Agency, including any requirement
relating to registration, licensing, fees, or
assessments; and
(F) the financial condition of such covered person,
including a related person, for the purpose of
assessing the ability of such person to perform its
obligation to consumers.
(4) Exception for related persons.--Other than reports
permitted under paragraph (3)(F) or in connection with a
supervisory action or examination or pursuant to the powers
granted in subtitle E, the Agency shall not impose requirements
regarding reports of any related person.
(d) Examinations.--
(1) Examinations required.--The Agency shall conduct
examinations of covered persons that are not credit unions or
depository institutions as part of the programs implemented
under paragraphs (2) and (3) of section 4202(c).
(2) Examination standards and procedures.--The Director
shall establish risk-based standards and procedures for
conducting examinations of covered persons required to be
examined under paragraph (1), including the frequency and scope
of such examinations, except that the Agency shall conduct
examinations of such covered persons that are determined to
pose the highest risk to consumers based on factors determined
by the Director, such as the operations, sales practices, or
consumer financial products or services provided by such
covered persons.
(e) Authority to Collect Information Regarding Fees or
Assessments.--To the extent permitted by Federal law, the Agency may
obtain from the Secretary of the Treasury information relating to a
covered person which is not a bank holding company, credit union, or
depository institution, including information regarding compliance with
a reporting or registration requirement under the subchapter II of
chapter 53 of title 31, United States Code, for the purposes of, and
only to the extent necessary in, investigating, determining, or
enforcing compliance with a requirement relating to any fee or
assessment imposed by the Agency under this title.
SEC. 4210. EFFECTIVE DATE.
This subtitle shall take effect on the designated transfer date.
Subtitle C--Specific Authorities
SEC. 4301. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR PRACTICES.
(a) In General.--The Agency may take any action authorized under
subtitle E to prevent a person 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) Regulations.--
(1) In general.--The Director may prescribe regulations
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.
(2) Includes prevention measures.--Regulations prescribed
under this section may include requirements for the purpose of
preventing such acts or practices.
(c) Unfairness.--
(1) In general.--The Director and the Agency 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 Agency has a
reasonable basis to conclude that the act or practice causes or
is likely to cause substantial injury to consumers which is not
reasonably avoidable by consumers and such substantial injury
is not outweighed by countervailing benefits to consumers or to
competition.
(2) Established public policy as factor.--In determining
whether an act or practice is unfair, the Agency may consider
established public policies as evidence to be considered with
all other evidence.
(d) Consultation.--In prescribing any regulation under this
section, the Director shall consult with the Federal banking agencies,
State bank supervisors, the Federal Trade Commission, or other Federal
agencies, as appropriate, regarding the consistency of a proposed
regulation with prudential, consumer protection, civil rights, market,
or systemic objectives administered by such agencies or supervisors.
SEC. 4302. DISCLOSURES.
(a) In General.--The Director may prescribe regulations to ensure
the timely, appropriate and effective disclosure to consumers of the
costs, benefits, and risks associated with any consumer financial
product or service.
(b) Coordination With Other Laws.--In prescribing regulations under
subsection (a), the Director shall take into account disclosure
requirements under other laws in order to enhance consumer compliance
and reduce regulatory burden.
(c) Compliance.--
(1) Model disclosures.--The Agency may provide model
disclosures to facilitate compliance with the requirements of
regulations prescribed under this section.
(2) Per se compliance.--Compliance by a covered person with
the model disclosures issued by the Agency under this
subsection shall per se constitute compliance with the
disclosure requirements of this section.
(3) Additional guidance.--The Agency may issue exemptions,
no action letters, and other guidance to promote compliance
with disclosures requirements of regulations prescribed under
this section.
(d) Combined Mortgage Loan Disclosure.--Within 1 year after the
designated transfer date, the Director shall propose for public comment
regulations and model disclosures that combine the disclosures required
under the Truth in Lending Act and the Real Estate Settlement
Procedures Act into a single, integrated disclosure for mortgage loan
transactions covered by those laws, unless the Director determines that
any proposal issued by the Board of Governors and the Department of
Housing and Urban Development carries out the same purpose.
SEC. 4303. SALES PRACTICES.
The Director may prescribe regulations and issue orders and
guidance regarding the manner, settings, and circumstances for the
provision of any consumer financial products or services to ensure that
the risks, costs, and benefits of the products or services, both
initially and over the term of the products or services, are fully and
accurately represented to consumers.
SEC. 4304. PILOT DISCLOSURES.
(a) Pilot Disclosures.--The Agency shall establish standards and
procedures for approval of pilot disclosures to be provided or made
available by a covered person to consumers in connection with the
provision of a consumer financial product or service, or the offering
of a consumer financial product or service.
(b) Standards.--The procedures shall provide that a pilot
disclosure must be limited in time and scope and reasonably designed to
contribute materially to the understanding of consumer awareness and
understanding of, and responses to, disclosures or communications about
the risks, costs, and benefits of consumer financial products or
services.
(c) Transparency.--The procedures shall provide for public
disclosure of pilots, but the Agency may limit disclosure to the extent
necessary to encourage covered persons to conduct effective pilots.
SEC. 4305. ADOPTING OPERATIONAL STANDARDS TO DETER UNFAIR, DECEPTIVE,
OR ABUSIVE PRACTICES.
(a) Authority To Prescribe Standards.--The States are encouraged to
prescribe standards applicable to covered persons who are not insured
depository institutions or credit unions, or service providers, to
deter and detect unfair, deceptive, abusive, fraudulent, or illegal
transactions in the provision of consumer financial products or
services, including standards for--
(1) background checks for principals, officers, directors,
or key personnel;
(2) registration, licensing, or certification;
(3) bond or other appropriate financial requirements to
provide reasonable assurance of ability to perform its
obligations to consumers;
(4) creating and maintaining records of transactions or
accounts; or
(5) procedures and operations relating to the provision of,
or maintenance of accounts for, consumer financial products or
services.
(b) Agency Authority to Prescribe Standards.--
(1) In general.--The Director may prescribe regulations
establishing minimum standards under this section for any class
of covered persons other than covered persons which are subject
to the jurisdiction of a Federal banking agency or a State bank
supervisor , or for any service provider.
(2) Registration and licensing standards.--In addition to
prescribing standards for the purposes described in subsection
(a), the Director may prescribe registration or licensing
standards applicable to covered persons for the purposes of
imposing fees or assessments in accordance with this title.
(3) Enforcement of standards.--The Director may enforce
under subtitle E compliance with standards adopted by the
Director or a State pursuant to this section for covered
persons or service providers operating in that State.
(c) Consultation.--In prescribing minimum standards under this
section, the Director shall consult with the Federal banking agencies,
State bank supervisors, the Federal Trade Commission, or other Federal
agencies, as appropriate, regarding the consistency of a proposed
regulation with prudential, consumer protection, civil rights, market,
or systemic objectives administered by such agencies or supervisors.
SEC. 4306. DUTIES.
(a) In General.--
(1) Regulations ensuring fair dealing with consumers.--The
Director shall prescribe regulations imposing duties on a
covered person, or an employee of a covered person, or an agent
or independent contractor for a covered person, who deals or
communicates directly with consumers in the provision of a
consumer financial product or service, as the Director deems
appropriate or necessary to ensure fair dealing with consumers.
(2) Considerations for duties.--In prescribing such
regulations, the Director shall consider whether--
(A) the covered person, employee, agent, or
independent contractor represents implicitly or
explicitly that the person, employee, agent, or
contractor is acting in the interest of the consumer
with respect to any aspect of the transaction;
(B) the covered person, employee, agent, or
independent contractor provides the consumer with
advice with respect to any aspect of the transaction;
(C) the consumer's reliance on or use of any advice
from the covered person, employee, agent, or
independent contractor would be reasonable and
justifiable under the circumstances;
(D) the benefits to consumers of imposing a
particular duty would outweigh the costs; and
(E) any other factors as the Director considers
appropriate.
(3) Duties relating to compensation practices.--
(A) In general.--The Director may prescribe
regulations establishing duties regarding compensation
practices applicable to a covered person, employee,
agent, or independent contractor who deals or
communicates directly with a consumer in the provision
of a consumer financial product or service for the
purpose of promoting fair dealing with consumers.
(B) No compensation caps.--The Director may not
prescribe a limit on the total dollar amount of
compensation paid to any person.
(C) Disparity treatment prohibited.--The Director
may not prescribe regulations that directly or
indirectly disparately treat, or are interpreted to
disparately treat, or disparately impact any entity
that employs covered persons.
(4) Requirement to include disclaimer on public
statements.--The Director shall ensure that the Agency's
website, and any statement made by the Director or the Agency
to the public, includes a disclaimer stating that the Agency
does not endorse any particular financial product or service
and consumers are expected to exercise due diligence in
deciding what financial products and services are appropriate
for them.
(b) Administrative Proceedings.--
(1) In general.--Any regulation prescribed by the Director
under this section shall be enforceable only by the Agency
through an adjudication proceeding under subtitle E or by a
State regulator through an appropriate administrative
proceeding as permitted under State law.
(2) Exclusivity of remedy.--No action may be commenced in
any court to enforce any requirement of a regulation prescribed
under this section, and no court may exercise supplemental
jurisdiction over a claim asserted under a regulation
prescribed under this section based on allegations or evidence
of conduct that otherwise may be subject to such regulation.
(3) Rule of construction.--The Agency, the Attorney
General, and any State attorney general or State regulator
shall not be precluded from enforcing any other Federal or
State law against a person with respect to conduct that may be
subject to a regulation prescribed by the Director under this
section.
(c) Exclusions.--This section shall not be construed as authorizing
the Director to prescribe regulations applicable to--
(1) an attorney licensed to practice law and in compliance
with the applicable rules and standards of professional
conduct, but only to the extent that the consumer financial
product or service provided is within the attorney-client
relationship with the consumer; or
(2) any trustee, custodian, or other person that holds a
fiduciary duty in connection with a trust, including a
fiduciary duty to a grantor or beneficiary of a trust, that is
subject to and in compliance with the applicable law relating
to such trust.
SEC. 4307. CONSUMER RIGHTS TO ACCESS INFORMATION.
(a) In General.--Subject to regulations prescribed by the Director,
a covered person shall make available to a consumer, in an electronic
form usable by the consumer, 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.
(b) Exceptions.--A covered person shall 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 law (including section 6103 of the Internal Revenue Code
of 1986); 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.--No provision of this section
shall be construed as imposing any duty on a covered person to maintain
or keep any information about a consumer.
(d) Standardized Formats for Data.--The Director, by regulation,
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 Director shall, when prescribing any
regulation under this section, consult with the Federal banking
agencies, State bank supervisors, the Federal Trade Commission, and the
Commissioner of Internal Revenue to ensure that the regulations--
(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. 4308. PROHIBITED ACTS.
It shall be unlawful for any person--
(1) to advertise, market, offer, sell, enforce, or attempt
to enforce, any term, agreement, change in terms, fee, or
charge in connection with a consumer financial product or
service that is not in conformity with this title or applicable
regulation prescribed or order issued by the Director or to
engage in any unfair, deceptive, or abusive act or practice,
except that no person shall be held to have violated this
subsection solely by virtue of providing or selling time or
space to a person placing an advertisement;
(2) to fail or refuse to pay any fee or assessment imposed
by the Agency under this title, to fail or refuse to permit
access to or copying of records, to fail or refuse to establish
or maintain records, or to fail or refuse to make reports or
provide information to the Agency, as required by this title,
an enumerated consumer law, or pursuant to the authorities
transferred by subtitles F and H, or any regulation prescribed
or order issued by the Director this title or pursuant to any
such authority; or
(3) to knowingly or recklessly provide substantial
assistance to another person in violation of the provisions of
section 4301, or any regulation prescribed or order issued
under such section, and any such person shall be deemed to be
in violation of that section to the same extent as the person
to whom such assistance is provided.
SEC. 4309. TREATMENT OF REMITTANCE TRANSFERS.
(a) Disclosures Required for Remittance Transfers.--
(1) In general.--Each remittance transfer provider shall
make disclosures to consumers, as specified by this section and
by regulation prescribed by the Director.
(2) Specific disclosures.--In addition to any other
disclosures applicable under this title, a remittance transfer
provider shall--
(A) disclose clearly and conspicuously, in writing
and in a form that the consumer may keep, to each
consumer who requests information regarding the fees or
exchange rate for a remittance transfer, prior to the
consumer making any payment in connection with the
transfer--
(i) the total amount in United States
dollars that will be required to be paid by the
consumer in connection with the remittance
transfer;
(ii) the amount of currency that the
designated recipient of the remittance transfer
will receive, using the values of the currency
into which the funds will be exchanged;
(iii) the fee charged by the remittance
transfer provider for the remittance transfer;
(iv) any exchange rate to be used by the
remittance transfer provider for the remittance
transfer, unless the exchange rate is not fixed
on send;
(v) the amount of time for which the
information specified in this subparagraph (A)
will be in effect;
(vi) the expected time interval within
which the funds being transferred will be made
available to the recipient; and
(vii) the location where the funds being
transferred will be made available to the
recipient if the funds are to be made available
only at one location, or if the remittance
transfer provider permits the recipient to
choose from multiple locations where the funds
being transferred will be made available to the
recipient, the remittance transfer provider
shall make available to the consumer or the
recipient a resource that lists such locations;
(B) at the time at which the consumer makes payment
in connection with the remittance transfer, a receipt
in writing disclosing clearly and conspicuously--
(i) the information described in
subparagraph (A);
(ii) the expected time interval within
which the funds being transferred will be made
available to the recipient, which shall be not
more than ten days after the date the consumer
makes payment in connection with the remittance
transfer unless otherwise prohibited by
applicable State or Federal law or the law of
another country, or as may be specified by the
consumer so long as the consumer has the choice
to order that the funds be made available to
the recipient not more than ten days after the
consumer makes payment in connection with the
remittance transfer;
(iii) the location where the funds being
transferred will be made available to the
recipient if the funds are to be made available
only at one location, or if the remittance
transfer provider permits the recipient to
choose from multiple locations where the funds
being transferred will be made available to the
recipient, the remittance transfer provider
shall make available to the consumer or the
recipient a resource that lists such locations;
(iv) the name and telephone number or
address of the designated recipient, if
provided to the remittance transfer provider by
the consumer;
(v) information about the rights of the
consumer under this section to cancel the
remittance transfer, to resolve errors and to
receive refunds;
(vi) appropriate contact information for
the remittance transfer provider;
(vii) a transaction reference number unique
to that remittance transfer; and
(viii) information as to when the exchange
rate will be calculated (for example, when the
funds are received by the recipient), if the
customer has been notified that the exchange
rate is not fixed on send;
(C) at the time at which the consumer initiates the
remittance transfer, offer to provide in writing, prior
to making any payment in connection with the transfer,
the information listed in subparagraph (A); and
(D) in the case of an exchange rate not fixed on
send, the remittance provider shall also disclose, at
the time at which the consumer initiates the remittance
transfer, the range, using the high and low rates, for
the prior 30 day period, that the consumer would have
received if a representative amount had been exchanged
by the remittance transfer provider, as well as a clear
and conspicuous notice that the actual exchange rate
may vary.
If the actual rate used for the transfer is known to the
remittance provider, either because such rate was set by the
remittance provider itself or because the remittance provider
receives confirmation of the actual exchange rate used, the
remittance provider shall make available to consumers written
or electronic confirmation of the actual exchange rate used and
the amount of currency that the recipient or the remittance
transfer received, using the values of the currency into which
the funds were exchanged. The Director shall within 2 years
after the date of the enactment of the Consumer Financial
Protection Agency Act of 2009 prescribe consumer disclosures
for transfers with rates not fixed on send that are
functionally equivalent to those applicable to remittances
where the exchange rate is specified by the remittance transfer
provider at the time the consumer initiates the remittance
transfer. To the greatest extent possible, the Director shall
ensure that functional equivalence will enable remittance
transfer providers to comply with all requirements in this
title and provide consumers with information sufficient to
compare services providers, to time their use of the product,
to discover errors in transmission and to seek remedies.
(3) Exemption.--Notwithstanding requirements under
paragraph (2)(A)(ii), (2)(A)(iv), or (2)(B)(i), no such
disclosure is required--
(A) because of the requirements of another law,
including the law of another country;
(B) because the transfer is being routed through
the Directo a Mexico offered by the Federal reserve
banks; or
(C) because of any other circumstance deemed
permissible by regulation of the Director; If the
actual rate used for the transfer is known to the
remittance provider, the remittance provider shall make
available to consumers written or electronic
confirmation 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.
(4) Provision of toll-free number and web access.--
(A) In addition to providing the disclosures
required by this section to a consumer at a remittance
transfer provider location, a remittance transfer
provider shall provide a toll-free telephone number or
local number, and an Internet website that a consumer
can access for which access no remittance transfer
provider may assess a charge, to obtain the information
required by paragraph (2)(A) for remittance transfers
offered by that remittance transfer provider or
information about the status of a remittance transfer
for which a consumer has made payment.
(B) A remittance transfer provider that on an
aggregate basis originates 30,000 or fewer transfers on
a calendar year basis (or such other amount as may be
prescribed by the Director) is not required to offer
the web access prescribed in subparagraph (A), but is
required to provide a toll-free telephone number or
local number as prescribed in subparagraph (A).
(5) Alternative methods of disclosure.--Subject to
subsection (e)(2), a remittance transfer provider may--
(A) if the transaction is conducted entirely by
telephone (which shall include, but not be limited to,
a mobile telephone) satisfy the requirements of
paragraph (2)(A) orally or, at the option of the
consumer, electronically through a message sent to the
consumer through any electronic means (including, but
not limited to, an electronic mail address or a mobile
telephone) as designated by the consumer;
(B) satisfy the requirements of paragraph (2)(A)
electronically if the transfer is initiated by the
consumer electronically through the remittance transfer
provider's website or through any other electronic
means; and
(C) satisfy the requirements of paragraph (2)(B) by
mailing (or transmitting electronically if the transfer
is initiated electronically by the consumer through the
remittance transfer provider's website or the consumer
otherwise consents in accordance with the provisions of
section 101 of the Electronic Signatures in Global and
National Commerce Act) the information required under
such paragraph to the consumer not later than one
business day after the date on which the transaction is
conducted, if the transaction is conducted entirely by
telephone (or electronically) and the consumer requests
a written receipt.
(b) Written Foreign Language Disclosures.--
(1) In general.--The disclosures required under subsections
(a)(2)(A) and (a)(2)(B)(i) shall be made in English and--
(A) at each remittance transfer provider location,
shall be made in the same languages principally used by
the remittance transfer provider, or any of its agents,
to advertise, solicit, or market its remittance
transfers business, either orally or in writing, at
that location, if other than English, provided that
such languages are those for which the Director has
issued model disclosures as provided in subsection (g);
or
(B) on a remittance transfer provider's website,
shall at a minimum be made in any other language for
which the Director has issued model disclosures as
provided in subsection (g) if the remittance transfer
provider, or any of its agents, advertises, solicits,
or markets its remittance transfers business in such
language.
(2) Disputes concerning terms.--If a disclosure is required
by this section to be in English and another language, the
English version of the disclosure shall govern any dispute
concerning the terms of the receipt. However, any discrepancies
between the English version and any other version due to the
translation of the receipt from English to another language
including errors or ambiguities shall be construed against the
remittance transfer provider or its agent and the remittance
transfer provider or its agent shall be liable for any damages
caused by these discrepancies.
(c) Remittance Transfer Cancellations, Refunds, and Errors.--
(1) Cancellations.--
(A) After receiving the receipt required under
subsection (a)(2)(B), a consumer may cancel the
currency transaction--
(i) before leaving the premises of the
remittance transfer provider where the consumer
received the receipt, and
(ii) not later than 30 minutes after the
time the consumer initiated the remittance
transfer with the remittance transfer provider.
(B) If a consumer cancels the transaction, the
remittance transfer provider shall immediately refund
to the consumer the fees paid and the currency to be
transferred, and issue a receipt indicating that the
transaction has been cancelled.
(C) A consumer may not cancel a remittance transfer
after the remittance transfer provider has sent the
funds to the recipient.
(D) A remittance transfer provider shall not be
required to provide a refund if providing a refund
would violate State or Federal law.
(2) Refunds.--
(A) If a remittance transfer provider receives
written notice from the consumer within ten days of the
promised date of delivery of a remittance transfer that
no amount of the funds to be remitted was made
available to the designated recipient in the foreign
country, the remittance transfer provider shall--
(i) refund to the consumer the total amount
in U.S. dollars that was paid by the consumer
in connection with such remittance transfer;
(ii) promptly transmit the remittance
transfer in accordance with the terms in the
written receipt provided to the consumer
pursuant to subsection (a)(2)(B);
(iii) provide such other remedy, as
determined appropriate by rule of the Director
for the protection of consumers; or
(iv) demonstrate to the consumer that the
proceeds of the remittance transfer were made
available to the recipient of the remittance
provider.
(B) A remittance transfer provider shall not be
required to provide a refund if providing a refund
would violate State or Federal law.
(3) Error resolution.--
(A) In general.--If a remittance transfer provider
receives written notice from the consumer within 60
days of the promised date of delivery that an error
occurred with respect to a remittance transfer,
including that the full amount of the funds to be
remitted was not made available to the designated
recipient in the foreign country, the remittance
transfer provider shall resolve the error pursuant to
this paragraph.
(B) Remedies.--Not later than 120 days after the
date of receipt of a notice from the consumer pursuant
to subparagraph (A), the remittance transfer provider
shall--
(i) as applicable to the error and as
designated by the consumer--
(I) refund to the consumer the
total amount in U.S. dollars that was
paid by the consumer in connection with
the remittance transfer that was not
properly transmitted;
(II) make available to the
designated recipient, without
additional cost to the designated
recipient or to the consumer, the
amount appropriate to resolve the
error;
(III) provide such other remedy, as
determined appropriate by regulation of
the Director for the protection of
consumers; or
(ii) demonstrate to the consumer that there
was no error.
(4) Regulations.--The Director, in order to protect
consumers, shall establish, by regulation, clear and
appropriate standards for remittance transfer providers with
respect to error resolution, cancellation and refunds.
(d) Enforcement Authority.--The Director shall have the sole
authority to enforce the provisions of this section, and any
regulations established pursuant to this section.
(e) Applicability of Other Provisions of Law.--
(1) Applicability of title 18 and title 31 provisions.--A
remittance transfer provider that is a money transmitting
business as defined in section 5330 of title 31, United States
Code, may provide remittance transfers only if such provider is
in compliance with the requirements of section 5330 of title
31, United States Code, and section 1960 of title 18, United
States Code, as applicable.
(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, or chapter 2 of title I of
Public Law 91-508, or any regulations promulgated
thereunder; or
(B) to cause any fund transfer that would not
otherwise be treated as such under paragraph (2) 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
regulation prescribed under such subparagraph.
(f) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Depository institution.--the term ``depository
institution'' has the same meaning as in section 3 of the
Federal Deposit Insurance Act and includes a credit union.
(2) Not fixed on send.--The term ``not fixed on send'' when
referring to an exchange rate used in a remittance transfer
means an exchange rate that is not set by the remittance
transfer provider at the time the consumer initiates the
remittance transfer.
(3) Remittance transfer.--The term ``remittance transfer''
means the electronic (as defined in section 106(2) of the
Electronic Signatures in Global and National Commerce Act)
transfer of funds at the request of a consumer located in any
State to a person in another country that is initiated by a
remittance transfer provider, whether or not the consumer is an
account holder of the remittance transfer provider or whether
or not the remittance transfer is also an electronic fund
transfer, as defined in section 903 of the Electronic Fund
Transfer Act.
(4) Remittance transfer provider.--The term ``remittance
transfer provider'' means any person or depository institution,
or agent thereof, that originates remittance transfers on
behalf of consumers in the normal course of its business,
whether or not the consumer is an account holder of that person
or depository institution.
(g) Model Disclosures.--
(1) Publication.--Notwithstanding any provisions of this
title, the Director shall establish and publish model
disclosure forms to facilitate compliance with the disclosure
requirements of this section and to aid the consumer in
understanding the transaction to which the subject disclosure
form relates.
(2) Languages to be used in model disclosures.--The
Director shall make these disclosures available within 1 year
of the effective date of this title--
(A) in English, and
(B) the ten most frequently spoken languages in the
United States, other than English, used by consumers
initiating remittance transfers, as may be determined
by the Director.
(3) Use of automated equipment.--In establishing model
forms under this subsection, the Director shall consider the
use by lessors of data processing or similar automated
equipment.
(4) Use optional.--A remittance transfer provider may
utilize a model disclosure form established by the Director
under this subsection for purposes of compliance with this
section, at the discretion of the remittance transfer provider.
(5) Effect of use.--Any remittance transfer provider that
properly uses the material aspects of any model disclosure form
established by the Director under this subsection shall be
deemed to be in compliance with the disclosure requirements to
which the form relates.
(h) Regulation and Exemption Authority.--Notwithstanding any other
provisions of this title, the Director, in the sole discretion of the
Director, in consultation with relevant Federal and State government
agencies may by regulation exempt from one or more requirements of this
section, any category of remittance transfer provider if the Director
determines that under applicable Federal or State law that such
category of remittance transfer provider is subject to requirements
substantially similar to those imposed under this section or that such
law gives greater protection and benefit to the consumer, and that
there is adequate provision for enforcement.
(i) Applicability of State Law.--
(1) This section does not annul, alter, affect, or exempt
any person subject to the provisions of this section from
complying with other applicable Federal law and the laws of any
State relating to remittance transfers and remittance transfer
providers, except to the extent that those laws are
inconsistent with the provisions of this section, and then only
to the extent of the inconsistency.
(2) Notwithstanding any other provisions of this title, the
Director may determine whether such inconsistencies exist. A
State law is not inconsistent with this section if the
protection such law affords any consumer is greater than the
protection afforded by this section. If the Director determines
that a State requirement is inconsistent, remittance transfer
providers shall incur no liability under the law of that State
for a good faith failure to comply with that law,
notwithstanding that such determination is subsequently
amended, rescinded, or determined by judicial or other
authority to be invalid for any reason. This section does not
extend the applicability of any such law to any class of
persons or transactions to which it would not otherwise apply.
(3) This section does not annul, alter, or affect the laws
of any State relating to the licensing or registration,
supervision or examination of remittance transfer providers.
(4) Nothing in this section shall be construed as limiting
the authority of a State attorney general or State regulator to
bring an action or other regulatory proceeding arising solely
under the law of that State.
(j) Federal Credit Union Act Amendment.--Paragraph (12)(A) of
section 107 of the Federal Credit Union Act (12 U.S.C. 1757(12)(A)) is
amended by inserting ``and remittance transfers, as defined in section
4309 of the Consumer Financial Protection Agency Act of 2009'' after
``and domestic electronic fund transfers''.
(k) Automated Clearinghouse System.--
(1) Expansion of system.--The Board of Governors of the
Federal Reserve System shall work with the Federal reserve
banks to expand the use of the automated clearinghouse system
for remittance transfers to foreign countries, with a focus on
countries that receive significant remittance transfers from
the United States, based on--
(A) the volume and dollar amount of remittance
transfers to those countries;
(B) the significance of the volume of such
transfers, relative to the external financial flows of
the receiving country; and
(C) the feasibility of such an expansion.
(2) Report to the congress.--Before the end of the 180-day
period beginning on the date of the enactment of this title,
and on April 30 biennially thereafter, the Board of Governors
of the Federal Reserve System shall submit a report to the
Director, 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 section.
(l) Regulatory Guidance on Remittance Transfers.--
(1) Provision of guidelines to institutions.--The Director
shall provide guidelines to all remittance transfer providers
regarding--
(A) the offering of low-cost remittance transfers;
(B) the availability of agency services to
remittance transfer providers;
(C) compliance with the provisions of this title;
and
(D) specific options that allow remittance transfer
providers to take advantage of automated clearing
systems, including the FedACH International Services
offered by the Board of Governors of the Federal
Reserve System and the Federal reserve banks, to
transmit remittances at low cost.
(2) Content of guidelines.--Guidelines provided to
remittance transfer providers under this section shall
include--
(A) information as to the methods of providing
remittance transfer services;
(B) the potential economic opportunities in
providing low-cost remittance transfers; and
(C) the potential value to depository institutions
of broadening their financial bases to include persons
that use remittance transfers.
(3) Assistance to financial literacy commission.--The
Secretary of the Treasury and each agency referred to in
subsection (a) shall, as part of their duties as members of the
Financial Literacy and Education Commission, assist that
Commission in improving the financial literacy and education of
consumers who send remittances.
(m) 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 the enactment of this title, 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 a consumer's remittance history
could be used to enhance a consumer's credit score;
(2) the current legal and business model barriers and
impediments that impede the use of a consumer's remittance
history to enhance the consumer's credit score; and
(3) recommendations on the manner in which maximum
transparency and disclosure to consumers of exchange rates for
remittance transfers subject to 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 section s 919(a)(2)(D) and 919(a)(3) of the
Electronic Fund Transfer Act (as amended by subsection (a)).
(n) Effective Date.--This section shall apply with respect to
remittance transfers made after the end of the 180-day period beginning
on the date of the enactment of this title.
SEC. 4310. EFFECTIVE DATE.
This subtitle shall take effect on the designated transfer date.
SEC. 4311. NO AUTHORITY TO REQUIRE THE OFFERING OF FINANCIAL PRODUCTS
OR SERVICES.
The Director may not prescribe any regulation, issue any order or
guidance, or take any other action, including any enforcement action,
the effect of which would be to require a covered person to offer to
any consumer a specific financial product or service.
SEC. 4312. APPRAISAL INDEPENDENCE REQUIREMENTS.
(a) Promulgation of New Requirements.--The Director shall lead a
Negotiated Rulemaking Committee under the Federal Advisory Committee
Act and the Negotiated Rulemaking Act to promulgate appraisal
independence requirements for residential loan purposes, and such
Committee shall promulgate such requirements not later than the end of
the 60-day period beginning on the date of the enactment of this title.
(b) Certain Regulation Requirements.--Regulations promulgated by
the Negotiated Rulemaking Committee under this section--
(1) shall not prohibit lenders, the Federal National
Mortgage Association, or the Federal Home Loan Mortgage
Corporation from accepting any appraisal report completed by an
appraiser selected, retained, or compensated in any manner by a
mortgage loan originator--
(A) licensed or registered in accordance with
section 1501 et seq. of the SAFE Mortgage Licensing Act
of 2008; and
(B) subject to State or Federal laws that make it
unlawful for a mortgage loan originator to make any
payment, threat, or promise, directly or indirectly, to
any appraiser of a property, for the purposes of
influencing the independent judgment of the appraiser
with respect to the value of the property, except that
nothing in this section shall prohibit a person with an
interest in a real estate transaction from asking an
appraiser to--
(i) consider additional, appropriate
property information;
(ii) provide further detail,
substantiation, or explanation for the
appraiser's value conclusion; or
(iii) correct errors in the appraisal
report; and
(2) shall include a requirement that lenders and their
agents compensate appraisers at a rate that is customary and
reasonable for appraisal services performed in the market area
of the property being appraised.
(c) Sunset.--Effective on the date the appraisal independence
requirements are promulgated pursuant to subsection (a), the Home
Valuation Code of Conduct announced by the Federal Housing Finance
Agency on December 23, 2008, shall have no force or effect.
Subtitle D--Preservation of State Law
SEC. 4401. RELATION TO STATE LAW.
(a) In General.--
(1) Rule of construction.--This title shall not be
construed as annulling, altering, or affecting, or exempting
any person subject to the provisions of this title from
complying with, the laws, regulations, orders, or
interpretations, in effect in any State, except to the extent
that such statute, regulation, order, or interpretation is
inconsistent with the provisions of this title and then only to
the extent of the inconsistency.
(2) Greater protection under state law.--For the 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 such statute,
regulation, order, or interpretation affords 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 Agency 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 4803, 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.
SEC. 4402. PRESERVATION OF ENFORCEMENT POWERS OF STATES.
(a) In General.--
(1) Action by state.--Any State attorney general may bring
a civil action in the name of such State, as parens patriae on
behalf of natural persons residing in such State, in any
district court of the United States or State court having
jurisdiction of the defendant, to secure monetary or equitable
relief for violation of any provisions of this title or
regulations issued thereunder.
(2) 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 to enforce any provision of
this title, including any regulation prescribed by the
Director 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 Agency, or
the Agency's designee.
(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 Agency immediately upon
instituting the action or proceeding.
(C) Contents of notice.--The notification required
under this section 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 Director or
Agency or another Federal agency.
(2) Agency response.--In any action described in paragraph
(1), the Agency 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 Director 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 limiting the authority of a State attorney general
or State regulator to bring an action or other regulatory
proceeding arising solely under the law of 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. 4403. PRESERVATION OF EXISTING CONTRACTS.
This title, and regulations, orders, guidance, and interpretations
prescribed, issued, and established by the Agency, 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 the enactment of this title, 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. 4404. 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 1 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 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 meaning
as in section 3 of the Federal Deposit Insurance Act.
``(b) Preemption Standard.--
``(1) In general.--National banks shall generally comply
with State laws. State laws are preempted only if--
``(A) application of a state 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) the Comptroller of the Currency determines by
regulation or order on a case-by-case basis that a
State law prevents or significantly interferes with the
ability of an insured depository institution chartered
as national bank to engage in the business of banking;
or
``(C) the State law is preempted by Federal law
other than this Act.
``(2) Savings clause.--This Act does not preempt or alter
the applicability of any State law to any national bank
subsidiary, affiliate, or other entity that is not an insured
depository institution chartered as a national bank.
``(3) Rule of construction.--This Act does not occupy the
field in any area of State law and a court shall review any
claim that a State law is preempted by this Act as a matter of
law and without deference to any agency claim that a State law
is preempted under this Act.
``(4) Review of preemption decisions.--A court shall review
any claim that a State law is preempted by this Act as a matter
of law and without deference to any agency claim that a state
law is preempted under this Act. Nothing in this subsection
shall affect the deference that a court affords to the
Comptroller of the Currency regarding the meaning or
interpretation of the National Bank Act or other Federal laws.
``(c) Substantial Evidence.--No regulation 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 that the provision prevents
or significantly interferes with the national bank's exercise of a
power explicitly granted by the Congress.
``(d) Other Federal Laws.--Notwithstanding any other provision of
law, the Comptroller of the Currency may not prescribe regulation
pursuant to subsection (b)(1)(B) until the Comptroller of the Currency,
after consultation with the Consumer Financial Protection Agency, makes
a finding, in writing, that a Federal law provides a substantive
standard, applicable to a national bank, which regulates the particular
conduct, activity, or authority that is subject to such provision of
the State consumer financial law.
``(e) Periodic Review of Preemption Determinations.--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 timely propose to continue, amend or rescind it, as may be
appropriate, in accordance with the procedures set forth in subsections
(a) and (b) of section 5244 (12 U.S.C. 43(a)-(b)).
``(f) Application of State Consumer Financial Law to Subsidiaries
and Affiliates.--Notwithstanding any provision of this title, a State
consumer financial law shall apply to a subsidiary or affiliate of 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.''.
(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:
``5136C. State law preemption standards for national banks and
subsidiaries clarified.''.
SEC. 4405. VISITORIAL STANDARDS.
Section 5136C of the Revised Statutes of the United States (as
added by section 4404) is amended by adding at the end the following
new subsections:
``(g) Visitorial Powers.--
``(1) Rule of construction.--No provision of this title
which relates to visitorial powers or otherwise limits or
restricts the supervisory, examination, or regulatory 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
any action in any court of appropriate jurisdiction--
``(A) to require a national bank to produce records
relative to the investigation of violations of State
consumer law, or Federal consumer laws;
``(B) to enforce any applicable Federal or State
law, as authorized by such law; or
``(C) on behalf of residents of such State, to
enforce any applicable provision of any Federal or
State law against a national bank, as authorized by
such law, or to seek relief and recover damages for
such residents from any violation of any such law by
any national bank.
``(2) Consultation.--The attorney general (or other chief
law enforcement officer) of any State shall consult with the
head of the agency responsible for chartering and regulating
national banks before acting under paragraph (1).
``(h) Enforcement Actions.--The ability of the head of the agency
responsible for chartering and regulating national banks to bring an
enforcement action under this title or section 5 of the Federal Trade
Commission Act shall not be construed as precluding private parties
from enforcing rights granted under Federal or State law in the
courts.''.
SEC. 4406. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY INSTITUTION
SUBSIDIARIES.
Section 5136C of the Revised Statutes of the United States is
amended by inserting after subsection (h) (as added by section 4405)
the following new subsection:
``(i) Clarification of Law Applicable to Nondepository Institution
Subsidiaries and Affiliates of National Banks.--
``(1) Definitions.--For purposes of this section, the
following definitions shall apply:
``(A) Depository institution, subsidiary,
affiliate.--The terms `depository institution',
`subsidiary', and `affiliate' have the same meanings as
in section 3 of the Federal Deposit Insurance Act.
``(B) Nondepository institution.--The term
`nondepository institution' means any entity that is
not a depository institution.
``(2) In general.--No provision of this title shall be
construed as annulling, altering, or affecting the
applicability of State law to any nondepository institution,
subsidiary, other affiliate, or agent of a national bank.''.
SEC. 4407. 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) State Consumer Financial Law Defined.--For purposes of this
section, the term `State consumer financial law' means a State law that
does not directly or indirectly discriminate against Federal savings
associations and that regulates the manner, content, or terms and
conditions of any financial transaction (as may be authorized for
Federal savings associations to engage in), or any account related
thereto, with respect to a consumer.
``(b) Preemption Standard.--
``(1) In general.--Federal savings associations shall
generally comply with State laws. State laws are preempted only
if--
``(A) application of a state law would have a
discriminatory effect on Federal savings associations
in comparison with the effect of the law on a bank
chartered by that State;
``(B) the Director of the Office of Thrift
Supervision determines by regulation or order on a
case-by-case basis that a State law prevents or
significantly interferes with the ability of an insured
depository institution chartered as a Federal savings
associations to engage in the business of banking; or
``(C) the State law is preempted by Federal law
other than this Act.
``(2) Savings clause.--This Act does not preempt or alter
the applicability of any State law to any Federal savings
associations subsidiary, affiliate, or other entity that is not
an insured depository institution chartered as a national bank.
``(3) Rule of construction.--This Act does not occupy the
field in any area of State law and a court shall review any
claim that a State law is preempted by this Act as a matter of
law and without deference to any agency claim that a State law
is preempted under this Act.
``(4) Review of preemption decisions.--A court shall review
any claim that a State law is preempted by this Act as a matter
of law and without deference to any agency claim that a state
law is preempted under this Act. Nothing in this subsection
shall affect the deference that a court affords to the Director
of the Office of Thrift Supervision regarding the meaning or
interpretation of the National Bank Act or other Federal laws.
``(c) Other Federal Law.--Notwithstanding any other provision of
law, the Director of the Office of Thrift Supervision may not prescribe
any regulation pursuant to subsection (b)(1)(B) until such Director,
after consultation with the Consumer Financial Protection Agency, makes
a finding, in writing, that a Federal law provides a substantive
standard, applicable to a Federal savings association, which regulates
the particular conduct, activity, or authority that is subject to such
provision of the State consumer financial law.
``(d) Substantial Evidence.--No regulation prescribed by the
Director of the Office of Thrift Supervision issued under subsection
(b)(1)(B) shall be interpreted or applied so as to invalidate, or
otherwise declare inapplicable to a Federal savings association, the
provision of the State consumer financial law unless substantial
evidence, made on the record of the proceeding, supports the specific
finding that the provision prevents or significantly interferes with
the Federal savings association's exercise of a power explicitly
granted by the Congress.
``(e) Periodic Review of Preemption Determinations.--The Director
of the Office of Thrift Supervision 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 timely propose to continue, amend or rescind it, as may be
appropriate, in accordance 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)).
``(f) Application of State Consumer Financial Law to Subsidiaries
and Affiliates.--Notwithstanding any provision of this Act, a State
consumer financial law shall apply to a subsidiary or affiliate of a
Federal savings association to the same extent that the State consumer
financial law applies to any person, corporation, or other entity
subject to such State law and consistent with Federal 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 clarified.''.
SEC. 4408. VISITORIAL STANDARDS.
Section 6 of the Home Owners' Loan Act (as added by section 4407 of
this title) is amended by adding at the end the following new
subsections:
``(g) Visitorial Powers.--
``(1) In general.--No provision of this Act shall be
construed as limiting or restricting the authority of any
attorney general (or other chief law enforcement officer) of
any State to bring any action in any court of appropriate
jurisdiction--
``(A) to require a Federal savings association to
produce records relative to the investigation of
violations of State consumer law, or Federal consumer
laws;
``(B) to enforce any applicable Federal or State
law, as authorized by such law; or
``(C) on behalf of residents of such State, to
enforce any applicable provision of any Federal or
State law against a Federal savings association, as
authorized by such law, or to seek relief and recover
damages for such residents from any violation of any
such law by any Federal savings association.
``(2) Consultation.--The attorney general (or other chief
law enforcement officer) of any State shall consult with the
Director or any successor agency before acting under paragraph
(1).
``(h) Enforcement Actions.--The ability of the Director or any
successor officer or agency to bring an enforcement action under this
Act or section 5 of the Federal Trade Commission Act shall not be
construed as precluding private parties from enforcing rights granted
under Federal or State law in the courts.''.
SEC. 4409. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY INSTITUTION
SUBSIDIARIES.
Section 6 of the Home Owners' Loan Act is amended by adding after
subsection (h) (as added by section 4408) the following new subsection:
``(i) Clarification of Law Applicable to Nondepository Institution
Subsidiaries and Affiliates of Federal Savings Associations.--
``(1) Definitions.--For purposes of this section, the
following definitions shall apply:
``(A) Depository institution, subsidiary,
affiliate.--The terms `depository institution',
`subsidiary', and `affiliate' have the same meanings as
in section 3 of the Federal Deposit Insurance Act.
``(B) Nondepository institution.--The term
`nondepository institution' means any entity that is
not a depository institution.
``(2) In general.--No provision of this title shall be
construed as preempting the applicability of State law to any
nondepository institution, subsidiary, other affiliate, or
agent of a Federal savings association.''.
SEC. 4410. EFFECTIVE DATE.
This subtitle shall take effect on the designated transfer date.
Subtitle E--Enforcement Powers
SEC. 4501. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) Civil investigative demand and demand.--The terms
``civil investigative demand'' and ``demand'' mean any demand
issued by the Agency.
(2) Agency investigation.--The term ``Agency
investigation'' means any inquiry conducted by an Agency
investigator for the purpose of ascertaining whether any person
is or has been engaged in any conduct that violates this title,
any enumerated consumer law, or any regulation prescribed or
order issued by the Director under this title or under the
authorities transferred under subtitles F and H.
(3) Agency investigator.--The term ``Agency investigator''
means any attorney or investigator employed by the Agency who
is charged with the duty of enforcing or carrying into effect
any provisions of this title, any enumerated consumer law, the
authorities transferred under subtitles F and H, or any
regulation prescribed or order issued under this title or
pursuant to any such authority by the Director.
(4) Custodian.--The term ``custodian'' means the custodian
or any deputy custodian designated by the Agency.
(5) Documentary material.--The term ``documentary
material'' includes the original or any copy of any book,
document, record, report, memorandum, paper, communication,
tabulation, chart, log, electronic file, or other data or data
compilations stored in any medium.
(6) Violation.--The term ``violation'' means any act or
omission that, if proved, would constitute a violation of any
provision of this title, any enumerated consumer law, any law
for which authorities were transferred under subtitles F and H,
or of any regulation prescribed or order issued by the Director
under this title or pursuant to any such authority.
SEC. 4502. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY.
(a) Joint Investigations.--
(1) In general.--The Agency or, where appropriate, an
Agency representative may engage in joint investigations and
requests for information.
(2) Fair lending.--The authority under paragraph (1)
includes matters relating to fair lending, and where
appropriate, joint investigations and requests for information
with the Secretary of Housing and Urban Development, the
Attorney General, or both.''
(b) Subpoenas.--
(1) In general.--The Agency or an Agency 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 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 Agency or an Agency
investigator and after notice to such person, shall have
jurisdiction to issue an order requiring such person to appear
and give testimony or to appear and produce documents or other
material, or both.
(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 Agency 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 Agency may, before
the institution of any proceedings under this title or under
any enumerated consumer law or pursuant to the authorities
transferred under subtitles F and H, 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 Agency;
(B) submit such tangible things;
(C) file written reports or answers to questions;
(D) give oral testimony concerning documentary
material 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 Agency investigator who shall
conduct the investigation and the custodian to whom the
transcript of such investigation shall be submitted.
(7) Service.--
(A) Any civil investigative demand may be served by
any Agency investigator at any place within the
territorial jurisdiction of any court of the United
States.
(B) Any such demand or any enforcement petition
filed under this section may be served upon any person
who is not 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
in a foreign nation.
(C) 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 its
principal office or place of business.
(9) Proof of service.--
(A) 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) 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) Procedure.--
(i) Oath and recordation.--Any Agency
investigator 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 investigator, record the
testimony of the witness.
(ii) Transcriptions.--The testimony shall
be taken stenographically and transcribed.
(iii) Copy to custodian.--After the
testimony is fully transcribed, the Agency
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 Agency 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 such person, the officer before whom
the testimony is to be taken, an investigator or
representative of an agency with which the Agency 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 Agency 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) Confidential advice.--The attorney may
advise the person summoned, 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.--The person summoned or
the attorney may object on the record to any
question, in whole or in part, and shall
briefly state for the record the reason for the
objection.
(iv) Refusal to answer.--An objection may
properly be made, received, and entered upon
the record when it is claimed that the person
summoned 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 shall not otherwise
interrupt the oral examination, directly or
through such person's attorney.
(v) Petition for order.--If such person
refuses to answer any question, the Agency may
petition the district court of the United
States pursuant to this section for an order
compelling such person to answer such question.
(vi) Basis for compelling testimony.--If
such person refuses to answer any question 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.--
(i) Right to examine.--After the testimony
of any witness is fully transcribed, the Agency
investigator shall afford the witness (who may
be accompanied by an attorney) a reasonable
opportunity to examine the transcript.
(ii) Reading the transcript.--The
transcript shall be read to or by the witness,
unless such examination and reading are waived
by the witness.
(iii) Request for changes.--Any changes in
form or substance which the witness desires to
make shall be entered and identified upon the
transcript by the Agency investigator with a
statement of the reasons given by the witness
for making such changes.
(iv) Signature.--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.
(v) Agency action in lieu of signature.--If
the transcript is not signed by the witness
during the 30-day period following the date
upon which the witness is first afforded a
reasonable opportunity to examine it, the
Agency 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 Agency
investigator shall certify on the transcript that the
witness was duly sworn by the investigator and that the
transcript is a true record of the testimony given by
the witness, and the Agency investigator shall promptly
deliver the transcript or send it by registered or
certified mail to the custodian.
(G) Copy of transcript.--The Agency investigator
shall furnish a copy of the transcript (upon payment of
reasonable charges for the transcript) to the witness
only, except that the Agency may for good cause limit
such witness to inspection of the official transcript
of the testimony of such witness.
(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.--Materials received as a result of a civil
investigative demand shall be subject to requirements and
procedures regarding confidentiality, in accordance with
regulations established by the Director.
(2) Disclosure to congress.--No regulation established by
the Director regarding the confidentiality of materials
submitted to, or otherwise obtained by, the Agency shall be
intended to prevent disclosure to either House of the Congress
or to an appropriate committee of the Congress, except that the
Director may prescribe regulations allowing prior notice to any
party that owns or otherwise provided the material to the
Agency and has 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 such person
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 Agency, through such officers or attorneys
as the Director 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 Agency investigator named in the demand, such
person may file with the Agency a petition for an order by the
Agency modifying or setting aside the demand.
(2) Compliance during pendency.--The time permitted for
compliance with the demand in whole or in part, as deemed
proper and ordered by the Agency, shall not run during the
pendency of such petition at the Agency, except that such
person shall comply with any portions of the demand not sought
to be modified or set aside.
(3) Specific grounds.--Such petition shall specify each
ground upon which the petitioner relies in seeking such 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 such custodian by this section or regulation prescribed by
the Director.
(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 into effect the provisions of this section.
(2) Appeal.--Any final order so entered shall be subject to
appeal pursuant to section 1291 of title 28, United States
Code.
SEC. 4503. HEARINGS AND ADJUDICATION PROCEEDINGS.
(a) In General.--The Agency may 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 regulations
prescribed by the Director under this title; and
(2) any other Federal law that the Agency is authorized to
enforce, including an enumerated consumer law, and any
regulations or order prescribed thereunder, unless such Federal
law specifically limits the Agency from conducting a hearing or
adjudication proceeding and only to the extent of such
limitation.
(b) Special Rules for Cease-and-desist Proceedings.--
(1) Issuance.--
(A) Notice of charges.--If, in the opinion of the
Agency, any covered person or service provider is
engaging or has engaged in an activity that violates a
law, regulation, or any condition imposed in writing on
the person by the Agency, the Agency may issue and
serve upon the person a notice of charges with respect
to such violation.
(B) Contents of notice.--The notice shall contain a
statement of the facts constituting any alleged
violation and shall fix a time and place at which a
hearing will be held to determine whether an order to
cease-and-desist there from should issue against the
person.
(C) Time of hearing.--A hearing under this
subsection shall be fixed for a date not earlier than
30 days nor later than 60 days after service of such
notice unless an earlier or a later date is set by the
Agency at the request of any party so served.
(D) Nonappearance deemed to be consent to order.--
Unless the party or parties so served shall appear at
the hearing personally or by a duly authorized
representative, they shall be deemed to have consented
to the issuance of the cease-and-desist order.
(E) Issuance of order.--In the event of such
consent, or if upon the record made at any such
hearing, the Agency shall find that any violation
specified in the notice of charges has been
established, the Agency may issue and serve upon the
person an order to cease-and-desist from any such
violation or practice.
(F) Includes requirement for corrective action.--
Such order may, by provisions which may be mandatory or
otherwise, require the person to cease-and-desist from
the same, and, further, to take affirmative action to
correct the conditions resulting from any such
violation.
(2) Effectiveness of order.--A cease-and-desist order shall
take effect at the end of the 30-day period beginning on the
date of the service of such order upon the covered person or
service provider concerned (except in the case of a cease-and-
desist order issued upon consent, which shall take effect at
the time specified therein), and shall remain effective and
enforceable as provided therein, except to such extent as it is
stayed, modified, terminated, or set aside by action of the
Agency or a reviewing court.
(3) Decision and appeal.--
(A) Place of and procedures for hearing.--Any
hearing provided for in this subsection shall be held
in the Federal judicial district or in the territory in
which the residence or home office 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.
(B) Time limit for decision.--After such hearing,
and within 90 days after the Agency has notified the
parties that the case has been submitted to it for
final decision, the Agency shall--
(i) render its decision (which shall
include findings of fact upon which its
decision is predicated) and shall issue; and
(ii) 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.
(C) Modification of order generally.--Unless a
petition for review is timely filed in a court of
appeals of the United States, as hereinafter provided
in paragraph (4), and thereafter until the record in
the proceeding has been filed as so provided, the
Agency may at any time, upon such notice and in such
manner as it shall deem proper, modify, terminate, or
set aside any such order.
(D) Modification of order after filing record on
appeal.--Upon such filing of the record, the Agency may
modify, terminate, or set aside any such order with
permission of the court.
(4) Appeal to court of appeals.--
(A) In general.--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 Agency be
modified, terminated, or set aside.
(B) Transmittal of copy to the agency.--A copy of
such petition shall be forthwith transmitted by the
clerk of the court to the Agency, and thereupon the
Agency shall file in the court the record in the
proceeding, as provided in section 2112 of title 28 of
the United States Code.
(C) Jurisdiction of court.--Upon the filing of a
petition under subparagraph (A), 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 Agency.
(D) Scope of review.--Review of such proceedings
shall be had as provided in chapter 7 of title 5 of the
United States Code.
(E) Finality.--The judgment and decree of the court
shall be final, except that the same shall be subject
to review by the Supreme Court 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 Agency.
(c) Special Rules for Temporary Cease-and-desist Proceedings.--
(1) Issuance.--
(A) In general.--Whenever the Agency 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 of such
violation, 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 Agency 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.
(B) Other requirements.--Any temporary order issued
under this paragraph may include any requirement
authorized under this subtitle.
(C) Effect date of order.--Any temporary order
issued under this paragraph shall take effect upon
service upon the person and, unless set aside, limited,
or suspended by a court in proceedings authorized by
paragraph (2) of this subsection, shall remain
effective and enforceable pending the completion of the
administrative proceedings pursuant to such notice and
until such time as the Agency 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.--Within 10 days after the person 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 home office 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 a person's
books and records are so incomplete or inaccurate that
the Agency 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 Agency 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 take effect 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 Agency
determines, by examination or
otherwise, that the person's books and
records are accurate and reflect the
financial condition of the person.
(d) Special Rules for Enforcement of Orders.--
(1) In general.--The Agency may in its discretion apply to
the United States district court within the jurisdiction of
which the principal office 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) Regulations.--The Director shall prescribe regulations
establishing such procedures as may be necessary to carry out this
section.
SEC. 4504. LITIGATION AUTHORITY.
(a) In General.--If any person violates a provision of this title,
any enumerated consumer law, any law for which authorities were
transferred under subtitles F and H, or any regulation prescribed or
order issued by the Director under this title or pursuant to any such
authority, the Agency may commence a civil action against such person
to impose a civil penalty and to seek all appropriate legal and
equitable relief including a permanent or temporary injunction as
permitted by law.
(b) Representation.--The Agency may act in its own name and through
its own attorneys in enforcing any provision of this title, regulations
under this title, or any other law or regulation, or in any action,
suit, or proceeding to which the Agency is a party.
(c) Compromise of Actions.--The Agency may compromise or settle any
action if such compromise is approved by the court.
(d) Notice to the Attorney General.--When commencing a civil action
under this title, any enumerated consumer law, any law for which
authorities were transferred under subtitles F and H, or any regulation
thereunder, the Agency shall notify the Attorney General.
(e) Appearance Before the Supreme Court.--The Agency may represent
itself in its own name before the Supreme Court of the United States,
if--
(1) the Agency 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
(2) the Attorney General concurs with such request or fails
to take action within 60 days of the Agency's request.
(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 this title, any
enumerated consumer law, any law for which authorities were transferred
under subtitles F and H, or any regulation prescribed or order issued
by the Director under this title or pursuant to any such authority.
(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 the discovery of the violation to which
an action relates.
(2) Limitations under other federal laws.--
(A) For purposes of this section, an action arising
under this title shall not include claims arising
solely under enumerated consumer laws.
(B) In any action arising solely under an
enumerated consumer law, the Agency may commence,
defend, or intervene in the action in accordance with
the requirements of that law, as applicable.
(C) In any action arising solely under the laws for
which authorities were transferred by subtitles F and
H, the Agency may commence, defend, or intervene in the
action in accordance with the requirements of that law,
as applicable.
SEC. 4505. RELIEF AVAILABLE.
(a) Administrative Proceedings or Court Actions.--
(1) Jurisdiction.--The court (or Agency, as the case may
be) in an action or adjudication proceeding brought under this
title, any enumerated consumer law, or any law for which
authorities were transferred by subtitles F and H, shall have
jurisdiction to grant any appropriate legal or equitable relief
with respect to a violation of this title, any enumerated
consumer law, and any law for which authorities were
transferred by subtitles F and H, including a violation of a
regulation prescribed or order issued under this title, any
enumerated consumer law and any law for which authorities were
transferred by subtitles F and H.
(2) Relief.--Such relief may include--
(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;
(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 under 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 Agency, a
State attorney general, or a State bank supervisor to enforce any
provision of this title, any enumerated consumer law, any law for which
authorities were transferred by subtitles F and H, or any regulation
prescribed or order issued by the Director under this title or pursuant
to any such authority, the Agency, State attorney general, or State
bank supervisor may recover the costs incurred by such Agency, attorney
general, or supervisor in connection with prosecuting such action if
the Agency, State attorney general, or State bank supervisors (as the
case may be) is the prevailing party in the action.
(c) Civil Money Penalty in Court and Administrative Actions.--
(1) Any person that violates, through any act or omission,
any provision of this title, any enumerated consumer law, or
any regulation prescribed or order issued by the Director under
this title shall forfeit and pay a civil penalty pursuant to
this subsection determined as follows:
(A) First tier.--For any violation of any law,
regulation, final order or condition imposed in writing
by the Agency, or for any failure to pay any fee or
assessment imposed by the Agency (including any fee or
assessment for which a related person may be liable), a
civil penalty shall not exceed $5,000 for each day
during which such violation continues.
(B) Second tier.--Notwithstanding paragraph (A),
for any violation of a regulation prescribed under
section 4306 or for any person that recklessly engages
in a violation of this title, any enumerated consumer
law, or any regulation prescribed or order issued by
the Director under this title, relating to the
provision of an alternative consumer financial product
or service, a civil penalty shall 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 this
title, any enumerated consumer law, or any regulation
prescribed or order issued by the Director under this
title, a civil penalty shall not exceed $1,000,000 for
each day during which such violation continues.
(2) Mitigating factors.--In determining the amount of any
penalty assessed under paragraph (1), the Agency 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.
(3) Authority to modify or remit penalty.--The Agency may
compromise, modify, or remit any penalty which may be assessed
or had already been assessed under paragraph (1). 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.
(4) Notice and hearing.--No civil penalty may be assessed
with respect to a violation of this title, any enumerated
consumer law, or any regulation prescribed or order issued by
the Director, unless--
(A) the Agency 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 Agency.
SEC. 4506. REFERRALS FOR CRIMINAL PROCEEDINGS.
Whenever the Agency obtains evidence that any person, either
domestic or foreign, has engaged in conduct that may constitute a
violation of Federal criminal law, the Agency may transmit such
evidence to the Attorney General, who may institute criminal
proceedings under appropriate law. No provision of this section shall
be construed as affecting any other authority of the Agency to disclose
information.
SEC. 4507. 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 employee's
initiative or in the ordinary course of the employee's duties (or any
person acting pursuant to a request of the employee)--
(1) has provided information to the Agency or to any other
State, local, or Federal Government authority or law
enforcement official information relating to any violation of,
or any act or omission the employee reasonably believes to be a
violation of any provision of this title or any other law that
is subject to the jurisdiction of the Agency, or any
regulation, order, standard, or prohibition prescribed by the
Director;
(2) has testified or is about to testify in any proceeding
resulting from the administration or enforcement of any
provision of this title or any other law that is subject to the
jurisdiction of the Agency, or any regulation, order, standard,
or prohibition prescribed by the Director;
(3) has filed or instituted, or has caused to be filed or
instituted, any proceeding under any enumerated consumer law or
any law for which authorities were transferred by subtitles F
and H; or
(4) has 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, regulation, order, standard, or prohibition,
subject to the jurisdiction of, or enforceable by, the Agency.
(b) Covered Employee Defined.--For the purposes of this section,
the term ``covered employee'' means any individual performing tasks
related to the provision of a financial product or service to a
consumer.
(c) Timetables.--
(1) Filing complaint.--Any individual who believes that
such individual has been discharged or otherwise discriminated
against by any person in violation of subsection (a) may,
before the end of the 180-day period beginning on the date on
which such violation occurs, file (or have any person file on
behalf of such individual) a complaint with the Secretary of
Labor (hereafter in this subsection referred to as the
``Secretary'', notwithstanding section 4002(34)) alleging such
discharge or discrimination and identifying the person
responsible for such act.
(2) Secretary's action on receipt of complaint.--Upon
receipt of a complaint by any individual under paragraph (1),
the Secretary shall notify, in writing, the person named in the
complaint who is alleged to have committed the violation of--
(A) the filing of the complaint;
(B) the allegations contained in the complaint;
(C) the substance of the evidence supporting the
complaint; and
(D) the opportunities that will be afforded to such
person under paragraph (3).
(3) Investigation, hearing, and orders.--
(A) Findings.--Not later than 60 days after the
date of receipt of a complaint filed under paragraph
(1) and after affording the individual filing the
complaint and the person named in the complaint who is
alleged to have committed the violation an opportunity
to submit to the Secretary a written response to the
complaint and an opportunity to meet with a
representative of the Secretary to present statements
from witnesses, the Secretary shall initiate an
investigation and determine whether there is reasonable
cause to believe that the complaint has merit and
notify, in writing, the complainant and the person
alleged to have committed a violation of subsection (a)
of the Secretary's findings.
(B) Preliminary order.--If the Secretary concludes
that there is reasonable cause to believe that a
violation of subsection (a) has occurred, the Secretary
shall accompany the Secretary's findings with a
preliminary order providing the relief prescribed by
paragraph (3)(B).
(C) Objections to findings or preliminary order.--
Not later than 30 days after the date of notification
of findings under subparagraph (A), 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.
(D) Objections do not constitute a stay.--The
filing of objections under subparagraph (C) shall not
operate to stay any reinstatement remedy contained in
the preliminary order.
(E) Expeditious hearing.--Any hearing requested
under subparagraph (C) shall be conducted
expeditiously.
(F) Finality of order.--If a hearing is not
requested under subparagraph (C) with respect to any
findings of the Secretary under subparagraph (A) within
the 30-day period described in subparagraph (C), the
preliminary order shall be deemed a final order that is
not subject to judicial review.
(4) Standards for determination.--
(A) Prima facie evidence of contribution.--The
Secretary shall dismiss a complaint filed under
paragraph (1) and shall not conduct an investigation
otherwise required under paragraph (3)(A) unless the
individual filing the complaint makes a prima facie
showing that any behavior described in paragraph (1),
(2), (3), or (4) of subsection (a) was a contributing
factor in the unfavorable personnel action alleged in
the complaint.
(B) Prohibition on investigation in case of clear
and convincing evidence of independent basis.--
Notwithstanding a finding by the Secretary that the
complainant has made the showing required under
subparagraph (A), no investigation otherwise required
under paragraph (3) 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) Contributing factor requirement.--The Secretary
may determine that a violation of subsection (a) has
occurred only if the complainant demonstrates that any
behavior described in paragraph (1), (2), (3), or (4)
of subsection (a) was a contributing factor in the
unfavorable personnel action alleged in the complaint.
(D) Prohibition on final order in case of clear and
convincing evidence of independent basis.--Relief may
not be ordered under paragraph (3) 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.
(5) Final order.--
(A) In general.--Not later than 120 days after the
date of conclusion of any hearing under paragraph (3),
the Secretary shall issue a final order providing the
relief prescribed by this subsection or denying the
complaint.
(B) Settlement agreement.--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, the
complainant, and the person alleged to have committed
the violation.
(C) Contents of order.--If, in response to a
complaint filed under paragraph (1), the Secretary
determines that a violation of subsection (a) has
occurred, the Secretary shall order the person who
committed such violation--
(i) to take affirmative action to abate the
violation;
(ii) to reinstate the complainant to such
individual's former position together with
compensation (including back pay) and restore
the terms, conditions, and privileges
associated with such individual's employment;
and
(iii) to provide compensatory damages to
the complainant.
(D) Costs and attorneys fees.--If an order is
issued under this paragraph, the Secretary, 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 attorneys' and expert witness fees)
reasonably incurred, as determined by the Secretary, by
the complainant for, or in connection with, the
bringing of the complaint upon which the order was
issued.
(E) Frivolous or bad faith complaints.--If the
Secretary finds that a complaint under paragraph (1) is
frivolous or has been brought in bad faith, the
Secretary may award to the prevailing employer a
reasonable attorneys' fee, not exceeding $1,000, to be
paid by the complainant.
(6) De novo action on claim.--
(A) Action at law or equity.--If the Secretary has
not issued a final decision within 210 days after the
filing of the complaint, or within 90 days after
receiving a written determination, the complainant who
filed such complaint may bring an action at law or
equity for de novo review in the appropriate district
court of the United States.
(B) Jury trial.--At the request of either party to
an action brought under subparagraph (A), such action
shall be tried by the court with a jury.
(C) Standards for determination.--The standards for
determination established under paragraph (4) shall
apply in any action under this paragraph.
(D) Relief.--The court shall have jurisdiction to
grant all relief, including injunctive relief and
compensatory damages , that necessary to make the
complainant who sought de novo review whole,
including--
(i) reinstatement with the same seniority
status that the complainant 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's
fees.
(E) Not reviewable.--The decision of the court
shall be final without further review.
(7) Judicial review of final order.--
(A) In general.--Unless a complainant brings a de
novo action under paragraph (6), any person adversely
affected or aggrieved by a final order issued under
paragraph (5) may obtain 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.
(B) Statute of limitation .--Any petition for
review of a final order under subsection shall be filed
not later than 60 days after the date of the issuance
of the final order by the Secretary.
(C) Standards for review.--The standards for review
established under chapter 7 of title 5, United States
Code, shall apply in any review of a final order under
this paragraph.
(D) Effect of proceedings as stay.--The
commencement of proceedings under this paragraph shall
not operate as a stay of the final order of the
Secretary under review, unless so ordered by the court.
(E) Limitation on effect of other proceedings.--
Except as provided in paragraph (6) and this paragraph,
an order of the Secretary with respect to which review
could have been obtained under subparagraph (A) shall
not be subject to judicial review in any criminal or
other civil proceeding.
(8) Enforcement of orders by secretary.--
(A) In general.--Whenever any person has failed to
comply with an order issued under paragraph (5), the
Secretary may file a civil action in the United States
district court for the district in which the violation
was found to occur, or in the United States district
court for the District of Columbia, to enforce such
order.
(B) Relief.--In actions brought under this
paragraph, the district courts shall have jurisdiction
to grant all appropriate relief including injunctive
relief and compensatory damages.
(9) Enforcement of order by aggrieved party .--
(A) In general.--A person on whose behalf an order
was issued under paragraph (5) may commence a civil
action against the person to whom such order was issued
to require compliance with such order.
(B) Relief.--The court, in issuing any final order
under this paragraph, may award costs of litigation
(including reasonable attorneys' and expert witness
fees) to any party whenever the court determines such
award is appropriate.
(d) Action in Nature of Mandamus.--Any nondiscretionary duty
imposed by this section shall be enforceable in a mandamus proceeding
brought under section 1361 of title 28, United States Code.
(e) Unenforceability of Certain Agreements.--
(1) No waiver of rights and remedies.--Notwithstanding any
law and except as provided under paragraph (3), 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) Predispute arbitration agreements.--Notwithstanding any
law and except as provided under paragraph (3), no predispute
arbitration agreement shall be valid or enforceable and to the
extent the agreement 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)(2) unless the Director determines by regulation that such
provision is inconsistent with the purposes of this title.
SEC. 4508. EFFECTIVE DATE.
This subtitle shall take effect on the designated transfer date.
Subtitle F--Transfer of Functions and Personnel; Transitional
Provisions
SEC. 4601. TRANSFER OF CERTAIN FUNCTIONS.
(a) In General.--Except as provided in subsection (b), 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 Director.
(B) Board of governors' authority.--The Director
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 Director.
(B) Comptroller's authority.--The Director 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 Director.
(B) Director's authority.--The Director 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 Director.
(B) Corporation's authority.--The Director 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.--Except as provided in
subparagraph (C), the consumer financial protection
functions of the Federal Trade Commission that are
contained within the enumerated consumer laws are
transferred to the Agency, except as provided in
section 4202(e).
(B) Commission's authority.--Except as provided in
subparagraph (C), the Director shall have all powers
and duties that were vested in the Federal Trade
Commission, relating to consumer financial protection
functions, on the day before the designated transfer
date.
(C) Continuation of certain commission
authorities.--Notwithstanding subparagraphs (A) and
(B), the Federal Trade Commission shall continue to
enforce the following provisions of law and prescribe
regulations under such provisions:
(i) The Credit Repair Organizations Act.
(ii) Section 5 of the Federal Trade
Commission Act.
(iii) The Telemarketing and Consumer Fraud
and Abuse Prevention Act.
(6) National credit union administration.--
(A) Transfer of functions.--All consumer financial
protection functions of the National Credit Union
Administration are transferred to the Director.
(B) National credit union administration's
authority.--The Director 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) Secretary of housing and urban development.--
(A) Transfer of functions.--All consumer protection
functions of the Secretary of Housing and Urban
Development relating to the Real Estate Settlement
Procedures Act of 1974 and the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 are
transferred to the Director.
(B) Secretary of hud's authority.--The Director
shall have all powers and duties that were vested in
the Secretary of Housing and Urban Development relating
to the Real Estate Settlement Procedures Act of 1974
and the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008, on the day before the designated
transfer date
(b) Transfers of Functions Subject to Backstop Enforcement
Authority Remaining With Transferor Agencies.--The transfers of
functions in subsection (a) shall not affect the authority of the
agencies identified in subsection (a) from initiating enforcement
proceedings under the circumstances described in section 4202(e)(3).
(c) Termination of Authority of Transferor Agencies To Collect Fees
for Consumer Financial Protection Purposes.--Authorities of the
agencies identified in subsection (a) to assess and collect fees to
cover the cost of conducting consumer financial protection functions
shall terminate on the day before the designated transfer date.
(d) Consumer Financial Protection Functions Defined.--For purposes
of this subtitle, the term ``consumer financial protection functions''
means research, rulemaking, issuance of orders or guidance,
supervision, examination, and enforcement activities, powers, and
duties relating to the provision of consumer financial products or
services, including the authority to assess and collect fees for those
purposes, except that such term shall not include any such function
relating to an agency's responsibilities under the Community
Reinvestment Act of 1977.
(e) Effective Date.--Subsections (a) and (b) shall take effect on
the designated transfer date.
SEC. 4602. DESIGNATED TRANSFER DATE.
(a) In General.--Not later than 60 days after the date of the
enactment of this title, the Secretary--
(1) shall, 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 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 Director under section 4601; and
(2) shall publish notice of that designation 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 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 designation 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 18 months after the date of the
enactment of this title.
(2) Extension of time.--The Secretary may designate a date
that is later than 18 months after the date of the enactment of
this title if the Secretary transmits to appropriate committees
of Congress--
(A) a written determination that orderly
implementation of this title is not feasible on the
date that is 18 months after the date of the enactment
of this title;
(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 shall any date
designated under this section be later than 24 months after the
date of the enactment of this title.
SEC. 4603. SAVINGS PROVISIONS.
(a) Board of Governors.--
(1) Existing rights, duties, and obligations not
affected.--Section 4601(a)(1) shall 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 Director 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 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 Director by this title, except that the
Director 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 4601(a)(4) shall 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 Director 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 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 Director by
this title, except that the Director 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.--
(1) Existing rights, duties, and obligations not
affected.--Section 4601(a)(5) shall not affect the validity of
any right, duty, or obligation of the United States, the
Federal Trade Commission, or any other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
Federal Trade Commission transferred to the Director 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 Federal Trade Commission
before the designated transfer date with respect to any
consumer financial protection function of the Federal Trade
Commission transferred to the Director by this title, except
that the Director shall be substituted for the Federal Trade
Commission as a party to any such proceeding as of the
designated transfer date.
(d) National Credit Union Administration.--
(1) Existing rights, duties, and obligations not
affected.--Section 4601(a)(6) shall 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
Director 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 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 Director by this title,
except that the Director 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) Comptroller of the Currency.--
(1) Existing rights, duties, and obligations not
affected.--Section 4601(a)(2) shall 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 Director
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 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 Director by
this title before the designated transfer date, except that the
Director 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) Director of the Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not
affected.--Section 4601(a)(3) 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--
(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 Director by this title; and
(B) that 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 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 Director by this title before the designated transfer date,
except that the Director 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) Secretary of Housing and Urban Development.--
(1) Existing rights, duties, and obligations not
affected.--Section 4601(a)(7) shall not affect the validity of
any right, duty, or obligation of the United States, the
Secretary of Housing and Urban Development, 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 Housing and Urban
Development under the Real Estate Settlement Procedures
Act of 1974 and the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 transferred to the
Director by this title; and
(B) that 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 Housing and
Urban Development (or the Department of Housing and Urban
Development) with respect to any consumer financial protection
function of the Secretary of Housing and Urban Development
transferred to the Director by this title before the designated
transfer date, except that the Director shall be substituted
for the Secretary of Housing and Urban Development (or such
Department) as a party to any such proceeding as of the
designated transfer date.
(h) Continuation of Existing Orders, Regulations, Determinations,
Agreements, and Resolutions.--All orders, resolutions, determinations,
agreements, and regulations that have been issued, made, prescribed, or
allowed to become effective by the Board of Governors (or any Federal
reserve bank), the Federal Deposit Insurance Corporation, the Federal
Trade Commission, the National Credit Union Administration, the
Comptroller of the Currency, the Director of the Office of Thrift
Supervision, the Secretary of Housing and Urban Development, 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 according to the terms of those orders,
resolutions, determinations, agreements, and regulations, and shall be
enforceable by or against the Director until modified, terminated, set
aside, or superseded in accordance with applicable law by the Director,
by any court of competent jurisdiction, or by operation of law.
(i) Identification of Regulations Continued.--Not later than the
designated transfer date, the Director--
(1) shall, after 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, and the Secretary
of Housing and Urban Development identify the regulations
continued under subsection (g) that will be enforced by the
Director; and
(2) shall publish a list of such regulations in the Federal
Register.
(j) Status of Regulations Proposed or Not Yet Effective.--
(1) Proposed regulations.--Any proposed regulation of the
Board of Governors, the Federal Deposit Insurance Corporation,
the Federal Trade Commission, the National Credit Union
Administration, the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, or the Secretary of
Housing and Urban Development which that agency, in performing
consumer financial protection functions transferred by this
title, has proposed before the designated transfer date but has
not published as a final regulation before that date, shall be
deemed to be a proposed regulation of the Director.
(2) Regulations not yet effective.--Any interim or final
regulation of Board of Governors, the Federal Deposit Insurance
Corporation, the Federal Trade Commission, the National Credit
Union Administration, the Comptroller of the Currency, the
Director of the Office of Thrift Supervision, or the Secretary
of Housing and Urban Development 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
take effect as a regulation of the Director according to its
terms.
SEC. 4604. TRANSFER OF CERTAIN PERSONNEL.
(a) In General.--
(1) Certain federal reserve system employees transferred.--
(A) Identifying employees for transfer.--The
Director and the Board of Governors shall--
(i) jointly determine the number of
employees of the Board necessary to perform or
support the consumer financial protection
functions of the Board of Governors that are
transferred to the Director 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
Agency in a manner that the Director and the
Board of Governors, in their sole discretion,
deem equitable.
(B) Identified employees transferred.--All
employees of the Board of Governors identified under
subparagraph (A)(ii) shall be transferred to the Agency
for employment.
(C) Federal reserve bank employees.--Employees of
any Federal reserve bank who, on the day before the
designated transfer date, 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
Director 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 Director by this title;
and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Corporation for transfer to the Agency in a
manner that the Director and the Board of
Directors of the Corporation, in their
discretion, deem equitable.
(B) Identified employees transferred.--All
employees of the Corporation identified under
subparagraph (A)(ii) shall be transferred to the Agency
for employment.
(3) Certain ncua employees transferred.--
(A) Identifying employees for transfer.--The
Director 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 Director 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 Agency in a manner that the
Director and the National Credit Union
Administration Board, in their discretion, deem
equitable.
(B) Identified employees transferred.--All
employees of the National Credit Union Administration
identified under subparagraph (A)(ii) shall be
transferred to the Agency for employment.
(4) Certain hud employees transferred.--
(A) Identifying employees for transfer.--The
Director and the Secretary 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 financial protection
functions of the Secretary of Housing and Urban
Development that are transferred to the
Director 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 Agency in a manner that the
Director and the Secretary of Housing and Urban
Development, in their 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 Agency for employment.
(5) Appointment authority for excepted service and senior
executive service transferred.--
(A) In general.--In the case of employees occupying
positions in the excepted service or the Senior
Executive Service, any appointment authority
established pursuant to law or regulations of the
Director 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 to such subparagraph) 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 such employee's position assignment
not later than 120 days after the effective date of the
employee's 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 fdic, ftc, hud, ncua, occ,
and ots.--Each employee transferred from the Federal Deposit
Insurance Corporation, the Federal Trade Commission, 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 Agency with the same status and
tenure as he or she held on the day before the designated
transfer date.
(2) Employees transferred from the federal reserve
system.--
(A) Comparability.--Each employee transferred from
the Board of Governors or from a Federal reserve bank
shall be placed in a position with the same status and
tenure as that of employees transferring to the Agency
from the Office of the Comptroller of the Currency who
perform similar functions and have similar periods of
service.
(B) Service periods credited.--For purposes of this
paragraph, periods of service with the Board of
Governors or a Federal reserve bank shall be credited
as periods of service with a Federal agency.
(e) Additional Certification Requirements Limited.--Examiners
transferred to the Agency shall not be subject to any additional
certification requirements before being placed in a comparable
examiner's position at the Agency examining the same types of
institutions as the transferred examiners examined before such
examiners were transferred.
(f) Personnel Actions Limited.--
(1) 5-year protection.--Except as provided in paragraph
(2), each transferred employee holding a permanent position on
the day before the designated transfer date shall not, during
the 5-year period beginning on the designated transfer date, be
involuntarily separated, or involuntarily reassigned outside
such transferred employee's local locality pay area as defined
by the Director of the Office of Personnel Management.
(2) Exceptions.--Paragraph (1) shall not be construed as
limiting the right of the Director 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 a supervisory employee outside such
employee's locality pay area as defined by the Director
of the Office of Personnel Management when the Director
determines that the reassignment is necessary for the
efficient operation of the Agency.
(g) Pay.--
(1) 1-year protection.--Except as provided in paragraph
(2), each transferred employee shall, during the 1-year period
beginning on the designated transfer date, receive pay at a
rate not less than the basic rate of pay (including any
geographic differential) that the employee received during the
1-year period immediately before the transfer.
(2) Exceptions.--Paragraph (1) shall not be construed as
limiting the right of the Agency to reduce the rate of basic
pay of a transferred employee--
(A) for cause;
(B) for unacceptable performance; or
(C) with the employee's consent.
(3) Protection only while employed.--Paragraph (1) applies
to a transferred employee only while that employee remains
employed by the Agency.
(4) Pay increases permitted.--Paragraph (1) shall not be
construed as limiting the authority of the Agency to increase a
transferred employee's pay.
(h) Reorganization.--
(1) Between 1st and 3rd year.--
(A) In general.--If the Agency determines, during
the period beginning 1 year after the designated
transfer date and ending 3 years after the designated
transfer date, that a reorganization of the staff of
the Agency is required--
(i) that 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;
(ii) before the reorganization occurs, all
employees in the same locality pay area as
defined by the Director of 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 Agency shall--
(I) establish competitive areas (as
that term is defined in regulations
issued by the Director of 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 Director of 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 Agency 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 Agency determines, at any
time after the 3-year period beginning on the
designated transfer date, that a reorganization of the
staff of the Agency 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 Agency 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.--Except as provided in subparagraph (B),
each transferred employee shall remain enrolled
in such employee's existing retirement plan as
long as the employee remains employed by the
Agency.
(ii) Employer's contribution.--The Director
shall pay any employer contributions to the
existing retirement plan of each transferred
employee as required under that plan.
(B) Option for employees transferred from federal
reserve system to be subject to federal employee
retirement program.--
(i) Election.--Any transferred employee who
was enrolled in a Federal Reserve System
retirement plan on the day before the date of
the employee's transfer to the Agency may,
during the period beginning 6 months after the
designated transfer date and ending 1 year
after the designated transfer date, elect to be
subject to the Federal employee retirement
program.
(ii) Effective date of coverage.--For any
employee making an election under clause (i),
coverage by the Federal employee retirement
program shall begin 1 year after the designated
transfer date.
(C) Agency participation in federal reserve system
retirement plan.--
(i) Separate account in federal reserve
system retirement plan established.--A separate
account in the Federal Reserve System
retirement plan shall be established for Agency
employees who do not make the election under
subparagraph (B).
(ii) Funds attributable to transferred
employees remaining in federal reserve system
retirement plan transferred.--The proportionate
share of funds in the Federal Reserve System
retirement plan, including the proportionate
share of any funding surplus in that plan,
attributable to a transferred employee who does
not make the election under subparagraph (B),
shall be transferred to the account established
under clause (i).
(iii) Employer contributions deposited.--
The Director shall deposit into the account
established under clause (i) the employer
contributions that the Agency makes on behalf
of employees who do not make the election under
subparagraph (B).
(iv) Account administration.--The Director
shall administer the account established under
clause (i) as a participating employer in the
Federal Reserve System retirement plan.
(D) Definitions.--For purposes of this paragraph,
the following definitions shall apply:
(i) Existing retirement plan.--The term
``existing retirement plan'' means, with
respect to any employee transferred under this
section, the particular retirement plan
(including the Financial Institutions
Retirement Fund) and any associated thrift
savings plan of the agency or Federal reserve
bank from which the employee was transferred,
which the employee was enrolled in on the day
before the designated transfer date.
(ii) Federal employee retirement plan.--The
term ``Federal employee retirement program''
means the retirement program for Federal
employees established by chapters 83 and 84 of
title 5, United States Code.
(2) Benefits other than retirement benefits for transferred
employees.--
(A) During 1st year.--
(i) Existing plans continue.--Each
transferred employee 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 dental, vision, long-
term care, or life insurance program, to which
the employee belonged on the day before the
designated transfer date.
(ii) Employer's contribution.--The Director
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) Dental, vision, or life insurance after 1st
year.--If, after the 1-year period beginning on the
designated transfer date, the Director decides not to
continue participation in any dental, vision, or life
insurance program of an agency or bank from which
employees transferred, a transferred employee who is a
member of such a program may, before the Director's
decision takes effect, elect to enroll, without regard
to any regularly scheduled open season, in--
(i) the enhanced dental benefits
established by chapter 89A of title 5, United
States Code;
(ii) the enhanced vision benefits
established by chapter 89B of title 5, United
States Code; and
(iii) the Federal Employees Group Life
Insurance Program established by 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 designated
transfer date, the Director decides not to continue
participation in any long-term care insurance program
of an agency or bank from which employees transferred,
a transferred employee who is a member of such a
program may, before the Director's decision takes
effect, elect to apply for coverage under the Federal
Long Term Care Insurance Program established by chapter
90 of title 5, United States Code, under the
underwriting requirements applicable to a new active
workforce member (as defined in Part 875, title 5, Code
of Federal Regulations).
(D) Employee's contribution.--An individual
enrolled in the Federal Employees Health Benefits
program shall pay any employee contribution required by
the plan.
(E) Additional funding.--The Director 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 Director and the Director of 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.
(F) Credit for time enrolled in other plans.--For
employees transferred under this section, enrollment in
a health benefits plan administered by the Comptroller
of the Currency, the Director of the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation,
the National Credit Union Administration, the Board of
Governors, the Secretary of Housing and Urban
Development, or a Federal reserve bank, 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 the Board of Governors of the
Federal Reserve System, the Federal Deposit
Insurance Corporation, the Federal Trade
Commission, the Secretary of Housing and Urban
Development, the National Credit Union
Administration, the Comptroller of the
Currency, or the Director of the Office of
Thrift Supervision 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 Agency,
without regard to any regularly scheduled open
season and requirement of insurability.
(ii) Employee's contribution.--An
individual enrolled in a life insurance plan
under this clause shall pay any employee
contribution required by the plan.
(iii) Additional funding.--The Director
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 Director and the
Director of 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
section, enrollment in a life insurance plan
administered by the Board of Governors, the
Federal Deposit Insurance Corporation, the
Federal Trade Commission, the Secretary of
Housing and Urban Development, the National
Credit Union Administration, the Comptroller of
the Currency, the Director of the Office of
Thrift Supervision, or a Federal reserve bank
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) Implementation of Uniform Pay and Classification System.--Not
later than 2 years after the designated transfer date, the Director
shall implement a uniform pay and classification system for all
transferred employees.
(k) Equitable Treatment.--In administering the provisions of this
section, the Director--
(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 Federal Trade Commission, the
Secretary 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 those employees' 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, including the Board of Governors of
the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Federal Trade Commission, 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 Director shall work with the Director of the Office of
Personnel Management and other entities with expertise in matters
related to employment to ensure a fair and orderly transition for
affected employees.
SEC. 4605. 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 the enactment of this title.
SEC. 4606. INTERIM AUTHORITY OF THE SECRETARY.
(a) In General.--The Secretary is authorized to perform the
functions of the Director under this subtitle until the appointment of
the Director is confirmed by the Senate in accordance with section
4102.
(b) Interim Administrative Services by the Department of the
Treasury.--The Secretary of the Treasury may provide administrative
services necessary to support the Agency before the designated transfer
date.
(c) Interim Funding for the Department of the Treasury.--For the
purposes of carrying out the authorities granted in this section, there
are appropriated to the Secretary of the Treasury such sums as are
necessary. Notwithstanding any other provision of law, such amounts
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.
Subtitle G--Regulatory Improvements
SEC. 4701. COLLECTION OF DEPOSIT ACCOUNT DATA.
(a) Purpose.--The purpose of this section is to promote awareness
and understanding of the access of individuals and communities to
financial services, and to identify business and community development
needs and opportunities.
(b) In General.--
(1) Records required.--For each branch, automated teller
machine at which deposits are accepted, and other deposit
taking service facility with respect to any financial
institution, the financial institution shall maintain records
of the number and dollar amounts of deposit accounts of
customers.
(2) Geo-coded addresses of depositors.--The customers'
addresses maintained pursuant to paragraph (1) shall be geo-
coded so that data shall be collected regarding the census
tracts of the residence or business location of the customers.
(3) Identification of depositor type.--In maintaining
records on any deposit account under this section, the
financial institution shall also record whether the deposit
account is for a residential or commercial customer.
(4) Public availability.--
(A) In general.--The following information shall be
publicly available on an annual basis--
(i) the address and census tracts of each
branch, automated teller machine at which
deposits are accepted, and other deposit taking
service facility with respect to any financial
institution;
(ii) the type of deposit account including
whether the account was a checking or savings
account; and
(iii) data on the number and dollar amounts
of the accounts, presented by census tract
location of the residential and commercial
customers.
(iv) any other data deemed appropriate by
the Director.
(B) Protection of identity.--In the publicly
available data, any personally identifiable data
element shall be removed so as to protect the
identities of the commercial and residential customers.
(c) Availability of Information.--
(1) Submission to agencies.--The data required to be
compiled and maintained under this section by any financial
institution shall be submitted annually to the Agency, or to a
Federal banking agency, in accordance with regulations
prescribed by the Director.
(2) Availability of information.--Information compiled and
maintained under this section shall be retained for not less
than 3 years after the date of preparation and shall be made
available to the public, upon request, in the form required
under regulations prescribed by the Director.
(d) Agency Use.--The Director--
(1) shall assess the distribution of residential and
commercial accounts at such financial institution across income
and minority level of census tracts; and
(2) may use the data for any other purpose as permitted by
law.
(e) Regulations and Guidance.--
(1) In general.--The Director shall prescribe such
regulations and issue guidance as may be necessary to carry
out, enforce, and compile data pursuant to this section.
(2) Data compilation regulations.--The Director shall
prescribe regulations regarding the provision of data compiled
under this section to the Federal banking agencies to carry out
the purposes of this section and shall issue guidance to
financial institutions regarding measures to facilitate
compliance with the this section and the requirements of
regulations prescribed under this section.
(f) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Agency.--The term ``Agency'' means the Consumer
Financial Protection Agency.
(2) Credit union.--The term ``credit union'' means a
Federal credit union or a State-chartered credit union (as such
terms are defined in section 101 of the Federal Credit Union
Act).
(3) Deposit account.--The term ``deposit account'' includes
any checking account, savings account, credit union share
account, and other type of account as defined by the Director.
(4) Director.--The term ``Director'' means the Director of
the Agency.
(5) Federal banking agency.--The term ``Federal banking
agency'' means the Board of Governors of the Federal Reserve
System, the head of the agency responsible for chartering and
regulating national banks, the Director of the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation, and the
National Credit Union Administration; and the term ``Federal
banking agencies'' means all of those agencies.
(6) Financial institution.--The term ``financial
institution''--
(A) has the meaning given to the term ``insured
depository institution'' in section 3(c)(2) of the
Federal Deposit Insurance Act; and
(B) includes any credit union.
(g) Effective Date.--This section shall take effect on the
designated transfer date.
SEC. 4702. 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 new
section:
``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- and minority-owned small businesses.
``(b) In General.--Subject to the requirements of this section, in
the case of any application to a financial institution for credit for a
small business, the financial institution shall--
``(1) inquire whether the business is a women- or minority-
owned 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) In general.--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) Exception.--If a financial institution determines
that 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 will provide notice
to the applicant of the access of the underwriter to this
information, along with notice that the financial institution
may not discriminate on this basis of this information.
``(e) Form and Manner of Information.--
``(1) In general.--Each financial institution shall compile
and maintain, in accordance with regulations of the Agency, 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 also be itemized in order to clearly
and conspicuously disclose the following:
``(A) The number of the application and the date
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 small business loan
applicant.
``(F) The gross annual revenue of the business in
the last fiscal year of the small business loan
applicant preceding the date of the application.
``(G) The race, sex, and ethnicity of the principal
owners of the business.
``(H) Any additional data the Agency determines
would aid in fulfilling the purposes of this section.
``(3) Inclusion of personally identifiable information
prohibited.--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, and any other personally
identifiable information concerning any individual who is, or
is connected with, the small business loan applicant.
``(4) Discretion to delete or modify publicly available
data.--The Agency may, in the discretion of the Agency, delete
or modify data collected under this section which is or will be
available to the public if the Agency determines that the
deletion or modification of the data would advance a compelling
privacy interest.
``(f) Availability of Information.--
``(1) Submission to agency.--The data required to be
compiled and maintained under this section by any financial
institution shall be submitted annually to the Agency.
``(2) Availability of information.--
``(A) In general.--Information compiled and
maintained under this section shall be retained for not
less than 3 years after the date of preparation and
shall be made available to the public, upon request, in
the form required under regulations prescribed by the
Agency.
``(B) Annual disclosure to the public.--In addition
to the availability by request under subparagraph (A)
of data compiled and maintained under this section, the
Agency shall annually provide such data to the public.
``(C) Procedures.--The procedures for disclosing
data compiled and maintained under this section to the
public shall be determined by the Agency by regulation.
``(3) Compilation of aggregate data.--
``(A) In general.--The Agency may, in the
discretion of the Agency, compile for the Agency's own
use compilations of aggregate data.
``(B) Public availability of aggregate data.--The
Agency may, in the discretion of the Agency, make
public compilations of aggregate data in such manner as
the Agency may determine to be appropriate.
``(g) 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) 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.
``(3) 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.
``(4) Minority.--The term `minority' has the meaning given
to such term by section 1204(c)(3) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989.
``(5) Small business loan.--The term `small business loan'
shall be defined by the Agency, which may take into account--
``(A) the gross revenues of the borrower;
``(B) the total number of employees of the
borrower;
``(C) the industry in which the borrower has its
primary operations; and
``(D) the size of the loan.
``(h) Agency Action.--
``(1) In general.--The Agency shall prescribe such
regulations and issue such guidance as may be necessary to
carry out, enforce, and compile data pursuant to this section.
``(2) Exceptions.--The Agency, by regulation or order, may
adopt exceptions to any requirement of this section and may,
conditionally or unconditionally, exempt any financial
institution or class of institutions from the requirements of
this section as the Agency determines to be necessary or
appropriate to carry out the purposes and objectives of this
section.
``(3) Guidance.--The Agency 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- or
minority-owned for the purposes of this section.''.
(b) Technical and Conforming Amendment.--Section 701(b) of the
Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is amended--
(1) by striking ``or'' after the semicolon at the end of
paragraph (3);
(2) by striking the period at the end of paragraph (4) and
inserting ``; or''; and
(3) by inserting after paragraph (4), the following new
paragraph:
``(5) to make an inquiry under section 704B in accordance
with the requirements of such section.''.
(c) Clerical Amendment.--The table of sections for the Equal Credit
Opportunity 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 take effect on the
designated transfer date.
SEC. 4703. ANNUAL FINANCIAL AUTOPSY.
(a) Study Required.--Not later than March 31 of each calendar year,
the Director shall--
(1) conduct a scientific sampling of foreclosures and
bankruptcies during the previous calendar year in each State or
territory of the United States; and
(2) identify any underlying causes of such bankruptcies or
foreclosures, including any specific financial products or
services that have been the cause of substantial numbers of
such bankruptcies or foreclosures.
(b) Report.--After the completion of each study required under
subsection (a), the Director shall submit a report to the Congress
containing--
(1) any conclusions made by the Director in carrying out
such study;
(2) any specific financial products or services that the
Director has identified to have caused a substantial number of
bankruptcies or foreclosures, as well as which companies or
individuals provided such financial products or services; and
(3) any recommendations the Director has for legislation
that would reduce the underlying causes of bankruptcies and
foreclosures identified in such study.
Subtitle H--Conforming Amendments
SEC. 4801. AMENDMENTS TO THE INSPECTOR GENERAL ACT OF 1978.
(a) Establishment.--Section 8G(a)(2) of the Inspector General Act
of 1978 (5 U.S.C. App.) is amended by inserting ``the Consumer
Financial Protection Agency,'' before ``the Consumer Product Safety
Commission,''.
(b) Effective Date.--This section shall take effect on the date of
the enactment of this title.
SEC. 4802. AMENDMENTS TO THE PRIVACY ACT OF 1974.
(a) Applicability.--Section 552a of title 5, United States Code, is
amended by adding at the end the following new subsection:
``(w) Applicability to Consumer Financial Protection Agency.--
Except as provided in the Consumer Financial Protection Agency Act of
2009, this section shall apply with respect to the Consumer Financial
Protection Agency.''.
(b) Effective Date.--This section shall take effect on the date of
the enactment of this title.
SEC. 4803. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY
ACT OF 1982.
(a) Section 803(1).--Section 803(1) of the Alternative Mortgage
Transaction Parity Act of 1982 (12 U.S.C. 3802(1)) is amended by
striking paragraphs (B) and (C).
(b) Section 804(a).--Section 804(a) of the Alternative Mortgage
Transaction Parity Act of l982 (12 U.S.C. 3803(a)) is amended--
(1) in paragraphs (1), (2), and (3), by inserting ``on or
before the designated transfer date, as determined in section
4602 of the Consumer Financial Protection Agency Act of 2009''
after ``transactions made'' each place such term appears;
(2) in paragraph (2), by striking ``and'' at the end;
(3) in paragraph (3), by striking the period at the end and
inserting ``; and''; and
(4) by adding at the end the following new paragraph:
``(4) with respect to transactions made after the
designated transfer date, as determined in section 4602 of the
Consumer Financial Protection Agency Act of 2009, only in
accordance with regulations governing alternative mortgage
transactions as issued by the Consumer Financial Protection
Agency for federally chartered housing creditors, in accordance
with the rulemaking authority granted to the Consumer Financial
Protection Agency with regard to federally chartered housing
creditors under laws other than this section.''.
(c) Section 804.--Section 804 of the Alternative Mortgage
Transaction Parity Act of l982 (12 U.S.C. 3803) is amended--
(1) by striking subsection (c) and inserting the following
new subsection:
``(c) Effect of State Law.--
``(1) In general.--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.
``(2) Rule of construction.--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
(2) by adding at the end the following new subsection:
``(d) Duties of Consumer Financial Protection Agency.--The Consumer
Financial Protection Agency shall--
``(1) review the regulations identified by the Comptroller
of the Currency, the National Credit Union Administration, and
the Director of the Office of Thrift Supervision (as those
regulations exist on the designated transfer date, as
determined in section 4602 of the Consumer Financial Protection
Agency Act of 2009) as applicable under paragraphs (1), (2),
and (3) of subsection (a);
``(2) determine whether such regulations are fair and not
deceptive and otherwise meet the objectives of section 4201 of
the Consumer Financial Protection Agency Act of 2009; and
``(3) prescribe regulations under subsection (a)(4) after
the designated transfer date, as determined under such Act.''.
(d) Effective Date and Scope of Application.--
(1) Effective date.--This section shall take effect on the
designated transfer date.
(2) Scope of application.--The amendments made by
subsection (a) shall not affect any transaction covered by the
Alternative Mortgage Transaction Parity Act of l982 which is
entered into on or before the designated transfer date.
SEC. 4804. AMENDMENTS TO THE CONSUMER CREDIT PROTECTION ACT.
(a) Truth in Lending Act.--
(1) Section 103.--Section 103 of the Truth in Lending Act
(15 U.S.C. 1602) is amended by striking subsection (b) and
inserting the following new subsection:
``(b) Agency Definitions.--
``(1) Board.--The term `Board' means the `Board of
Governors of the Federal Reserve System'.
``(2) Agency.--The term `Agency' means the Consumer
Financial Protection Agency.''.
(2) Universal amendment relating to board of governors of
the federal reserve system.--
(A) In general.--Except as provided in subparagraph
(B), the Truth in Lending Act (15 U.S.C. 1601 et seq.)
is amended by striking ``Board'' each place such term
appears, including in chapters 4 and 5 relating to
credit billing and consumer leases, and inserting
``Agency''.
(B) Exceptions.--The amendment described in
subparagraph (A) shall not apply to sections 108(a) (as
amended by paragraph (4)) and 140(d).
(3) Section 105.--Section 105(b) of the Truth in Lending
Act (15 U.S.C. 1604(b)) is amended by striking the first
sentence and inserting the following: ``The Agency shall
publish a single, integrated disclosure for mortgage loan
transactions, including real estate settlement cost statements,
which include the disclosure requirements of this title, in
conjunction with the disclosure requirements of the Real Estate
Settlement Procedures Act that, taken together, may apply to
transactions subject to both or either law. The purpose of such
model disclosure shall be to facilitate compliance with the
disclosure requirements of those titles, and to aid the
borrower or lessee in understanding the transaction by
utilizing readily understandable language to simplify the
technical nature of the disclosures.''.
(4) Section 108.--Section 108 of the Truth in Lending Act
(15 U.S.C. 1607) is amended--
(A) by striking subsection (a) and inserting the
following new subsection:
``(a) Enforcing Agencies.--Subject to section 4202 of the Consumer
Financial Protection Agency Act of 2009, compliance with the
requirements imposed under this title shall be enforced as follows:
``(1) Under section 8 of the Federal Deposit Insurance Act,
in the case of--
``(A) national banks, and Federal branches and
Federal agencies of foreign banks, by the head of the
agency responsible for chartering and regulating
national 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 25(a) of the Federal Reserve Act, by the
Board;
``(C) depository institution insured by the Federal
Deposit Insurance Corporation (other than members of
the Federal Reserve System, Federal savings
associations, and savings and loan holding companies)
and insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit Insurance
Corporation; and
``(D) Federal savings associations and savings and
loan holding companies, by the Director of the Office
of Thrift Supervision.
``(2) Under subtitle E of the Consumer Financial Protection
Agency Act of 2009, by the Agency.
``(3) Under the Federal Credit Union Act, by the head of
the agency responsible for chartering and regulating Federal
credit unions.
``(4) Under 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.
``(5) Under 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.
``(6) Under 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
(B) by striking subsection (c) and inserting the
following new subsection:
``(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 subsection (a) and subject to section 4202 of
the Consumer Financial Protection Agency Act of 2009, the Federal Trade
Commission shall 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 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 in the
Federal Trade Commission Act.''.
(5) Universal amendment relating to the federal trade
commission.--
(A) In general.--Except as provided in subparagraph
(B), the Truth in Lending Act (15 U.S.C. 1601 et seq.)
is amended by striking ``Federal Trade Commission''
each place such term appears and inserting ``Agency''.
(B) Exceptions.--The amendment described in
subparagraph (A) shall not apply to sections 108(c) (as
amended by paragraph (4)) and 129(m) (as amended by
paragraph (7)).
(6) Section 127.--Subparagraph (C) of section 127(b)(11) of
the Truth in Lending Act (15 U.S.C. 1637(b)(11)) is amended to
read as follows:
``(C) Notwithstanding subparagraphs (A) and (B), in
the case of a creditor with respect to which compliance
with this title is enforced by the Agency, the
following statement, in a prominent location on the
front of the billing statement, disclosed clearly and
conspicuously: `Minimum Payment Warning: Making only
the required minimum payment will increase the interest
you pay and the time it takes to repay your balance.
For example, making only the typical 5 percent minimum
monthly payment on a balance of $300 at an interest
rate of 17 percent would take 24 months to repay the
balance in full. For an estimate of the time it would
take to repay your balance, making only minimum monthly
payments, call the Consumer Financial Protection Agency
at this toll-free number: _________ [the blank space to
be filled in by the creditor].' A creditor who is
subject to this subparagraph shall not be subject to
subparagraph (A) or (B).''.
(7) Section 129.--Section 129(m) of the Truth in Lending
Act (15 U.S.C. 1639(m)) is amended to read as follows:
``(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 Agency pursuant to
subsection (l)(2) of this section shall be treated as a violation of a
regulation promulgated under section 18 of the Federal Trade Commission
Act (15 U.S.C. 57a) regarding unfair or deceptive acts or practices.''.
(b) Fair Credit Reporting Act.--
(1) Section 603.--Section 603 of the Fair Credit Reporting
Act (15 U.S.C. 1681a) is amended--
(A) by redesignating subsections (w) and (x) as
subsections (x) and (y), respectively; and
(B) by inserting after subsection (v) the following
new subsection:
``(w) Agency.--The term `Agency' means the Consumer Financial
Protection Agency.''.
(2) Universal amendments relating to the federal trade
commission.--Other than in connection with the amendment made
by paragraph (7)(A), the Fair Credit Reporting Act (15 U.S.C.
1681a) is amended--
(A) by striking ``Federal Trade Commission'' each
place such term appears and inserting ``Agency'';
(B) by striking ``Commission'' each place such term
appears (other than in connection with the term amended
in subparagraph (A)) and inserting ``Agency''; and
(C) by striking ``Federal banking agencies, the
National Credit Union Administration, and the
Commission shall jointly'' each place such term appears
in sections 605(h)(2) and 623(a)(8)(A) and inserting
``Agency shall''.
(3) Section 603.--Section 603(k)(2) of the Fair Credit
Reporting Act (15 U.S.C. 1681a(k)(2)) is amended by striking
``Board of Governors of the Federal Reserve System'' and
inserting ``Agency''.
(4) Section 604.--Subsection 604(g) of the Fair Credit
Reporting Act (15 U.S.C. 1681b(g)) is amended--
(A) by striking subparagraph (C) of paragraph (3)
and inserting the following new subparagraph:
``(C) as otherwise determined to be necessary and
appropriate, by regulation or order and subject to
paragraph (6), by the Agency (with respect to any
covered person subject to the jurisdiction of such
agency under paragraph (2) of section 621(b)), 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 new paragraph:
``(5) Regulations required.--The Agency 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) Section 611.--Section 611(e)(2) of the Fair Credit
Reporting Act (15 U.S.C.1681i(e)(2)) is amended to read as
follows:
``(2) Exclusion.--Complaints received or obtained by the
Agency pursuant to its investigative authority under the
Consumer Financial Protection Agency Act of 2009 shall not be
subject to paragraph (1).''.
(6) Section 615.--Section 615(h)(6)(A) of the Fair Credit
Reporting Act (15 U.S.C. 1681m(h)(6)(A)) is amended to read as
follows:
``(A) Rules required.--The Agency shall prescribe
rules.''.
(7) Section 621.--Section 621 of the Fair Credit Reporting
Act (15 U.S.C. 1681s) is amended--
(A) by striking subsection (a) and inserting the
following new subsection:
``(a) Enforcement by Federal Trade Commission.--
``(1) In general.--Subject to section 4202 of the Consumer
Financial Protection Agency Act of 2009, compliance with the
requirements imposed under this title shall be enforced under
the Federal Trade Commission Act by the Federal Trade
Commission 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
subsection (b) hereof. 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 and shall be
subject to enforcement by the Federal Trade Commission under
section 5(b) of such Act with respect to any consumer reporting
agency or person 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 in the Federal Trade Commission Act. The
Federal Trade Commission shall have such procedural,
investigative, and enforcement powers (subject to section 4202
of the Consumer Financial Protection Agency Act of 2009),
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
thereof were part of this title.
``(2) Civil money penalties.--
``(A) In general.--Subject to section 4202 of the
Consumer Financial Protection Agency Act of 2009, in
the event of a knowing violation, which constitutes a
pattern or practice of violations of this title, the
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) Factors in determining 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 prior such
conduct, ability to pay, effect on ability to continue
to do business, and such other matters as justice may
require.
``(3) Exception.--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 or the Agency, as the case may
be, 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 new subsection:
``(b) Enforcement by Other Agencies.--Subject to section 4202 of
the Consumer Financial Protection Agency Act of 2009, 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 subsection (d) of section 615 shall
be enforced as follows:
``(1) Under section 8 of the Federal Deposit Insurance Act,
in the case of--
``(A) national banks, and Federal branches and
Federal agencies of foreign banks, by the head of the
agency responsible for chartering and regulating
national 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, by the
Board of Governors of the Federal Reserve System;
``(C) banks insured by the Federal Deposit
Insurance Corporation (other than members of the
Federal Reserve System, Federal savings associations,
and savings and loan holding companies) and insured
State branches of foreign banks, by the Board of
Directors of the Federal Deposit Insurance Corporation;
and
``(D) Federal savings associations and savings and
loan holding companies, by the Director of the Office
of Thrift Supervision.
``(2) Under subtitle E of the Consumer Financial Protection
Agency Act of 2009, by the Agency in the case of a covered
person under that Act.
``(3) Under the Federal Credit Union Act, by the National
Credit Union Administration Board with respect to any Federal
credit union.
``(4) Under 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.
``(5) Under 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.
``(6) Under 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.
``(7) Under the Commodity Exchange Act, with respect to a
person subject to the jurisdiction of the Commodity Futures
Trading Commission.
``(8) Under the Federal securities law and any other laws
subject to the jurisdiction of the Securities and Exchange
Commission, with respect to a person subject to the
jurisdiction of the Securities and Exchange Commission.
Any term used in paragraph (1) that is not defined in this title or
otherwise defined in section 3(s) of the Federal Deposit Insurance Act
shall have the meaning given to such term in section 1(b) of the
International Banking Act of 1978.'';
(C) by striking subsection (e) and inserting the
following new subsection:
``(e) Regulatory Authority.--The Agency shall prescribe such
regulations as necessary to carry out the purposes of this Act with
respect to a covered person described in subsection (b).''; and
(D) in the heading of subsection (g) by striking
``FTC''.
(8) Section 623.--Section 623 of the Fair Credit Reporting
Act (15 U.S.C. 1681s-2) is amended--
(A) by amending subparagraph (a)(7)(D) to read as
follows:
``(D) Model disclosure.--
``(i) Duty of agency to prepare.--The
Agency shall prescribe a brief model disclosure
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 shall be construed
as requiring a financial institution to use any
such model form prescribed by the Agency.
``(iii) Compliance using model.--A
financial institution shall be deemed to be in
compliance with subparagraph (A) if the
financial institution uses any such model form
prescribed by the Agency, or the financial
institution uses any such model form and
rearranges its format.''.
(B) by amending subsection (e) to read as follows:
``(e) Accuracy Guidelines and Regulations Required.--
``(1) Guidelines.--The Agency shall, with respect to the
entities that are subject to its enforcement authority 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
or implementing the guidelines established pursuant to
subparagraph (A).
``(2) Criteria.--In developing the guidelines required by
paragraph (1)(A), the Agency 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.''
(c) Equal Credit Opportunity Act.--
(1) Section 701.--Section 701 of the Equal Credit
Opportunity Act (15 U.S.C. 1691) is amended by striking
``Board'' each place such term appears and inserting
``Agency''.
(2) Section 702.--Section 702(c) of the Equal Credit
Opportunity Act (15 U.S.C. 1691a) is amended to read as
follows:
``(c) The term `Agency' means the Consumer Financial Protection
Agency.''.
(3) Section 703.--Section 703 of the Equal Credit
Opportunity Act (15 U.S.C. 1691b) is amended--
(A) by striking subsection (b);
(B) in subsection (a)--
(i) by striking ``(1)''; and
(ii) by redesignating paragraphs (2), (3),
(4), and (5) as subsections (b), (c), (d), and
(e), respectively;
(C) in subsection (c) (as so redesignated)--
(i) by striking ``paragraph (2)'' and
inserting ``subsection (b)''; and
(ii) by striking ``such paragraph'' and
inserting ``such subsection'';
(D) in subsection (d) (as so redesignated)--
(i) by striking ``subsection'' and
inserting ``section'''
(ii) by striking ``Act'' and inserting
``title''; and
(iii) by striking ``this paragraph'' and
inserting ``this subsection''; and
(E) by striking ``Board'' each place such term
appears in such section and inserting ``Agency''.
(4) Section 704.--Section 704 of the Equal Credit
Opportunity Act (15 U.S.C. 1691c) is amended--
(A) in subsection (a)--
(i) in the matter preceding paragraph (1),
by striking ``Compliance'' and inserting
``Subject to section 4202 of the Consumer
Financial Protection Agency Act of 2009,
compliance'';
(ii) in paragraph (1)(A), by striking
``Office of the Comptroller of the Currency''
and inserting ``head of the agency responsible
for chartering and regulating national banks'';
(iii) in paragraph (1)(B), by striking
``and'' after the semicolon;
(iv) in paragraph (1)(C), by inserting
``and'' after the semicolon;
(v) by inserting after subparagraph (C) of
paragraph (1) the following new subparagraph:
``(D) savings associations and savings and loan
holding companies by the Director of the Office of
Thrift Supervision;''; and
(vi) by amending paragraph (2) to read as
follows:
``(2) Subtitle E of the Consumer Financial Protection
Agency Act of 2009, by the Agency.'';
(B) by striking subsection (c) and inserting the
following new subsection:
``(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 subsection (a) and subject to section 4202 of the Consumer
Financial Protection Agency Act of 2009, the Federal Trade Commission
shall 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 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 in the Federal Trade Commission
Act, including the power to enforce any regulation prescribed by the
Director 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 ``Agency''.
(5) Section 704a.--Section 704A(a)(1) of the Equal Credit
Opportunity Act (15 U.S.C. 1691c-1(a)(1)) is amended in by
striking ``Board'' and inserting ``Agency''.
(6) Section 705.--Section 705 of the Equal Credit
Opportunity Act (15 U.S.C. 1691d) is amended--
(A) in subsection (f), by striking ``Board'' each
place such term appears and inserting ``Agency''; and
(B) in subsection (g), by striking ``Board'' and
inserting ``Agency''.
(7) Section 706.--Section 706 of the Equal Credit
Opportunity Act (15 U.S.C. 1691e) is amended--
(A) in subsection (e)--
(i) by striking ``Board'' each place such
term appears and inserting ``Agency''; and
(ii) by striking ``Federal Reserve System''
and inserting ``Consumer Financial Protection
Agency'';
(B) in subsection (f), by striking ``two years''
each place such term appears and inserting ``5 years'';
(C) in subsection (g)--
(i) by striking ``The agencies having'', in
the 1st sentence, and inserting ``The Agency
and the agencies having''
(ii) by striking ``Each agency referred'',
in the 2nd sentence, and inserting ``The Agency
and each agency referred'';
(iii) by striking ``Each such agency'', in
the 3rd sentence, and inserting ``The Agency
and each such agency''; and
(iv) by striking ``whenever the agency'' in
the 3rd sentence, and inserting ``whenever the
Agency or an agency having responsibility for
administrative enforcement under section 704'';
and
(D) in subsection (k)--
(i) by striking ``Whenever an agency'' and
inserting ``Whenever the Agency or an agency'';
and
(ii) by striking ``the agency shall
notify'' and inserting ``the Agency, or an
agency referred to in any such paragraph, as
the case may be, shall notify''.
(8) Section 707.--Section 707 of the Equal Credit
Opportunity Act (15 U.S.C. 1691f) is amended by striking
``Board'' each place such term appears and inserting
``Agency''.
(d) Fair Debt Collection Practices Act.--
(1) Section 803.--Section 803 of the Fair Debt Collection
Practices Act (15 U.S.C. 1692a) is amended--
(A) by redesignating paragraphs (1), (2), (3), (4),
(5), (6), (7), and (8) as paragraphs (2), (3), (4),
(5), (6), (7), (8), and (9), respectively; and
(B) by inserting before paragraph (2) (as so
redesignated) the following new paragraph:
``(1) The term `Agency' means the Consumer Financial
Protection Agency.''.
(2) Section 813.--Section 813(e) of the Fair Debt
Collection Practices Act (15 U.S.C. 1692k(e)) is amended by
striking ``Commission'' and inserting ``Agency''.
(3) Section 814.--Section 814 of the Fair Debt Collection
Practices Act (15 U.S.C. 1692l) is amended--
(A) by striking subsection (a) and inserting the
following new subsection:
``(a) Federal Trade Commission.--Subject to section 4202 of the
Consumer Financial Protection Agency Act of 2009, compliance with this
title shall be enforced by the Commission, except to the extent that
enforcement of the requirements imposed under this title is
specifically committed to another agency under subsection (b). For
purpose of the exercise by the Commission of its functions and powers
under the Federal Trade Commission Act, 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 Commission under the
Federal Trade Commission Act are available to the 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
in 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.'';
(B) in subsection (b)--
(i) in the matter preceding paragraph (1),
by striking ``Compliance'' and inserting
``Enforcement by Other Agency.--Subject to
section 4202 of the Consumer Financial
Protection Agency Act of 2009, compliance''.
(ii) in paragraph (1)(A), by striking
``Office of the Comptroller of the Currency;''
and inserting ``head of the agency responsible
for chartering and regulating national
banks;'';
(iii) in paragraph (1)(B), by striking
``and'' after the semicolon;
(iv) in paragraph (1)(C), by inserting
``and'' after the semicolon;
(v) by inserting after subparagraph (C) of
paragraph (1) the following new subparagraph:
``(D) savings associations and savings and loan
holding companies by the Director of the Office of
Thrift Supervision;''; and
(vi) by striking paragraph (2) and
inserting the following new paragraph:
``(2) subtitle E of the Consumer Financial Protection
Agency Act of 2009, by the Agency;''; and
(C) by striking subsection (d) and inserting the
following new subsection:.
``(d) Regulations.--The Agency may prescribe regulations with
respect to the collection of debts by any debt collector.''.
(4) Section 815.--Section 815 (15 U.S.C. 1692m) is
amended--
(A) in the section heading, by striking
``Commission'' and inserting ``Agency''; and
(B) by striking ``Commission'' each place such term
appears and inserting ``Agency''.
(5) Section 817.--Section 817 (15 U.S.C. 1692o) is amended
by striking ``Commission'' each place such term appears and
inserting ``Agency''.
(e) Electronic Fund Transfer Act.--
(1) Section 903.--Section 903 of the Electronic Fund
Transfer Act (15 U.S.C. 1693a) is amended--
(A) by striking paragraph (3) and inserting the
following new paragraph:
``(3) the term `Agency' means the Consumer Financial
Protection Agency;''; and
(B) in paragraph (6), by striking ``Board'' and
inserting ``Agency''.
(2) Section 904.--Section 904 of the Electronic Fund
Transfer Act (15 U.S.C. 1693b) is amended by striking ``Board''
each place such term appears and inserting ``Agency''.
(3) Section 905.--Section 905 of the Electronic Fund
Transfer Act (15 U.S.C. 1693c) is amended by striking ``Board''
each place such term appears and inserting ``Agency''.
(4) Section 906.--Section 906(b) of the Electronic Fund
Transfer Act (15 U.S.C. 1693d(b)) is amended by striking
``Board'' and inserting ``Agency''.
(5) Section 907.--Section 907(b) of the Electronic Fund
Transfer Act (15 U.S.C. 1693e(b)) is amended by striking
``Board'' and inserting ``Agency''.
(6) Section 908.--Section 908(f)(7) of the Electronic Fund
Transfer Act (15 U.S.C. 1693f(f)(7)) is amended by striking
``Board'' and inserting ``Agency''.
(7) Section 910.--Section 910(a)(1)(E) of the Electronic
Fund Transfer Act (15 U.S.C. 1693h(a)(1)(E)) is amended by
striking ``Board'' and inserting ``Agency''.
(8) Section 911.--Section 911(b)(3) of the Electronic Fund
Transfer Act (15 U.S.C. 1693i(b)(3) is amended by striking
``Board'' and inserting ``Agency''.
(9) Section 915.--Section 915(d) of the Electronic Fund
Transfer Act (15 U.S.C. 1693m(d)) is amended--
(A) by striking ``Board'' each place such term
appears and inserting ``Agency''; and
(B) by striking ``Federal Reserve System'' and
inserting ``Consumer Financial Protection Agency''.
(10) Section 917.--Section 917 of the Electronic Fund
Transfer Act (15 U.S.C. 1693o) is amended--
(A) in subsection (a)--
(i) by striking ``Compliance'' and
inserting ``Subject to section 4202 of the
Consumer Financial Protection Agency Act of
2009, compliance'';
(ii) in paragraph (1)(A), by striking
``Office of the Comptroller of the Currency''
and inserting ``head of the agency responsible
for chartering and regulating national banks'';
and
(iii) by striking paragraph (2) and
inserting:
``(2) subtitle E of the Consumer Financial Protection
Agency Act of 2009, by the Agency;''; and
(B) by striking subsection (c) and inserting the
following new subsection:
``(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 subsection (a) and subject to section 4202 of
the Consumer Financial Protection Agency Act of 2009, the Federal Trade
Commission shall 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 Commission to enforce compliance by any person subject to the
jurisdiction of the Commission with the requirements imposed under this
title, irrespective of whether that person is engaged in commerce or
meets any other jurisdictional tests in the Federal Trade Commission
Act.''.
(11) Section 918.--Section 918 of the Electronic Fund
Transfer Act (15 U.S.C. 1693p) is amended by striking ``Board''
each place such term appears and inserting ``Agency''.
(12) Section 919.--Section 919 of the Electronic Fund
Transfer Act (15 U.S.C. 1693q) is amended by striking ``Board''
each place such term appears and inserting ``Agency''.
(13) Section 920.--Section 920 of the Electronic Fund
Transfer Act (15 U.S.C. 1693r) is amended by striking ``Board''
each place such term appears and inserting ``Agency''.
(f) Amendments to HOEPA Relating to the Truth in Lending Act.--
Section 158 of the Home Ownership and Equity Protection Act of 1994 (15
U.S.C. 1601 nt.) (relating to hearings on home equity lending) is
amended--
(1) in subsection (a), by striking ``Board of Governors of
the Federal Reserve System, in consultation with the Consumer
Advisory Council of the Board,'' and inserting ``Consumer
Financial Protection Agency, in consultation with the Advisory
Board to the Agency''; and
(2) in subsection (b), by striking ``Board of Governors of
the Federal Reserve System'' and inserting ``Consumer Financial
Protection Agency''.
(g) Amendment to the Fair and Accurate Credit Transactions Act of
2003 Relating to the Fair Credit Reporting Act.--Section 214(b)(1) of
the Fair and Accurate Credit Transactions Act of 2003 (15 U.S.C. 1681s-
3 nt.) is amended by striking ``The Federal banking agencies, the
National Credit Union Administration, and the Commission, with respect
to the entities that are subject to their respective enforcement
authority under section 621 of the Fair Credit Reporting Act and'' and
inserting ``The Consumer Financial Protection Agency, with respect to a
person subject to the enforcement authority of the Agency, the
Commodity Futures Trading Commission, and''.
SEC. 4805. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY ACT.
(a) Section 605.--Section 605(f)(1) of the Expedited Funds
Availability Act (12 U.S.C. 4004(f)(1)) is amended by inserting ``, in
consultation with the Director of the Consumer Financial Protection
Agency,''after ``Board''.
(b) Section 609.--Section 609(a) of the Expedited Funds
Availability Act (12 U.S.C. 4008(a)) is amended by inserting ``, in
consultation with the Director of the Consumer Financial Protection
Agency,''after ``Board''.
SEC. 4806. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.
(a) Section 8.--Section 8(t) the Federal Deposit Insurance Act (12
U.S.C. 1818(t)), as amended by section 1111(b)(2), is further amended
by adding at the end the following new paragraph:
``(7) Referral to consumer financial protection
commission.--Each appropriate Federal banking agency shall make
a referral to the Consumer Financial Protection Agency when the
Federal banking agency has a reasonable belief that a violation
of an enumerated consumer law, as defined in section 4202(e)(2)
of the Consumer Financial Protection Agency Act of 2009, by any
insured depository institution or institution-affiliated party
within the jurisdiction of that appropriate Federal banking
agency.''.
(b) Section 43.--Section 43 of the Federal Deposit Insurance Act
(12 U.S.C. 1831t) is amended--
(1) in subsection (c), by striking ``Federal Trade
Commission'' and inserting ``Agency'';
(2) in subsection (d), by striking ``Federal Trade
Commission'' and inserting ``Agency'';
(3) in subsection (e)--
(A) in paragraph (2)(B), by striking ``Federal
Trade Commission'' and inserting ``Agency''; and
(B) by adding at the end the following new
paragraph:
``(5) Agency.--The term `Agency' means the Consumer
Financial Protection Agency.''.
(c) Section 43(f).--Section 43(f) of the Federal Deposit Insurance
Act (12 U.S.C. 1831t(f)) is amended--
(1) by striking paragraph (1) and inserting the following
new paragraph:
``(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
Agency Act of 2009 by the Agency with respect to any person
(and without regard to the provision of a consumer financial
product or service).''; and
(2) in paragraph (2), by striking subparagraph (C) and
inserting the following new subparagraph:
``(C) Limitation on state action while federal
action pending.--If the Agency has instituted an
enforcement action for a violation of this section, no
appropriate State supervisory may, during the pendency
of such action, bring an action under this section
against any defendant named in the complaint of the
Agency for any violation of this section that is
alleged in that complaint.''.
SEC. 4807. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.
(a) Section 504.--Section 504(a)(1) of the Gramm-Leach-Bliley Act
(15 U.S.C. 6804(a)(1)) is amended--
(1) by striking ``The Federal banking agencies, the
National Credit Union Administration, the Secretary of the
Treasury,'' and inserting ``The Consumer Financial Protection
Agency and''; and
(2) by striking ``, and the Federal Trade Commission''.
(b) Section 505.--
(1) Section 505(a) of the Gramm-Leach-Bliley Act (15 U.S.C.
6805(a)) is amended--
(A) in the matter preceding paragraph (1), by
striking ``This subtitle and the regulations prescribed
thereunder shall be enforced by'' and inserting
``Subject to section 4202 of the Consumer Financial
Protection Agency Act of 2009, this subtitle and the
regulations prescribed under this title shall be
enforced by the Consumer Financial Protection
Agency,''; and
(B) by inserting after paragraph (7) the following
new paragraph:
``(8) Under the Consumer Financial Protection Agency Act of
2009, by the Consumer Financial Protection Agency in the case
of financial institutions and other covered persons and service
providers subject to the jurisdiction of the Agency under that
Act, but not with respect to the standards under section
501.''.
(2) Section 505(b)(1) of the Gramm-Leach-Bliley Act (15
U.S.C. 6805(b)(1)) is amended by inserting ``, other than the
Consumer Financial Protection Agency,'' after ``described in
subsection (a)''.
SEC. 4808. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT OF 1975.
(a) Section 303.--Section 303 of the Home Mortgage Disclosure Act
of 1975 (12 U.S.C. 2802) is amended--
(1) by redesignating paragraphs (1), (2), (3), (4), (5),
and (6) as paragraphs (2), (3), (4), (5), (6), and (7),
respectively; and
(2) by inserting before paragraph (2) (as so redesignated)
the following new paragraph:
``(1) The term `Agency' means the Consumer Financial
Protection Agency.''.
(b) Universal Amendment Relating to Agency.--Except as provided in
subsections (c), (d), (e), and (f), the Home Mortgage Disclosure Act of
1975 (12 U.S.C. 2801-11) is amended by striking ``Board'' each place
such term appears and inserting ``Agency''.
(c) Section 304.--Section 304 of the Home Mortgage Disclosure Act
of 1975 (12 U.S.C. 2803(h)) is amended--
(1) in subsection (b)--
(A) by striking ``and'' after the semicolon at the
end of paragraph (3);
(B) by striking ``and gender'' in paragraph (4),
and inserting ``age, and gender'';
(C) by striking the period at the end of paragraph
(4) and inserting a semicolon; and
(D) by inserting after paragraph (4) the following
new paragraphs:
``(5) the number and dollar amount of mortgage loans
grouped according to the following measurements:
``(A) the total points and fees payable at
origination in connection with the mortgage as
determined by the Agency, taking into account section
103(aa)(4) of the Truth in Lending Act (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 Agency may
require; and
``(6) the number and dollar amount of mortgage loans and
completed applications grouped according to the following
measurements:
``(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 Agency may determine to be
appropriate, a unique identifier that identifies the
loan originator as set forth in section 1503 of the
Secure and Fair Enforcement for Mortgage Licensing Act
of 2008;
``(G) as the Agency may determine to be
appropriate, a universal loan identifier;
``(H) as the Agency 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 Agency may prescribe,
except that the Agency shall modify or require
modification of credit score data that is or will be
available to the public to protect the compelling
privacy interest of the mortgage applicant or
mortgagors; and
``(J) such other information as the Agency may
require.'';
(2) by striking subsection (h) and inserting the following
new subsection:
``(h) Submission to Agencies.--
``(1) In general.--The data required to be disclosed under
subsection (b) shall be submitted to the Agency or to the
appropriate agency for any institution reporting under this
title, in accordance with regulations prescribed by the Agency.
Institutions will not be required to report new data required
under section 4808(c) before the first January 1 that occurs
after the end of the 9-month period beginning on the date that
regulations prescribed by the Agency are prescribed in final
form.
``(2) Regulations.--Notwithstanding the requirement of
section 304(a)(2)(A) for disclosure by census tract, the
Agency, in cooperation with other appropriate regulators,
including--
``(A) the head of the agency responsible for
chartering and regulating national banks for national
banks and Federal branches, Federal agencies of foreign
banks, and savings associations;
``(B) the Federal Deposit Insurance Corporation for
depository institutions insured by the Federal Deposit
Insurance Corporation (other than members of the
Federal Reserve System, Federal savings associations,
and savings and loan holding companies) and insured
State branches of foreign banks;
``(C) the Director of the Office of Thrift
Supervision for Federal savings associations and
savings and loan holding companies;
``(D) the National Credit Union Administration
Board for credit unions; and
``(E) the Secretary of Housing and Urban
Development for other lending institutions not
regulated by an agency referred to in subparagraphs
(A), (B), (C), or (D),
shall develop regulations prescribing the format for such
disclosures, the method for submission of the data to the
appropriate regulatory agency, and the procedures for
disclosing the information to the public.
``(3) Required disclosures.--The regulations prescribed
under paragraph (2) shall require the collection of data
required to be disclosed under subsection (b) with respect to
loans sold by each institution reporting under this title, and,
in addition, shall require disclosure of the class of the
purchaser of such loans.
``(4) Additional data or explanations.--Any reporting
institution may submit in writing to the Agency or to the
appropriate agency such additional data or explanations as it
deems relevant to the decision to originate or purchase
mortgage loans.'';
(3) in subsection (i), by striking ``subsection (b)(4)''
and inserting ``paragraphs (4), (5), and (6) of subsection
(b)'';
(4) in subsection (j)--
(A) by striking ``(as'' where such term appears in
paragraph (1) and inserting ``(containing loan-level
and application-level information relating to
disclosures required under subsections (a) and (b) and
as otherwise'';
(B) by striking ``in the format in which such
information is maintained by the institution'' where
such term appears in paragraph (2)(A), and inserting
``in such formats as the Agency may require''; and
(C) by striking paragraph (3) and inserting the
following new paragraph:
``(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 Agency may require.''; and
(5) by striking paragraph (2) of subsection (m) and
inserting the following new paragraph:
``(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 Agency may require.''.
(d) Section 305.--Section 305 of the Home Mortgage Disclosure Act
of 1975 (12 U.S.C. 2804) is amended--
(1) by striking subsection (b) and inserting the following
new subsection:
``(b) Powers of Certain Other Agencies.--Compliance with the
requirements imposed under this title shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance Act, in
the case of--
``(A) national banks, and Federal branches and
Federal agencies of foreign banks, by the head of the
agency responsible for chartering and regulating
national 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 25(a) of the Federal Reserve Act, by the
Board;
``(C) depository institutions insured by the
Federal Deposit Insurance Corporation (other than
members of the Federal Reserve System, Federal savings
associations, and savings and loan holding companies)
and insured State branches of foreign banks, by the
Board of Directors of the Federal Deposit Insurance
Corporation; and
``(D) Federal savings associations, and savings and
loan holding companies, by the Director of the Office
of Thrift Supervision;
``(2) subtitle E of the Consumer Financial Protection
Agency Act of 2009, by the Agency;
``(3) the Federal Credit Union Act, by the Administrator of
the National Credit Union Administration with respect to any
credit union; and
``(4) other lending institutions, by the Secretary of
Housing and Urban Development. 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 meaning given to them in section 1(b)
of the International Banking Act of 1978 (12 U.S.C. 3101).
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 meaning given to them in section
1(b) of the International Banking Act of 1978.''; and
(2) by inserting at the end of section 305 the following
new subsection:
``(d) Overall Enforcement Authority of the Consumer Financial
Protection Agency.--Subject to section 4202 of the Consumer Financial
Protection Agency Act of 2009, enforcement of the requirements imposed
under this title is committed to each of the agencies under subsection
(b). The Agency may exercise its authorities under the Consumer
Financial Protection Agency Act of 2009 to exercise principal authority
to examine and enforce compliance by any person with the requirements
under this title.''.
(e) Section 306.--Subsection 306(b) of the Home Mortgage Disclosure
Act of 1975 (12 U.S.C. 2805(b)) is amended to read as follows:
``(b) The Agency may, by regulation, exempt from the requirements
of this title any State chartered depository institution within any
State or subdivision of any state if the Agency determines that, under
the law of such State or subdivision, that institution is subject to
requirements 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
head of the agency responsible for chartering and regulating national
banks under section 8 of the Federal Deposit Insurance Act in the case
of national banks and savings association the deposits of which are
insured by the Federal Deposit Insurance Corporation.''.
(f) Section 307.--Section 307 of the Home Mortgage Disclosure Act
of 1975 (12 U.S.C. 2806) is amended to read as follows:
``SEC. 307. RESEARCH AND IMPROVED METHODS.
``(a) Enhanced Compliance in Economical Manner.--
``(1) In general.--The Director of the Consumer Financial
Protection Agency, 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 Consumer Financial
Protection Agency 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 appropriation.--There is authorized
to be appropriated such sums as may be necessary to carry out
this subsection.
``(3) Authority of agency.--The Director of the Consumer
Financial Protection Agency is authorized to utilize, contract
with, act through, or compensate any person or agency in order
to carry out this subsection.
``(b) Recommendations to the Congress.--The Director of the
Consumer Financial Protection Agency shall recommend to the Committee
on Financial Services of the House of Representatives and the Committee
on Banking, Housing, and Urban Affairs of the Senate such additional
legislation as the Director of the Consumer Financial Protection Agency
deems appropriate to carry out the purpose of this title.''.
SEC. 4809. AMENDMENTS TO DIVISION D OF THE OMNIBUS APPROPRIATIONS ACT,
2009.
(a) Section 626(a) of title VI of division D of the Omnibus
Appropriations Act, 2009 (15 U.S.C. 1638 nt.) (as amended by the Credit
Card Accountability Responsibility and Disclosure Act of 2009) is
amended--
(1) by striking by paragraph (1) and inserting the
following new paragraph: ``(1) The Director of the Consumer
Financial Protection Agency shall have authority to prescribe
regulations 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 regulation prescribed under this
subsection shall be treated as a violation of a regulation
prohibiting unfair, deceptive, or abusive acts or practices
under the Consumer Financial Protection Agency Act of 2009.'';
(2) by striking paragraph (2);
(3) by striking paragraph (3); and
(4) by striking paragraph (4) and inserting the following
new paragraph:
``(2) The Director of the Consumer Financial Protection Agency
shall enforce the regulations 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 Agency Act of 2009 were incorporated into and made
part of this section.''.
(b) Section 626(b) of title VI of division D of the Omnibus
Appropriations Act, 2009 (15 U.S.C. 1638 nt.) (as amended by the Credit
Card Accountability Responsibility and Disclosure Act of 2009) is
amended by striking ``primary Federal regulator'' each place it appears
and inserting ``Consumer Financial Protection Agency''.
SEC. 4810. 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 the matter preceding paragraph (1) of subsection
(a), by striking ``Compliance'' and inserting ``Subject to
section 4202 of the Consumer Financial Protection Agency Act of
2009, compliance'';
(2) in subsection (a)(2), by striking ``and'' after the
semicolon at the end;
(3) in subsection (a)(3), by striking the period at the end
and inserting ``; and'';
(4) by inserting after subsection (a)(3), the following new
paragraph:
``(4) subtitle E of the Consumer Financial Protection
Agency Act of 2009, by the Consumer Financial Protection
Agency.''; and.
(5) in subsection (b)(2), by inserting ``, subject to
section 4202 of the Consumer Financial Protection Agency Act of
2009'' before the period at the end.
SEC. 4811. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT OF
1974.
(a) Section 3.--Section 3 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2602) is amended--
(1) in paragraph (7), by striking ``and'' after the
semicolon at the end;
(2) in paragraph (8), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following new paragraph
``(9) the term `Agency' means the Consumer Financial
Protection Agency.''.
(b) Section 4.--Section 4 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2603) is amended--
(1) in subsection (a), by striking the first sentence and
inserting the following: ``The Agency shall publish a single,
integrated disclosure for mortgage loan transactions, including
real estate settlement cost statements, which include the
disclosure requirements of this title, in conjunction with the
disclosure requirements of the Truth in Lending Act (15 U.S.C.
1601 note et seq.) that, taken together, may apply to
transactions subject to both or either law. The purpose of such
model disclosure shall be to facilitate compliance with the
disclosure requirements of those titles, and to aid the
borrower or lessee in understanding the transaction by
utilizing readily understandable language to simplify the
technical nature of the disclosures.'';
(2) by striking ``Secretary'' each place such term appears
and inserting ``Agency''; and
(3) by striking ``form'' each place such term appears and
inserting ``forms''.
(c) Section 5.--Section 5 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2604) is amended--
(1) by striking ``Secretary'' each place such term appears,
and inserting ``Agency''; and
(2) by striking the first sentence of subsection (a), and
inserting ``The Agency shall prepare and distribute booklets
jointly complying with the requirements of the Truth in Lending
Act (15 U.S.C. 1601 note et seq.) 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.''.
(d) Section 6.--Section 6(j)(3) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2605(j)(3)) is amended--
(1) by striking ``Secretary'' and inserting ``Director of
the Agency''; and
(2) by striking ``by regulations that shall take effect not
later than April 20, 1991,'' and inserting ``by regulation,''.
(e) Section 7.--Section 7 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2606) is amended by striking ``Secretary'' and
inserting ``the Director of the Agency''.
(f) Section 8.--Section 8 of the Real Estate Settlement Procedures
Act of 1974 (12 U.S.C. 2607) is amended--
(1) in subsection (c)(5), by striking ``prescribed by the
Secretary'' and inserting ``prescribed by the Director of the
Agency''; and
(2) in subsection (d)(4)--
(A) by striking ``The Secretary,'' and inserting
``The Agency, the Secretary,''; and
(B) by adding at the end the following new
sentence: ``However, to the extent that a Federal law
authorizes the Agency and other Federal and State
agencies to enforce or administer the law, the Agency
shall have primary authority to enforce or administer
that Federal law in accordance with section 4202 of the
Consumer Financial Protection Agency Act of 2009.''.
(g) Section 10.--Section 10(d) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2609(d)) is amended by striking
``Secretary'' and inserting ``Agency''.
(h) Section 16.--Section 16 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2614) is amended by inserting ``the
Agency,'' before ``the Secretary''.
(i) Section 18.--Section 18 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2616) is amended by striking
``Secretary'' each place such term appears and inserting ``Agency''.
(j) Section 19.--Section 19 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2617) is amended--
(1) in the section heading, by striking ``secretary'' and
inserting ``agency''; and
(2) by striking ``Secretary'' each place such term appears
and inserting ``Agency''.
SEC. 4812. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978.
(a) Amendments to Section 1101.--Section 1101 of the Right to
Financial Privacy Act of 1978 (12 U.S.C. 3401) is amended--
(1) by striking paragraph (1) and inserting the following
new paragraph:
``(1) `financial institution' means any bank, savings
association, card issuer as defined in section 103(n) of the
Truth in Lending Act, credit union, or consumer finance
institution located in any State or territory of the United
States, the District of Columbia, Puerto Rico, Guam, American
Samoa, or the Virgin Islands;''; and
(2) in paragraph (7), by inserting after subparagraph (A)
the following new subparagraph:
``(B) the Consumer Financial Protection Agency;''.
(b) Amendments to Section 1112.--Section 1112(e) of the Right to
Financial Privacy Act of 1978 (12 U.S.C. 3412) is amended by striking
``and the Commodity Futures Trading Commission is permitted'' and
inserting ``the Commodity Futures Trading Commission, and the Consumer
Financial Protection Agency is permitted''.
(c) Amendments to Section 1113.--Section 1113 of the Right to
Financial Privacy Act of 1978 (12 U.S.C. 3413) is amended by adding at
the end the following new subsection--
``(r) Disclosure to the Consumer Financial Protection Agency.--
Nothing in this chapter shall apply to the examination by or disclosure
to the Consumer Financial Protection Agency of financial records or
information in the exercise of its authority with respect to a
financial institution.''.
SEC. 4813. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT FOR MORTGAGE
LICENSING ACT OF 2008.
(a) Section 1503.--Section 1503 of the Secure and Fair Enforcement
for Mortgage Licensing Act of 2008 (12 U.S.C. 5102) is amended--
(1) by striking paragraph (9);
(2) by redesignating paragraph (1) as paragraph (4), and
transferring paragraph (4) (as so redesignated) and inserting
such paragraph after paragraph (3) (as added by paragraph (5));
(3) by redesignating paragraphs (3), (4), (5), (6), (7),
(8), (10), (11), and (12) as paragraphs (5), (6), (7), (8),
(9), (10), (11), (12), and (13), respectively;
(4) by inserting before paragraph (2) the following new
paragraph:
``(1) Agency.--The term `Agency' means the Consumer
Financial Protection Agency.''; and
(5) by inserting after paragraph (2) the following new
paragraph:
``(3) Director.--The term `Director' means the Director of
the Agency.''.
(b) Universal Amendments Relating to Agency.--The Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.)
is amended--
(1) by striking ``Federal banking agencies'' each place
such term appears (other than in subsection (a)(4) (as so
redesignated by subsection (a), relating to the definition of
Federal banking agencies) or in connection with a reference
that is specifically amended by another provision of this
section) and inserting ``Agency''; and
(2) by striking ``Secretary'' each place such term appears
(other than in connection with a reference that is specifically
amended by another provision of this section) and inserting
``Director''.
(c) Section 1507.--Section 1507 of the Secure and Fair Enforcement
for Mortgage Licensing Act of 2008 (12 U.S.C. 5106) is amended--
(1) in subsection (a)--
(A) by striking paragraph (1) and inserting the
following new paragraph:
``(1) In general.--The Agency shall develop and maintain a
system for registering employees of any 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 July 30, 2010.''; and
(B) by striking ``appropriate Federal banking
agency and the Farm Credit Administration'' in
paragraph (2) and inserting ``Agency''; and
(2) in subsection (b), by striking ``Federal banking
agencies, through the Financial Institutions Examination
Council, and the Farm Credit Administration'' each place such
term appears and inserting ``Agency''.
(d) Section 1508.--
(1) In general.--Section 1508 of the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 5107)
is amended by adding at the end the following new subsection--
``(f) Regulations.--
``(1) In general.--The Agency may prescribe 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) Factors taken into account.--Such regulations 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 consumers' access to affordable and
sustainable mortgage loans.''.
(2) Clerical amendment.--The heading for section 1508 of
the Secure and Fair Enforcement for Mortgage Licensing Act of
2008 is amended by striking ``secretary of housing and urban
development'' and inserting ``consumer financial protection
agency''.
(e) Section 1510.--Section 1510 of the Secure and Fair Enforcement
for Mortgage Licensing Act of 2008 (12 U.S.C. 5109) is amended to read
as follows:
``SEC. 1510. FEES.
``The Agency 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.''.
(f) Section 1513.--Section 1513 of the Secure and Fair Enforcement
for Mortgage Licensing Act of 2008 (12 U.S.C. 5112) is amended to read
as follows:
``SEC. 1513. LIABILITY PROVISIONS.
``The Agency, 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
by 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.''.
(g) Section 1514.--The heading for section 1514 of the Secure and
Fair Enforcement for Mortgage Licensing Act of 2008 (12 U.S.C. 5113) is
amended by striking ``under hud backup licensing system'' and inserting
``by the agency''.
SEC. 4814. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.
(a) Section 263.--Section 263 of the Truth in Savings Act (12
U.S.C. 4302) is amended in subsection (b) by striking ``Board'' each
place such term appears and inserting ``Agency''.
(b) Section 265.--Section 265 of the Truth in Savings Act (12
U.S.C. 4304) is amended by striking ``Board'' each place such term
appears and inserting ``Agency''.
(c) Section 266.--Section 266(e) of the Truth in Savings Act is
amended (12 U.S.C. 4305) by striking ``Board'' and inserting
``Agency''.
(d) Section 269.--Section 269 of the Truth in Savings Act (12
U.S.C. 4308) is amended by striking ``Board'' each place such term
appears and inserting ``Agency''.
(e) Section 270.--Section 270 of the Truth in Savings Act (12
U.S.C. 4309) is amended--
(1) in subsection (a)--
(A) by striking ``Compliance'' and inserting
``Subject to section 4202 of the Consumer Financial
Protection Agency Act of 2009, compliance'';
(B) by striking subparagraph (A) of paragraph (1)
and inserting the following new subparagraph:
``(A) by the head of the agency responsible for
chartering and regulating national banks for national
banks, and Federal branches and Federal agencies of
foreign banks;''; and
(C) by adding at the end, the following new
paragraph:
``(3) subtitle E of the Consumer Financial Protection
Agency Act of 2009, by the Agency.''; and
(2) in subsection (c)--
(A) in the subsection heading, by striking
``Board'' and insert ``Agency''; and
(B) by striking ``Board'' and inserting ``Agency''.
(f) Section 272.--Section 272 of the Truth in Savings Act (12
U.S.C. 4311) is amended--
(1) in subsection (a), by striking ``Board'' and inserting
``Agency''; and
(2) in subsection (b), by striking ``regulation prescribed
by the Board'' each place such term appears and inserting
``regulation prescribed by the Agency''.
(g) Section 273.--Section 273 of the Truth in Savings Act (12
U.S.C. 4312) is amended in the last sentence by striking ``Board'' and
inserting ``Agency''.
(h) Section 274.--Section 274 of the Truth in Savings Act (12
U.S.C. 4313) is amended--
(1) in paragraph (2) by striking ``Board'' and inserting
``Agency''; and
(2) by striking paragraph (4) and inserting the following
new paragraph:
``(4) Agency.--The term `Agency' means the Consumer
Financial Protection Agency.''.
SEC. 4815. AMENDMENTS TO THE TELEMARKETING AND CONSUMER FRAUD AND ABUSE
PREVENTION ACT.
(a) Section 3.--Section 3 of the Telemarketing and Consumer Fraud
and Abuse Prevention Act (15 U.S.C. 6102) is amended--
(1) in subsection (b), by inserting after the 2nd sentence
``In prescribing a regulation under this Act that relates to
the provision of a consumer financial product or service that
is subject to the Consumer Financial Protection Agency Act,
including any enumerated consumer law thereunder, the
Commission shall consult with the Consumer Financial Protection
Agency regarding the consistency of a proposed regulation with
standards, purposes, or objectives administered by the Consumer
Financial Protection Agency.''; and
(2) in subsection (c), by adding at the end ``Any violation
of any regulation prescribed under subsection (a) committed by
a person subject to the Consumer Financial Protection Agency
Act shall be treated as a violation of a regulation under
section 4301 of the Consumer Financial Protection Agency 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--
(1) in the subsection heading, by inserting after
``Commission'' the following: ``or the Consumer Financial
Protection Agency''; and
(2) by inserting after ``Commission'' each place such term
appears ``or the Consumer Financial Protection Agency''.
(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 such term appears ``or the
Consumer Financial Protection Agency''.
(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 new subsection:
``(d) Enforcement by Consumer Financial Protection Agency.--Except
as otherwise provided in sections 3(d), 3(e), 4, and 5, this Act shall
be enforced by the Consumer Financial Protection Agency under subtitle
E of the Consumer Financial Protection Agency Act.''.
SEC. 4816. 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--
(1) in subparagraph (B), by striking ``and'' at the end;
(2) by redesignating subparagraph (C) as subparagraph (D);
and
(3) by inserting after subparagraph (B) the following new
subparagraph:
``(C) the Director of the Consumer Financial
Protection Agency; and''.
SEC. 4817. EFFECTIVE DATE.
The amendments made by sections 4803 through 4815 shall take effect
on the designated transfer date.
Subtitle I--Improvements to the Federal Trade Commission Act
SEC. 4901. AMENDMENTS TO THE FEDERAL TRADE COMMISSION ACT.
(a) Section 5(m)(1)(A) of the Federal Trade Commission Act (15
U.S.C. 45(m)(1)(A)) is amended--
(1) by inserting ``this Act or'' after ``violates'' the
first place such term appears; and
(2) by inserting ``a violation of this Act or is'' before
``prohibited''.
(b) Section 5 of the Federal Trade Commission Act (15 U.S.C. 45) is
amended by adding at the end thereof the following new subsection:
``(o) Unlawful Assistance.--It is unlawful for any person,
knowingly or recklessly, to provide substantial assistance to another
in violating any provision of this Act or of any other Act enforceable
by the Commission that relates to unfair or deceptive acts or
practices. Any such violation shall constitute an unfair or deceptive
act or practice described in section 5(a)(1) of this Act.''.
(c) Section 18 of the Federal Trade Commission Act (15 U.S.C.
57a(b)) is amended--
(1) by amending subsection (b) to read as follows:
``(b) Procedure Applicable.--When prescribing a rule under
subsection (a)(1)(B) of this section, the Commission shall proceed in
accordance with section 553 of Title 5 (without regard to any reference
in such section to sections 556 and 557 of such title).'';
(2)(A) in subsection (d), by striking all that precedes
paragraph (3);
(B) by striking subsections (c), (f), (i), and (j); and
(C) by redesignating subsections (e), (g) and (h) as
subsections (d), (e) and (f);
(3) by redesignating paragraph (3) of subsection (d) as
subsection (c); and
(4) in subsection (d) (as redesignated)--
(A) in paragraph (1)(B), by striking ``the
transcript required by subsection (c)(5),'';
(B) in paragraph (3), by striking ``error)'' all
that follows and inserting ``error).''; and
(C) in paragraph (5), by striking subparagraph (C).
TITLE V--CAPITAL MARKETS
Subtitle A--Private Fund Investment Advisers Registration Act
SEC. 5001. SHORT TITLE.
This subtitle may be cited as the ``Private Fund Investment
Advisers Registration Act of 2009''.
SEC. 5002. 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 new paragraphs:
``(29) Private fund.--The term `private fund' means an
issuer that would be an investment company under section 3(a)
of the Investment Company Act of 1940 (15 U.S.C. 80a-3(a)) but
for the exception provided from that definition by either
section 3(c)(1) or section 3(c)(7) of such Act.
``(30) Foreign private fund adviser.--The term `foreign
private fund adviser' means an investment adviser who--
``(A) has no place of business in the United
States;
``(B) during the preceding 12 months has had--
``(i) fewer than 15 clients in the United
States; and
``(ii) assets under management attributable
to clients in the United States of less than
$25,000,000, or such higher amount as the
Commission may, by rule, deem appropriate in
the public interest or for the protection of
investors; and
``(C) neither holds itself out generally to the
public in the United States as an investment adviser,
nor acts as an investment adviser to any 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 (15 U.S.C. 80a-53) and
has not withdrawn such election.''.
SEC. 5003. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED EXEMPTION
FOR FOREIGN PRIVATE FUND 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 ``, except an investment
adviser who acts as an investment adviser to any private
fund,'' after ``any investment adviser'';
(2) by amending paragraph (3) to read as follows:
``(3) any investment adviser that is a foreign private fund
adviser;'';
(3) in paragraph (5), by striking ``or'' at the end;
(4) in paragraph (6)--
(A) in subparagraph (A), by striking ``or'';
(B) in subparagraph (B), by striking the period at
the end and adding ``; or''; and
(C) by adding at the end the following new
subparagraph:
``(C) a private fund; or''; and
(5) by adding at the end the following:
``(7) any investment adviser who solely advises--
``(A) small business investment companies licensed
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, which notice or license has not been
revoked; or
``(C) applicants, related to one or more licensed
small business investment companies covered in
subparagraph (A), that have applied for another
license, which application remains pending.''.
SEC. 5004. COLLECTION OF SYSTEMIC RISK DATA.
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 new
subsection:
``(b) Records and Reports of Private Funds.--
``(1) In general.--The Commission is authorized to require
any investment adviser registered under this Act to maintain
such records of and file with the Commission such reports
regarding private funds advised by the investment adviser as
are necessary or appropriate in the public interest and for the
protection of investors or for the assessment of systemic risk
as the Commission determines in consultation with the Board of
Governors of the Federal Reserve System. The Commission is
authorized to provide or make available to the Board of
Governors of the Federal Reserve System, and to any other
entity that the Commission identifies as having systemic risk
responsibility, those reports or records or the information
contained therein. The records and reports of any private fund,
to which any such investment adviser provides investment
advice, maintained or filed by an investment adviser registered
under this Act, shall be deemed to be the records and reports
of the investment adviser.
``(2) Required information.--The records and reports
required to be maintained or filed with the Commission under
this subsection shall include, for each private fund advised by
the investment adviser--
``(A) the amount of assets under management;
``(B) the use of leverage (including off-balance
sheet leverage);
``(C) counterparty credit risk exposures;
``(D) trading and investment positions;
``(E) trading practices; and
``(F) such other information as the Commission, in
consultation with the Board of Governors of the Federal
Reserve System, determines necessary or appropriate in
the public interest and for the protection of investors
or for the assessment of systemic risk.
``(3) Optional information.--The Commission may require the
reporting of such additional information from private fund
advisers as the Commission determines necessary. In making such
determination, the Commission, taking into account the public
interest and potential to contribute to systemic risk, may set
different reporting requirements for different classes of
private fund advisers, based on the particular types or sizes
of private funds advised by such advisers.
``(4) Maintenance of records.--An investment adviser
registered under this Act is required to maintain and keep such
records of private funds advised by the investment adviser for
such period or periods as the Commission, by rule or
regulation, may prescribe as necessary or appropriate in the
public interest and for the protection of investors or for the
assessment of systemic risk.
``(5) Examination of records.--
``(A) Periodic and special examinations.--All
records of a private fund maintained by an investment
adviser registered under this Act shall be subject at
any time and from time to time to such periodic,
special, and other examinations by the Commission, or
any member or representative thereof, as the Commission
may prescribe.
``(B) Availability of records.--An investment
adviser registered under this Act shall make available
to the Commission or its representatives 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.
``(6) Information sharing.--The Commission shall make
available to the Board of Governors of the Federal Reserve
System, and to any other entity that the Commission identifies
as having systemic risk responsibility, copies of all reports,
documents, records, and information filed with or provided to
the Commission by an investment adviser under this subsection
as the Board, or such other entity, may consider necessary for
the purpose of assessing the systemic risk of a private fund.
All such reports, documents, records, and information obtained
by the Board, or such other entity, from the Commission under
this subsection shall be kept confidential in a manner
consistent with confidentiality established by the Commission
pursuant to paragraph (8).
``(7) Disclosures of certain private fund information.--An
investment adviser registered under this Act shall provide such
reports, records, and other documents to investors, prospective
investors, counterparties, and creditors, of any private fund
advised by the investment adviser as the Commission, by rule or
regulation, may prescribe as necessary or appropriate in the
public interest and for the protection of investors or for the
assessment of systemic risk.
``(8) Confidentiality of reports.--Notwithstanding any
other provision of law, the Commission shall not be compelled
to disclose any report or information contained therein
required to be filed with the Commission under this subsection.
Nothing in this paragraph shall authorize 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 or any self-regulatory
organization requesting the report or information for purposes
within the scope of its jurisdiction, 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 paragraph shall be
considered a statute described in subsection (b)(3)(B) of such
section.''.
SEC. 5005. ELIMINATION OF DISCLOSURE PROVISION.
Section 210 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
10) is amended by striking subsection (c).
SEC. 5006. 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 new subsection:
``(l) Exemption of and Reporting by Venture Capital Fund
Advisers.--The Commission shall identify and define the term `venture
capital fund' and shall provide an adviser to such a fund an exemption
from the registration requirements under this section (excluding any
such fund whose adviser is exempt from registration pursuant to
paragraph (7) of subsection (b)). 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. 5007. EXEMPTION OF AND REPORTING BY CERTAIN PRIVATE FUND ADVISERS.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3), as amended by section 5006, is further amended by adding at the end
the following new subsections:
``(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
private funds 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. 5008. CLARIFICATION OF RULEMAKING AUTHORITY.
Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
11) is amended--
(1) by amending subsection (a) to read as follows:
``(a) The Commission shall have authority from time to time to
make, issue, amend, and rescind such rules and regulations and such
orders as are necessary or appropriate to the exercise of the functions
and powers conferred upon the Commission elsewhere in this title,
including rules and regulations defining technical, trade, and other
terms used in this title. For the purposes of its rules and
regulations, the Commission may--
``(1) classify persons and matters within its jurisdiction
based upon, but not limited to--
``(A) size;
``(B) scope;
``(C) business model;
``(D) compensation scheme; or
``(E) potential to create or increase systemic
risk;
``(2) prescribe different requirements for different
classes of persons or matters; and
``(3) ascribe different meanings to terms (including the
term `client', except the Commission shall not ascribe a
meaning to the term `client' 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) used in different sections of this title as the
Commission determines necessary to effect the purposes of this
title.''; and
(2) by adding at the end the following new subsection:
``(e) The Commission and the Commodity Futures Trading Commission
shall, after consultation with the Board of Governors of the Federal
Reserve System, within 12 months after the date of enactment of the
Private Fund Investment Advisers Registration Act of 2009, jointly
promulgate rules to establish the form and content of the reports
required to be filed with the Commission under sections 203(l) and
204(b) and with the Commodity Futures Trading Commission by investment
advisers that are registered both under the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.) and the Commodity Exchange Act (7 U.S.C.
1 et seq.).''.
SEC. 5009. GAO STUDY.
(a) Study Required.--The Comptroller General of the United States
shall carry out a study to assess the annual costs on industry members
and their investors due to the registration requirements and ongoing
reporting requirements under this subtitle and the amendments made by
this subtitle.
(b) Report to the Congress.--Not later than the end of the 2-year
period beginning on the date of the enactment of this title, the
Comptroller General of the United States shall submit a report to the
Congress containing the findings and determinations made by the
Comptroller General in carrying out the study required under subsection
(a).
SEC. 5010. EFFECTIVE DATE; TRANSITION PERIOD.
(a) Effective Date.--This subtitle, and the amendments made by this
subtitle, shall take effect with respect to investment advisers after
the end of the 1-year period beginning on the date of the enactment of
this title.
(b) Transition Period.--The Securities and Exchange Commission
shall prescribe rules and regulations to permit an investment adviser
who will be required to register with the Securities and Exchange
Commission by reason of this subtitle with the option of registering
with the Securities and Exchange Commission before the date described
under subsection (a).
SEC. 5011. 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 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, not later than one year after the date of the
enactment of the Private Fund Investment Advisers Registration Act of
2009, and every 5 years thereafter, adjust for the effects of inflation
on such test. Any such adjustment that is not a multiple of $1,000
shall be rounded to the nearest multiple of $1,000.''.
Subtitle B--Accountability and Transparency in Rating Agencies Act
SEC. 6001. SHORT TITLE.
This subtitle may be cited as the ``Accountability and Transparency
in Rating Agencies Act of 2009''.
SEC. 6002. ENHANCED REGULATION OF NATIONALLY RECOGNIZED STATISTICAL
RATING ORGANIZATIONS.
Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7) is amended--
(1) in subsection (a)--
(A) in paragraph (1)(A), by striking ``furnish to''
and inserting ``file with'';
(B) in paragraph (2)(A), by striking ``furnished
to'' and inserting ``filed with''; and
(C) in paragraph (2)(B)(i)(II), by striking
``furnished to'' and inserting ``filed with'';
(2) 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'';
(3) in subsection (c)--
(A) paragraph (2)--
(i) in the second sentence by inserting
``including the requirements of this section,''
after ``Notwithstanding any other provision of
law,''; and
(ii) by inserting before the period at the
end of the last sentence ``, provided that this
paragraph does not afford a defense against any
action or proceeding brought by the Commission
to enforce the antifraud provision of the
securities laws'';
(B) by adding at the end the following new
paragraph:
``(3) Review of internal processes for determining credit
ratings.--
``(A) In general.--The Commission shall examine
credit ratings issued by, and the policies, procedures,
and methodologies employed by, each nationally
recognized statistical rating organization to review
whether--
``(i) the nationally recognized statistical
rating organization has established and
documented a system of internal controls, due
diligence and implementation of methodologies
for determining credit ratings, taking into
consideration such factors as the Commission
may prescribe by rule;
``(ii) the nationally recognized
statistical rating organization adheres to such
system; and
``(iii) the public disclosures of the
nationally recognized statistical rating
organization required under this section about
its credit ratings, methodologies, and
procedures are consistent with such system.
``(B) Manner and frequency.--The Commission shall
conduct reviews required by this paragraph no less
frequently than annually in a manner to be determined
by the Commission.
``(4) Provision of information to the commission.--Each
nationally recognized statistical rating organization shall
make available and maintain such records and information, for
such a period of time, as the Commission may prescribe, by
rule, as necessary for the Commission to conduct the reviews
under paragraph (3).
``(5) Disclosures with respect to structured securities.--
``(A) Regulations required.--The rules and
regulations prescribed by the Commission pursuant to
this section with respect to nationally recognized
statistical rating organizations shall, with respect to
the procedures and methodologies by which any
nationally recognized statistical rating organization
determines credit ratings for structured securities--
``(i) specify the information required to
be disclosed to such rating organizations by
the sponsor, issuers, and underwriters of such
structured securities on the collateral
underlying such structured securities; and
``(ii) establish and implement procedures
to collect and disclose information about the
processes used by such sponsor, issuers, and
underwriters to assess the accuracy and
integrity of their data and fraud detection.
``(B) Definition.--For purposes of this paragraph,
the Commission shall, by rule or regulation, define the
term `structured securities' as appropriate in the
public interest and for the protection of investors.
``(6) Historical default rate disclosures.--The rules and
regulations prescribed by the Commission pursuant to this
section with respect to nationally recognized statistical
rating organizations shall require each nationally recognized
statistical rating organization to establish and maintain, on a
publicly accessible Internet site, a facility to disclose, in a
central database, the historical default rates of all classes
of financial products rated by such organization.''
(4) in subsection (d)--
(A) in the heading, by inserting ``Fine,'' after
``Censure,'';
(B) by striking ``shall censure'' and all that
follows through ``revocation'' and inserting the
following: ``shall censure, fine in accordance with
section 21B(a), place limitations on the activities,
functions, or operations of, suspend for a period not
exceeding 12 months, or revoke the registration of any
nationally recognized statistical rating organization
(or 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 nationally recognized
statistical rating organization, the Commission, by
order, shall censure, fine in accordance with section
21B(a), place limitations on the activities or
functions of such person, suspend for a period not
exceeding 12 months, or bar such person from being
associated with a nationally recognized statistical
rating organization), if the Commission finds, on the
record after notice and opportunity for hearing, that
such censure, fine, placing of limitations, bar,
suspension, or revocation'';
(C) in paragraph (2), by striking ``furnished to''
and inserting ``filed with'';
(D) in paragraph (4)--
(i) by striking ``furnish'' and inserting
``file'';
(ii) by striking ``or'' at the end;
(E) in paragraph (5), by striking the period at the
end and inserting a semicolon; and
(F) by adding at the end the following:
``(6) has failed reasonably to supervise another person who
commits a violation of the securities laws, the rules or
regulations thereunder, or any rules of the Municipal
Securities Rulemaking Board if such other person is subject to
his or her supervision, except that no person shall be deemed
to have failed reasonably to supervise any other person under
this paragraph, if--
``(A) there have been established procedures, and a
system for applying such procedures, which would
reasonably be expected to prevent and detect, insofar
as practicable, any such violation by such other
person, and
``(B) such person has reasonably discharged the
duties and obligations incumbent upon him or her by
reason of such procedures and system without reasonable
cause to believe that such procedures and system were
not being complied with; or
``(7) fails to conduct sufficient surveillance to ensure
that credit ratings remain current and reliable, as
applicable.'';
(5) in subsection (e)--
(A) by striking paragraph (1); and
(B) in paragraph (2), by striking ``(2) Commission
authority.--'' and moving the text of such paragraph to
follow the heading of subsection (e);
(6) by amending subsection (h) to read as follows:
``(h) Corporate Governance, Organization, and Management of
Conflicts of Interest.--
``(1) Board of directors.--
``(A) In general.--Each nationally recognized
statistical rating organization or its ultimate holding
company shall have a board of directors.
``(B) Independent directors.--At least \1/3\ of
such board, but no less than 2 of the members of the
board of directors, shall be independent directors. In
order to be considered independent for purposes of this
subsection, a director of a nationally recognized
statistical rating organization 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.
``(C) Compensation and term.--The compensation of
the independent directors 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 exceeding 5 years and
shall not be renewable.
``(D) Duties.--In addition to the overall
responsibility of the board of directors, the board
shall oversee--
``(i) the establishment, maintenance, and
enforcement of policies and procedures for
determining credit ratings;
``(ii) the establishment, maintenance, and
enforcement of policies and procedures to
address, manage, and disclose any conflicts of
interest;
``(iii) the effectiveness of the internal
control system with respect to policies and
procedures for determining credit ratings; and
``(iv) the compensation and promotion
policies and practices of the nationally
recognized statistical rating organization.
``(2) Organization policies and procedures.--Each
nationally recognized statistical rating organization shall
establish, maintain, and enforce written policies and
procedures reasonably designed, taking into consideration the
nature of the business of the nationally recognized statistical
rating organization and affiliated persons and affiliated
companies thereof, to address, manage, and disclose any
conflicts of interest that can arise from such business.
``(3) Commission rules.--The Commission shall issue rules
to prohibit, or require the management and disclosure of, any
conflicts of interest relating to the issuance of credit
ratings by a nationally recognized statistical rating
organization, including rules regarding--
``(A) conflicts of interest relating to the manner
in which a nationally recognized statistical rating
organization is compensated by the obligor, or any
affiliate of the obligor, for issuing credit ratings or
providing related services;
``(B) conflicts of interest relating to business
relationships, ownership interests, and affiliations of
nationally recognized statistical rating organization
board members with obligors, or any other financial or
personal interests between a nationally recognized
statistical rating organization, or any person
associated with such nationally recognized statistical
rating organization, and the obligor, or any affiliate
of the obligor;
``(C) conflicts of interest relating to any
affiliation of a nationally recognized statistical
rating organization, or any person associated with such
nationally recognized statistical rating organization,
with any person who underwrites securities, money
market instruments, or other instruments that are the
subject of a credit rating;
``(D) a requirement that each nationally recognized
statistical rating organization disclose on such
organization's website a consolidated report at the end
of each fiscal year that shows--
``(i) the percent of net revenue earned by
the nationally recognized statistical rating
organization or an affiliate of a nationally
recognized statistical rating organization, or
any person associated with a nationally
recognized statistical rating organization, to
the extent determined appropriate by the
Commission, for that fiscal year for providing
services and products other than credit rating
services to each person who paid for a credit
rating; and
``(ii) the relative standing of each person
who paid for a credit rating that was
outstanding as of the end of the fiscal year in
terms of the amount of net revenue earned by
the nationally recognized statistical rating
organization attributable to each such person
and classified by the highest 5, 10, 25, and 50
percentiles and lowest 50 and 25 percentiles;
``(E) the establishment of a system of payment for
credit ratings issued by each nationally recognized
statistical rating organization that requires that
payments are structured in a manner designed to ensure
that the nationally recognized statistical rating
organization conducts accurate and reliable
surveillance of credit ratings over time, as
applicable, and that incentives for reliable credit
ratings are in place;
``(F) a requirement that a nationally recognized
statistical rating organization disclose with the
publication of a credit rating the type and number of
credit ratings it has provided to the person being
rated or affiliates of such person, the fees it has
billed for the credit rating, and the aggregate amount
of net revenue earned by the nationally recognized
statistical rating organization in the preceding 2
fiscal years attributable to the person being rated and
its affiliates; and
``(G) any other potential conflict of interest, as
the Commission determines necessary or appropriate in
the public interest or for the protection of investors.
``(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.'';
(7) by amending subsection (j) to read as follows:
``(j) Designation of Compliance Officer.--
``(1) In general.--Each nationally recognized statistical
rating organization shall designate an individual to serve as a
compliance officer.
``(2) Duties.--The compliance officer shall--
``(A) report directly to the board of the
nationally recognized statistical rating organization;
``(B) review compliance with policies and
procedures to manage conflicts of interest and assess
the risk that the compliance (or lack of such
compliance) may compromise the integrity of the credit
rating process;
``(C) review compliance with the internal control
system with respect to the procedures and methodologies
for determining credit ratings, including qualitative
methodologies and quantitative inputs used in the
rating process, and assess the risk that such internal
control system is reasonably designed to ensure the
integrity and quality of the credit rating process;
``(D) in consultation with the board of the
nationally recognized statistical rating organization,
resolve any conflicts of interest that may arise;
``(E) be responsible for administering the policies
and procedures required to be established pursuant to
this section;
``(F) ensure compliance with securities laws and
the rules and regulations issued thereunder, including
rules prescribed by the Commission pursuant to this
section; and
``(G) establish procedures--
``(i) for the receipt, retention, and
treatment of complaints regarding credit
ratings, models, methodologies, and compliance
with the securities laws and the policies and
procedures required under this section;
``(ii) for the receipt, retention, and
treatment of confidential, anonymous complaints
by employees, obligors, issuers, and investors;
``(iii) for the remediation of non-
compliance issues found during compliance
office reviews, the reviews required under
paragraph (7), internal or external audit
findings, self-reported errors, or through
validated complaints; and
``(iv) designed so that ratings that the
nationally recognized statistical rating
organization disseminates reflect consideration
of all information in a manner generally
consistent with the nationally recognized
statistical rating organization's published
rating methodology, including information which
is provided, received, or otherwise obtained
from obligor, issuer and non-issuer sources,
such as investors, the media, and other
interested or informed parties.
``(3) Limitations.--The compliance officer shall not, while
serving in that capacity--
``(A) determine credit ratings;
``(B) participate in the establishment of the
procedures and methodologies or the qualitative
methodologies and quantitative inputs used to determine
credit ratings;
``(C) perform marketing or sales functions; or
``(D) participate in establishing compensation
levels, other than for employees working for the
compliance officer.
``(4) Annual reports required.--The compliance officer
shall annually prepare and sign a report on the compliance of
the nationally recognized statistical rating organization with
the securities laws and such organization's internal policies
and procedures, including its code of ethics and conflict of
interest policies, in accordance with rules prescribed by the
Commission. Such compliance report shall accompany the
financial reports of the nationally recognized statistical
rating organization that are required to be filed with the
Commission pursuant to this section and shall include a
certification that, under penalty of law, the report is
accurate and complete.
``(5) Compensation.--The compensation of the compliance
officer 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 the officer's
judgment.'';
(8) in subsection (k)--
(A) by striking ``, on a confidential basis,'';
(B) by striking ``furnish to'' and inserting ``file
with'';
(C) by striking ``Each nationally'' and inserting
the following:
``(1) In general.--Each nationally''; and
(D) by adding at the end the following new
paragraph:
``(2) Exception.--The Commission may treat as confidential
any information provided by a nationally recognized statistical
rating organization under this section consistent with
applicable Federal laws or Commission rules.'';
(9) in subsection (l)(2)(A)(i), by striking ``furnished''
and inserting ``filed'';
(10) by amending subsection (p) to read as follows:
``(p) Establishment of SEC Office.--
``(1) In general.--The Commission shall establish an office
that administers the rules of the Commission with respect to
the practices of nationally recognized statistical rating
organizations.
``(2) Staffing.--The office of the Commission established
under this subsection shall be staffed sufficiently to carry
out fully the requirements of this section.
``(3) Rulemaking authority.--The Commission shall--
``(A) establish, by rule, fines and other penalties
for any nationally recognized statistical rating
organization that violates the applicable requirements
of this title; and
``(B) issue such rules as may be necessary to carry
out this section with respect to nationally recognized
statistical rating organizations.''; and
(11) by adding after subsection (p) the following new
subsections:
``(q) Transparency of Ratings Performance.--
``(1) Rulemaking required.--The Commission shall, by rule,
require each nationally recognized statistical rating
organization to publicly disclose information on initial
ratings and subsequent changes to such ratings for the purpose
of providing a gauge of the performance of ratings and allowing
investors to compare 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, so that investors can
compare rating performance across rating organizations;
``(B) are clear and informative for a wide range of
investor sophistication;
``(C) include performance information over a range
of years and for a variety of classes of credit
ratings, as determined by the Commission;
``(D) are published and made freely available by
the nationally recognized statistical rating
organization, on an easily accessible portion of its
website and in written form when requested by
investors; and
``(E) 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.--
``(1) In general.--The Commission shall prescribe rules, in
the public interest and for the protection of investors, that
require each nationally recognized statistical rating
organization to establish, maintain, and enforce written
procedures and methodologies and an internal control system
with respect to such procedures and methodologies that are
reasonably designed to--
``(A) ensure that credit ratings are determined
using procedures and methodologies, including
qualitative methodologies and quantitative inputs that
are determined in accordance with the policies and
procedures of the nationally recognized statistical
rating organization for developing and modifying credit
rating procedures and methodologies;
``(B) ensure that when major changes to credit
rating procedures and methodologies, including to
qualitative methodologies and quantitative inputs, are
made, that the changes are applied consistently to all
credit ratings to which the changed procedures and
methodologies apply and, to the extent the changes are
made to credit rating surveillance procedures and
methodologies, they are applied to current credit
ratings within a time period to be determined by the
Commission by rule, and that the reason for the change
is publicly disclosed;
``(C) notify persons who have access to the credit
ratings of the nationally recognized statistical rating
organization, regardless of whether they are made
readily accessible for free or a reasonable fee, of the
procedure or methodology, including qualitative
methodologies and quantitative inputs, used with
respect to a particular credit rating;
``(D) notify persons who have access to the credit
ratings of the nationally recognized statistical rating
organization, regardless of whether they are made
readily accessible for free or a reasonable fee, when a
change is made to a procedure or methodology, including
to qualitative methodologies and quantitative inputs,
or an error is identified in a procedure or methodology
that may result in credit rating actions, and the
likelihood of the change resulting in current credit
ratings being subject to rating actions; and
``(E) use credit rating symbols that distinguish
credit ratings for structured products from credit
ratings for other products that the Commission
determines appropriate or necessary in the public
interest and for the protection of investors.
``(2) Rating clarity and consistency.--
``(A) Commission obligation.--Subject to
subparagraphs (B) and (C), the Commission shall
require, by rule, each nationally recognized
statistical rating organization to establish, maintain,
and enforce written policies and procedures reasonably
designed--
``(i) with respect to credit ratings of
securities and money market instruments, to
assess the risk that investors in securities
and money market instruments may not receive
payment in accordance with the terms of such
securities and instruments;
``(ii) to define clearly any credit rating
symbol used by that organization; and
``(iii) to apply such credit rating symbol
in a consistent manner for all types of
securities and money market instruments.
``(B) Additional credit factors.--Nothing in
subparagraph (A)--
``(i) prohibits a nationally recognized
statistical rating organization from using
additional credit factors that are documented
and disclosed by the organization and that have
a demonstrated impact on the risk an investor
in a security or money market instrument will
not receive repayment in accordance with the
terms of issuance;
``(ii) prohibits a nationally recognized
statistical rating organization from
considering credit factors that are unique to
municipal securities; or
``(iii) prohibits a nationally recognized
statistical rating organization from using an
additional symbol with respect to the ratings
described in subparagraph (A)(i) for the
purpose of distinguishing the ratings of a
certain type of security or money market
instrument from ratings of any other types of
securities or money market instruments.
``(C) Complementary ratings.--The Commission shall
not impose any requirement under subparagraph (A) that
prevents nationally recognized statistical rating
organizations from establishing ratings that are
complementary to the ratings described in subparagraph
(A)(i) and that are created to measure a discrete
aspect of the security's or instrument's risk.
``(s) Transparency of Credit Rating Methodologies and Information
Reviewed.--
``(1) In general.--The Commission shall require, by rule, a
nationally recognized statistical rating organization to
include with the publication of each credit rating regardless
of whether the credit rating is made readily accessible for
free or a reasonable fee a form that discloses information
about the assumptions underlying the procedures and
methodologies used, and the data relied on, to determine the
credit rating in the format prescribed in paragraph (2) and
containing the information described in paragraph (3).
``(2) Format.--The Commission shall prescribe a form for
use under paragraph (1) that--
``(A) is designed in a user-friendly and helpful
manner for investors to understand the information
contained in the report;
``(B) requires the nationally recognized
statistical rating organization to provide the content,
as required by paragraph (3), in a manner that is
directly comparable across securities; and
``(C) the nationally recognized statistical rating
organization certifies the information on the form as
true and accurate.
``(3) Content.--The Commission shall prescribe a form that
requires a nationally recognized statistical rating
organization to disclose --
``(A) the main assumptions included in constructing
procedures and methodologies, including qualitative
methodologies and quantitative inputs and assumptions
about the correlation of defaults across underlying
assets used in rating certain structured products;
``(B) the potential shortcomings of the credit
ratings, and the types of risks not measured in the
credit ratings that the nationally recognized
statistical rating organization is not commenting on,
such as liquidity, market, and other risks;
``(C) information on the certainty of the rating,
including information on the reliability, accuracy, and
quality of the data relied on in determining the
ultimate credit rating and a statement on the extent to
which key data inputs for the credit rating were
reliable or limited, including any limits on the reach
of historical data, limits in accessibility to certain
documents or other forms of information that would have
better informed the credit rating, and the completeness
of certain information considered;
``(D) whether and to what extent third party due
diligence services have been utilized, and a
description of the information that such third party
reviewed in conducting due diligence services;
``(E) a description of relevant data about any
obligor, issuer, security, or money market instrument
that was used and relied on for the purpose of
determining the credit rating;
``(F) a statement containing an overall assessment
of the quality of information available and considered
in producing a credit rating for a security in relation
to the quality of information available to the
nationally recognized statistical rating organization
in rating similar obligors, securities, or money market
instruments;
``(G) an explanation or measure of the potential
volatility for the credit rating, including any factors
that might lead to a change in the credit rating, and
the extent of the change that might be anticipated
under different conditions;
``(H) information on the content of the credit
rating, including--
``(i) the expected default probability; and
``(ii) the loss given default;
``(I) 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 such assumptions were proven false or
inaccurate; and
``(ii) an analysis, using concrete
examples, on how each of the 5 assumptions
identified under clause (i) impacts a rating.
``(J) where 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
``(K) such additional information as may be
required by the Commission.
``(4) Due diligence services.--
``(A) Certification required.--In any case in which
third-party due diligence services are employed by a
nationally recognized statistical rating organization
or an issuer, underwriter, or sponsor in connection
with the issuance of a credit rating, the firm
providing the due diligence services shall provide to
the nationally recognized statistical rating
organization written certification of such due
diligence, which shall be subject to review by the
Commission, and the issuer, underwriter, or sponsor
shall provide any reports issued by the provider of
such due diligence services to the nationally
recognized statistical rating organization.
``(B) Format and content.--The Commission shall
establish the appropriate format and content for
written certifications required under subparagraph (A)
to ensure that providers of due diligence services have
conducted a thorough review of data, documentation, and
other relevant information necessary for the nationally
recognized statistical rating organization to provide a
reliable rating.
``(C) Disclosure of certification.--The Commission
shall adopt rules requiring a nationally recognized
statistical rating organization to disclose to persons
who have access to the credit ratings of the nationally
recognized statistical rating organization regardless
of whether they are made readily accessible for free or
a reasonable fee the certification described in
subparagraph (A) with the publication of the applicable
credit rating in a manner that may permit the persons
to determine the adequacy and level of due diligence
services provided by the third party.
``(t) Prohibited Activities.--Beginning 180 days from the date of
enactment of the Accountability, Reliability, and Transparency in
Rating Agencies Act, it shall be unlawful for a nationally recognized
statistical rating organization, or an affiliate of a nationally
recognized statistical rating organization, or any person associated
with a nationally recognized statistical rating organization, that
provides a credit rating for an issuer, underwriter, or placement agent
of a security to provide any non-rating service, including--
``(1) risk management advisory services;
``(2) advice or consultation relating to any merger, sales,
or disposition of assets of the issuer;
``(3) ancillary assistance, advice, or consulting services
unrelated to any specific credit rating issuance; and
``(4) such further activities or services as the Commission
may determine as necessary or appropriate in the public
interest or for the protection of investors.''.
SEC. 6003. STANDARDS FOR PRIVATE ACTIONS.
(a) In General.--Section 21D(b)(2) of the Securities Exchange Act
of 1934 (15 U.S.C. 78u-4(b)(2)) is amended by inserting before the
period at the end of the following: ``, and in the case of an action
brought under this title for money damages against a nationally
recognized statistical rating organization, it shall be sufficient for
purposes of pleading any required state of mind for purposes of such
action that the complaint shall state with particularity facts giving
rise to a strong inference that the nationally recognized statistical
rating organization knowingly or recklessly violated the securities
laws''.
(b) Pleading Standard.--Section 15E(m) of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-7(m)) amended to read as follows:
``(m) Application of Enforcement Provisions; Pleading Standard in
Private Rights of Action.--Statements made by nationally recognized
statistical rating organizations shall not be deemed forward looking
statements for purposes of section 21E. In any private right of action
commenced against a nationally recognized statistical rating
organization under this title, the same pleading standards with respect
to knowledge and recklessness shall apply to the nationally recognized
statistical rating organization as would apply to any other person in
the same or a similar private right of action against such person.''.
SEC. 6004. ISSUER DISCLOSURE OF PRELIMINARY RATINGS.
The Securities and Exchange Commission shall adopt rules under
authority of the Securities Act of 1933 (15 U.S.C. 77a, et seq.) to
require issuers to disclose preliminary credit ratings received from
nationally recognized statistical rating agencies on structured
products and all forms of corporate debt.
SEC. 6005. CHANGE TO DESIGNATION.
The Securities Act of 1933 and the Securities Exchange Act of 1934
are each amended by striking ``nationally recognized statistical
rating'' each place it appears and inserting ``nationally registered
statistical rating''.
SEC. 6006. TIMELINE FOR REGULATIONS.
Unless otherwise specified in this subtitle, the Securities and
Exchange Commission shall adopt rules and regulations, as required by
the amendments made by this subtitle, not later than 365 days after the
date of enactment.
SEC. 6007. 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. 6008. ADVISORY BOARD.
(a) Establishment.--Not later than 90 days after the date of the
enactment of this subtitle, the Securities and Exchange Commission
shall establish an advisory board to be known as the Credit Ratings
Agency Advisory Board (in this section referred to as ``the Board'').
(b) Appointment and Terms of Service.--The Board shall consist of 7
members appointed by the Commission, no more than 2 of whom may be
former employees of a credit rating agency. Members of the Board shall
be prominent individuals of integrity and reputation who have a
demonstrated commitment to the interests of investors and the public,
and an understanding of the role that credit ratings play to a broad
range of investors. Terms of service shall be staggered as determined
by the Commission.
(c) Duties.--The Board shall--
(1) advise the Commission concerning the rules and
regulations required by the amendments made by this subtitle;
(2) ensure that the Commission properly and fully executes
its oversight functions and responsibilities with the respect
to nationally recognized statistical rating organizations and
individual participants; and
(3) issue an annual report to Congress detailing its work
and recommending any additional Congressional actions necessary
to aid the Commission and such additional reports from time to
time as appropriate when it feels that the Commission is not
properly executing its oversight functions.
SEC. 6009. 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 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) and redesignating
paragraph (4) as paragraph (3); and
(E) in paragraph (3) (as so redesignated)--
(i) by striking subparagraph (A) and
redesignating subparagraphs (B) and (C) as
subparagraphs (A) and (B), respectively; and
(ii) 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'';
(2) 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''; and
(3) in section 7(b)(1)(E)(i), by striking ``credit rating
entities, and other private economic'' and insert ``private
economic, credit,''.
(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--
(1) in the section heading, by striking ``by rating
organization''; and
(2) 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 that 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 defined 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 defined 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 ``rating'' and
inserting ``worthiness''.
(g) Effective Date.--The amendments made by this section shall take
effect after the end of the 6-month period beginning on the date of the
enactment of this subtitle.
SEC. 6010. REVIEW OF RELIANCE ON RATINGS.
(a) Agency Review.--
(1) Review.--Not later than 1 year after the date of the
enactment of this subtitle, each Federal agency listed in
paragraph (4) shall, to the extent applicable, review--
(A) 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
(B) any references to or requirements in such
regulations regarding credit ratings.
(2) Modifications required.--Each such agency shall modify
any such regulations identified by the review conducted under
paragraph (1) 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.
(3) Report.--Upon conclusion of the review required under
paragraph (1), each Federal agency listed in paragraph (4)
shall transmit a report to Congress containing a description of
any modification of any regulation such agency made pursuant to
paragraph (2).
(4) Applicable agencies.--The agencies required to conduct
the review and report required by this subsection are--
(A) the Securities and Exchange Commission;
(B) the Federal Deposit Insurance Corporation;
(C) the Office of Thrift Supervision;
(D) the Office of the Comptroller of the Currency;
(E) the Board of Governors of the Federal Reserve;
(F) the National Credit Union Administration; and
(G) the Federal Housing Finance Agency.
(b) GAO Review of Other Agencies.--
(1) Review.--The Comptroller General shall conduct a
comprehensive review of the use of credit ratings by Federal
agencies other than those listed in subsection (a)(3),
including an analysis of the provisions of law or regulation
applicable to each such agency that refer to and require the
use of credit ratings by the agency, and the policies and
practices of each agency with respect to credit ratings.
(2) Report.--Not later than 1 year after the date of the
enactment of this subtitle, the Comptroller General shall
transmit to Congress a report on the findings of the study
conducted pursuant to paragraph (1), including recommendations
for any legislation or rulemaking necessary or appropriate in
order for such agencies to reduce their reliance on credit
ratings.
SEC. 6011. PUBLICATION OF RATING HISTORIES ON THE EDGAR SYSTEM.
Not later than 180 days after the date of the enactment of this
subtitle, the Securities and Exchange Commission shall revise its rules
in section 240.17g-2(a) and (d) of title 17, Code of Federal
Regulations, to require that the random sample of ratings histories of
credit ratings required under such rules to be disclosed on the website
of a nationally recognized statistical rating organization also be
provided to the Commission in a format consistent with publication by
the Commission on the EDGAR system.
SEC. 6012. 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. 6013. STUDIES.
(a) GAO Study.--
(1) In general.--The Comptroller General shall conduct a
study of--
(A) the implementation of this subtitle and the
amendments made by this subtitle by the Securities and
Exchange Commission;
(B) the appropriateness of relying on ratings for
use in Federal, State, and local securities and banking
regulations, including for determining capital
requirements; and
(C) the effect of liability in private actions
arising under the Securities Exchange Act of 1934;
(D) alternative means for compensating credit
rating agencies that would create incentives for
accurate credit ratings and what, if any, statutory
changes would be required to permit or facilitate the
use of such alternative means of compensation; and
(E) alternative methodologies to assess credit
risk, including market-based measures.
(2) Report.--Not later than 30 months after the date of
enactment of this subtitle, the Comptroller General shall
submit to Congress and the Securities Exchange Commission, a
report containing the findings under the study required by
subsection (a).
(b) SEC Study on Assigning Credit Rating Agencies on a Rotating
Basis.--The Securities and Exchange Commission shall undertake a study
on creating a system whereby nationally recognized statistical rating
organizations are assigned on a rotating basis to issuers and obligors
seeking a credit rating. Not later than 1 year after the date of
enactment of this subtitle, the Securities and Exchange Commission
shall transmit to Congress a report containing the findings of the
study.
(c) SEC Study on Effect of New Requirements on NRSRO
Registration.--The Securities and Exchange Commission shall conduct a
study on the effect of the amendments made by section 2 on credit
rating agencies seeking to register as nationally recognized
statistical rating organizations, including whether the new
requirements in such amendments deter credit rating agencies from
registering as nationally recognized statistical rating organizations.
Not later than 1 year after the date of enactment of this subtitle, the
Commission shall transmit 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 findings of such study.
(d) Study of Credit Ratings of Different Classes of Bonds.--
(1) Study.--The Securities and Exchange Commission shall
conduct a study of the treatment of different classes of bonds
(municipal versus corporate) by the nationally recognized
statistical rating organizations. Such study shall examine--
(A) whether there are fundamental differences in
the treatment of different classes of bonds by such
rating organizations that cause some classes of bonds
to suffer from undue discrimination;
(B) if there are such differences, what are the
causes of such differences and how can they be
alleviated;
(C) whether there are factors other than risk of
loss that are appropriate for the credit ratings
agencies to consider when rating bonds, and do those
factors vary across different sectors
(D) the types of financing arrangement used by
municipal issuers
(E) the differing legal and regulatory regimes
governing disclosures for corporate bonds and municipal
bonds;
(F) the extent to which retail investors could be
disadvantaged by a single ratings scale; and
(G) practices, policies, and methodologies by the
nationally recognized statistical rating organizations
with respect to rating municipal bonds.
(2) Report.--Within 6 months after the date of enactment of
this subtitle, the Securities and Exchange Commission shall
submit a report on the results of the study required by
paragraph (1) to the Committee on Financial Services of the
House of Representatives and the Committee on Banking, Housing,
and Urban Development of the Senate. Such report shall include
as assessment of each of the issues and subjects described in
subparagraphs (A) through (G) of paragraph (1).
(e) SEC Study on Meaningful Multi Digit Rating Symbols.--
(1) Study.--The Securities and Exchange Commission shall
conduct a study on the feasibility and desirability of
implementing a standardized rating system whereby ratings
symbols contain multiple characters, each representing a range
of default probabilities and loss expectations under
standardized and increasingly severe levels of market stress.
The study shall optimize the definitions of the symbols to
maximize their overall usefulness for users of credit ratings.
(2) Initial example for guidance.--An example to provide
initial guidance for the study is a ratings symbol consisting
of three digits, each of which corresponds to default
probabilities under different levels of market stress as
follows:
(A) The first digit represents the default
probability under ``normal'' market stress,
characterized by normal economic fluctuations in
addition to a 5 percent decline in asset value and 2
percent increase in unemployment.
(B) The second digit represents the default
probability under more severe market stress,
characterized a 20 percent decline in asset value and 5
percent increase in unemployment.
(C) The third digit represents the default
probability under extreme market stress, characterized
by a 50 percent decline in asset value and 10 percent
increase in unemployment.
(3) Report.--Not later than 1 year after the date of the
enactment of this subtitle, the Commission shall transmit to
Congress a report of the study conducted pursuant to paragraph
(1), including recommendations on whether the system similar to
that described in paragraph (2) should be implemented and, if
so, any necessary legislation required to implement such a
system.
(f) SEC Study on Ratings Standardization.--
(1) In general.--The Securities and Exchange 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 shall 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 subtitle, the Securities and Exchange
Commission shall transmit to Congress a report containing the
findings of the study and the recommendations of the
Commission.
Subtitle C--Investor Protection Act
SEC. 7001. SHORT TITLE.
This subtitle may be cited as the ``Investor Protection Act of
2009''.
PART 1--DISCLOSURE
SEC. 7101. INVESTOR ADVISORY COMMITTEE ESTABLISHED.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by adding after section 4C the following new section:
``SEC. 4D. INVESTOR ADVISORY COMMITTEE.
``(a) Establishment and Purpose.--There is established an Investor
Advisory Committee (in this section referred to as the `Committee') to
advise and consult with the Commission on--
``(1) regulatory priorities and issues regarding new
products, trading strategies, fee structures and the
effectiveness of disclosures;
``(2) initiatives to protect investor interest; and
``(3) initiatives to promote investor confidence in the
integrity of the marketplace.
``(b) Membership.--
``(1) Appointment.--The Chairman of the Commission shall
appoint the members of the Committee, which members shall--
``(A) represent the interests of individual
investors;
``(B) represent the interests of institutional
investors; and
``(C) use a wide range of investment approaches.
``(2) Members not commission employees.--Members shall not
be considered employees or agents of the Commission solely
because of membership on the Committee.
``(c) Meetings.--The Committee shall meet from time to time at the
call of the Commission, but, at a minimum, shall meet at least twice
each year.
``(d) Compensation and Travel Expenses.--Members of the Committee
who are not full-time employees of the United States shall--
``(1) be entitled to receive compensation at a rate fixed
by the Commission while attending meetings of the Committee,
including travel time; and
``(2) be allowed travel expenses, including transportation
and subsistence, while away from their homes or regular places
of business.
``(e) Committee Findings.--Nothing in this section requires the
Commission to accept, agree, or act upon the findings or
recommendations of the Committee.
``(f) Authorization of Appropriations.--There is authorized to be
appropriated to the Commission such sums as are necessary for the
activities of the Committee.''.
SEC. 7102. CLARIFICATION OF THE COMMISSION'S AUTHORITY TO ENGAGE IN
CONSUMER TESTING.
(a) Amendment to Securities Act of 1933.--Section 19 of the
Securities Act of 1933 (15 U.S.C. 77s) is amended by adding at the end
the following new subsection:
``(e) For the purposes of evaluating its rules and programs and for
considering, proposing, adopting, or engaging in rules or programs, the
Commission is authorized to gather information, communicate with
investors or other members of the public, and engage in such temporary
or experimental programs as the Commission in its discretion determines
is in the public interest or for the protection of investors. The
Commission may delegate to its staff some or all of the authority
conferred by this subsection.''.
(b) Amendment to Securities Exchange Act of 1934.--Section 23 of
the Securities Exchange Act of 1934 (15 U.S.C. 78w) is amended by
redesignating subsections (b), (c), and (d) as subsections (c), (d),
and (e), respectively, and inserting after subsection (a) the
following:
``(b) For the purposes of evaluating its rules and programs and for
considering proposing, adopting, or engaging in rules or programs, the
Commission is authorized to gather information, communicate with
investors or other members of the public, and engage in such temporary
or experimental programs as the Commission in its discretion determines
is in the public interest or for the protection of investors. The
Commission may delegate to its staff some or all of the authority
conferred by this subsection.''.
(c) Amendment to Investment Company Act of 1940.--Section 38 of the
Investment Company Act of 1940 (15 U.S.C. 80a-38) is amended by adding
at the end the following new subsection:
``(d) Gathering Information.--For the purposes of evaluating its
rules and programs and for considering proposing, adopting, or engaging
in rules or programs, the Commission is authorized to gather
information, communicate with investors or other members of the public,
and engage in such temporary or experimental programs as the Commission
in its discretion determines is in the public interest or for the
protection of investors. The Commission may delegate to its staff some
or all of the authority conferred by this subsection.''.
(d) Amendment to the Investment Advisers Act of 1940.--Section 211
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-11) (as amended
by section 5008(2)) is further amended by adding at the end the
following new subsection:
``(f) For the purposes of evaluating its rules and programs and for
considering proposing, adopting, or engaging in rules or programs, the
Commission is authorized to gather information, communicate with
investors or other members of the public, and engage in such temporary
or experimental programs as the Commission in its discretion determines
is in the public interest or for the protection of investors. The
Commission may delegate to its staff some or all of the authority
conferred by this subsection.''.
SEC. 7103. ESTABLISHMENT OF A FIDUCIARY DUTY FOR BROKERS, DEALERS, AND
INVESTMENT ADVISERS, AND HARMONIZATION OF REGULATION.
(a) In General.--
(1) Securities exchange act of 1934.--Section 15 of the
Securities Exchange Act of 1934 (15 U.S.C. 78o) (as amended by
section 1951(c)) is further amended by adding at the end the
following new subsections:
``(m) Standard of Conduct.--
``(1) In general.--Notwithstanding any other provision of
this Act or the Investment Advisers Act of 1940, the Commission
shall 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 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.
``(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
shall 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).
``(3) 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 or dealer; and
``(B) uses such advice primarily for personal,
family, or household purposes.
``(n) 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.''.
(3) Investment advisers act of 1940.--Section 211 of the
Investment Advisers Act of 1940, as amended by section 7102(d),
is further amended by adding at the end the following new
subsections:
``(g) Standard of Conduct.--
``(1) In general.--The Commission shall 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.''.
(b) Harmonization of Enforcement.--
(1) Securities exchange act of 1934.--Section 15 of the
Securities Exchange Act of 1934, as amended by subsection
(a)(1), is further amended by adding at the end the following
new subsection:
``(o) 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 advisor 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
(a)(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 advisor 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. 7104. COMMISSION STUDY ON DISCLOSURE TO RETAIL CUSTOMERS BEFORE
PURCHASE OF PRODUCTS OR SERVICES.
(a) Study Required.--Prior to proposing any rules or regulations
pursuant to subsection (b)(1) regarding the manner in which investment
products or services are sold or provided in the United States to
retail customers or the information that must be provided to retail
customers prior to the purchase of such products or services, and
within 180 days after the date of the enactment of this subtitle, the
Securities and Exchange Commission shall publish a study that
examines--
(1) the nature of a ``retail customer'', taking into
consideration the definition in section 15(k) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o), as amended by section
7103 of this subtitle;
(2) the range of products and services sold or provided to
retail customers, and the sellers or providers of such products
and services, that are within the Commission's jurisdiction;
(3) how such products and services are sold or provided to
retail customers, the fees charged for such products and
services, and the conflicts of interest that may arise during
the sales process or provision of services;
(4) information that retail customers should receive prior
to purchasing each product or service, and the appropriate
person or entity to provide such information; and
(5) ways to ensure that, where possible, reasonably similar
products and services are subject to similar regulatory
treatment, including with respect to information that must be
provided to retail customers prior to the purchase of such
products or services and how such information is provided.
(b) Rulemaking.--
(1) Notwithstanding any other provision of the Securities
Act of 1933 (15 U.S.C. 77a et seq.) or the Investment Company
Act of 1940 (15 U.S.C. 80a-1 et seq.), following completion of
the study required by subsection (a), the Commission is
authorized to promulgate rules to require that the appropriate
persons or entities provide designated documents or information
to retail customers prior to the purchase of identified
investment products or services. Any such rules shall--
(A) take into account the findings of the study
conducted pursuant to subsection (a);
(B) take into consideration, to the extent
possible, the need for such documents and information
to be consistent and comparable across investment
products or services sold or provided to retail
customers; and
(C) reduce, to the extent possible, disruptions to
the purchase process for investment products and
services sold or provided to retail customers, by means
such as permitting required disclosures to be made via
the Internet.
(2) Notwithstanding paragraph (1), the Commission is
authorized to promulgate rules in connection with--
(A) the implementation of section 7103; and
(B) disclosure to retail customers other than in
connection with the purchase of investment products or
services.
SEC. 7105. 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. 7106. REVISION TO RECORDKEEPING RULES.
(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 with custody or use of a registered
investment company's securities, deposits, or credits shall
maintain and preserve all records that relate to the person's
custody or use of the registered investment company's
securities, deposits, or credits for such period or periods as
the Commission, by rules and regulations, 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
new paragraph:
``(4) Records of persons with custody or use.--
``(A) In general.--Notwithstanding paragraph (1),
records of persons with custody or use of a registered
investment company's securities, deposits, or credits,
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.--Persons 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 the Commission with a detailed listing, in
writing, of the registered investment company's
securities, deposits, or credits within such person's
custody or use.''.
(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 with custody or use
of a client's securities, deposits, or credits, 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.--Persons
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 client's
securities, deposits, or credits within such person's custody
or use.''.
SEC. 7107. STUDY ON ENHANCING INVESTMENT ADVISOR 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. 7108. GAO STUDY OF FINANCIAL PLANNING.
(a) Study Required.--The Comptroller General of the United States
shall conduct a study on the regulation and oversight of financial
planning. The study shall consider--
(1) the unique role of financial planners in providing
comprehensive advice in investment planning, income tax
planning, education planning, retirement planning, estate
planning, risk management, and other areas with respect to the
management of financial resources; and
(2) any gaps in the regulation of financial planners given
existing State and Federal regulation of financial planning
activities and the need to provide related consumer protections
for such financial planning activities.
(b) Report.--Not later than the end of the 180-day period beginning
on the date of the enactment of this subtitle, the Comptroller General
of the United States shall submit to the Congress a report containing
the findings and determinations made by the Comptroller General in
carrying out the study required under subsection (a), including
recommendations for the appropriate regulation of, or standards for,
financial planners as a profession and how such regulations or
standards should be established.
PART 2--ENFORCEMENT AND REMEDIES
SEC. 7201. 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
section 7103, is further amended by adding at the end the following new
subsection:
``(p) 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. 7202. COMPTROLLER GENERAL STUDY TO REVIEW SECURITIES ARBITRATION
SYSTEM.
(a) Study.--The Comptroller General of the United States shall
conduct a study to review--
(1) the costs to parties of an arbitration proceeding using
the arbitration system operated by the Financial Industry
Regulatory Authority and overseen by the Securities and
Exchange Commission as compared to litigation;
(2) the percentage of recovery of the total amount of a
claim in an arbitration proceeding using the arbitration system
operated by the Financial Industry Regulatory Authority and
overseen by the Securities and Exchange Commission; and
(3) 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 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), including in such report recommendations for
improvements to the arbitration system referenced in such subsection.
SEC. 7203. WHISTLEBLOWER PROTECTION.
(a) In General.--The Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.) is amended by adding after section 21E the following new
section:
``SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTECTION.
``(a) In General.--In any judicial or administrative action brought
by the Commission under the securities laws that results in monetary
sanctions exceeding $1,000,000, the Commission, under regulations
prescribed by the Commission and subject to subsection (b), may pay an
award or awards not exceeding an amount equal to 30 percent, in total,
of the monetary sanctions imposed in the action or related actions to
one or more whistleblowers who voluntarily provided original
information to the Commission that led to the successful enforcement of
the action. Any amount payable under the preceding sentence shall be
paid from the fund described in subsection (f).
``(b) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--The determination
of the amount of an award, within the limit specified in
subsection (a), shall be in the sole discretion of the
Commission. The Commission may take into account the
significance of the whistleblower's information to the success
of the judicial or administrative action described in
subsection (a), the degree of assistance provided by the
whistleblower and any legal representative of the whistleblower
in such action, the Commission's programmatic interest in
deterring violations of the securities laws by making awards to
whistleblowers who provide information that leads to the
successful enforcement of such laws, and such additional
factors as the Commission may establish by rules or
regulations.
``(2) Denial of award.--No award under subsection (a) shall
be made--
``(A) to any whistleblower who is, or was at the
time he or she acquired the original information
submitted to the Commission, a member, officer, or
employee of any appropriate regulatory agency, the
Department of Justice, the Public Company Accounting
Oversight Board, or a self-regulatory 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; or
``(C) to any whistleblower who fails to submit
information to the Commission in such form as the
Commission may, by rule, require.
``(c) Representation.--
``(1) Permitted representation.--Any whistleblower who
makes a claim for an award under subsection (a) may be
represented by counsel.
``(2) Required representation.--Any whistleblower who makes
a claim for an award under subsection (a) must be represented
by counsel if the whistleblower submits the information upon
which the claim is based anonymously. Prior to the payment of
an award, the whistleblower must disclose his or her identity
and provide such other information as the Commission may
require.
``(d) No Contract Necessary.--No contract with the Commission is
necessary for any whistleblower to receive an award under subsection
(a), unless the Commission, by rule or regulation, so requires.
``(e) Appeals.--Any determinations under this section, including
whether, to whom, or in what amounts to make awards, shall be in the
sole discretion of the Commission, and any such determinations shall be
final and not subject to judicial review.
``(f) 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'
(referred to in this section as the `Fund').
``(2) Use of fund.--The Fund shall be available to the
Commission, without further appropriation or fiscal year
limitation, for the following purposes:
``(A) Paying awards to whistleblowers as provided
in subsection (a).
``(B) Funding investor education initiatives
designed to help investors protect themselves against
securities fraud or other violations of the securities
laws, or the rules and regulations thereunder.
``(3) Deposits and credits.--There shall be deposited into
or credited to the Fund--
``(A) 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
pursuant to section 308 of the Sarbanes-Oxley Act of
2002 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 $100,000,000;
``(B) any monetary sanction added to a disgorgement
fund or other fund pursuant to section 308 of the
Sarbanes-Oxley Act of 2002 that is not distributed to
the victims for whom the disgorgement fund or other
fund was established, unless the balance of the Fund at
the time the determination is made not to distribute
the monetary sanction to such victims exceeds
$100,000,000; and
``(C) 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
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services 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 that were granted and the types of
cases in which awards were granted during the preceding
fiscal year;
``(B) investor 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 (a);
``(G) the amount paid from the Fund during the
preceding fiscal year for investor education
initiatives described in paragraph (1)(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.
``(g) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(A) In general.--No employer may discharge,
demote, suspend, threaten, harass, or in any other
manner discriminate against an employee, contractor, or
agent in the terms and conditions of employment because
of any lawful act done by the employee, contractor, or
agent in providing information to the Commission in
accordance with subsection (a), or 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).
``(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.--An action
under this subsection may not be brought more
than 6 years after the date on which the
violation of subparagraph (A) occurred, or 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), but in no
event after 10 years after the date on which
the violation occurs.
``(C) Relief.--An employee, contractor, or agent
prevailing in any action brought under subparagraph (B)
shall be entitled to all relief necessary to make that
employee, contractor, or agent whole, including
reinstatement with the same seniority status that the
employee, contractor, or agent would have had, but for
the discrimination, 2 times the amount of back pay,
with interest, and compensation for any special damages
sustained as a result of the discrimination, including
litigation costs, expert witness fees, and reasonable
attorneys' fees.
``(2) Confidentiality.--
``(A) In general.--Except as provided in
subparagraph (B), all information provided to the
Commission by a whistleblower shall be confidential and
privileged as an evidentiary matter (and shall not be
subject to civil discovery or other legal process) in
any proceeding in any Federal or State court or
administrative agency, and shall be exempt from
disclosure, in the hands of an agency or establishment
of the Federal Government, under the Freedom of
Information Act (5 U.S.C. 552), or otherwise, unless
and until required to be disclosed to a defendant or
respondent in connection with a proceeding instituted
by the Commission or any entity described in
subparagraph (B). 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. Nothing herein is intended to
limit the Attorney General's ability 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.
``(B) Availability to government agencies.--Without
the loss of its status as confidential and privileged
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
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) the Public Company Accounting
Oversight Board,
``(v) State attorneys general in connection
with any criminal investigation, and
``(vi) any appropriate State regulatory
authority,
each of which shall maintain such information as
confidential and privileged, in accordance with the
requirements in subparagraph (A).
``(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.
``(h) Provision of False Information.--Any whistleblower who
knowingly and willfully makes any false, fictitious, or fraudulent
statement or representation, or 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.
``(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.
``(j) Definitions.--For purposes of this section, the following
terms have the following meanings:
``(1) Original information.--The term `original
information' means information that--
``(A) is based on the direct and independent
knowledge or analysis of a whistleblower;
``(B) is not known to the Commission from any other
source, unless the whistleblower is the initial source
of the information; and
``(C) is not based on allegations in a judicial or
administrative hearing, in a governmental report,
hearing, audit, or investigation, or from the news
media, unless the whistleblower is the initial source
of the information that resulted in the judicial or
administrative hearing, governmental report, hearing,
audit, or investigation, or the news media's report on
the allegations.
``(2) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative
action, means any monies, including but not limited to
penalties, disgorgement, and interest, ordered to be paid, and
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.
``(3) 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
subsection (g)(2)(B) that is based upon the same original
information provided by a whistleblower pursuant to subsection
(a) that led to the successful enforcement of the Commission
action.
``(4) Whistleblower.--The term `whistleblower' means an
individual, or two or more individuals acting jointly, who
submit information to the Commission as provided in this
section.''.
(b) 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 added by subsection (a). Such office shall
report annually to Congress on its activities, whistleblower
complaints, and the response of the Commission to such complaints.
SEC. 7204. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.
(a) In General.--Each of the following provisions is amended by
inserting ``and section 21F of the Securities Exchange Act of 1934''
after ``the Sarbanes-Oxley Act of 2002'':
(1) Section 20(d)(3)(A) of the Securities Act of 1933 (15
U.S.C. 77t(d)(3)(A)).
(2) Section 42(e)(3)(A) of the Investment Company Act of
1940 (15 U.S.C. 80a-41(e)(3)(A)).
(3) Section 209(e)(3)(A) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-9(e)(3)(A)).
(b) Securities Exchange Act.--The Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.) is amended--
(1) in section 21(d)(3)(C)(i) (15 U.S.C. 78u(d)(3)(C)(i)),
by inserting ``and section 21F of this title'' after ``the
Sarbanes-Oxley Act of 2002'';
(2) in section 21A(d)(1) (15 U.S.C. 78u-1(d)(1))--
(A) by striking ``(subject to subsection (e))'';
and
(B) by inserting ``and section 21F of this title''
after ``the Sarbanes-Oxley Act of 2002''; and
(3) in section 21A, by striking subsection (e) and
redesignating subsections (f) and (g) as subsection (e) and
(f), respectively.
SEC. 7205. IMPLEMENTATION AND TRANSITION PROVISIONS FOR WHISTLEBLOWER
PROTECTIONS.
(a) Implementing Rules.--The Securities and Exchange Commission
shall issue final regulations implementing the provisions of section
21F of the Securities Exchange Act of 1934, as added by this part, no
later than 270 days after the date of enactment of this subtitle.
(b) Original Information.--Information submitted to the Commission
by a whistleblower in accordance with regulations implementing the
provisions of section 21F of the Securities Exchange Act of 1934, as
added by this part, shall not lose its status as original information,
as defined in subsection (i)(1) of such section, solely because the
whistleblower submitted such information prior to the effective date of
such regulations, provided such information was submitted after the
date of enactment of this subtitle, or related to insider trading
violations for which a bounty could have been paid at the time such
information was submitted.
(c) Awards.--A whistleblower may receive an award pursuant to
section 21F of the Securities Exchange Act of 1934, as added by this
part, 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.
SEC. 7206. COLLATERAL BARS.
(a) Section 15 of the Securities Exchange Act of 1934.--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, transfer
agent, or nationally recognized statistical rating organization,''.
(b) Section 15B of the Securities Exchange Act of 1934.--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,
transfer agent, or nationally recognized statistical rating
organization,''.
(c) Section 17A of the Securities Exchange Act of 1934.--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, or nationally recognized statistical rating
organization,''.
(d) Section 203 of the 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, transfer agent, or
nationally recognized statistical rating organization,''.
SEC. 7207. 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.''.
(c) 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. 7208. 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 subsections:
``(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.
``(g) Enforcement by National Securities Associations.--The
Commission may permit or require a national securities association
registered under the Securities Exchange Act of 1934 to enforce
compliance by its members and persons associated with its members with
the provisions of this Act, the rules and regulations thereunder, and
to adopt such rules (subject to any rule or order of the Commission
pursuant to the Securities Exchange Act of 1934) as the association may
deem necessary and in the public interest to further the purposes of
this Act.''.
SEC. 7209. 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 (as added by section 7101) 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 head of any division or
office within the Commission or his 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 head of any division or office
within the Commission or his 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 head of any division or office
within the Commission or his 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 head of any division or office within the
Commission or his 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 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 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 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. 7210. 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, subpoenas issued to compel the attendance of
witnesses 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.''.
(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, subpoenas issued to compel the attendance of
witnesses 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.''.
(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, subpoenas issued to compel
the attendance of witnesses 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.''.
(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, subpoenas issued to compel
the attendance of witnesses 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.''.
SEC. 7211. AUTHORITY TO IMPOSE CIVIL PENALTIES IN CEASE AND DESIST
PROCEEDINGS.
(a) 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 for imposing.--In any cease-and-desist
proceeding under subsection (a), the Commission may impose a
civil penalty on a person if it 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 thereunder; 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 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 paragraph (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 paragraphs (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 substantial losses or
created a significant risk of substantial
losses to other persons or resulted in
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
respondent's ability 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 such person's ability to continue
in business and the collectability of a penalty, taking into
account any other claims of the United States or third parties
upon such person's assets and the amount of such person's
assets.''.
(b) Under the Securities Exchange Act of 1934.--Subsection (a) of
section 21B of the Securities Exchange Act of 1934 (15 U.S.C. 78u-2(a))
is amended--
(1) by striking ``(a) Commission Authority To Assess Money
Penalties.--In any proceeding'' and inserting the following:
``(a) Commission Authority To Assess Money Penalties.--
``(1) In general.--In any proceeding'';
(2) by redesignating paragraphs (1) through (4) of such
subsection as subparagraphs (A) through (D), respectively, and
moving such redesignated subparagraphs and the matter following
such subparagraphs 2 ems to the right; and
(3) by adding at the end of such subsection the following
new paragraph:
``(2) Cease-and-desist proceedings.--In any proceeding
instituted pursuant to section 21C of this title against any
person, the Commission may impose a civil penalty if it 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 thereunder; or
``(B) is or was a cause of the violation of any
provision of this title, or any rule or regulation
thereunder.''.
(c) Under the Investment Company Act of 1940.--Paragraph (1) of
section 9(d) of the Investment Company Act of 1940 (15 U.S.C. 80a-
9(d)(1)) is amended--
(1) by striking ``(1) Authority of commission.--In any
proceeding'' and inserting the following:
``(1) Authority of commission.--
``(A) In general.--In any proceeding'';
(2) by redesignating subparagraphs (A) through (C) of such
paragraph as clauses (i) through (iii), respectively, and by
moving such redesignated clauses and the matter following such
subparagraphs 2 ems to the right; and
(3) by adding at the end of such paragraph the following
new subparagraph:
``(B) Cease-and-desist proceedings.--In any
proceeding instituted pursuant to subsection (f)
against any person, the Commission may impose a civil
penalty if it 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 thereunder; or
``(ii) is or was a cause of the violation
of any provision of this title, or any rule or
regulation thereunder.''.
(d) Under the Investment Advisers Act of 1940.--Paragraph (1) of
section 203(i) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3(i)(1)) is amended--
(1) by striking ``(1) Authority of commission.--In any
proceeding'' and inserting the following:
``(1) Authority of commission.--
``(A) In general.--In any proceeding'';
(2) by redesignating subparagraphs (A) through (D) of such
paragraph as clauses (i) through (iv), respectively, and moving
such redesignated clauses and the matter following such
subparagraphs 2 ems to the right; and
(3) by adding at the end of such paragraph 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 it 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 thereunder; or
``(ii) is or was a cause of the violation
of any provision of this title, or any rule or
regulation thereunder.''.
SEC. 7212. 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
misconduct was, a member or employee''.
(b) Person Associated With a Government Securities Broker or
Dealer.--Section 15C of the Securities Exchange Act of 1934 (15 U.S.C.
78o-5) is amended--
(1) in subsection (c)(1)(C), by striking ``or seeking to
become associated,'' and inserting ``seeking to become
associated, or, at the time of the alleged misconduct,
associated or seeking to become associated'';
(2) in subsection (c)(2)(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
(3) in subsection (c)(2)(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 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
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 new subparagraph:
``(C) Investigative and enforcement authority.--For
purposes of the provisions of sections 3(c), 101(c),
105, and 107(c) and Board or Commission rules
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--
``(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, while such
person was associated or seeking to become
associated with a registered public accounting
firm; and
``(ii) the authority to commence a
proceeding under section 105(c)(1), or impose
disciplinary sanctions under section 105(c)(4),
against such person shall apply only on--
``(I) the basis of 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. 7213. SHARING PRIVILEGED INFORMATION WITH OTHER AUTHORITIES.
Section 24 of the Securities Exchange Act of 1934 (15 U.S.C. 78x)
is amended--
(1) by redesignating subsections (d) and (e) as subsections
(e) and (f), respectively;
(2) in subsection (e), as redesignated, by striking ``as
provided in subsection (e)'' and inserting ``as provided in
subsection (f)''; and
(3) by inserting after subsection (c) the following new
subsection:
``(d) 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) any foreign securities authority;
``(C) the Public Company Accounting Oversight
Board;
``(D) any self-regulatory organization;
``(E) any foreign law enforcement authority; or
``(F) any State securities or law enforcement
authority.
``(2) Non-disclosure of privileged information provided to
the commission.--Except as provided in subsection (f), 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) Non-waiver 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 with respect to certain actions.--
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, foreign, or State 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.
``(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. 7214. EXPANDED ACCESS TO GRAND JURY MATERIAL.
(a) In General.--Title VI of the Sarbanes-Oxley Act of 2002 is
amended by adding at the end the following new section:
``SEC. 605. ACCESS TO GRAND JURY INFORMATION.
``(a) Disclosure.--
``(1) In general.--Upon motion of an attorney for the
government, a court may direct disclosure of matters occurring
before a grand jury during an investigation of conduct that may
constitute a violation of any provision of the securities laws
to the Commission for use in relation to any matter within the
jurisdiction of the Commission.
``(2) Substantial need required.--A court may issue an
order under paragraph (1) only upon a finding of a substantial
need in the public interest.
``(b) Use of Matter.--A person to whom a matter has been disclosed
under this section shall not use such matter other than for the purpose
for which such disclosure was authorized.
``(c) Definitions.--As used in this section, the terms `attorney
for the government' and `grand jury information' have the meanings
given to those terms in section 3322 of title 18, United States
Code.''.
(b) Conforming Amendment.--The table of contents in section 1(b) of
the Sarbanes-Oxley Act of 2002 is amended by inserting after the item
relating to section 604 the following:
``Sec. 605. Access to grand jury information.''.
SEC. 7215. 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. 7216. EXTRATERRITORIAL JURISDICTION OF THE ANTIFRAUD PROVISIONS OF
THE FEDERAL SECURITIES LAWS.
(a) 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 jurisdiction of the
district courts of the United States and the United States courts of
any Territory described under subsection (a) includes violations of
section 17(a), and all suits in equity and actions at law under that
section, 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.''.
(b) Under the Securities Exchange Act of 1934.--Section 27 of the
Securities Exchange Act of 1934 (15 U.S.C. 78aa) is amended--
(1) by striking ``The district'' and inserting the
following:
``(a) In General.--The district''; and
(2) by inserting at the end the following new subsection:
``(b) Extraterritorial Jurisdiction.--The jurisdiction of the
district courts of the United States and the United States courts of
any Territory or other place subject to the jurisdiction of the United
States described under subsection (a) includes violations of the
antifraud provisions of this title, and all suits in equity and actions
at law under those provisions, 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.''.
(c) Under the Investment Advisers Act of 1940.--Section 214 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-14) is amended--
(1) by striking ``The district'' and inserting the
following:
``(a) In General.--The district''; and
(2) by inserting at the end the following new subsection:
``(b) Extraterritorial Jurisdiction.--The jurisdiction of the
district courts of the United States and the United States courts of
any Territory or other place subject to the jurisdiction of the United
States described under subsection (a) includes violations of section
206, and all suits in equity and actions at law under that section,
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.''.
SEC. 7217. FIDELITY BONDING.
Section 17(g) of the Investment Company Act of 1940 (15 U.S.C. 80a-
17(g)) is amended to read as follows:
``(g) Fidelity Bonding.--
``(1) In general.--The Commission is authorized to require
that a registered management company provide and maintain a
fidelity bond against loss as to any officer or employee who
has access to securities or funds of the company, either
directly or through authority to draw upon such funds or to
direct generally the disposition of such securities (unless the
officer or employee has such access solely through his position
as an officer or employee of a bank), in such form and amount
as the Commission may prescribe by rule, regulation, or order
for the protection of investors.
``(2) Definitions.--For purposes of this subsection:
``(A) Management company.--The term `management
company' has the meaning given such term under section
4 of the Investment Company Act of 1940.
``(B) Officer or employee.--The term `officer or
employee' means--
``(i) any officer or employee of the
management company; and;
``(ii) any officer or employee of any
investment adviser to the management company,
or of any affiliated company of any such
investment adviser, as the Commission may
prescribe by rule, regulation, or order for the
protection of investors.
``(C) Other definitions.--The terms `affiliated
company' and `investment adviser' shall have the
meaning given such terms under section 2 of the
Investment Company Act of 1940.''.
SEC. 7218. ENHANCED SEC AUTHORITY TO CONDUCT SURVEILLANCE AND RISK
ASSESSMENT.
(a) Securities Exchange Act of 1934 Amendments.--Section 17(b) of
the Securities Exchange Act of 1934 (15 U.S.C. 78q(b)) is amended by
adding at the end the following new paragraph:
``(5) Surveillance and risk assessment.--All persons
described in subsection (a) of this section are subject at any
time, or from time to time, to such reasonable periodic,
special, or other information and document requests by
representatives of the Commission as the Commission by rule or
order deems necessary or appropriate to conduct surveillance or
risk assessments of the securities markets, persons registered
with the Commission under this title, or otherwise in
furtherance of the purposes of this title.''.
(b) Investment Company Act of 1940 Amendments.--Section 31(b) of
the Investment Company Act of 1940 (15 U.S.C. 80a-30(b)), as amended by
section 7106(a)(2), is further amended by adding at the end the
following new paragraph:
``(5) Surveillance and risk assessment.--All persons
described in paragraph (1) are subject at any time, or from
time to time, to such reasonable periodic, special, or other
information and document requests by representatives of the
Commission as the Commission by rule or order deems necessary
or appropriate to conduct surveillance or risk assessments of
the securities markets, persons registered with the Commission
under this title, or otherwise in furtherance of the purposes
of this title.''.
(c) Investment Advisers Act of 1940 Amendments.--Section 204 of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-4), as amended by
section 7106(b), is further amended by adding at the end the following
new subsection:
``(e) Surveillance and Risk Assessment.--All persons described in
subsection (a) are subject at any time, or from time to time, to such
reasonable periodic, special, or other information and document
requests by representatives of the Commission as the Commission by rule
or order deems necessary or appropriate to conduct surveillance or risk
assessments of the securities markets, persons registered with the
Commission under this title, or otherwise in furtherance of the
purposes of this title.''.
SEC. 7219. INVESTMENT COMPANY EXAMINATIONS.
Section 31(b)(1) of the Investment Company Act of 1940 (15 U.S.C.
80a-30) is amended to read as follows:
``(1) In general.--All records of each registered
investment company, and each underwriter, broker, dealer, or
investment adviser that is a majority-owned subsidiary of such
a company, shall be subject at any time, or from time to time,
to such reasonable periodic, special, or other examinations by
representatives of the Commission as the Commission deems
necessary or appropriate in the public interest or for the
protection of investors.''.
SEC. 7220. CONTROL PERSON LIABILITY UNDER THE SECURITIES EXCHANGE ACT.
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. 7221. ENHANCED APPLICATION OF ANTI-FRAUD 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 it 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. 7222. SEC AUTHORITY TO ISSUE RULES ON 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 authority of the Commission to prescribe rules and
regulations under paragraph (1) includes rules and regulations that
require the inclusion and set procedures relating to the inclusion, in
a solicitation of a proxy or consent or authorization by or on behalf
of an issuer, of a nominee or nominees submitted by shareholders to
serve on the issuer's board of directors.''.
PART 3--COMMISSION FUNDING AND ORGANIZATION
SEC. 7301. 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 2010, $1,115,000,000;
``(2) for fiscal year 2011, $1,300,000,000;
``(3) for fiscal year 2012, $1,500,000,000;
``(4) for fiscal year 2013, $1,750,000,000;
``(5) for fiscal year 2014, $2,000,000,000; and
``(6) for fiscal year 2015, $2,250,000,000.''.
SEC. 7302. INVESTMENT ADVISER REGULATION FUNDING.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) (as amended by sections 5006 and 5007) is further amended by adding
at the end the following new subsection:
``(o) Annual Assessment.--
``(1) In general.--The Commission shall, in accordance with
this subsection, promulgate rules pursuant to which it may
collect from investment advisers required to register with the
Commission under this title, fees designed to help recover the
cost of inspections and examinations of registered investment
advisers conducted by the Commission pursuant to this title.
``(2) Fee payment required.--An investment adviser shall,
at the time of registration with the Commission, and each
fiscal year thereafter during which such adviser is so
registered, pay to the Commission a fair and reasonable fee
determined by the Commission. In determining such fee, the
Commission shall consider objective factors such as--
``(A) the investment adviser's size;
``(B) the number of clients of the investment
adviser;
``(C) the types of clients of the investment
adviser; and
``(D) such other relevant factors as the Commission
determines to be appropriate.
``(3) Amount and use of fees.--
``(A) Minimum aggregate amount.--The aggregate
amount of fees determined by the Commission under this
subsection for any fiscal year shall be greater than
the amount the Commission spent on inspections and
examinations of registered investment advisers during
the 2009 fiscal year.
``(B) Excess fees.--The Commission may retain any
excess fees collected under this subsection during a
fiscal year for application towards the costs of
inspections and examinations of investment advisers in
future fiscal years.
``(4) Review and adjustment of fees.--The Commission may
review fee rates established pursuant to this section before
the end of any fiscal year and make any appropriate adjustments
prior to collecting any such fee in the following fiscal year.
``(5) Penalty fee.--The Commission shall prescribe by rule
or regulation an additional fee to be assessed as a penalty for
late payment of fees required by this subsection.
``(6) Judicial review.--Increases or decreases in fees made
pursuant to this section shall not be subject to judicial
review.''.
SEC. 7303. AMENDMENTS TO SECTION 31 OF THE SECURITIES EXCHANGE ACT OF
1934.
Section 31 of the Securities Exchange Act of 1934 (15 U.S.C. 78ee)
is amended--
(1) in subsection (e)(2), by striking ``September 30'' and
inserting ``September 25'';
(2) in subsection (g), by striking ``April 30'' and
inserting ``August 31''; and
(3) in subsection (j)(2)--
(A) by striking ``5 months'' and inserting ``4
months''; and
(B) by striking ``(including fees collected during
such 5-month period and assessments collected under
subsection (d))'' and inserting ``(including fees
estimated to be collected under subsections (b) and (c)
prior to the effective date of the uniform adjusted
rate and assessments estimated to be collected under
subsection (d))''.
SEC. 7304. 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 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);
(2) recommendations for legislative, regulatory, or
administrative action that the consultant determines
appropriate to enable the SEC and other entities on which it
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. 7305. CAPITAL MARKETS SAFETY BOARD.
There is established within the Securities and Exchange Commission
an office to be known as the Capital Markets Safety Board whose purpose
shall be to conduct investigations, at the direction of the Commission,
of failed institutions registered with the Commission, to determine
what caused such institutions to fail. Upon the conclusion of an
investigation, the Board shall make available on the Commission's
website a report of its findings, including recommendations regarding
how others can avoid similar mistakes. No information that may
compromise an ongoing Federal investigation shall be made available in
any such report.
SEC. 7306. REPORT ON IMPLEMENTATION OF ``POST-MADOFF REFORMS''.
(a) In General.--Not later than 6 months after the date of the
enactment of this subtitle, the Securities and Exchange Commission
shall provide 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 describing the implementation of reforms
outlined by the Commission in the wake of the discovery of fraud by
Bernie Madoff.
(b) Contents of Report.--The report required by subsection (a)
shall include an analysis of--
(1) how many of the post-Madoff reforms have been
implemented and to what extent; and
(2) whether there is overlap between any of the
Commission's reform proposals and those recommended by the
Inspector General of the Commission.
(c) Publication of Report.--The Commission and the Committees
referred to in subsection (a) shall publish the report required by such
subsection on their Web sites.
SEC. 7307. JOINT ADVISORY COMMITTEE.
The Securities and Exchange Commission and the Commodities Futures
Trading Commission may jointly form and operate a joint advisory
committee composed of members of each Commission and industry experts
and participants. The purposes of such an advisory committee include--
(1) considering and developing solutions to emerging and
ongoing issues of common interest in the futures and securities
markets;
(2) identifying emerging regulatory risks and assess and
quantify their implications for investors and other market
participants, and provide recommendations for solutions;
(3) serving as a vehicle for discussion and communication
on regulatory issues of mutual concerns affecting each
Commission, the regulated markets, and the industry generally;
and
(4) reporting regularly to each Commission and to Congress
on its activities.
PART 4--ADDITIONAL COMMISSION REFORMS
SEC. 7401. REGULATION OF SECURITIES LENDING.
Section 10 of the Securities Exchange Act of 1934 (15 U.S.C. 78j)
is amended by adding at the end the following new subsection:
``(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) shall be construed to limit the
authority of an appropriate Federal banking agency (as defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))),
the National Credit Union Administration, or any other Federal
department or agency identified under law as having a systemic risk
responsibility from prescribing rules or regulations to impose
restrictions on 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.''.
SEC. 7402. 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, cancelled, or any
other category of securities as the Commission, by rule, may
prescribe''; 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. 7403. FINGERPRINTING.
Section 17(f)(2) of the Securities Exchange Act of 1934 (15 U.S.C.
78q(f)(2)) is amended--
(1) by striking ``and registered clearing agency,'' and
inserting ``registered clearing agency, registered securities
information processor, national securities exchange, and
national securities association''; and
(2) by striking ``or clearing agency,'' and inserting
``clearing agency, securities information processor, national
securities exchange, or national securities association,''.
SEC. 7404. 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. 7405. 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--
(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. 7406. CONFORMING AMENDMENTS FOR THE 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.),''; and
(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.''.
(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 amending paragraph
(17) to read as follows:
``(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
it 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 amending
paragraph (8) to read as follows:
``(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. 7407. PROMOTING TRANSPARENCY IN FINANCIAL REPORTING.
(a) Findings.--Congress finds the following:
(1) Transparent and clear financial reporting is integral
to the continued growth and strength of our capital markets and
the confidence of investors.
(2) The increasing detail and volume of accounting,
auditing, and reporting guidance pose a major challenge.
(3) The complexity of accounting and auditing standards in
the United States has added to the costs and effort involved in
financial reporting.
(b) Testimony Required on Reducing Complexity in Financial
Reporting.--The Securities and Exchange Commission, the Public Company
Accounting Oversight Board, and the standard setting body designated
pursuant to section 19(b) of the Securities Act of 1933 shall annually
provide oral testimony by their respective Chairpersons or a designee
of the Chairperson, beginning in 2010, and for 5 years thereafter, to
the Committee on Financial Services of the House of Representatives on
their efforts to reduce the complexity in financial reporting to
provide more accurate and clear financial information to investors,
including--
(1) reassessing complex and outdated accounting standards;
(2) improving the understandability, consistency, and
overall usability of the existing accounting and auditing
literature;
(3) developing principles-based accounting standards;
(4) encouraging the use and acceptance of interactive data;
and
(5) promoting disclosures in ``plain English''.
SEC. 7408. 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. 7409. PROTECTING CONFIDENTIALITY OF MATERIALS SUBMITTED TO THE
COMMISSION.
(a) Securities Exchange Act of 1934.--Section 17(i) of the
Securities Exchange Act of 1934 (as amended by section 1314(2)) is
amended to read as follows:
``(i) Authority To Limit Disclosure of Information.--
``(1) In general.--Notwithstanding any other provision of
law, the Commission shall not be compelled to disclose any
information, documents, records, or reports that relate to an
examination, surveillance, or risk assessment of a person
subject to or described in this section, or the financial or
operational condition of such persons, or any information
supplied to the Commission by any domestic or foreign
regulatory agency or self-regulatory organization that relates
to the financial or operational condition of such persons, of
any associated person of such persons, or any affiliate of an
investment bank holding company.
``(2) Certain exceptions.--Nothing in this subsection shall
authorize the Commission to withhold information from the
Congress, prevent the Commission from complying with a request
for information from any other Federal department or agency,
the Public Company Accounting Oversight Board, or any self-
regulatory organization requesting the information for purposes
within the scope of its jurisdiction, or prevent the Commission
from complying with an order of a court of the United States in
an action brought by the United States or the Commission
against a person subject to or described in this section to
produce information, documents, records, or reports relating
directly to the examination, surveillance, or risk assessment
of that person or the financial or operational condition of
that person or an associated or affiliated person of that
person.
``(3) Treatment under section 552 of title 5, united states
code.--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 that section.
``(4) Certain information to be confidential.--In
prescribing regulations to carry out the requirements of this
subsection, the Commission shall designate information
described in or obtained pursuant to subparagraphs (A), (B),
and (C) of subsection (i)(3) as confidential information for
purposes of section 24(b)(2) of this title.''.
(b) Investment Company Act of 1940.--Section 31(b) of the
Investment Company Act of 1940 (15 U.S.C. 80a-30(b)), as amended by
sections 7106(a)(2) and 7218(b)(4), is further amended by adding at the
end the following new paragraph:
``(6) Confidentiality.--
``(A) In general.--Notwithstanding any other
provision of law, the Commission shall not be compelled
to disclose any information, documents, records, or
reports that relate to an examination, surveillance, or
risk assessment of a person subject to or described in
this section.
``(B) Certain exceptions.--Nothing in this
subsection shall authorize the Commission to withhold
information from the Congress, prevent the Commission
from complying with a request for information from any
other Federal department or agency, or the Public
Company Accounting Oversight Board requesting the
information for purposes within the scope of its
jurisdiction, or prevent the Commission from complying
with an order of a court of the United States in an
action brought by the United States or the Commission
against a person subject to or described in this
section to produce information, documents, records, or
reports relating directly to the examination of that
person or the financial or operational condition of
that person or an associated or affiliated person of
that person.
``(C) Treatment under section 552 of title 5,
united states code.--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 that section.''.
(c) Investment Advisers Act of 1940.--Section 204 of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-4), as amended by sections 7106(b)
and 7218(c), is further amended by adding at the end the following new
subsection:
``(f) Confidentiality.--
``(1) In general.--Notwithstanding any other provision of
law, the Commission shall not be compelled to disclose any
information, documents, records, or reports that relate to an
examination of a person subject to or described in this
section.
``(2) Certain exceptions.--Nothing in this subsection shall
authorize the Commission to withhold information from Congress,
prevent the Commission from complying with a request for
information from any other Federal department or agency, the
Public Company Accounting Oversight Board, or a self-regulatory
organization requesting the information for purposes within the
scope of its jurisdiction, or prevent the Commission from
complying with an order of a court of the United States in an
action brought by the United States or the Commission against a
person subject to or described in this section to produce
information, documents, records, or reports relating directly
to the examination of that person or the financial or
operational condition of that person or an associated or
affiliated person of that person.
``(3) Treatment under section 552 of title 5, united states
code.--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 that section.''.
SEC. 7410. TECHNICAL CORRECTIONS.
(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 the matter following paragraph (5) of section 11(a),
by striking ``earning statement'' and inserting ``earnings
statement''.
(3) in section 18(b)(1)(C) (15 U.S.C. 77r(b)(1)(C)), by
striking ``is a security'' and inserting ``a security'';
(4) in section 18(c)(2)(B)(i) (15 U.S.C. 77r(c)(2)(B)(i)),
by striking ``State, or'' and inserting ``State or'';
(5) 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
(6) 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. 78 et seq.) is amended--
(1) in section 2(1)(a) (15 U.S.C. 78b(1)(a)), by striking
``affected'' and inserting ``effected'';
(2) in section 3(a)(55)(A) (15 U.S.C. 78c(a)(55)(A)), by
striking ``section 3(a)(12) of the Securities Exchange Act of
1934'' and inserting ``section 3(a)(12) of this Act'';
(3) in section 3(g) (15 U.S.C. 78c(g)), by striking
``company, account person, or entity'' and inserting ``company,
account, person, or entity'';
(4) in section 10A(i)(1)(B)(i) (15 U.S.C. 78j-
1(i)(1)(B)(i)), by striking ``nonaudit'' and inserting ``non-
audit'';
(5) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking
``earning statement'' and inserting ``earnings statement'';
(6) in section 15(b)(1) (15 U.S.C. 78o(b)(1))--
(A) by striking the sentence beginning ``The order
granting'' and ending ``from such membership.'' in
subparagraph (B); and
(B) by inserting such sentence in the matter
following such subparagraph after ``are satisfied.'';
(7) 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;
(B) by striking the sentence beginning ``The order
granting'' and ending ``from such membership.'' in such
subparagraph (B), as redesignated; and
(C) by inserting such sentence in the matter
following such redesignated subparagraph after ``are
satisfied.'';
(8) 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
(9) 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'';
(2) in section 313(a)(4) (15 U.S.C. 77mmm(a)(4)) by
striking ``subsection (b) of section 311'' and inserting
``section 311(b)''; and
(3) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by
striking ``(1),'' and inserting ``(1)''.
(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)(B) (15 U.S.C. 80a-2(a)(19)(B)) by
striking ``clause (vi)'' both places it appears in the last two
sentences and inserting ``clause (vii)'';
(2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by
inserting ``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 13(a)(3) (15 U.S.C. 80a-13(a)(3)), by
inserting ``or'' after the semicolon at the end;
(5) in section 17(f)(4) (15 U.S.C. 80a-17(f)(4)), by
striking ``No such member'' and inserting ``No member of a
national securities exchange'';
(6) in section 17(f)(6) (15 U.S.C. 80a-17(f)(6)), by
striking ``company may serve'' and inserting ``company, may
serve''; and
(7) 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 ``section 205(b)(1) or (2)''.
(e) Investment Advisers Act of 1940.--The Investment Advisers Act
of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
(1) in each of the following sections, by striking
``principal business office'' or ``principal place of
business'' (whichever and wherever it appears) and inserting
``principal office and place of business'': sections
203(c)(1)(A), 203(k)(4)(B), 213(a), 222(b), and 222(c) (15
U.S.C. 80b-3(c)(1)(A), 80b-3(k)(4)(B), 80b-13(a), 80b-18a(b),
and 80b-18a(c)); and
(2) in section 206(3) (15 U.S.C. 80b-6(3)), by inserting
``or'' after the semicolon at the end.
SEC. 7411. MUNICIPAL SECURITIES.
Section 15B(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78o-4(b)) is amended--
(1) by amending paragraph (1) to read as follows:
``(1) Composition of the municipal securities rulemaking
board.--Not later than October 1, 2010, the Municipal
Securities Rulemaking Board (hereinafter in this section
referred to as the `Board'), shall be composed of members which
shall perform the duties set forth in this section and shall
consist of--
``(A) a majority of independent public
representatives, at least one of whom shall be
representative of investors in municipal securities and
at least one of whom shall be representative of issuers
of municipal securities (which members are hereinafter
referred to as `public representatives');
``(B) at least one individual who is representative
of municipal securities brokers and municipal
securities dealers which are not banks or subsidiaries
or departments or divisions of banks (which members are
hereinafter referred to as `broker-dealer
representatives'); and
``(C) at least one individual who is 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
(2) by amending paragraph (2)(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 municipal securities
brokers and municipal securities dealers. Such rules--
``(i) shall establish requirements regarding the
independence of public representatives;
``(ii) shall provide that the number of public
representatives of the Board shall at all times exceed
the total number of broker-dealer representatives and
bank representatives;
``(iii) shall establish minimum knowledge,
experience, and other appropriate qualifications for
individuals to serve as public representatives, which
may include, among other things, prior work experience
in the securities, municipal finance, or municipal
securities industries;
``(iv) shall specify the term members shall serve;
and
``(v) may increase or decrease the number of
members which shall constitute the whole Board, but in
no case may such number be an even number.''.
SEC. 7412. INTERESTED PERSON DEFINITION.
Section 2(a)(19)(A) of the Investment Company Act of 1940 (15
U.S.C. 80a-2(a)(19)(A)) is amended--
(1) by striking clauses (v) and (vi);
(2) by inserting after clause (iv) the following new
clause:
``(v) any natural person who is a member of
a class of persons who the Commission, by rule
or regulation, determines are unlikely to
exercise an appropriate degree of independence
as a result of--
``(I) a material business or
professional relationship with such
company or any affiliated person of
such company; or
``(II) a close familial
relationship with any natural person
who is an affiliated person of such
company;'';
(3) by redesignating clause (vii) as clause (vi); and
(4) in clause (vi), as redesignated, by striking ``two
completed fiscal years'' and inserting ``five completed fiscal
years''.
SEC. 7413. RULEMAKING AUTHORITY TO PROTECT REDEEMING INVESTORS.
Section 22(e) of the Investment Company Act of 1940 (15 U.S.C. 80a-
22(e)) is amended by adding at the end the following: ``The Commission
may, by rules and regulations, limit the extent to which a registered
open-end investment company may own, hold, or invest in illiquid
securities or other illiquid property.''.
SEC. 7414. 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
have engaged in information sharing or 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).
SEC. 7415. STUDY ON INTERNAL CONTROL EVALUATION AND REPORTING COST
BURDENS ON SMALLER ISSUERS.
(a) Study Required.--The Government Accountability Office and the
Securities and Exchange Commission shall each conduct a study
evaluating the costs and benefits of complying with section 404(b) of
the Sarbanes-Oxley Act of 2002 (15 U.S.C. Sec. 7262(b)) on issuers who
are not accelerated or large accelerated filers as defined by
Commission Rule 12b-2. The study shall--
(1) include recommendations, administrative reforms, and
legislative proposals on implementation steps that could be
taken to reduce compliance burdens on these issuers; and
(2) determine the efficacy of the Securities and Exchange
Commission's measures to limit the cost of compliance on
smaller issuers.
(b) Reports Required.--On or before June 1, 2010, the Government
Accountability Office and the Securities and Exchange Commission shall
submit separate reports to Congress containing the findings and
conclusions of the studies required under subsection (a), together with
such recommendations for regulatory, legislative, or administrative
action as may be appropriate.
(c) Effective Date Contingent on Reports.--Requirements under
section 404(b) of the Sarbanes-Oxley Act of 2002 on issuers described
under subsection (a) shall not become effective until the results of
the report are delivered, but in no case before June 1, 2011.
SECTION 7416. ANALYSIS OF RULE REGARDING SMALLER REPORTING COMPANIES.
(a) Findings.--Congress finds the following:
(1) Many small businesses in cutting-edge technology
sectors require significant capital investment to develop new
technologies related to clean energy, drug treatments for
terminal diseases and food production in hunger-stricken areas
of the World.
(2) Many technology companies conducting research do not
meet the definition of ``smaller reporting company'' under the
Securities and Exchange Commission's Rule 12b-2 due to
unusually high public floats despite low or zero revenue.
(3) The Final Report of the Advisory Committee on Smaller
Public Companies to the Securities and Exchange Commission
recommended that a company with a market capitalization of less
than about $787,000,000 be considered a smallcap company and
that the Commission provide exemptions from section 404(b) of
the Sarbanes-Oxley Act to companies with less than $250,000,000
in annual revenues.
(b) Study of Using Revenue as Criteria to Define Smaller Reporting
Company.--The Securities and Exchange Commission shall conduct a study
of the inclusion of revenue as a criteria used in defining smaller
reporting company as defined under the Commission's Rule 12b-2 to
account for smaller public companies with public floats less than
$700,000,000 and revenues less than $250,000,000. Not later than 180
days after the date of enactment of this subtitle, the Commission shall
provide the Committee on Financial Services of the House of
Representatives and the Committee on Banking, Housing and Urban Affairs
of the Senate a report of the findings of the study.
SEC. 7417. FINANCIAL REPORTING FORUM.
(a) Establishment.--There is hereby established a Financial
Reporting Forum (hereinafter referred to as the ``Forum''), which shall
consist of--
(1) the Chairman of the Securities Exchange Commission
(hereinafter referred to as the ``SEC'');
(2) the head of the Financial Accounting Standards Board;
(3) the Chairman of the Public Company Accounting Oversight
Board;
(4) the head of each appropriate Federal banking agency, as
such term is defined under section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q));
(5) the Administrator of the National Credit Union
Administration;
(6) the Secretary of the Treasury;
(7) a representative of a non-financial institution,
appointed by the SEC;
(8) a representative of a financial institution, appointed
by the SEC;
(9) a representative of auditors, appointed by the SEC; and
(10) a representative of investors, appointed by the SEC.
(b) Meetings.--The Forum shall meet no less often than quarterly.
(c) Duties.--The Forum shall meet to discuss immediate and long-
term issues critical to financial reporting.
(d) Reporting.--The Forum shall issue an annual report to the
Congress detailing any determinations or findings made by the Forum
during the previous year, including any legislative recommendations the
Forum may have related to financial reporting matters.
SEC. 7418. INVESTMENT ADVISERS SUBJECT TO STATE AUTHORITIES.
Section 203A(a) 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 new
paragraph:
``(2) Treatment of certain mid-sized investment advisers.--
Notwithstanding paragraph (1), an investment adviser that--
``(A) is regulated and examined, or required to be
regulated and examined, by a State; and
``(B) 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,
shall register with, and be subject to examination by,
such State. The Commission shall publish a list of the
States that regulate and examine, or require regulation
and examination of, investment advisers to which the
requirements of this paragraph apply.''.
SEC. 7419. CUSTODIAL REQUIREMENTS.
Not later than 180 days after the date of the enactment of this
subtitle, the Securities and Exchange Commission shall adopt a rule
pursuant to its authority under section 211(a) of the Investment
Advisers Act of 1940 making it unlawful under section 206(4) of such
Act for an investment adviser registered under the Act to have custody
of funds or securities of a client the value of which exceeds
$10,000,000, subject to such exception the Commission determines in
such rule are in the public interest and consistent with the protection
of investors, unless--
(1) the funds and securities are maintained with a
qualified custodian either in a separate account for each
client under the client's name, or in accounts that contain
only client funds and securities under the name of the
investment adviser as agent or trustee for the client; and
(2) the qualified custodian does not directly or indirectly
provide investment advice with respect to such funds or
securities.
SEC. 7420. OMBUDSMAN.
(a) Appointment.--Not later than 180 days after the date of the
enactment of this subtitle, the Chairman of the Securities and Exchange
Commission shall appoint an Ombudsman who shall report directly to the
Chairman.
(b) Duties.--The Ombudsman appointed under subsection (a) shall--
(1) act as a liaison between the Commission and any
affected person with respect to any problem such person may
have in dealing with the Commission resulting from the
regulatory activities of the Commission;
(2) review and make recommendations regarding Commission
policies and procedures to encourage persons to present
questions to the Commission regarding compliance with Federal
securities laws; and
(3) maintain confidentiality of communications between such
persons and the Ombudsman.
(c) Limitation.--In carrying out the duties under subsection (b),
the Ombudsman shall utilize personnel of the Commission to the extent
practicable. Nothing in this section shall be construed as replacing,
altering, or diminishing the activities of any ombudsman or similar
office in any other agency.
(d) Report.--Each year, the Ombudsman shall submit a report to the
Commission for inclusion in the annual report that describes the
activities and evaluates the effectiveness of the Ombudsman during the
preceding year. In that report, the Ombudsman shall include solicited
comments and evaluations from registrants in regards to the
effectiveness of the Ombudsman.
PART 5--SECURITIES INVESTOR PROTECTION ACT AMENDMENTS
SEC. 7501. 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''.
SEC. 7502. 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 by striking ``of not to exceed
$1,000,000,000'' and inserting ``the lesser of $2,500,000,000 or the
target amount of the SIPC Fund specified in the bylaws of SIPC''.
SEC. 7503. 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 March 31, 2010, as
provided under subsection (e).
``(e) Inflation Adjustment.--
``(1) In general.--No later than April 1, 2010, 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 containing 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.''.
SEC. 7504. SIPC AS TRUSTEE IN SIPA LIQUIDATION PROCEEDINGS.
Section 5(b)(3) of the Securities Investor Protection Act of 1970
(15 U.S.C. 78eee(b)(3)) is amended--
(1) by striking ``SIPC has determined that the liabilities
of the debtor to unsecured general creditors and to
subordinated lenders appear to aggregate less than $750,000 and
that''; and
(2) by striking ``five hundred'' and inserting ``five
thousand''.
SEC. 7505. INSIDERS INELIGIBLE FOR SIPC ADVANCES.
Section 9(a)(4) of the Securities Investor Protection Act of 1970
(15 U.S.C. 78fff-3(a)(4)) is amended by inserting ``an insider,'' after
``or net profits of the debtor,''.
SEC. 7506. ELIGIBILITY FOR DIRECT PAYMENT PROCEDURE.
Section 10(a)(4) of the Securities Investor Protection Act of 1970
(15 U.S.C. 78fff-4(a)(4)) is amended by striking ``$250,000'' and
inserting ``$850,000''.
SEC. 7507. 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''.
SEC. 7508. 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 five years.
``(2) Internet service providers.--Any Internet service
provider that, on or through a system or network controlled or
operated by the Internet service provider, transmits, routes,
provides connections for, or stores any material containing any
misrepresentation of the kind prohibited in paragraph (1) shall
be liable for any damages caused thereby, including damages
suffered by SIPC, if the Internet service provider--
``(A) has actual knowledge that the material
contains a misrepresentation of the kind prohibited in
paragraph (1), or
``(B) in the absence of actual knowledge, is aware
of facts or circumstances from which it is apparent
that the material contains a misrepresentation of the
kind prohibited in paragraph (1), and
upon obtaining such knowledge or awareness, fails to act
expeditiously to remove, or disable access to, the material.
``(3) 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) or (2). 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. 7509. FUTURES HELD IN A PORTFOLIO MARGIN SECURITIES ACCOUNT
PROTECTION.
(a) SIPC Advances.--Section 9(a)(1) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78fff-3(a)(1)) is amended by
inserting ``or options on futures contracts'' after ``claim for
securities''.
(b) Definitions.--Section 16 of such Act (15 U.S.C. 78lll) is
amended--
(1) by amending paragraph (2) to read as follows:
``(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. The term `customer' includes any person who
has a claim against the debtor arising out of sales or
conversions of such securities.
``(B) Included persons.--The term `customer'
includes--
``(i) any person who has deposited cash
with the debtor for the purpose of purchasing
securities; and
``(ii) any person who has a claim against
the debtor for, or a claim against the debtor
arising out of sales or conversions of, 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.
``(C) Excluded persons.--The term `customer' does
not include--
``(i) any person to the extent that the
claim of such person arises out of transactions
with a foreign subsidiary of a member of SIPC;
``(ii) any person to the extent that 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; or
``(iii) any person to the extent such
person has a claim relating to any open
repurchase or open reverse repurchase
agreement.
For purposes of this paragraph, the term `repurchase
agreement' means the sale of a security at a specified
price with a simultaneous agreement or obligation to
repurchase the security at a specified price on a
specified future date.'';
(2) in paragraph (4), by inserting after the first sentence
the following new sentence: ``In the case of portfolio
margining accounts of customers that are carried as securities
accounts pursuant to a portfolio margining program approved by
the Commission, such term shall also include futures contracts
and options on futures contracts received, acquired, or held by
or for the account of a debtor from or for such accounts, and
the proceeds thereof.'';
(3) in paragraph (9), by inserting before ``Such term'' in
the matter following subparagraph (L) the following: ``The term
includes revenues earned by a broker or dealer in connection
with transactions in customers' portfolio margining accounts
carried as securities accounts pursuant to a portfolio
margining program approved by the Commission.''; and
(4) in paragraph (11)--
(A) by amending subparagraph (A) to read as
follows:
``(A) calculating the sum which would have been
owed by the debtor to such customer if the debtor had
liquidated, by sale or purchase on the 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;
minus''; and
(B) by inserting before ``In determining'' in the
matter following subparagraph (C) 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 for the mark-
to-market (variation) payments due with respect to such
contract as of the filing date, and such claim shall be
treated as a claim for cash.''.
SEC. 7510. STUDY AND REPORT ON THE FEASIBILITY OF RISK-BASED
ASSESSMENTS FOR SIPC MEMBERS.
(a) Study Required.--The Comptroller General of the United States
shall conduct a study on whether the Securities Investor Protection
Corporation (hereafter in this section referred to as ``SIPC'') should
be required to impose assessments, on its member brokers and dealers,
based on risk for the purpose of adequately maintaining the SIPC Fund.
(b) Content.--The Comptroller General in conducting this study
shall--
(1) identify and examine available approaches, including
modeling, to measure broker and dealer operational risk;
(2) analyze whether the available approaches to measure
broker and dealer operational risk can be used in managing the
aggregate risk to the SIPC Fund;
(3) explore whether objective measures like the volume of
assets of the SIPC member, previous enforcement and compliance
actions taken by regulatory bodies against the SIPC member, or
the number of years the SIPC member has been in operation,
among other factors, can be used to assess the probability the
fund will incur a loss with respect to the SIPC member;
(4) examine the impact that risk-based assessments could
have on large and small brokers and dealers; and
(5) examine the impact that risk-based assessments could
have on institutional and retail brokers and dealers.
(c) Consultation.--The Comptroller General in planning and
conducting this study shall consult with the Securities and Exchange
Commission, the Federal Deposit Insurance Corporation, SIPC, the
Financial Industry Regulatory Authority, and any other public or
private sector organization that the Comptroller General considers
appropriate.
(d) Report Required.--Not later than one year after the date of
enactment of this subtitle, the Comptroller general shall submit a
report of 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.
SEC. 7511. BUDGETARY TREATMENT OF COMMISSION LOANS TO SIPC.
Section 4(g) of the Securities Investor Protection Act of 1970 (15
U.S.C. 78ddd(g)) is amended by adding at the end the following: ``Any
loan made by the Commission to SIPC under this subsection shall not be
considered to result in a new direct loan obligation or a new loan
guarantee commitment for purposes of section 504 of the Federal Credit
Reform Act of 1990.''.
PART 6--SARBANES-OXLEY ACT AMENDMENTS
SEC. 7601. PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD OVERSIGHT OF
AUDITORS OF BROKERS AND DEALERS.
(a) Definitions.--(1) Title I of the Sarbanes-Oxley Act of 2002 is
amended by adding at the end the following new section:
``SEC. 110. DEFINITIONS.
``For the purposes of this title, and notwithstanding section 2:
``(1) Audit.--The term `audit' means an examination of the
financial statements, reports, documents, procedures or
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 (or, for the period preceding
the adoption of applicable rules of the Board under section
103, in accordance with then-applicable generally accepted
auditing and related standards for such purposes), for the
purpose of expressing an opinion on such financial statements,
reports, documents, procedures or controls, or notices.
``(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, other document, procedures, or
controls; or
``(ii) asserts that no such opinion can be
expressed.
``(3) 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.
``(4) 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.
``(5) 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.
``(6) Self-regulatory organization.--The term `self-
regulatory organization' has the same meaning as in section
3(a)(26) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(26)).''.
(2) The table of sections in section 1(b) of such Act is amended,
by inserting after the item relating to section 109 the following new
item:
``Sec. 110. Definitions.''.
(b) Establishment and Administration of the Public Company
Accounting Oversight Board.--Section 101 of such Act is amended--
(1) by striking ``issuers'' each place it appears and
inserting ``issuers, brokers, and dealers'';
(2) in subsection (a), by striking ``public companies'' and
inserting ``companies''; and
(3) in subsection (a), 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 such Act is
amended--
(1) in subsection (a), by striking ``Beginning 180 days
after the date of the determination of the Commission under
section 101(d), it'' and inserting ``It'';
(2) in subsections (a) and (b)(2)(G), by striking
``issuer'' each place it appears and inserting ``issuer,
broker, or dealer''; and
(3) in subsection (b)(2)(A), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''.
(d) Auditing and Independence.--Section 103(a) of such Act 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.--Section 104
of such Act is amended--
(1) in subsection (a), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers'';
(2) in subsection (b)(1)(A)--
(A) by striking ``audit reports'' and inserting
``audit reports on annual financial statements''; and
(B) by striking ``and'';
(3) in subsection (b)(1)(B)--
(A) by striking ``audit reports'' and inserting
``audit reports on annual financial statements''; and
(B) by striking the period at the end and inserting
``; and''; and
(4) by adding at the end of subsection (b)(1) the following
new subparagraph:
``(C) with respect to each registered public
accounting firm that regularly provides audit reports
and is not described under subparagraph (A) or (B), on
a basis to be determined by the Board, by rule,
consistent with the public interest and protection of
investors.''.
(f) Investigations and Disciplinary Proceedings.--Section
105(c)(7)(B) of such Act is amended--
(1) in the subparagraph heading, by inserting ``, broker,
or dealer'' after ``issuer'';
(2) by striking ``any issuer'' each place it 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 of such Act is
amended--
(1) in subsection (a)(1), by striking ``issuer'' and
inserting ``issuer, broker, or dealer''; and
(2) in subsection (a)(2), by striking ``issuers'' and
inserting ``issuers, brokers, or dealers''.
(h) Funding.--Section 109 of such Act is amended--
(1) in subsection (c)(2), by striking ``subsection (i)''
and inserting ``subsection (j)'';
(2) in subsection (d)(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 and brokers and dealers, as appropriate'';
(3) in subsection (d), by inserting at the end the
following new paragraph:
``(3) Brokers and dealers.--The rules of the Board under
paragraph (1) shall provide that the allocation, assessment,
and collection by the Board (or an agent appointed by the
Board) of the fee established under paragraph (1) with respect
to brokers and dealers shall not begin until the first day of
the first full fiscal year beginning after the date of the
enactment of this paragraph.'';
(4) by redesignating subsections (h), (i), and (j) as
subsections (i), (j), and (k), respectively; and
(5) by inserting after subsection (g) the following new
subsection:
``(h) Allocation of Accounting Support Fees Among Brokers and
Dealers.--
``(1) In general.--Any amount due from brokers and dealers
(or a particular class of such brokers and dealers) under this
section to fund the budget of the Board shall be allocated
among and payable by such brokers and dealers (or such brokers
and dealers in a particular class, as applicable). A broker or
dealer's allocation shall be in proportion to the broker or
dealer's net capital compared to the total net capital of all
brokers and dealer, in accordance with the rules of the Board.
``(2) Obligation to pay.--Every broker or dealer shall pay
the share of a reasonable annual accounting support fee or fees
allocated to such broker or dealer under this section.''.
(i) Referral of Investigations to a Self-regulatory Organization.--
Section 105(b)(4)(B) of the Sarbanes-Oxley Act of 2002 is amended--
(1) by redesignating clauses (ii) and (iii) as clauses
(iii) and (iv), respectively; and
(2) by inserting after clause (i) the following new clause:
``(ii) to a self-regulatory organization,
in the case of an investigation that concerns
an audit report for a broker or dealer that is
subject to the jurisdiction of such self-
regulatory organization;''.
(j) Use of Documents Related to an Inspection or Investigation.--
Section 105(b)(5)(B)(ii) of such Act is amended--
(1) in subclause (III), by striking ``and'';
(2) in subclause (IV), by striking the comma and inserting
``; and''; and
(3) by inserting after subclause (IV) the following new
subclause:
``(V) a self-regulatory
organization, with respect to an audit
report for a broker or dealer that is
subject to the jurisdiction of such
self-regulatory organization,''.
SEC. 7602. FOREIGN REGULATORY INFORMATION SHARING.
(a) Definition.--Section 2(a) of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7201(a)) is amended by inserting after paragraph (16) 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.--When in the Board's discretion it is
necessary to accomplish the purposes of this Act or to
protect investors, and 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 within the
inspection authority, or other regulatory or law
enforcement jurisdiction, of a foreign auditor
oversight authority may be made available to the
foreign auditor oversight authority if the foreign
auditor oversight authority provides such assurances of
confidentiality as the Board determines appropriate.''.
(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. 7603. EXPANSION OF AUDIT INFORMATION TO BE PRODUCED AND EXCHANGED
WITH FOREIGN COUNTERPARTS.
Section 106 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216) is
amended--
(1) by amending subsection (b) to read as follows:
``(b) Production of Documents.--
``(1) Production by foreign firms.--If a foreign public
accounting firm issues an audit report, performs audit work,
conducts interim reviews, or performs material services upon
which a registered public accounting firm relies in the conduct
of an audit or interim review, the foreign public accounting
firm shall produce its audit work papers and all other
documents related to any such audit work or interim review to
the Commission or the Board when requested by the Commission or
the Board and the foreign public accounting firm shall be
subject to the jurisdiction of the courts of the United States
for purposes of enforcement of any request of 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 foreign public accounting firm's
audit work papers 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
its reliance 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 new
subsections:
``(d) Service of Requests or Process.--Any foreign public
accounting firm that performs work for a domestic registered public
accounting firm shall furnish to the domestic firm a written
irrevocable consent and power of attorney that designates the domestic
firm as an agent upon whom may be served any process, pleadings, or
other papers in any action brought to enforce this section. Any foreign
public accounting firm that issues an audit report, performs audit
work, performs interim reviews, or performs other material services
upon which a registered public accounting firm relies in the conduct of
an audit or interim review, shall designate to the Commission or the
Board an agent in the United States upon whom may be served any
process, pleading, or other papers in any action brought to enforce
this section or any request by the Commission or the Board under 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 a violation of this Act.
``(f) Other Means of Satisfying Production Obligations.--
Notwithstanding any other provision of this section, the staff of the
Commission or Board may allow foreign public accounting firms subject
to this section to meet production obligations under this section
though alternate means, such as through foreign counterparts of the
Commission or Board.''.
SEC. 7604. CONFORMING AMENDMENT RELATED TO REGISTRATION.
Section 102(b)(3)(A) of the Sarbanes-Oxley Act of 2002 (15 U.S.
Code 7212(b)(3)(A)) is amended by striking ``by the Board'' and
inserting ``by the Commission or the Board''.
SEC. 7605. FAIR FUND AMENDMENTS.
Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a))
is amended--
(1) by amending subsection (a) to read as follows:
``(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 (as such term is defined in section 3(a)(47) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)), the Commission
obtains a civil penalty against any person for a violation of such laws
or the rules and regulations thereunder, or such person agrees in
settlement of any such action to such civil penalty, the amount of such
civil penalty or settlement 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), by--
(A) striking ``for a disgorgement fund described in
subsection (a)'' and inserting ``for a disgorgement
fund or other fund described in subsection (a)''; and
(B) striking ``in the disgorgement fund'' and
inserting ``in such fund''; and
(3) by striking subsection (e).
SEC. 7606. 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
not an accelerated filer within the meaning Rule 12b-2 of the
Commission (17 C.F.R. 240.12b-2).''.
(b) Study.--The Securities and Exchange Commission and the
Comptroller General shall jointly 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 180 days after the date of the enactment of
this subtitle, the Commission and the Comptroller General shall
transmit a report of such study to Congress.
SEC. 7607. WHISTLEBLOWER PROTECTION AGAINST RETALIATION BY A SUBSIDIARY
OF AN ISSUER.
Section 1514A(a) 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 ``(15 U.S.C. 78o(d)),''.
SEC. 7608. CONGRESSIONAL ACCESS TO INFORMATION.
Section 101 of the Sarbanes-Oxley Act of 2002 is amended by adding
at the end the following:
``(i) Congressional Access to Information.--Nothing in this section
shall--
``(1) affect the Boards obligations, if any, to provide
access to records under the Right to Financial Privacy Act; or
``(2) authorize the Board to withhold information from
Congress or prevent the Board from complying with an order of a
court of the United States in an action commenced by the United
States or the Board.''.
SEC. 7609. CREATION OF OMBUDSMAN FOR THE PCAOB.
(a) Ombudsman.--Title I of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7211 et seq.), as amended by section 7601(a)(1), is further
amended by adding at the end the following new section:
``SEC. 111. OMBUDSMAN.
``(a) Establishment Required.--Not later than 180 days after the
date of enactment of the Investor Protection Act, the Board shall
appoint an ombudsman for the Board. The Ombudsman shall report directly
to the Chairman.
``(b) Duties of Ombudsman.--The ombudsman appointed in accordance
with subsection (a) for the Board shall--
``(1) act as a liaison between the Board and--
``(A) any registered public accounting firm or
issuer with respect to issues or disputes concerning
the preparation or issuance of any audit report with
respect to that issuer; and
``(B) any affected registered public accounting
firm or issuer with respect to--
``(i) any problem such firm or issuer may
have in dealing with the Board resulting from
the regulatory activities of the Board,
particularly with regard to the implementation
of section 404; and
``(ii) issues caused by the relationships
of registered public accounting firms and
issuers generally; and
``(2) assure that safeguards exist to encourage
complainants to come forward and to preserve confidentiality;
and
``(3) carry out such activities, and any other activities
assigned by the Board, in accordance with guidelines prescribed
by the Board.''.
(b) Conforming Amendment.--The table of sections in section 1(b) of
such Act is amended, by inserting after the item relating to section
110 (as added by section 601(a)(2)) the following new item:
``Sec. 111. Ombudsman.''.
SEC. 7610. AUDITING OVERSIGHT BOARD.
The Sarbanes-Oxley Act of 2002 is amended--
(1) in section 2(a)(5), by striking ``Public Company
Accounting Oversight Board'' and inserting ``Auditing Oversight
Board'';
(2) in section 101(a), by striking ``Public Company
Accounting Oversight Board'' and inserting ``Auditing Oversight
Board''; and
(3) in the heading of title I, by striking ``PUBLIC COMPANY
ACCOUNTING OVERSIGHT BOARD'' and inserting ``AUDITING OVERSIGHT
BOARD''.
PART 7--SENIOR INVESTMENT PROTECTION
SEC. 7701. FINDINGS.
Congress finds that--
(1) many seniors are targeted by salespersons and advisers
using misleading certifications and professional designations;
(2) many certifications and professional designations used
by salespersons and advisers represent limited training or
expertise, and may in fact be of no value with respect to
advising seniors on financial and estate planning matters, and
far too often, such designations are obtained simply by
attending a weekend seminar and passing an open book, multiple
choice test;
(3) many seniors have lost their life savings because
salespersons and advisers holding a misleading designation have
steered them toward products that were unsuitable for them,
given their retirement needs and life expectancies;
(4) seniors have a right to clearly know whether they are
working with a qualified adviser who understands the products
and is working in their best interest or a self-interested
salesperson or adviser advocating particular products; and
(5) many existing State laws and enforcement measures
addressing the use of certifications, professional
designations, and suitability standards in selling financial
products to seniors are inadequate to protect senior investors
from salespersons and advisers using such designations.
SEC. 7702. DEFINITIONS.
For purposes of this part:
(1) Misleading designation.--The term ``misleading
designation''--
(A) means the use of a purported certification,
professional designation, or other 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 any legitimate certification,
professional designation, license, or other credential,
if--
(i) it has been offered by an academic
institution having regional accreditation; or
(ii) it meets the standards for
certifications, licenses, and professional
designations outlined by the North American
Securities Administrators Association (in this
part referred to as the ``NASAA'') Model Rule
on the Use of Senior-Specific Certifications
and Professional Designations, as in effect on
the date of the enactment of this subtitle, or
any successor thereto, or it was issued by or
obtained from any State.
(2) Financial product.--The term ``financial product''
means securities, insurance products (including insurance
products which pay a return, whether fixed or variable), and
bank and loan products.
(3) Misleading or fraudulent marketing.--The term
``misleading or fraudulent marketing'' means the use of a
misleading designation when selling to or advising a senior
about the sale of a financial product.
(4) Senior.--The term ``senior'' means any individual who
has attained the age of 62 years or more.
(5) State.--The term ``State'' means each of the 50 States,
the District of Columbia, and the unincorporated territories of
Puerto Rico and the U.S. Virgin Islands.
SEC. 7703. GRANTS TO STATES FOR ENHANCED PROTECTION OF SENIORS FROM
BEING MISLEAD BY FALSE DESIGNATIONS.
(a) Grant Program.--The Securities and Exchange Commission (in this
part referred to as the ``Commission'')--
(1) shall establish a program in accordance with this part
to provide grants to States--
(A) to investigate and prosecute misleading and
fraudulent marketing practices; or
(B) to develop educational materials and training
aimed at reducing misleading and fraudulent marketing
of financial products toward seniors; and
(2) may establish such performance objectives, reporting
requirements, and application procedures for States and State
agencies receiving grants under this part as the Commission
determines are necessary to carry out and assess the
effectiveness of the program under this part.
(b) Use of Grant Amounts.--A grant under this part may be used
(including through subgrants) by the State or the appropriate State
agency designated by the State--
(1) to fund additional staff to identify, investigate, and
prosecute (through civil, administrative, or criminal
enforcement actions) cases involving misleading or fraudulent
marketing of financial products to seniors;
(2) to fund technology, equipment, and training for
regulators, prosecutors, and law enforcement 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 those
targeting 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 of financial products;
(5) to provide educational materials and training to
seniors to increase their awareness and understanding of
designations; and
(6) to develop comprehensive plans to combat misleading or
fraudulent marketing of financial products to seniors.
(c) Grant Requirements.--
(1) Maximum.--The amount of a grant under this part may not
exceed $500,000 per fiscal year per State, if all requirements
of paragraphs (2), (3), (4), and (5) are met. Such amount shall
be limited to $100,000 per fiscal year per State in any case in
which the State meets the requirements of--
(A) paragraphs (2) and (3), but not each of
paragraphs (4) and (5); or
(B) paragraphs (4) and (5), but not each of
paragraphs (2) and (3).
(2) Standard designation rules for securities.--A State
shall have adopted rules on the appropriate use of designations
in the offer or sale of securities or investment advice, which
shall meet or exceed the minimum requirements of the NASAA
Model Rule on the Use of Senior-Specific Certifications and
Professional Designations, as in effect on the date of the
enactment of this subtitle, or any successor thereto.
(3) Suitability rules for securities.--A State shall have
adopted standard rules on the suitability requirements in the
sale of securities, which shall, to the extent practicable,
conform to the minimum requirements on suitability imposed by
self-regulatory organization rules under the securities laws
(as defined in section 3 of the Securities Exchange Act of
1934).
(4) Standard designation rules for insurance products.--A
State shall have adopted standard rules on the appropriate use
of designations in the sale of insurance products, which shall,
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, as in effect on the date of the enactment of this
subtitle, or any successor thereto.
(5) Suitability and supervision rules for annuity
products.--
(A) In general.--A State shall have adopted rules
governing insurer supervision of, suitability of, and
insurer and insurance producer conduct relating to, the
sale of annuity products, including fixed and index
annuities.
(B) Annuity products criteria.--The rules required
by subparagraph (A) shall, to the extent practicable,
provide--
(i) that insurers, and insurance producers
are responsible for, and liable for penalties
for, the suitability of each recommended
annuity transaction;
(ii) that insurers and insurance producers
are required to apply a standard for
determining the suitability of each recommended
annuity transaction, including fixed and index
annuities, that is at least as protective of
the interests of the consumer as rule 2821(b)
of the Financial Industry Regulatory Authority
(in this paragraph referred to as ``FINRA''),
as in effect on the date of the enactment of
this subtitle, or any successor to such rule;
(iii) that insurers and insurance producers
are required to maintain a process for review
of the suitability, and approval or
disapproval, of each recommended annuity
transaction that is at least as protective of
the interests of the consumer as the principal
review required under rule 2821(c) of FINRA, as
in effect on the date of the enactment of this
subtitle, or any successor to such rule;
(iv) that insurers and insurance producers
are required to maintain processes for the
supervision of direct annuity sales and
insurance producer-recommended annuity sales
(including procedures for the insurer to obtain
and confirm consumer suitability information
and for the insurer to confirm consumer
understanding of the annuity transaction) that
are at least as protective of the interests of
the consumer as member broker and dealer
supervision requirements of FINRA, as in effect
on the date of the enactment of this subtitle,
or any successor to such requirements;
(v) that insurers are required to verify
that each insurance producer successfully
completes, and each insurance producer is
required to receive, training designed to
ensure that the insurance producer is competent
to recommend each class of annuity;
(vi) that insurers are required to verify
that insurance producers receive, and insurance
producers are required to receive, training
regarding the features of each offered annuity
product, to an extent that is at least as
protective of the interests of the consumer as
the FINRA firm element training requirements,
as in effect on the date of the enactment of
this subtitle, or any successor to such
requirements;
(vii) for coordination of such rules with
the rules of FINRA governing member brokers,
dealers, and security representatives, to the
extent appropriate, consistent with protecting
the interests of consumers, for State insurance
regulators to rely on, or to avoid duplication
of FINRA rules; and
(viii) for exemption from such rules only
if such exemption is consistent with the
protection of consumers.
SEC. 7704. APPLICATIONS.
To be eligible for a grant under this part, the State or
appropriate State agency shall submit to the Commission a proposal to
use the grant money to protect seniors from misleading or fraudulent
marketing techniques in the offer and sale of financial products, which
application shall--
(1) identify the scope of the problem;
(2) describe how the proposed program will help to protect
seniors from misleading or fraudulent marketing in the sale of
financial products, including, at a minimum--
(A) by proactively identifying senior victims of
misleading and fraudulent marketing in the offer and
sale of financial products;
(B) how the proposed program can assist in the
investigation and prosecution of those using misleading
or fraudulent marketing in the offer and sale of
financial products to seniors; and
(C) how the proposed program can help discourage
and reduce future cases of misleading or fraudulent
marketing in the offer and sale of financial products
to seniors; and
(3) describe how the proposed program is to be integrated
with other existing State efforts.
SEC. 7705. LENGTH OF PARTICIPATION.
A State receiving a grant under this part shall be provided
assistance funds for a period of 3 years, after which the State may
reapply for additional funding.
SEC. 7706. AUTHORIZATION OF APPROPRIATIONS.
There are authorized to be appropriated to carry out this part,
$8,000,000 for each of the fiscal years 2011 through 2015.
PART 8--REGISTRATION OF MUNICIPAL FINANCIAL ADVISORS
SEC. 7801. MUNICIPAL FINANCIAL ADVISER REGISTRATION REQUIREMENT.
(a) In General.--The Securities Exchange Act of 1934 (as amended by
section 3204) is amended by inserting after section 15F (15 U.S.C. 78o-
7) the following new section:
``SEC. 15G. MUNICIPAL FINANCIAL ADVISER REGISTRATION REQUIREMENT.
``(a)(1)(A) It shall be unlawful for any person to make use of the
mails or any means or instrumentality of interstate commerce to act as
a municipal financial adviser unless such person is registered as a
municipal financial adviser in accordance with subsection (b).
``(B) Subparagraph (A) shall not apply to a natural person
associated with a municipal financial adviser, as long as such adviser
is registered in accordance with subsection (b) and is not a natural
person.
``(2) The Commission, by rule or order, as it deems consistent with
the public interest and the protection of investors, may conditionally
or unconditionally exempt from paragraph (1) of this section any
municipal financial adviser or class of municipal financial advisers
specified in such rule or order.
``(b)(1) A municipal financial adviser may be registered by filing
with the Commission an application for registration in such form and
containing such information and documents concerning such municipal
financial adviser and any persons associated with such municipal
financial adviser as the Commission, by rule, may prescribe as
necessary or appropriate in the public interest or for the protection
of investors. Within 45 days of the date of the filing of such
application (or within such longer period as to which the applicant
consents), the Commission shall--
``(A) by order grant registration, or
``(B) institute proceedings to determine whether registration
should be denied. Such proceedings shall include notice of the grounds
for denial under consideration and opportunity for hearing and shall be
concluded within 120 days of the date of the filing of the application
for registration. At the conclusion of such proceedings, the
Commission, by order, shall grant or deny such registration. The
Commission may extend the time for conclusion of such proceedings for
up to 90 days if it finds good cause for such extension and publishes
its reasons for so finding or for such longer period as to which the
applicant consents.
The Commission shall grant such registration if the Commission finds
that the requirements of this section are satisfied. The Commission
shall deny such registration if it does not make such a finding or if
it finds that if the applicant were so registered, its registration
would be subject to suspension or revocation under paragraph (4).
``(2) An application for registration of a municipal financial
adviser to be formed or organized may be made by a municipal financial
adviser to which the municipal financial adviser to be formed or
organized is to be the successor. Such application, in such form as the
Commission, by rule, may prescribe, shall contain such information and
documents concerning the applicant, the successor, and any persons
associated with the applicant or the successor, as the Commission, by
rule, may prescribe as necessary or appropriate in the public interest
or for the protection of investors. The grant or denial of registration
to such an applicant shall be in accordance with the procedures set
forth in paragraph (1) of this subsection. If the Commission grants
such registration, the registration shall terminate on the 45th day
after the effective date thereof, unless prior thereto the successor
shall, in accordance with such rules and regulations as the Commission
may prescribe, adopt the application for registration as its own.
``(3) Any provision of this title (other than section 5 and
subsection (a) of this section) which prohibits any act, practice, or
course of business if the mails or any means or instrumentality of
interstate commerce is used in connection therewith shall also prohibit
any such act, practice, or course of business by any registered
municipal financial adviser or any person acting on behalf of such a
municipal financial adviser, irrespective of any use of the mails or
any means or instrumentality of interstate commerce in connection
therewith.
``(4) The Commission, by order, shall censure, place limitations on
the activities, functions, or operations of, suspend for a period not
exceeding 12 months, or revoke the registration of any municipal
financial adviser if it finds, on the record after notice and
opportunity for hearing, that such censure, placing of limitations,
suspension, or revocation is in the public interest and that such
municipal financial adviser, whether prior or subsequent to becoming
such, or any person associated with such municipal financial adviser,
whether prior or subsequent to becoming so associated--
``(A) has willfully made or caused to be made in any
application for registration or report required to be filed
with the Commission or with any other appropriate regulatory
agency under this title, or in any proceeding before the
Commission with respect to registration, 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, or has omitted to state in any such application
or report any material fact which is required to be stated
therein;
``(B) has been convicted within 10 years preceding the
filing of any application for registration or at any time
thereafter of any felony or misdemeanor or of a substantially
equivalent crime by a foreign court of competent jurisdiction
which the Commission finds--
``(i) involves the purchase or sale of any
security, the taking of a false oath, the making of a
false report, bribery, perjury, burglary, any
substantially equivalent activity however denominated
by the laws of the relevant foreign government, or
conspiracy to commit any such offense;
``(ii) arises out of the conduct of the business of
a municipal financial adviser, broker, dealer,
municipal securities dealer, government securities
broker, government securities dealer, investment
adviser, bank, insurance company, fiduciary, transfer
agent, nationally recognized statistical rating
organization, foreign person performing a function
substantially equivalent to any of the above, or entity
or person required to be registered under the Commodity
Exchange Act (7 U.S.C. 1 et seq.) or any substantially
equivalent foreign statute or regulation;
``(iii) involves the larceny, theft, robbery,
extortion, forgery, counterfeiting, fraudulent
concealment, embezzlement, fraudulent conversion, or
misappropriation of funds, or securities, or
substantially equivalent activity however denominated
by the laws of the relevant foreign government; or
``(iv) involves the violation of section 152, 1341,
1342, or 1343 or chapter 25 or 47 of title 18, or a
violation of a substantially equivalent foreign
statute;
``(C) is permanently or temporarily enjoined by order,
judgment, or decree of any court of competent jurisdiction from
acting as a municipal financial adviser, investment adviser,
underwriter, broker, dealer, municipal securities dealer,
government securities broker, government securities dealer,
transfer agent, nationally recognized statistical rating
organization, foreign person performing a function
substantially equivalent to any of the above, or entity or
person required to be registered under the Commodity Exchange
Act or any substantially equivalent foreign statute or
regulation, or as an affiliated person or employee of any
investment company, bank, insurance company, foreign entity
substantially equivalent to any of the above, or entity or
person required to be registered under the Commodity Exchange
Act or any substantially equivalent foreign statute or
regulation or from engaging in or continuing any conduct or
practice in connection with any such activity, or in connection
with the purchase or sale of any security;
``(D) has willfully violated any provision of the
Securities Act of 1933, the Investment Advisers Act of 1940,
the Investment Company Act of 1940, the Commodity Exchange Act,
this title, the rules or regulations under any of such
statutes, or is unable to comply with any such provision;
``(E) has willfully aided, abetted, counseled, commanded,
induced, or procured the violation by any other person of any
provision of the Securities Act of 1933, the Investment
Advisers Act of 1940, the Investment Company Act of 1940, the
Commodity Exchange Act, this title, the rules or regulations
under any of such statutes, or has failed reasonably to
supervise, with a view to preventing violations of the
provisions of such statutes, rules, and regulations, another
person who commits such a violation, if such other person is
subject to his supervision. For the purposes of this
subparagraph, no person shall be deemed to have failed
reasonably to supervise any other person, if--
``(i) there have been established procedures, and a
system for applying such procedures, which would
reasonably be expected to prevent and detect, insofar
as practicable, any such violation by such other
person, and
``(ii) such person has reasonably discharged the
duties and obligations incumbent upon him by reason of
such procedures and system without reasonable cause to
believe that such procedures and system were not being
complied with;
``(F) is subject to any order of the Commission barring or
suspending the right of the person to be associated with a
municipal financial adviser;
``(G) has been found by a foreign financial regulatory
authority to have--
``(i) made or caused to be made in any application
for registration or report required to be filed with a
foreign financial regulatory authority, or in any
proceeding before a foreign financial regulatory
authority with respect to registration, any statement
that 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, or has
omitted to state in any application or report to the
foreign financial regulatory authority any material
fact that is required to be stated therein;
``(ii) violated any foreign statute or regulation
regarding transactions in securities, or contracts of
sale of a commodity for future delivery, traded on or
subject to the rules of a contract market or any board
of trade; or
``(iii) aided, abetted, counseled, commanded,
induced, or procured the violation by any person of any
provision of any statutory provisions enacted by a
foreign government, or rules or regulations thereunder,
empowering a foreign financial regulatory authority
regarding transactions in securities, or contracts of
sale of a commodity for future delivery, traded on or
subject to the rules of a contract market or any board
of trade, or has been found, by a foreign financial
regulatory authority, to have failed reasonably to
supervise, with a view to preventing violations of such
statutory provisions, rules, and regulations, another
person who commits such a violation, if such other
person is subject to his supervision; or
``(H) is subject to any final order of a State securities
commission (or any agency or officer performing like
functions), State authority that supervises or examines banks,
savings associations, or credit unions, State insurance
commission (or any agency or office performing like functions),
an appropriate Federal banking agency (as defined in section 3
of the Federal Deposit Insurance Act (12 U.S.C. 1813(q))), or
the National Credit Union Administration, that--
``(i) bars such person from association with an
entity regulated by such commission, authority, agency,
or officer, or from engaging in the business of
securities, insurance, banking, savings association
activities, or credit union activities; or
``(ii) constitutes a final order based on
violations of any laws or regulations that prohibit
fraudulent, manipulative, or deceptive conduct.
``(5) Pending final determination whether any registration under
this subsection shall be revoked, the Commission, by order, may suspend
such registration, if such suspension appears to the Commission, after
notice and opportunity for hearing, to be necessary or appropriate in
the public interest or for the protection of investors. Any registered
municipal financial adviser may, upon such terms and conditions as the
Commission deems necessary or appropriate in the public interest or for
the protection of investors, withdraw from registration by filing a
written notice of withdrawal with the Commission. If the Commission
finds that any registered municipal financial adviser is no longer in
existence or has ceased to do business as a municipal financial
adviser, the Commission, by order, shall cancel the registration of
such municipal financial adviser.
``(6)(A) 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 municipal financial adviser, 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 municipal financial adviser, 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--
``(i) 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 this subsection;
``(ii) 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 paragraph; or
``(iii) is enjoined from any action, conduct, or practice
specified in subparagraph (C) of such paragraph (4).
``(B) It shall be unlawful--
``(i) for any person as to whom an order under subparagraph
(A) is in effect, without the consent of the Commission,
willfully to become, or to be, associated with a municipal
financial adviser in contravention of such order; or
``(ii) for any municipal financial adviser to permit such a
person, without the consent of the Commission, to become or
remain, a person associated with the municipal financial
adviser in contravention of such order, if such municipal
financial adviser knew, or in the exercise of reasonable care
should have known, of such order.
``(7) No registered municipal financial adviser shall act as such
unless it meets such standards of operational capability and such
municipal financial adviser and all natural persons associated with
such municipal financial adviser meet such standards of training,
experience, competence, and such other qualifications as the Commission
finds necessary or appropriate in the public interest or for the
protection of investors. The Commission shall establish such standards
by rules and regulations, which may--
``(A) specify that all or any portion of such standards
shall be applicable to any class of municipal financial
advisers and persons associated with municipal financial
advisers;
``(B) require persons in any such class to pass tests
prescribed in accordance with such rules and regulations, which
tests shall, with respect to any class of partners, officers,
or supervisory employees (which latter term may be defined by
the Commission's rules and regulations) engaged in the
management of the municipal financial adviser, include
questions relating to bookkeeping, accounting, supervision of
employees, maintenance of records, and other appropriate
matters; and
``(C) provide that persons in any such class other than
municipal financial advisers and partners, officers, and
supervisory employees of municipal financial advisers, may be
qualified solely on the basis of compliance with such standards
of training and such other qualifications as the Commission
finds appropriate.
The Commission, by rule, may prescribe reasonable fees and charges to
defray its costs in carrying out this paragraph, including, but not
limited to, fees for any test administered by it or under its
direction.
``(c)(1)(A) No municipal financial adviser shall make use of the
mails or any means or instrumentality of interstate commerce in
connection with which such municipal financial adviser engages in any
fraudulent, deceptive, or manipulative act or practice or violates such
rules and regulations regarding conflicts of interest or fair
practices, including but not limited to rules and regulations related
to political contributions, as the Commission shall prescribe in the
public interest or for the protection of investors or to maintain fair
and orderly markets.
``(B) The Commission shall, for the purposes of this paragraph as
the Commission finds necessary or appropriate in the public interest or
for the protection of investors, by rules and regulations define, and
prescribe means reasonably designed to prevent, such acts and practices
as are fraudulent, deceptive, or manipulative.
``(2) If the Commission finds, after notice and opportunity for a
hearing, that any person subject to the provisions of this section or
any rule or regulation thereunder has failed to comply with any such
provision, rule, or regulation in any material respect, the Commission
may publish its findings and issue an order requiring such person, and
any person who was a cause of the failure to comply due to an act or
omission the person knew or should have known would contribute to the
failure to comply, to comply, or to take steps to effect compliance,
with such provision or such rule or regulation thereunder upon such
terms and conditions and within such time as the Commission may specify
in such order.
``(d) Every registered municipal financial adviser shall establish,
maintain, and enforce written policies and procedures reasonably
designed, taking into consideration the nature of such municipal
financial adviser's business, to prevent the misuse in violation of
this title, or the rules or regulations thereunder, of material,
nonpublic information by such municipal financial adviser or any person
associated with such municipal financial adviser. The Commission, as it
deems necessary or appropriate in the public interest or for the
protection of investors, shall adopt rules or regulations to require
specific policies or procedures reasonably designed to prevent misuse
in violation of this title (or the rules or regulations thereunder) of
material, nonpublic information.
``(e) A municipal financial adviser and any person associated with
such municipal financial adviser shall be deemed to have a fiduciary
duty to any municipal securities issuer for whom such municipal
financial adviser acts as a municipal financial adviser. A municipal
financial adviser may not engage in any act, practice, or course of
business which is not consistent with a municipal financial adviser's
fiduciary duty. The Commission shall, for the purposes of this
paragraph, by rules and regulations define, and prescribe means
reasonably designed to prevent, such acts, practices, and courses of
business as are not consistent with a municipal financial adviser's
fiduciary duty to its clients.''.
(b) Definition.--Section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)) (as amended by section 3201(6)) is amended by
adding at the end the following new paragraphs:
``(78) Municipal financial adviser.--
``(A) The term `municipal financial adviser' means
a person who, for compensation, engages in the business
of--
``(i) providing advice to a municipal
securities issuer with respect to--
``(I) the issuance or proposed
issuance of securities, including any
remarketing of municipal securities
directly or indirectly by or on behalf
of a municipal securities issuer;
``(II) the investment of proceeds
from securities issued by such
municipal securities issuer;
``(III) the hedging of any risks
associated with subclauses (I) or (II),
including advice as to swap agreements
(as defined in section 206A of the
Gramm-Leach-Bliley Act regardless of
whether the counterparties constitute
eligible contract participants); or
``(IV) preparation of disclosure
documents in connection with the
issuance, proposed issuance, or
previous issuance of securities issued
by a municipal securities issuer,
including, without limitation, official
statements and documents prepared in
connection with a written agreement or
contract for the benefit of holders of
such securities described in section
240.15c2-12 of title 17, Code of
Federal Regulations;
``(ii) assisting a municipal securities
issuer in selecting or negotiating guaranteed
investment contracts or other investment
products; or
``(iii) assisting any municipal securities
issuer in the primary offering of securities
not involving a public offering.
``(B) Such term does not include--
``(i) an attorney, if the attorney is
offering advice or providing services that are
of a traditional legal nature;
``(ii) a nationally recognized statistical
rating organization to the extent it is
involved in the process of developing credit
ratings;
``(iii) a registered broker-dealer when
acting as an underwriter, as such term is
defined in section 2(a)(11) of the Securities
Act of 1933 (15 U.S.C. section 77b(a)(11)); or
``(iv) a State or any political subdivision
thereof.
``(79) Municipal securities issuer.--The term `municipal
securities issuer' means--
``(A) any entity that has the ability to issue a
security the interest on which is excludable from gross
income under section 103 of the Internal Revenue Code
of 1986 and the regulations thereunder; or
``(B) any person who receives the proceeds
generated from the issuance of municipal securities.
``(80) Person associated with a municipal financial
adviser; associated person of a municipal financial adviser.--
The term `person associated with a municipal financial adviser'
or `associated person of a municipal financial adviser' means
any partner, officer, director, or branch manager of such
municipal financial adviser (or any person occupying a similar
status or performing similar functions), any person directly or
indirectly controlling, controlled by, or under common control
with such municipal financial adviser, or any employee of such
municipal financial adviser, except that any person associated
with a municipal financial adviser whose functions are solely
clerical or ministerial shall not be included in the meaning of
such term for purposes of section 15G(b) (other than paragraph
(6) thereof).''.
SEC. 7802. CONFORMING AMENDMENTS.
(a) Securities Exchange Act of 1934 .--The Securities Exchange Act
of 1934 is amended--
(1) in section 15(b)(4)(B)(ii) (15 U.S.C.
78o(b)(4)(B)(ii)), by inserting ``municipal finance adviser,''
after ``nationally recognized statistical rating
organization,'';
(2) in section 15(b)(4)(C) (15 U.S.C. 78o(b)(4)(C)), by
inserting ``municipal finance adviser,'' after ``nationally
recognized statistical rating organization,''; and
(3) in section 17(a)(1) (15 U.S.C. 78q(a)(1)), by inserting
``registered municipal financial adviser,'' after ``nationally
recognized statistical rating organization,''.
(b) Investment Company Act of 1940.--The Investment Company Act of
1940 is amended--
(1) in section 2(a) (15 U.S.C. 80a-2(a)), by inserting at
the end the following new paragraph:
``(54) The term `municipal finance adviser' has the same
meaning as in section 3 of the Securities Exchange Act of
1934.'';
(2) in section 9(a)(1) (15 U.S.C. 80a-9(a)(1)), by
inserting ``municipal finance adviser,'' after ``credit rating
agency,''; and
(3) in section 9(a)(2) (15 U.S.C. 80a-9(a)(2)), by
inserting ``municipal finance adviser,'' after ``credit rating
agency,''.
(c) Investment Advisers Act of 1940.--The Investment Advisers Act
of 1940 is amended--
(1) in section 202(a) (15 U.S.C. 80b-2(a)), by inserting at
the end the following new paragraph:
``(31) The term `municipal finance adviser' has the same
meaning as in section 3 of the Securities Exchange Act of
1934.'';
(2) in section 203(e)(2)(B) (15 U.S.C. 80b-3(e)(2)(B)), by
inserting ``municipal finance adviser,'' after ``credit rating
agency,''; and
(3) in section 203(e)(4) (15 U.S.C. 80b-3(e)(4)) is amended
by inserting ``municipal finance adviser,'' after ``credit
rating agency,''.
SEC. 7803. EFFECTIVE DATES.
(a) In General.--The amendments made by this part shall take effect
30 days after the date of the enactment of this subtitle.
(b) Effective Date and Requirements for Regulations.--
Notwithstanding subsection (a), the Securities and Exchange Commission
shall, within 120 days after the date of the enactment of this
subtitle, publish for notice and public comment such regulations as are
initially required to implement this part, and shall take final action
with respect to such regulations not later than 270 days after the date
of enactment of this subtitle.
(c) Registration Date.--No person may continue to act as a
municipal financial adviser, as such term is defined in section
3(a)(65) of the Securities Exchange Act of 1934 (as added by this
part), after 30 days after the date the regulations described in
subsection (b) become effective unless such person has been registered
as required by the amendment made by section 7701 of this part.
TITLE VI--FEDERAL INSURANCE OFFICE
SEC. 8001. SHORT TITLE.
This title may be cited as the ``Federal Insurance Office Act of
2009''.
SEC. 8002. FEDERAL INSURANCE OFFICE ESTABLISHED.
(a) Establishment of Office.--Subchapter I of chapter 3 of title
31, United States Code, is amended--
(1) by transferring and inserting section 312 after section
313;
(2) by redesignating sections 313 and 312 (as so
transferred) as sections 312 and 315, respectively; and
(3) by inserting after section 312 (as so redesignated) the
following new sections:
``SEC. 313. FEDERAL INSURANCE OFFICE.
``(a) Establishment of Office.--There is established the Federal
Insurance Office as an office in the Department of the Treasury.
``(b) Leadership.--The Office shall be headed by a Director, who
shall be appointed by the Secretary of the Treasury. The position of
such Director shall be a career reserved position in the Senior
Executive Service.
``(c) Functions.--
``(1) Authority pursuant to direction of secretary.--The
Office shall have the authority, pursuant to the direction of
the Secretary, as follows:
``(A) To monitor the insurance industry to gain
expertise.
``(B) To identify 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.
``(C) To recommend to the Financial Services
Oversight Council that it designate an insurer,
including its affiliates, as an entity subject to
stricter standards.
``(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 any successor organization
and assisting the Secretary in negotiating covered
agreements.
``(F) To determine, in accordance with subsection
(f), whether State insurance measures are preempted by
covered agreements.
``(G) To consult with the States regarding
insurance matters of national importance and prudential
insurance matters of international importance.
``(H) To perform such other related duties and
authorities as may be assigned to it by the Secretary.
``(2) Advisory functions.--The Office shall advise the
Secretary on major domestic and prudential international
insurance policy issues.
``(d) Scope.--The authority of the Office shall extend to all lines
of insurance except health insurance, as determined by the Secretary
based on section 2791 of the Public Health Service Act (42 U.S.C.
300gg-91).
``(e) Gathering of Information.--
``(1) General.--In carrying out its functions under
subsection (c), the Office may request, receive, and collect
data and information on and from the insurance industry and
insurers, enter into information-sharing agreements, analyze
and disseminate data and information, and issue reports
regarding all lines of insurance except health insurance.
``(2) Collection of information from insurers and
affiliates.--Except as provided in paragraph (3) and subject to
paragraph (4), the Office may require an insurer, or affiliate
of an insurer, to submit such data or information that the
Office may reasonably require in carrying out its functions
under subsection (c). Notwithstanding subsection (p) and for
the purposes of this paragraph only, the term `insurer' means
any entity that is authorized to write insurance or reinsure
risks and issue contracts or policies in one 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 may be established by the
Office by order or rule. Such threshold shall be appropriate to
the particular request and need for the data or information.
``(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,
or 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,
or 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) The submission of any non-publicly 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) 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 non-publicly 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) 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 shall comply with
applicable Federal law and that 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) Section 552 of title 5, United States Code,
shall apply to any data or information submitted by an
insurer or affiliate of an insurer.
``(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) directly 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,
admitted, or otherwise authorized in that State; and
``(B) is inconsistent with a covered agreement that
is entered into on a date after the date of the
enactment of this Act.
``(2) Determination.--
``(A) Notice of potential inconsistency.--Before
making any determination of inconsistency, 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;
``(v) consider the effect of preemption
on--
``(I) the protection of
policyholders and policy claimants;
``(II) the maintenance of the
safety, soundness, integrity, and
financial responsibility of any entity
involved in the business of insurance
or insurance operations;
``(III) ensuring the integrity and
stability of the United States
financial system; and
``(IV) the creation of a gap or
void in financial or market conduct
regulation of any entity involved in
the business of insurance or insurance
operations in the United States; and
``(vi) consider any comments received.
The Director shall provide the notifications required
under clauses (i), (ii), and (iii) contemporaneously.
``(B) Scope of review.--For purposes of this
section, the Director's determination of State
insurance measures shall be limited to the subject
matter of the prudential measures applicable to the
business of insurance contained within the covered
agreement involved.
``(C) Notice of determination of inconsistency.--
Upon making any determination of inconsistency, 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 shorter than 90 days,
before the determination shall become
effective; and
``(iii) notify the Committee on Financial
Services of the House of Representatives and
the Committee on Banking, Housing, and Urban
Affairs of the Senate of the inconsistency.
``(3) Notice of effectiveness.--Upon the conclusion of the
period referred to in paragraph (2)(C)(ii), if the basis for
the determination of inconsistency still exists, the
determination shall become effective and the Director shall--
``(A) cause to be published 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 it has been preempted under this
subsection.
``(g) Applicability of Administrative Procedure Act.--
Determinations of inconsistency 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 and 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 any State insurance measure that governs any
insurer's rates, premiums, underwriting or sales practices, or
State coverage requirements for insurance, or to the
application of the antitrust laws of any State to the business
of insurance;
``(2) preempt any State insurance measure governing the
capital or solvency of an insurer, except to the extent that
such State insurance measure directly results in less favorable
treatment of a non-United States insurer than a United States
insurer;
``(3) be construed to alter, amend, or limit the
responsibility of the Consumer Financial Protection Agency;
``(4) preempt any State insurance measure because of
inconsistency with any agreement that is not a covered
agreement (as such term in defined in subsection (p)); or
``(5) 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 a general
supervisory or regulatory authority of the Office or the Department of
the Treasury 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 multi-national 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) Reports to Congress.--
``(1) Annual report.--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 the insurance
industry, any actions taken by the office pursuant to
subsection (f) (regarding preemption of inconsistent State
insurance measures).
``(2) Other reports.--The Director shall submit to the
President and the Committees referred to in paragraph (1) any
other information or reports as deemed relevant by the Director
or as requested by the Chairman or Ranking Member of any of
such Committees.
``(o) Use of Existing Resources.--To carry out this section, the
Office may employ personnel, facilities, and other Department of the
Treasury resources available to the Secretary and the Secretary shall
dedicate specific personnel to the Office.
``(p) Definitions.--For purposes of this section and section 314,
the following definitions shall apply:
``(1) Affiliate.--The term `affiliate' means, with respect
to an insurer, any person that 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 recognition agreement
that--
``(A) is entered into between the United States and
one or more foreign governments, authorities, or
regulatory entities; and
``(B) provides for 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) Determination of inconsistency.--The term
`determination of inconsistency' means a determination that a
State insurance measure is preempted under subsection (f).
``(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) Insurer.--The term `insurer' means any person engaged
in the business of insurance, including reinsurance.
``(6) 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.
``(7) Office.--The term `Office' means the Federal
Insurance Office established by this section.
``(8) Secretary.--The term `Secretary' means the Secretary
of the Treasury.
``(9) 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.
``(10) 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.
``(11) State insurance regulator.--The term `State
insurance regulator' means any State regulatory authority
responsible for the supervision of insurers.
``(12) 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.
``(q) Authorization of Appropriations.--There are authorized to be
appropriated for the Office such sums as may be necessary for each
fiscal year.
``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'' at the end;
(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.''.
SEC. 8003. REPORT ON GLOBAL REINSURANCE MARKET.
Not later than September 30, 2011, the Director of the Federal
Insurance Office appointed under section 313(b) of title 31, United
States Code (as amended by section 8002(a)(3) of this title) 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 describing the breadth and scope of the
global reinsurance market and the critical role such market plays in
supporting insurance in the United States.
SEC. 8004. STUDY ON MODERNIZATION AND IMPROVEMENT OF INSURANCE
REGULATION IN THE UNITED STATES.
(a) Study.--The Director of the Federal Insurance Office appointed
under section 313(b) of title 31, United States Code (as amended by
section 8002(a)(3) of this title) shall conduct a study on how to
modernize and improve the system of insurance regulation in the United
States. Such study shall include consideration of the following:
(1) Effective systemic risk regulation with respect to
insurance.
(2) Strong capital standards and an appropriate match
between capital allocation and liabilities for all risk.
(3) Meaningful and consistent consumer protection for
insurance products and practices.
(4) Increased national uniformity through either a Federal
charter or effective action by the States.
(5) Improved and broadened regulation of insurance
companies and affiliates on a consolidated basis, including
affiliates outside of the traditional insurance business.
(6) International coordination.
(b) Report.--Not later than one year after the date of the
enactment of this Act, 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 a report containing--
(1) the results of the study conducted under subsection
(a); and
(2) any legislative, administrative, or regulatory
recommendations that the Director considers appropriate to
modernize and improve the system of insurance regulation in the
United States.
(c) Consultation.--In carrying out subsections (a) and (b), the
Director shall consult with State insurance commissioners, consumer
organizations, representatives of the insurance industry,
policyholders, and other persons, as the Director considers
appropriate.
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