[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4173 Referred in Senate (RFS)]
111th CONGRESS
2d Session
H. R. 4173
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
January 20, 2010
Received; read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
AN ACT
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 ``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. 1100. Federal Reserve Board authority that of agent acting on
behalf of Council.
Sec. 1101. Council and Board authority to obtain information.
Sec. 1102. Council prudential regulation recommendations to Federal
financial regulatory agencies; agency
authority.
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. Additional related amendments.
Sec. 1111. Corporation may receive warrants when paying or risking
taxpayer funds.
Sec. 1112. Examinations and enforcement actions for insurance and
resolutions purposes.
Sec. 1113. Study of the effects of size and complexity of financial
institutions on capital market efficiency
and economic growth.
Sec. 1114. Exercise of Federal Reserve authority.
Sec. 1115. Stress tests.
Sec. 1116. Contingent Capital.
Sec. 1117. Restriction on proprietary trading by designated financial
holding companies.
Sec. 1118. Rule of construction.
Sec. 1119. Antitrust savings clause.
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.
Sec. 1257. Effective date.
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.
Sec. 1316. Mutual national banks and Federal mutual bank holding
companies authorized.
Sec. 1317. Nationwide Deposit Cap for Interstate Acquisitions.
Sec. 1318. De novo branching into states.
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; Purpose.
Sec. 1602. Definitions.
Sec. 1603. Systemic risk determination.
Sec. 1604. Dissolution; 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 Dissolution.
Sec. 1612. Miscellaneous provisions.
Sec. 1613. Amendment to Federal Deposit Insurance Act.
Sec. 1614. Application of executive compensation limitations.
Sec. 1615. Study on the effect of safe harbor provisions in insolvency
cases.
Sec. 1616. Treasury study.
Sec. 1617. Priority of claims in federal deposit insurance act.
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.
Sec. 1802. Federal Housing Finance Agency advisory role in FIEC.
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.
Sec. 1952. Reducing TARP funds to offset costs.
Subtitle L--Securities Holding Companies
Sec. 1961. Securities holding companies.
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--DERIVATIVE MARKETS TRANSPARENCY AND ACCOUNTABILITY ACT
Sec. 3001. Short title.
Sec. 3002. Review of regulatory authority.
Sec. 3003. International harmonization.
Sec. 3004. Prohibition against government assistance.
Sec. 3005. Studies.
Sec. 3006. Recommendations for changes to insolvency laws.
Sec. 3007. Abusive swaps.
Sec. 3008. Authority to prohibit participation in swap activities.
Sec. 3009. Memorandum.
Subtitle A--Regulation of Swap Markets
Sec. 3101. Definitions.
Sec. 3102. Jurisdiction.
Sec. 3103. Clearing and execution transparency.
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. Conflicts of interest.
Sec. 3109. Swap execution facilities.
Sec. 3110. Derivatives transaction execution facilities and exempt
boards of trade.
Sec. 3111. Designated contract markets.
Sec. 3112. Margin.
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. FDICIA amendments.
Sec. 3118. Enforcement authority.
Sec. 3119. Enforcement.
Sec. 3120. Retail commodity transactions.
Sec. 3121. Large swap trader reporting.
Sec. 3122. Segregation of assets held as collateral in swap
transactions.
Sec. 3123. Other authority.
Sec. 3124. Antitrust.
Sec. 3125. Review of prior actions.
Sec. 3126. Expedited process.
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. Reporting and recordkeeping.
Sec. 3206. State gaming and bucket shop laws.
Sec. 3207. Amendments to the Securities Act of 1933; treatment of
security-based swaps.
Sec. 3208. Other authority.
Sec. 3209. Jurisdiction.
Sec. 3210. Effective date.
Subtitle C--Improved Financial and Commodity Markets Oversight and
Accountability
Sec. 3301. Elevation of certain Inspectors General to appointment
pursuant to section 3 of the Inspector
General Act of 1978.
Sec. 3302. Continuation of provisions relating to personnel.
Sec. 3303. Corrective responses by heads of certain establishments to
deficiencies identified by Inspectors
General.
Sec. 3304. Effective date; transition rule.
Sec. 3305. Authority of the Commodity Futures Trading Commission to
define ``commercial risk'', ``operating
risk'', and ``balance sheet risk''.
Sec. 3306. Conflicts of interest in clearing organizations.
Sec. 3307. Definitions of major swap participant and major security-
based swap participant.
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. Establishment and composition of the commission.
Sec. 4104. Consumer Financial Protection Oversight Board.
Sec. 4105. Executive and administrative powers.
Sec. 4106. Administration.
Sec. 4107. Consumer Advisory Board.
Sec. 4108. Coordination.
Sec. 4109. Reports to the Congress.
Sec. 4110. GAO small business studies.
Sec. 4111. Funding; fees and assessments; penalties and fines.
Sec. 4112. Amendments relating to other administrative provisions.
Sec. 4113. Oversight by GAO.
Sec. 4114. 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.
Sec. 4313. Overdraft protection notice requirements.
Sec. 4314. Review, report, and program with respect to exchange
facilitators.
Sec. 4315. Regulation of person-to-person lending.
Sec. 4316. Treatment of reverse mortgages.
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. No private right of action.
Sec. 4509. 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.
Sec. 4704. Reporting of mortgage data by State.
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 Abuse and
Prevention Act.
Sec. 4816. Membership in Financial Literacy and Education Commission.
Sec. 4817. Effective date.
Sec. 4818. Amendments to Truth in Lending Act.
Subtitle I--Improvements to the Federal Trade Commission Act
Sec. 4901. Amendments to the Federal Trade Commission Act.
Subtitle J--Miscellaneous
Sec. 4951. Requirements for State-licensed loan originators.
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 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 and rulemaking 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 adviser 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 information.
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.
Sec. 7421. Notice to missing security holders.
Sec. 7422. Short sale reforms.
Sec. 7423. Streamlining of SEC filing procedures.
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.
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 misled 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.
Sec. 8005. Sense of Congress regarding simplified mortgage contract
summaries.
TITLE VII--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
Sec. 9000. Short title; designation as enumerated consumer law.
Subtitle A--Residential Mortgage Loan Origination Standards
Sec. 9001. Definitions.
Sec. 9002. Residential mortgage loan origination.
Sec. 9003. Prohibition on steering incentives.
Sec. 9004. Liability.
Sec. 9005. Regulations.
Sec. 9006. Study of shared appreciation mortgages.
Subtitle B--Minimum Standards For Mortgages
Sec. 9101. Ability to repay.
Sec. 9102. Net tangible benefit for refinancing of residential mortgage
loans.
Sec. 9103. Safe harbor and rebuttable presumption.
Sec. 9104. Liability.
Sec. 9105. Defense to foreclosure.
Sec. 9106. Additional standards and requirements.
Sec. 9107. Rule of construction.
Sec. 9108. Effect on State laws.
Sec. 9109. Regulations.
Sec. 9110. Amendments to civil liability provisions.
Sec. 9111. Lender rights in the context of borrower deception.
Sec. 9112. Six-month notice required before reset of hybrid adjustable
rate mortgages.
Sec. 9113. Required disclosures.
Sec. 9114. Disclosures required in monthly statements for residential
mortgage loans.
Sec. 9115. Legal assistance for foreclosure-related issues.
Sec. 9116. Effective date.
Sec. 9117. Report by the GAO.
Sec. 9118. State Attorney General enforcement authority.
Subtitle C--High-Cost Mortgages
Sec. 9201. Definitions relating to high-cost mortgages.
Sec. 9202. Amendments to existing requirements for certain mortgages.
Sec. 9203. Additional requirements for certain mortgages.
Sec. 9204. Regulations.
Sec. 9205. Effective date.
Subtitle D--Office of Housing Counseling
Sec. 9301. Short title.
Sec. 9302. Establishment of Office of Housing Counseling.
Sec. 9303. Counseling procedures.
Sec. 9304. Grants for housing counseling assistance.
Sec. 9305. Requirements to use HUD-certified counselors under HUD
programs.
Sec. 9306. Study of defaults and foreclosures.
Sec. 9307. Default and foreclosure database.
Sec. 9308. Definitions for counseling-related programs.
Sec. 9309. Accountability and transparency for grant recipients.
Sec. 9310. Updating and simplification of mortgage information booklet.
Sec. 9311. Home inspection counseling.
Sec. 9312. Warnings to homeowners of foreclosure rescue scams.
Subtitle E--Mortgage Servicing
Sec. 9401. Escrow and impound accounts relating to certain consumer
credit transactions.
Sec. 9402. Disclosure notice required for consumers who waive escrow
services.
Sec. 9403. Real Estate Settlement Procedures Act of 1974 amendments.
Sec. 9404. Truth in Lending Act amendments.
Sec. 9405. Escrows included in repayment analysis.
Subtitle F--Appraisal Activities
Sec. 9501. Property appraisal requirements.
Sec. 9502. Unfair and deceptive practices and acts relating to certain
consumer credit transactions.
Sec. 9503. Amendments relating to Appraisal Subcommittee of FIEC,
Appraiser Independence Monitoring, Approved
Appraiser Education, Appraisal Management
Companies, Appraiser Complaint Hotline,
Automated Valuation Models, and Broker
Price Opinions.
Sec. 9504. Study required on improvements in appraisal process and
compliance programs.
Sec. 9505. Equal Credit Opportunity Act amendment.
Sec. 9506. Real Estate Settlement Procedures Act of 1974 amendment
relating to certain appraisal fees.
Subtitle G--Sense of Congress Regarding the Importance of Government
Sponsored Enterprises Reform
Sec. 9601. Sense of Congress regarding the importance of Government-
sponsored enterprises reform to enhance the
protection, limitation, and regulation of
the terms of residential mortgage credit.
Subtitle H--Reports and Data Collection
Sec. 9701. GAO study report on government efforts to combat mortgage
foreclosure rescue scams and loan
modification fraud.
Sec. 9702. Reporting of mortgage data by State.
Subtitle I--Multifamily Mortgage Resolution
Sec. 9801. Multifamily mortgage resolution program.
Subtitle J--Study of Effect of Drywall Presence on Foreclosures
Sec. 9901. Study of effect of drywall presence on foreclosures.
Subtitle K--Home Affordable Modification Program
Sec. 9911. Home Affordable Modification Program guidelines.
Subtitle L--Making Home Affordable Program
Sec. 9921. Public availability of information.
TITLE VIII--FORECLOSURE AVOIDANCE AND AFFORDABLE HOUSING
Sec. 10001. Emergency mortgage relief.
Sec. 10002. Additional assistance for Neighborhood Stabilization
Program.
TITLE IX--NONADMITTED AND REINSURANCE REFORM ACT
Sec. 10051. Short title.
Sec. 10052. Effective date.
Subtitle A--Nonadmitted Insurance
Sec. 10101. Reporting, payment, and allocation of premium taxes.
Sec. 10102. Regulation of nonadmitted insurance by insured's home
state.
Sec. 10103. Participation in national producer database.
Sec. 10104. Uniform standards for surplus lines eligibility.
Sec. 10105. Streamlined application for commercial purchasers.
Sec. 10106. GAO study of nonadmitted insurance market.
Sec. 10107. Definitions.
Subtitle B--Reinsurance
Sec. 10201. Regulation of credit for reinsurance and reinsurance
agreements.
Sec. 10202. Regulation of reinsurer solvency.
Sec. 10203. Definitions.
Subtitle C--Rule of Construction
Sec. 10301. Rule of construction.
Sec. 10302. Severability.
TITLE X--INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED
Sec. 11001. Interest-bearing transaction accounts authorized.
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
(hereafter in this title referred to as a
``foreign financial parent'') after 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;
(B) that is, in whole or in part, directly or
indirectly, engaged in financial activities; and
(C) that is not a Farm Credit System institution
chartered under and subject to the provisions of the
Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et
seq.).
(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) after the date on which the functions
of the Office of Thrift Supervision are
transferred under subtitle C, any savings and
loan holding company (as defined in section
10(a)(1)(D) of the Home Owners' Loan Act) and
any subsidiary (as such term is defined in the
Bank Holding Company Act of 1956) 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;
(v) 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
(vi) 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 any 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) a securities-based swap execution
facility that is registered with the Securities
and Exchange Commission under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.);
(vi) 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.);
(vii) 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.);
(viii) 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
(ix) 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, any retail foreign
exchange dealer, 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,
designated contract market, or swap execution
facility (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, but no later than 2 years, 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 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.
(J) The head of the Consumer Financial Protection
Agency.
(2) Nonvoting members.--Nonvoting members, who shall serve
in an advisory capacity and shall not be excluded from any of
the Council's proceedings, meetings, discussions, and
deliberations:
(A) The Director of the Federal Insurance Office.
(B) 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.
(C) 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.
(D) A State securities commissioner (or an officer
performing like functions), to be designated by a
selection process determined by such State securities
commissioners, provided that the term for which a State
securities commissioner may serve shall last no more
than the 2-year period beginning on the date that the
commissioner 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, 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 strategies (and conduct exercises in
furtherance of those strategies) to prepare for potential
threats identified under paragraphs (2) and (3). In doing so,
the Council shall collaborate with participants in the
financial sector, financial sector coordinating councils, and
any other parties the Council determines to be appropriate.
(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 a dispute mechanism specifically has been provided under
section 4204 or title III);
(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) Voting Members of the Council.--The Secretary of the Treasury
shall and all other voting members of the Council may, with the
approval of the Council--
(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 Council--
(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 Ways and Means, the Committee on Agriculture, and the
Committee on Financial Services of the House of Representatives and the
Committee on Finance, the Committee on Agriculture, and 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 strategies 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 strategies;
(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 Ways and Means, the Committee on Agriculture, and
the Committee on Financial Services of the House of Representatives and
the Committee on Finance, the Committee on Agriculture, 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 Ways and Means, the Committee on
Agriculture, and the Committee on Financial Services of the
House of Representatives and the Committee on Finance, the
Committee on Agriculture, 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 Ways and Means, the
Committee on Agriculture, and the Committee on Financial
Services of the House of Representatives and the Committee on
Finance, the Committee on Agriculture, 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.
(e) Study of Effects Consumer Financial Protection Agency
Regulations and Standards.--
(1) Study required.--The Council shall conduct a study of
the effects that regulations and standards of the Consumer
Financial Protection Agency will have on all covered persons
(as such term is defined in section 4002(9)), including
nondepository institution covered persons. The Director of the
Consumer Financial Protection Agency shall take the findings of
the study into account when issuing regulations.
(2) Value of nonbank products.--The study shall include an
evaluation and assessment of the appropriateness of using
``APR'' as a true measure of the value of all nonbank products.
(3) Submission.--Not later than 240 days after the date of
the enactment of this Act, the Director of the Consumer
Financial Protection Agency shall submit the study to Congress
and include any recommendations the Director may have for
changes in law and regulations to improve consumer protections
and maintain access to credit.
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 or used by the Council;
(B) any records or other information under the
control of a person or entity acting on behalf of or
under the authority of the Council, to the extent such
records or other information is relevant to an audit
under subsection (a); and
(C) the officers, directors, employees, financial
advisors, staff, working groups, and agents and
representatives of the Council (as related to the
agent's or representative's activities on behalf of the
Council) at such reasonable times as the Comptroller
General may request.
(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.
(3) Copies.--Comptroller General may make and retain copies
of such books, accounts, and other records access to which is
granted under this provision as the Comptroller General
considers appropriate.
(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.
Subtitle B--Prudential Regulation of Companies and Activities for
Financial Stability Purposes
SEC. 1100. FEDERAL RESERVE BOARD AUTHORITY THAT OF AGENT ACTING ON
BEHALF OF COUNCIL.
For purposes of this subtitle, the Board of Governors of the
Federal Reserve System shall act in the capacity of agent for the
Council, acting on behalf of the Council.
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.
(3) Mitigation requirements in case of foreign financial
parents.--Before requiring the submission of reports from a
company that is a foreign financial parent, the Council or the
Board shall, to the extent appropriate, coordinate with any
appropriate foreign regulator of such company and any
appropriate multilateral organization and, whenever possible,
rely on information already being collected by such foreign
regulator or multilateral organizational with English
translation.
(d) Consultation With Agencies and Entities.--The Council or the
Board, as appropriate, may consult with Federal and State agencies and
other entities (including the Federal Insurance Office) 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;
(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
compelled to waive and 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; AGENCY AUTHORITY.
(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.--
(1) A Federal financial regulatory agency specifically may,
in response to a Council recommendation under this section or
otherwise, 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.
(2) Applying standards to foreign financial parents.--In
applying standards under paragraph (1) to any foreign financial
parent, or to any branch of, subsidiary of, or other operating
entity related to such foreign financial parent that operates
within the United States, the Federal financial regulatory
agency shall--
(A) give due regard to the principles of national
treatment and equality of competitive opportunity; and
(B) take into account the extent to which the
foreign financial parent is subject to comparable
standards on a consolidated basis in the home country
of such foreign financial parent that are administered
by a comparable foreign supervisory authority.
(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, and, in the case of
a financial holding company subject to stricter standards that is an
insurance company, the Federal Insurance Office, 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 extent of the company's leverage.
(2) The extent and nature of the company's off-balance
sheet exposures.
(3) The extent and nature of the company's transactions and
relationships with other financial companies.
(4) 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.
(5) The company's importance as a source of credit for low-
income, minority, or underserved communities and the impact the
failure of such company would have on the availability of
credit in such communities.
(6) 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.
(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 or, in the
case of a foreign financial parent, the extent to which such
foreign parent is subject to prudential standards on a
consolidated basis in the home country of such financial parent
that are administered and enforced by a comparable foreign
supervisory authority.
(9) The amount and nature of the company's financial
assets.
(10) The amount and nature of the company's liabilities,
including the degree of reliance on short-term funding.
(11) 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) 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.
(f) Effect of Council Decision.--
(1) Application of federal laws.--
(A) Application of bank holding company act and
federal deposit insurance act.--A financial company
subject to stricter standards that does not own a bank
(as defined in section 2 of the Bank Holding Company
Act of 1956) and that is not a foreign bank or company
that is treated as a bank holding company under section
8 of the International Banking Act of 1978 shall be
subject to section 4, subsections (b), (c), (d), (e),
(f), and (g) of section 5, and section 8 of the Bank
Holding Company Act of 1956, and section 8 of the
Federal Deposit Insurance Act in the same manner and to
the same extent as if such financial holding company
subject to stricter standards were a bank holding
company that has elected to be a financial holding
company (as such terms are defined in the Bank Holding
Company Act of 1956), its subsidiaries were
subsidiaries of a bank holding company, and the Board
was its appropriate Federal banking agency (as such
term is defined under the Federal Deposit Insurance
Act).
(B) Board authority.--For purposes of administering
and enforcing the provisions of this title, the Board
may take any action with respect to a financial holding
company subject to stricter standards described in
subparagraph (A) or its subsidiaries under the
authorities described in subparagraph (A) as if such
financial holding company subject to stricter standards
were a bank holding company that has elected to be a
financial holding company (as such terms are defined in
the Bank Holding Company Act of 1956), its subsidiaries
were subsidiaries of a bank holding company, and the
Board was its appropriate Federal banking agency (as
such term is defined under the Federal Deposit
Insurance Act).
(2) Application of activity restrictions and section 6
holding company requirements.--
(A) In general.--Except as provided in
subparagraphs (B) and (C)--
(i) a financial holding company subject to
stricter standards that conducts activities
that do not comply with section 4 of the Bank
Holding Company Act shall be required to
establish or designate a section 6 holding
company in accordance with section 6 of the
Bank Holding Company Act of 1956 through which
it conducts activities of the company that are
determined to be financial in nature or
incidental thereto under section 4(k) of the
such Act; and
(ii) such section 6 holding company shall
be the financial holding company subject to
stricter standards for purposes of this title.
(B) Exceptions from section 6 holding company
requirements.--
(i) General requirement for board to
consider exceptions.--Before such time as a
financial holding company subject to stricter
standards is required to establish or designate
a section 6 holding company under section 6 of
the Bank Holding Company Act, and in
consultation with the financial holding company
subject to stricter standards and any
appropriate Federal or State financial
regulators (and, in the case of a financial
holding company subject to stricter standards
that is an insurance company, the Federal
Insurance Office)--
(I) the Board shall consider
whether to grant any of the exemptions
from the requirements applicable to
section 6 holding companies under
section 6(a)(6)(A) of the Bank Holding
Company Act of 1956, in accordance with
that provision; and
(II) the Board, at the request of a
financial holding company subject to
stricter standards that is
predominantly engaged in activities
that are determined to be financial in
nature or incidental thereto under
section 4(k) of the Bank Holding
Company Act, shall consider whether to
exempt the financial holding company
subject to stricter standards from the
requirement to establish a section 6
holding company, taking into
consideration paragraph (2)(D), and the
extent to which the exemption would:
facilitate the extension of credit to
individuals, households and businesses;
improve efficiency or customer service
or result in other public benefits;
potentially threaten the safety and
soundness of the financial holding
company or any of its subsidiaries;
potentially increase systemic risk or
threaten the stability of the overall
financial system; potentially result in
unfair competition; and potentially
have anticompetitive effects that would
not be outweighed by public benefits.
(ii) Board determination not to exempt.--
(I) In general.--If the Board
determines not to exempt the financial
holding company subject to stricter
standards from the requirement to
establish a section 6 holding company,
the financial holding company subject
to stricter standards shall establish a
section 6 holding company within 90
days after the Board's determination.
(II) Extension of period.--The
Board may extend the time by which the
financial holding company subject to
stricter standards is required to
establish a section 6 holding company
for an additional reasonable period of
time, not to exceed 180 days.
(iii) Board determination to exempt.--
(I) In general.--If the Board
grants the requested exemption from the
requirement to establish a section 6
holding company, the financial holding
company subject to stricter standards
shall at all times remain predominantly
engaged in activities that are
determined to be financial in nature or
incidental thereto under section 4(k)
of the Bank Holding Company Act of
1956, and shall be the financial
holding company subject to stricter
standards for purposes of this title.
(II) Subsequent loss of
exemption.--Upon a determination by the
Board, in consultation with any
relevant Federal or State regulators of
the financial holding company subject
to stricter standards, and, in the case
of a financial holding company subject
to stricter standards that is an
insurance company, the Federal
Insurance Office, that the financial
holding company subject to stricter
standards fails to comply with this
subsection, the financial holding
company subject to stricter standards
shall lose the exemption from the
section 6 holding company requirement
and shall establish a section 6 holding
company within the time periods
described in clause (ii)(I).
(C) Activities conducted abroad.--Section 4 of the
Bank Holding Company Act of 1956 shall not apply to any
activities that a foreign financial holding company
subject to stricter standards conducts solely outside
the United States if such activities are conducted
solely by a company or other entity that is located
outside the United States.
(D) Flexible application.--In applying the activity
restrictions and ownership limitations of section 4 of
the Bank Holding Company Act of 1956 to financial
holding companies subject to stricter standards
described in paragraph (1)(A), the Board shall flexibly
adapt such requirements taking into account the usual
and customary practices in the business sector of the
financial company subject to stricter standards so as
to avoid unnecessary burden and expense.
(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, as agent of the Council, 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 stricter standards
imposed by the Board under this section shall include--
(i) risk-based capital requirements and
leverage limits, unless the Board determines
that such requirements are not appropriate for
a financial holding company subject to stricter
standards because of such company's activities
(such as investment company activities or
assets under management) or structure, in which
case the Board shall apply other standards that
result in appropriately stringent controls.
(ii) liquidity requirements;
(iii) concentration requirements (as
specified in subsection (c));
(iv) prompt corrective action requirements
(as specified in subsection (e));
(v) resolution plan requirements (as
specified in subsection (f)); and
(vi) overall risk management requirements.
(B) Additional standards.--The heightened standards
imposed by the Board under this section also may
include short-term debt limits prescribed in accordance
with subsection (d) and any other prudential standards
that the Board deems advisable, including taking
actions to mitigate systemic risk.
(C) Consultation with federal financial regulatory
agencies and the federal insurance office.--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. With respect to a financial holding company
subject to stricter standards that is an insurance
company or any insurance company subsidiary of such a
financial holding company subject to stricter
standards, the Board shall also consult with the
Federal Insurance Office.
(3) Application of required standards.--In imposing
prudential standards under this section, the Board--
(A) 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; and
(B) shall take into consideration whether and to
what extent a financial holding company subject to
stricter standards that is not a bank holding company
or treated as a bank holding company owns or controls a
depository institution and shall adapt the prudential
standards applied to such company as appropriate in
light of any predominant line of business of such
company, including assets under management or other
activities for which capital requirements are not
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 a foreign financial parent and
to a Federal or State branch, subsidiary, or operating entity
that is owned or controlled by a foreign financial parent,
giving due regard to principles of national treatment and
equality of competitive opportunity and taking into account the
extent to which the foreign financial parent is subject on a
consolidated basis 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 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 and, with respect to an
insurance company, the Federal Insurance Office.
(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
except as specifically provided in 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 except
as specifically provided in 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 may 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.--Any 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).
(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.
The Board shall define by rule or regulation
the term ``significantly undercapitalized'' at
a threshold the Board determines to be prudent
for the effective monitoring, management and
oversight of the financial system.
(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. The
Board, in determining whether to impose any requirement
under this subparagraph that is likely to have a
significant effect on a functionally regulated
subsidiary, subsidiary depository institution, or
insurance company subsidiary of a financial holding
company subject to stricter standards, shall consult
with the primary financial regulatory agency for such
subsidiary. In the case of an insurance company
subsidiary of a financial holding company subject to
stricter standards, the Board shall consult with the
Federal Insurance Office.
(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,
after consultation with the primary financial
regulatory agency for any functionally
regulated subsidiary, subsidiary depository
institution, or insurance company subsidiary
that is likely to be significantly affected by
such actions. In the case of an insurance
company subsidiary of a financial holding
company subject to stricter standards, the
Board shall consult with the Federal Insurance
Office.
(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 (and, if the
financial holding company subject to stricter standards
is an insurance company, the Federal Insurance Office),
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.
(j) Rule of Construction Regarding Consumer Protection Standards.--
The prudential standards imposed or recommended by the Board or the
Council under this section shall not be construed as superseding--
(1) any consumer protection standards promulgated under a
State or Federal consumer protection law, including the
Consumer Financial Protection Agency Act and the Federal Trade
Commission Act; or
(2) any investor protection standard that protects
consumers (including public reporting requirements) imposed
under State or Federal securities laws, including the
Securities Act of 1933, the Securities Exchange Act of 1934,
the Investment Company Act of 1944, and the Investment Advisors
Act of 1944.
(k) Rulemaking Authority.--The Board may prescribe such regulations
and issue such orders as the Board, in consultation with the Council,
determines to be necessary to carry out the provisions of this
subtitle.
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 holding company subject to stricter standards under this
title, shall consult with the Federal financial regulatory agency for
any such subsidiary. With respect to any requirements under this
section that is likely to have a significant effect on an insurance
company, the Council shall consult with the Federal Insurance Office.
(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 stricter 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 holding company subject to stricter standards, and
opportunity for hearing if requested, that the financial
holding company subject to stricter standards 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 holding
company subject to stricter 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. The aforementioned amounts shall be indexed to inflation.
(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 this section 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)(2), 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 pursuant to subsection (e)(5). 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.
(i) Rule of Construction.--Nothing in subsection (h) shall be
construed as limiting the authority of a Federal financial regulatory
agency to take action with respect to a financial company subject to
the jurisdiction of such agency pursuant to applicable law other than
this section.
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, as agent of the
Council, 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).
With respect to any standard that is likely to have a
significant effect on insurance companies, the Board
also shall consult with the Federal Insurance Office.
(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.
(3) Exception.--The standards recommended by the Board and
adopted by a primary financial regulatory agency pursuant to
this section shall not apply to activities that a foreign
financial parent conducts solely outside the United States if
such activities are conducted solely by a company or other
operating entity that is located outside the United States.
(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 solvent
depository institution holding companies (including any affiliates
thereof), 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. Such terms and conditions may
include the Corporation requiring collateral as a condition of any such
guarantee.
(c) Cap for Guaranteed Amount.--
(1) In general.--In connection with any program established
pursuant to subsection (a) and subject to paragraph (2), the
Corporation may not have guaranteed debt outstanding at any
time of more than $500,000,000,000 (as indexed to reflect
growth in assets of insured depository institutions and
depository institution holding companies as determined by the
Corporation).
(2) Additional debt guarantee authority.--If the
Corporation, with the concurrence of the Council and the
Secretary (in consultation with the President), determines that
the Corporation must guarantee debt in excess of
$500,000,000,000 (as indexed pursuant to paragraph (1)) to
prevent systemic financial instability, the Corporation may
transmit to the Congress a request for authority to guarantee
debt in excess of $500,000,000,000 (as indexed pursuant to
paragraph (1)). Such request shall be considered granted by
Congress upon adoption of a joint resolution approving such
request. Such joint resolution shall be considered in the
Senate under expedited procedures.
(d) 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 offset projected losses
and administrative expenses. 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 Dissolution 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 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
Dissolution 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 solely on participants in the program.
(e) 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 entity 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.
(f) Sunset of Corporation's Authority.--The Corporation's authority
under subsections (a) and (d) and the authority to borrow funds from
the Treasury under section 1609(o) shall expire on December 31, 2013.
(g) Rule of Construction.--For purposes of this section, a
guarantee of deposits held by insured depository institutions shall not
be treated as a debt guarantee program.
(h) Definitions.--For purposes of this section, the following
definitions apply:
(1) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(2) Depository institution holding company.--The term
``depository institution holding company'' has the meaning
given the term in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813).
(3) Insured depository institution.--The term ``insured
depository institution'' has the meaning given the term in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(4) Solvent.--The term ``solvent'' means assets are more
than the obligations to creditors.
SEC. 1110. ADDITIONAL RELATED AMENDMENTS.
(a) Federal Deposit Insurance Act Related Amendments.--
(1) Suspension of parallel federal deposit insurance act
authority.--Effective upon the date of the enactment of this
section through December 31, 2013, the Corporation may not
exercise its authority under section 13(c)(4)(G)(i) of the
Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) to
establish any widely-available debt guarantee program for which
section 1109 would provide authority.
(2) Federal deposit insurance act authority preserved.--
Effective December 31, 2013, the Corporation shall have the
same authority pursuant to section 13(c)(4)(G)(i) of the
Federal Deposit Insurance Act as the Corporation had prior to
the date of enactment of this Act.
(b) Effect of Default on an Fdic Guarantee.--If an insured
depository institution or depository institution holding company
participating in a program under section 1109 or any participant in a
debt guarantee program established pursuant to section 13(c)(4)(G)(i)
of the Federal Deposit Insurance Act defaults on any obligation
guaranteed by the Corporation after the date of enactment of this Act,
the Corporation may--
(1) appoint itself as receiver for the insured depository
institution that defaults;
(2) with respect to any other participating company that is
not an insured depository institution that defaults--
(A) require consideration of whether a
determination shall be made as provided in section 1603
to resolve the company under subtitle G; and
(B) if the Corporation is not appointed receiver
pursuant to subtitle G within 30 days of the date of
default, require the company to file a petition for
bankruptcy under section 301 of title 11, United States
Code, or file a petition for bankruptcy against the
company under section 303 of title 11, United States
Code.
(c) Authority to File Involuntary Petition for Bankruptcy.--Section
303 of title 11, United States Code, is amended by adding at the end
the following:
``(m) Notwithstanding subsections (a) and (b), an involuntary case
may be commenced by the Federal Deposit Insurance Corporation against a
depository institution holding company as defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813) or other company
participating in a guarantee program established by the Corporation on
the ground that the company has defaulted on a debt or obligation
guaranteed by the Corporation.''.
(d) Bankruptcy Priority for Defaults on Debt Guaranteed Pursuant to
Section 1109.--Section 507(a)(9) of title 11, United States Code, is
amended by inserting before the period at the end the following: ``and
allowed unsecured claims based upon any debt to the Federal Deposit
Insurance Corporation that arose prior to the commencement of the case
under this title, as a result of the debtor's default on a guarantee
provided by the Corporation pursuant to section 1109 of the Financial
Stability Improvement Act of 2009 or the Federal Deposit Insurance Act,
under a program established by the Corporation after the date of
enactment of the Financial Stability Improvement Act of 2009''.
SEC. 1111. CORPORATION MAY RECEIVE WARRANTS WHEN PAYING OR RISKING
TAXPAYER FUNDS.
(a) In General.--In connection with any payment, credit extension,
or guarantee or any commitment under section 1109 or 1604, the
Corporation may obtain from the insured depository institution,
depository institution holding company (including any affiliates
thereof), or covered financial company, as the case may be--
(1) in the case of an insured depository institution,
depository institution holding company (including any
affiliates thereof), or covered 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 insured depository institution,
depository institution holding company (including any
affiliates thereof), or covered 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. 1112. 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. 1113. 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. 1114. 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. 1115. 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. 1116. CONTINGENT CAPITAL.
(a) In General.--The Board, in coordination with the appropriate
primary financial regulatory agency, may, after notice and opportunity
for comment, 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) the Board determines that a specified financial company
fails to meet prudential standards established by the Board; or
(2) the Board 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. 1117. 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. 1118. RULE OF CONSTRUCTION.
(a) 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.
(b) Agent Responsibilities.--For purposes of this subtitle, the
term ``agent'' means the Board acting under section 1103(c) and
coordinating with the Council in exercising authority under sections
1104 and 1107.
SEC. 1119. ANTITRUST SAVINGS CLAUSE.
Nothing in this subtitle shall be construed to modify, impair, or
supercede the operation of any of the antitrust laws. For purposes of
the preceding sentence, the term ``antitrust laws'' has the 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 relates to unfair
methods of competition.
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, and
who shall coordinate with the Office of Thrift Supervision
pursuant to section 1211.
``(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,''.
(f) Effective Date.--Subsection (b) shall take effect on the date
of the enactment of this Act.
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.
(4) Functions relating to supervision of savings and loan
holding companies.--
(A) Transfer of functions.--All functions of the
Director of the Office of Thrift Supervision relating
to the supervision and regulation of Savings and Loan
Holding Companies are transferred to the Board.
(B) Board authority.--The Board 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 Savings
and Loan Holding Companies.
(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)(E), by striking ``and'' at the end;
(3) in paragraph (2)(F), by adding ``and'' at the end after
the semicolon;
(4) after paragraph (2)(F), by inserting the following new
subparagraph:
``(G) any savings and loan holding company and any
subsidiary of a savings and loan holding company (other
than a savings association); and'';
(5) 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
(6) 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;
and
(ii) an employee of the Office of the
Comptroller of the Currency 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 (a)--
(A) in paragraph (1)(A), by striking ``Director''
and inserting ``Board'';
(B) in paragraph (1)(D), by striking clause (i) and
inserting: ``(i) In general.--.
``(i) In general.--Except as provided in
clause (ii), the term `savings and loan holding
company' means any company that directly or
indirectly controls a savings association or
that controls any company that is a savings and
loan holding company, and that is either--
``(I) a fraternal beneficiary
society, as defined in section
501(c)(8) of the Internal Revenue Code
of 1986; or
``(II) a company that is, together
with all of its affiliates on a
consolidated basis, predominantly
engaged in the business of
insurance.'';
(C) in paragraph (1)(F), by striking ``Director''
and inserting ``Board'';
(D) in paragraph (1), by inserting at the end the
following new subparagraph:
``(K) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.''.
(E) in paragraph (2)(D), by striking ``Director''
and inserting ``Board'';
(F) in paragraph (3)(A), by striking ``Director''
and inserting ``Board''; and
(G) in paragraph (4), by striking ``Director'' and
inserting ``Board''.
(2) In subsection (b), by striking ``Director'' each place
it appears and inserting ``Board''.
(3) In subsection (c)--
(A) in paragraph, (2)(F)(i)--
(i) by striking ``of Governors of the
Federal Reserve System''; and
(ii) by striking ``Director'' and inserting
``Board'';
(B) in paragraph (2)(G), by striking ``Director''
and inserting ``Board'';
(C) in paragraph (4)(A), by striking ``Director''
and inserting ``Board'';
(D) in paragraph (4)(B)--
(i) in the heading, by striking
``director'' and inserting ``Board''; and
(ii) by striking ``the Director shall'' and
inserting ``the Board shall'';
(E) in paragraph (4)(C)--
(i) in the heading, by striking
``director'' and inserting ``Board''; and
(ii) by striking ``the Director may'' and
inserting ``the Board may'';
(F) in paragraph (5), by striking ``Director'' and
inserting ``Board'';
(G) in paragraph (6)(D)--
(i) in the heading, by striking
``director'' and inserting ``Board''; and
(ii) by striking ``Director'' each place it
appears and inserting ``Board'';
(H) in paragraph (9)(A)(ii), by inserting ``, but
only if the conditions for engaging in expanded
financial activities set forth in section 4(l) of the
Bank Holding Company Act of 1956 have been met'' after
``1956''; and
(I) in paragraph (9)(E), by striking ``Director''
each place it appears and inserting ``Board''.
(4) In subsection (e)--
(A) in paragraph (1)(A)--
(i) in clause (i), by striking ``Director''
and inserting ``Board'';
(ii) in clause (ii), by striking
``Director'' and inserting ``Board'';
(iii) in clause (iii), by striking
``Director'' each place it appears and
inserting ``Board''; and
(iv) in clause (iv), by striking
``Director'' each place it appears and
inserting ``Board'';
(B) in paragraph (1)(B), by striking ``Director''
each place it appears and inserting ``Board'';
(C) in paragraph (2), by striking ``Director'' each
place it appears and inserting ``Board'';
(D) in paragraph (3), by striking ``Director'' and
inserting ``Board'';
(E) in paragraph (4)(A), by striking ``Director''
and inserting ``Board''; and
(F) in paragraph (5), by striking ``Director'' each
place it appears and inserting ``Board''.
(5) In subsection (f), by striking ``Director'' each place
it appears and inserting ``Board''.
(6) In subsection (g), by striking ``Director'' each place
it appears and inserting ``Board''.
(7) In subsection (h)--
(A) in paragraph (2), by striking ``Director'' and
inserting ``Board''; and
(B) in paragraph (3), by striking ``Director'' and
inserting ``Board''.
(8) In subsection (i)--
(A) in paragraph (1)(A), by striking ``Director''
and inserting ``Board'';
(B) in paragraph (2)(B), by striking ``Director''
and inserting ``Board'';
(C) in paragraph (2)(F), by striking ``Director''
and inserting ``Board'';
(D) in paragraph (3)(B), by striking ``Director''
and inserting ``Board'';
(E) in paragraph (3)(F), by striking ``Director''
and inserting ``Board'';
(F) in paragraph (4), by striking ``Director'' and
inserting ``Board''; and
(G) in paragraph (5), by striking ``Director'' and
inserting ``Board''.
(9) In subsection (j), by striking ``Director'' each place
it appears and inserting ``Board''.
(10) In subsection (l)--
(A) in paragraph (1), by striking ``Director'' and
inserting ``Board, in consultation with the Comptroller
of the Currency,''; and
(B) in paragraph (2), by striking ``Director'' and
inserting ``Board, in consultation with the Comptroller
of the Currency,''.
(11) 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 1-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''.
(12) 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''.
(13) In subsections (p), (q), (r), and (s), by striking
``Director'' each place it appears and inserting ``Board''.
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.--
``(A) In general.--The Board shall consider waived
dividends in determining an appropriate exchange ratio
in the event of a full conversion to stock form.
``(B) Exception.--In the case of a savings
association which has reorganized into a mutual thrift
holding company under section 10(b) of the Home Owners'
Loan Act and has issued minority stock either from its
mid-tier stock holding company or its subsidiary stock
savings association prior to December 1, 2009, the
Board shall 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);
(2) 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); and
(3) 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'' at 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 decreases 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
a fraternal beneficiary society, as defined in section 501(c)(8) of the
Internal Revenue Code of 1986, or a company that is, together with all
of its affiliates 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
a fraternal beneficiary society, as defined in section 501(c)(8) of the
Internal Revenue Code of 1986, or a company that is, together with all
of its affiliates 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.
SEC. 1257. EFFECTIVE DATE.
Except as otherwise provided in this subtitle, the amendments made
by sections 1221 through section 1253 and 1256 and subsections (a),
(b), and (c)(1) of section 1254 shall take effect on the transfer date.
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 a fraternal beneficiary society, as defined in
section 501(c)(8) of the Internal Revenue Code of 1986,
or a company that is, together with all of its
affiliates on a consolidated basis, predominantly
engaged in the business of insurance''; and
(B) in subparagraph (F)(i), by inserting before the
semicolon the following: ``, including issuing credit
cards and other credit devices (including virtual or
intangible devices) that function as credit cards'';
(C) in subparagraph (F)(v), by inserting before the
semicolon the following: ``, other than loans that
otherwise meet the requirements of this subparagraph
and are made to businesses that meet the criteria for a
small business concern to be eligible for business
loans under regulations established by the Small
Business Administration under part 121 of title 13,
Code of Federal Regulations''; and
(D) by striking subparagraph (H) and inserting the
following:
``(H) An industrial loan company, industrial bank,
or other similar institution which--
``(i) is an institution organized under the
laws of a State which, on March 5, 1987, had in
effect or had under consideration in such
State's legislature a statute which required or
would require such institution to obtain
insurance under the Federal Deposit Insurance
Act;
``(ii) either--
``(I) does not accept demand
deposits that the depositor may
withdraw by check or similar means for
payment to third parties;
``(II) has total assets of less
than $100,000,000; or
``(III) the control of which is not
acquired by any company after August
10, 1987;
``(iii) predominantly provides financial
products and services to current and former
members of the military and their families; and
``(iv) is controlled by a savings and loan
holding company, as defined in section 10(a) of
the Home Owners' Loan Act.
This subparagraph shall cease to apply to any
institution which permits any overdraft (including any
intraday overdraft), or which incurs any such overdraft
in such institution's account at a Federal Reserve
bank, on behalf of an affiliate, if such overdraft is
not the result of an inadvertent computer or accounting
error that is beyond the control of both the
institution and the affiliate, or that is otherwise
permissible for a bank controlled by a company
described in section 1843(f)(1) of this title.''; 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 all such activities which
are permissible for a financial holding
company, as determined under section 4(k),
through such section 6 holding company, other
than--
``(I) 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 the
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
``(II) financial activities
involving the provision of credit for
the purchase or lease of products or
services from an affiliate or for the
purchase or lease of products produced
by an affiliate of such section 6
holding company that is not a
subsidiary of such section six holding
company, in accordance with regulations
prescribed by or orders issued by the
Board, pursuant to section 6 of this
Act.''; 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) on the date of enactment of the
Financial Stability Improvement Act of 2009, a
unitary savings and loan holding company that
continues to control not fewer than one savings
association that it controlled on May 4, 1999,
or that it acquired pursuant to an application
pending before the Office of Thrift Supervision
on or before that date, and that became a bank
for purposes of the Bank Holding Company Act as
a result of the enactment of section 1301(a)(3)
of the Financial Stability Improvement Act of
2009; or
``(ii) on November 23, 2009--
``(I) controlled an institution
which became a bank as a result of the
enactment of section 1301(a)(4)(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);
``(II) a change of control of an industrial
bank, its section 6 holding company, or any
entity that directly or indirectly controls the
industrial bank, in a transaction other than a
merger described in subclause (I), by an
acquiring company that is predominately engaged
in activities not permissible for a financial
holding company pursuant to subsection (k),
if--
``(aa) the transaction is approved
by the appropriate Federal banking
agency and the Board; and
``(bb) the industrial bank does not
thereafter establish a domestic branch
as defined in section 3(o) of the
Federal Deposit Insurance Act (12
U.S.C. 1813(o));
``(III) an inadvertent acquisition of
control, as determined by the Board, if such
inadvertent acquisition of control is reversed
or rectified within 180 days of its discovery;
or
``(IV) 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.
``(8) Unitary savings and loan holding company defined.--
For purposes of this subsection, the term `unitary savings and
loan holding company' means a company that was a savings and
loan holding company on May 4, 1999 (as then defined), or that
became a savings and loan holding company pursuant to an
application pending before the Office of Thrift Supervision on
or before that date, and--
``(A) that controls--
``(i) only 1 savings association; or
``(ii) more than 1 savings association, if
all, or all but 1, of the savings association
subsidiaries of such company were initially
acquired by the company pursuant to a
supervisory transaction under section 1823(c),
1823(i), or 1823(k) of this title, or section
408(m) of the National Housing Act (12 U.S.C.
1730a(m));
``(B) all of the savings association subsidiaries
of such company are qualified thrift lenders (as
determined under section 10 of the Home Owners' Loan
Act); and
``(C) that continues to control not fewer than 1
savings association that it controlled on May 4, 1999,
or that it acquired pursuant to an application pending
before the Office of Thrift Supervision on or before
that date.
``(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 section 1103 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
a section 6 holding company shall conduct all such
activities which are permissible for a financial
holding company, as determined under section 4(k),
through such section 6 holding company, other than--
``(i) 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 the at least \2/3\
of the assets or \2/3\ 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
``(ii) financial activities involving the
provision of credit for the purchase or lease
of products or services from an affiliate or
for the purchase or lease of products produced
by an affiliate of such section 6 holding
company that is not a subsidiary of such
section 6 holding company, in accordance with
regulations prescribed by or orders issued by
the Board, pursuant to section 6 of this Act.
``(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 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 section 1103 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) subject to the provisions of this
Act and other Federal law as provided in
section 1103(g) of the Financial Stability
Improvement Act of 2009; 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
section 1103 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) and financial activities involving
the provision of credit for the purchase or
lease of products or services from an affiliate
or for the purchase or lease of products
produced by an affiliate of such section 6
holding company that is not a subsidiary of
such section 6 holding company, 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 2-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.''.
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 section 1301 of the Financial Stability
Improvement Act of 2009 becomes a bank holding company, other
than a section 6 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); and
(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 at the end the following new subsection:
``(y) 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 holding company
subject to stricter standards if the Board determines
that the resulting concentration of liabilities on a
consolidated basis is likely to pose a great 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.''.
(3) Section 4(j) of the Bank Holding Company Act of 1956 is
amended by inserting after paragraph (4) the following new
paragraph (and redesignating succeeding paragraphs
accordingly):
``(5) 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
the sole discretion of the Board, disapprove any
acquisition, merger, or consolidation of, or by, a
financial holding company subject to stricter standards
if the Board determines that the resulting
concentration of liabilities on a consolidated basis is
likely to pose a great threat to financial stability
during times of severe economic distress.''.
(c) Bank Merger Act Transactions.--Section 18(c)(5) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)) is amended by--
(1) in paragraph (5), by striking ``and'' before ``the
convenience and needs of the community to be served'';
(2) in paragraph (5), 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''; and
(3) in paragraph (7)(B), by inserting ``subparagraphs (A)
and (B) of'' before ``paragraph''.
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.''.
SEC. 1316. MUTUAL NATIONAL BANKS AND FEDERAL MUTUAL BANK HOLDING
COMPANIES AUTHORIZED.
(a) In General.--Chapter one of title LXII of the Revised Statutes
of the United States (12 U.S.C. 21 et seq.) is amended by inserting
after section 5133 the following new sections:
``SEC. 5133A. MUTUAL NATIONAL BANKS.
``(a) In General.--Notwithstanding the section designated the
`Third' of section 5134, in order to provide mutual institutions for
the deposit of funds, the extension of credit, and provision of other
services, the Comptroller of the Currency may charter mutual national
banks either de novo or through a conversion of any insured depository
institution or any State mutual bank or credit union, subject to
regulations prescribed by the Comptroller of the Currency in accordance
with this section. The powers conferred by this section are intended to
provide for the creation and maintenance of mutual national banks as
bodies corporate existing in perpetuity for the benefit of their
depositors and the communities in which they operate.
``(b) Regulations.--
``(1) Regulations of the comptroller.--The Comptroller of
the Currency is authorized to prescribe appropriate regulations
for the organization, incorporation, examination, operation,
and regulation of mutual national banks. Except to the extent
that such existing regulations conflict with sections 5133A and
5133B, mutual national banks shall be subject to the
regulations of the Director of the Office of Thrift Supervision
governing corporate organization, governance, and conversion of
mutual institutions, as in effect on the date of the enactment
of the Wall Street Reform and Consumer Protection Act of 2009,
including parts 543, 544, 546, 563b, and 563c of chapter V of
title 12, Code of Federal Regulations (as in effect on that
date), for up to 3 years beginning on the date of the enactment
of the Wall Street Reform and Consumer Protection Act of 2009.
``(2) Applicability of capital stock requirements.--The
Comptroller of the Currency shall prescribe regulations
regarding the manner in which requirements of this title with
respect to capital stock, and limitations imposed on national
banks under this title based on capital stock, shall apply to
mutual national banks.
``(c) Conversions.--
``(1) Conversion of a mutual depository to a mutual
national bank.--Subject to such regulations as the Comptroller
of the Currency may prescribe for the protection of depositors'
rights and for any other purpose the Comptroller of the
Currency may consider appropriate, any mutual depository may
convert to a mutual national bank by filing with the
Comptroller of the Currency a notice of its election to convert
on a specified date that is not earlier than 30 days after the
date on which the notice is filed, and the mutual depository
shall be converted to a mutual national bank charter on the
date specified in the notice.
``(2) Conversion to stock national bank.--Subject to such
regulations as the Comptroller of the Currency may prescribe
for the protection of depositors' rights and for any other
purpose the Comptroller of the Currency may consider
appropriate, any national bank that is organized in the mutual
form under subsection (a) may reorganize as a stock national
bank.
``(3) Conversion to state banks.--Any national mutual bank
may convert to a State bank charter in accordance with
regulations prescribed by the Comptroller of the Currency and
applicable State law.
``(d) Terminating Mutuality.--If a mutual national bank elects to
terminate mutuality, it must do so by--
``(1) liquidating; or
``(2) converting to a national banking association
operating in stock form.
``(e) Status and Rights of Members.--
``(1) In general, the status of a member is primarily that
of a depositor and secondarily that of a holder of a contingent
right to participate in the equity of a mutual national bank
upon a liquidation or conversion.
``(2) Each member of a mutual national bank shall have the
following rights:
``(A) Such rights as may be agreed upon, by
contract, between the member and the mutual national
bank.
``(B) The right to vote for members of the board of
directors of the mutual national bank.
``(C) The right to attend any meeting of members
properly called by the board of directors of a mutual
national bank.
``(D) In the event the board of directors, in its
sole discretion, determines a conversion of a mutual
national bank to a national banking association
operating in stock form is in the best interests of the
community in which the bank operates and the members
approve the conversion through a special proxy, then
the members as of a record date set by the board of
directors shall have the first right to subscribe for
and purchase stock in the converted bank.
``(E) In the event the board of directors, in its
sole discretion, determines a liquidation of the mutual
national bank is in the best interests of the community
in which the bank operates and the members approve the
liquidation, or if for any other reason the bank is
liquidated by operation of law, then the members as of
the date of liquidation shall have the right to have
credited to their accounts, on a pro rata basis, any
residual assets left after the liquidation of the
mutual national bank.
``(3) In the consideration of all questions requiring
action by the members of a national mutual bank, the bank may
provide in its charter that each member shall be permitted (i)
one vote per member, or (ii) to cast one vote for each $100, or
fraction thereof, of the withdrawal value of the member's
account, but not more than 1,000 votes per member.
``(f) Proxies.--
``(1) A member may give, in writing or electronically, a
perpetual proxy to a committee of the board of directors of a
mutual depository, provided that the member may revoke such a
proxy in writing or electronically, with such revocation to
take effect after 6 business days.
``(2) Such proxies may be used to vote on any issue
requiring approval of the members, including the conversion of
a mutual depository into a mutual national bank and the
reorganization of a mutual national bank into a Federal mutual
bank holding company, except that, without a prior finding by
the regulator of the mutual national bank that such action is
needed to avoid loss to the Federal Deposit Insurance
Corporation's deposit insurance fund or to protect the
stability of the United States financial system, such proxies
may not be used to vote in favor of--
``(A) terminating mutuality for a mutual national
bank or a Federal mutual bank holding company;
``(B) permitting the modification of a Federal
mutual bank holding company; or
``(C) issuing mutual capital certificates (except
when used to found a mutual national bank or a Federal
mutual bank holding company de novo).
``(3) Proxies given by a member, in writing or
electronically, to management of, or to a committee of the
board of directors of, a mutual depository shall not be deemed
to have been revoked solely because of, and shall continue to
exist following, a conversion to a mutual national bank and any
concurrent or subsequent reorganization to a Federal mutual
bank holding company.
``(g) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Insured depository institution.--The term `insured
depository institution' has the same meaning as in section 3 of
the Federal Deposit Insurance Act.
``(2) Mutual national bank.--The term `mutual national
bank' means a national banking association that operates in
mutual form and is chartered by the Comptroller of the Currency
under this section.
``(3) Mutual depository.--The term `mutual depository'
means a depository institution that is organized in non-stock
form, including a Federal non-stock depository and any form of
non-stock depository provided for under State law, the deposits
of which are insured by an instrumentality of the Federal
Government.
``(4) Mutuality.--The term `mutuality' means the quality of
being an insured depository institution organized under a
Federal or State law providing for the organization of non-
stock depository institutions, or a holding company organized
under a Federal or State law providing for the organization of
non-stock entities that control one or more depository
institutions.
``(5) Member.--The term `member' means each tax-liable
depositor in a mutual depository's savings, demand, or other
authorized depository accounts and each tax-liable depositor in
such an account in a depository subsidiary of a Federal mutual
bank holding company.
``(6) Tax liable depositor.--The term `tax liable
depositor' means the single person responsible for paying any
Federal taxes due on any interest paid on any deposits held
within any savings, demand, or other authorized depository
account or accounts with any mutual depository.
``(7) Membership rights.--The term `membership rights'
means the rights of each member under this section.
``(h) Conforming References.--Unless otherwise provided by the
Comptroller of the Currency--
``(1) any reference in any Federal law to a national bank
operating in stock form, including a reference to the term
`national banking association', `member bank', `national bank',
`national association', `bank', `insured bank', `insured
depository institution', or `depository institution', shall be
deemed to refer also to a mutual national bank;
``(2) any reference in any Federal law to the term `board
of directors', `director', or `directors' of a national bank
operating in stock form shall be deemed to refer also to the
board of a mutual national bank; and
``(3) any terms in Federal law that may apply only to a
national bank operating in stock form, including the terms
`stock', `shares', `shares of stock', `capital stock', `common
stock', `stock certificate', `stock certificates',
`certificates representing shares of stock', `stock dividend',
`transferable stock', `each class of stock', `cumulate such
shares', `par value', `preferred stock' shall not apply to a
mutual national bank, unless the Comptroller of the Currency
determines that the context requires otherwise.
``SEC. 5133B. FEDERAL MUTUAL BANK HOLDING COMPANIES.
``(a) Reorganization of Mutual National Bank as a Holding
Company.--
``(1) In general.--Subject to approval under the Bank
Holding Company Act of 1956, a mutual national bank may
reorganize so as to become a Federal mutual bank holding
company by submitting a reorganization plan to the appropriate
bank holding company regulator.
``(2) Plan approval.--Upon the approval of the
reorganization plan by the appropriate bank holding company
regulator and the issuance of the appropriate charters--
``(A) the substantial part of the mutual national
bank's assets and liabilities, including all of the
bank's insured liabilities, shall be transferred to a
national banking association, a majority of the shares
of voting stock of which is owned, directly or
indirectly, by the mutual national bank that is to
become a Federal mutual bank holding company; and
``(B) the mutual national bank shall become a
Federal mutual bank holding company.
``(b) Directors and Certain Account Holders' Approval of Plan
Required.--This subsection does not authorize a reorganization unless--
``(1) a majority of the mutual national bank's board of
directors has approved the plan providing for such
reorganization; and
``(2) a majority of members has approved the plan at a
meeting held at the call of the directors under the procedures
prescribed by the bank's charter and bylaws.
``(c) Ownership of Depository Subsidiaries.--To avoid terminating
mutuality, a Federal mutual bank holding company must own, directly or
indirectly, a majority of the shares of voting stock of each of its
depository subsidiaries.
``(d) No Termination of Mutuality.--Neither a reorganization of a
mutual depository nor a modification of a Federal mutual bank holding
company shall cause a termination of mutuality.
``(e) Retention of Capital.--In connection with a transaction
described in subsection (a), a mutual national bank may, subject to the
approval of the appropriate bank holding company regulator, retain
capital at the holding company level to the extent that the capital
retained at the holding company level exceeds the amount of capital
required for the national banking association chartered as a part of a
transaction described in subsection (a) to meet all relevant capital
standards established by the Comptroller of the Currency for national
banking associations.
``(f) Terminating Mutuality.--If a Federal mutual bank holding
company elects to terminate mutuality, it must do so by either
liquidating or converting to a bank holding company operating in stock
form.
``(g) Membership Rights.--Holders of savings, demand, or other
authorized depository accounts in a depository subsidiary of a Federal
mutual bank holding company shall have the same membership rights with
respect to the Federal mutual bank holding company as those holders
would have had if the depository subsidiary of the Federal mutual bank
holding company had been a mutual national bank.
``(h) Regulation.--A Federal mutual bank holding company shall be--
``(1) chartered by the appropriate bank holding company
regulator and shall be subject to such regulations as the
appropriate bank holding company regulator shall prescribe; and
``(2) regulated under the Bank Holding Company Act of 1956
on the same terms and subject to the same limitations as any
other company that controls a bank.
``(i) Capital Improvement.--
``(1) Pledge of stock of national bank subsidiary.--This
section shall not prohibit a Federal mutual bank holding
company from pledging all or a portion of the stock of the
national banking association chartered as part of a transaction
described in subsection (a) to raise capital for such national
banking association.
``(2) Issuance of nonvoting shares.--This section shall not
prohibit a national banking association chartered as part of a
transaction described in subsection (a) from issuing any
nonvoting shares or less than 50 percent of the voting shares
of such bank to any person other than the Federal mutual bank
holding company.
``(j) Insolvency and Liquidation.--
``(1) In general.--Notwithstanding any other provision of
law, the appropriate bank holding company regulator may file a
petition under chapter 7 of title 11, United States Code, with
respect to a Federal mutual bank holding company upon--
``(A) the default of any national bank--
``(i) the stock of which is owned by the
Federal mutual bank holding company; and
``(ii) that was chartered in a transaction
described in subsection (a); or
``(B) a foreclosure on a pledge by the Federal
mutual bank holding company described in subsection
(i)(1).
``(2) Distribution of net proceeds.--Except as provided in
paragraph (3), the net proceeds of any liquidation of any
Federal mutual bank holding company under paragraph (1) shall
be transferred to persons who hold membership interests in such
Federal mutual bank holding company.
``(3) Recovery by fdic.--If the Federal Deposit Insurance
Corporation incurs a loss as a result of the default of any
insured bank subsidiary of a Federal mutual bank holding
company that is liquidated under paragraph (1), the Federal
Deposit Insurance Corporation shall succeed to the interests of
the depositors of the bank as members in the Federal mutual
bank holding company, to the extent of the Federal Deposit
Insurance Corporation's loss.
``(k) Definitions.--
``(1) Federal mutual bank holding company.--The term
`Federal mutual bank holding company' means a holding company
that is organized in mutual form and owns, directly or
indirectly, a majority of the shares of voting stock of one or
more depository subsidiaries of a Federal mutual bank holding
company.
``(2) Depository subsidiary of a federal mutual bank
holding company.--The term `depository subsidiary of a Federal
mutual bank holding company' means a depository institution
organized in stock form that is insured by the Federal Deposit
Insurance Corporation, the majority of the shares of voting
stock of which are owned by the Federal mutual bank holding
company or its wholly owned subsidiaries and none of the shares
of stock of which are pledged or otherwise subjected to lien
except as permitted in subsection (i).
``(3) Reorganization of a mutual depository.--The term
`reorganization of a mutual depository' means the conversion of
a mutual depository into a depository subsidiary of a Federal
mutual bank holding company.
``(4) Modification of a federal mutual bank holding
company.--The term `modification of a Federal mutual bank
holding company' means either: (A) the sale of shares of common
or preferred stock in a depository subsidiary of a Federal
mutual bank holding company to any party other than the
subsidiary's parent Federal mutual bank holding company or a
wholly owned subsidiary of that parent; or (B) the voluntary
grant of a lien on shares of common or preferred stock in a
depository subsidiary of a Federal mutual bank holding company.
``(5) Default.--With respect to a national bank, the term
`default' means an adjudication or other official determination
by any court of competent jurisdiction, the Comptroller of the
Currency, or other public authority pursuant to which a
conservator, receiver, or other legal custodian is appointed
for the national bank.
``(l) Conforming References.--Unless otherwise provided by the
appropriate bank holding company regulator--
``(1) any reference in any Federal law to a bank holding
company operating in stock form shall be deemed to refer also
to a Federal mutual bank holding company;
``(2) any reference in any Federal law to the term `board
of directors', `director', or `directors' of a national bank
operating in stock form shall be deemed to refer also to the
board of a Federal mutual bank holding company; and
``(3) any terms in Federal law that may apply only to a
national bank operating in stock form, including the terms
`stock', `shares', `shares of stock', `capital stock', `common
stock', `stock certificate', `stock certificates',
`certificates representing shares of stock', `stock dividend',
`transferable stock', `each class of stock', `cumulate such
shares', `par value', `preferred stock' shall not apply to a
Federal mutual bank holding company, unless the appropriate
bank holding company regulator determines that the context
requires otherwise.''.
(b) Limitation on Federal Regulation of State Banks.--Except as
otherwise provided in Federal law, the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System, and the Federal
Deposit Insurance Corporation may not adopt or enforce any regulation
that contravenes the corporate governance rules prescribed by State law
or regulation for State banks unless the Director, Board, or
Corporation finds that the Federal regulation is necessary to assure
the safety and soundness of the State banks.
(c) Technical Amendment.--The table of sections for chapter one of
title LXII of the Revised Statutes of the United States (12 U.S.C. 21
et seq.) is amended by inserting after the item relating to section
5133 the following new items:
``5133A. Mutual national banks.
``5133B. Federal mutual bank holding companies.''.
(d) Appropriate Federal Banking Agency for Federal Mutual Bank
Holding Companies.--Section 3(q)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(q)(2)) is amended by inserting after subparagraph
(F) the following new subparagraph:
``(G) supervisory or regulatory proceedings arising
from the authority given to the appropriate bank
holding company regulator under section 5133B of the
Revised Statutes of the United States.''.
(e) Mutual Holding Company Conversion.--
(1) In general.--Any mutual holding company, including any
form of mutual depository holding company provided for under
State law, may convert to a Federal mutual bank holding company
by filing with the appropriate bank holding company regulator a
notice of its election to convert on a specified date that is
not earlier than 30 days after the date on which the notice is
filed, and the mutual holding company shall be converted to a
Federal mutual holding company charter on the date specified in
the notice.
(2) Definitions.--For purposes of this subsection, the
following definitions shall apply:
(A) Federal mutual bank holding company.--The term
``Federal mutual bank holding company'' has the same
meaning as in section 5133B of the Revised Statutes of
the United States (as added by this section); and
(B) Mutual holding company.--The term ``mutual
holding company'' has the same meaning as in section
10(o)(10)(A) of the Home Owners Loan Act as in effect
on the day before the date of enactment of this Act.
(f) Effective Date.--This section shall take effect on the date of
enactment of this Act.
SEC. 1317. NATIONWIDE DEPOSIT CAP FOR INTERSTATE ACQUISITIONS.
(a) Amendments to the Bank Holding Company Act of 1956.--
(1) Concentration limit for bank holding companies.--
Section 3(d)(2)(A) of the Bank Holding Company Act (12 U.S.C.
1842(d)(2)(A)) is amended by striking ``paragraph (1)(A)'' and
inserting ``subsection (a) of this section''.
(2) Removal of nonbank savings association provision in
light of being defined as a bank.--Section 4 of the Bank
Holding Company Act is amended by striking subsection (i) and
insert the following new subsection:
``(i) [Repealed.]''.
(b) Amendments to the Federal Deposit Insurance Act.--
(1) In general.--Section 18(e) of the Federal Deposit
Insurance Act (12 U.S.C. 1828(c)) is amended--
(A) by redesignating paragraph (12) as paragraph
(13); and
(B) by inserting after paragraph (11), the
following new paragraph:
``(12) Nationwide deposit cap.--The responsible agency may
not approve an application for an interstate merger transaction
if the resulting insured depository institution (including all
insured depository institutions which are affiliates of the
resulting insured depository institution), upon consummation of
the transaction, would control more than 10 percent of, the
total amount of deposits of insured depository institutions in
the United States.''.
(2) Parallel requirement.--Section 44(b)(2) of the Federal
Deposit Insurance Act (12 U.S.C. 1831u(b)(2)(A) is amended to
read as follows:
``(A) Nationwide concentration limits.--The
responsible agency may not approve an application for
an interstate merger transaction involving two or more
insured depository institutions if the resulting
insured depository institution (including all insured
depository institutions which are affiliates of such
institution), upon consummation of the transaction
would control more than 10 percent of the total amount
of deposits of insured depository institutions in the
United States.''.
(c) Amendments to the Home Owners' Loan Act.--Section 10(e)(2) of
the Home Owners' Loan Act (12 U.S.C. 467a(e)(2)) is amended--
(1) by striking ``or'' at the end of subparagraph (C); and
(2) by striking the period at the end of subparagraph (D),
the following new subparagraph:
``(E) in the case of an application involving an
interstate acquisition, if the applicant (including all
insured depository institutions which are affiliates of
the applicant) controls, or upon consummation of the
acquisition for which such application is filed would
control, more than 10 percent of the total amount of
deposits of insured depository institutions in the
United States.''.
SEC. 1318. DE NOVO BRANCHING INTO STATES.
(a) National Banks.--Section 5155(g)(1)(A) of the Revised Statutes
(12 U.S.C. 36(g)(1)(A)) is amended to read as follows:
``(A) the law of the State where the branch is
located, or is to be located, would permit
establishment of the branch if the national bank were a
state bank chartered by such State;''.
(b) State Insured Banks.--Section 18(d)(4)(A)(i) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is amended to read
as follows:
``(i) the law of the State where the branch
is located, or is to be located, would permit
establishment of the branch if the bank were a
State bank chartered by such State;''.
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,
minus additional deductions or adjustments
necessary to establish assessments consistent
with the definition under section 7(b)(1)(C) of
the Federal Deposit Insurance Act for custodial
banks (as defined by the Corporation based on
factors including percentage of total revenues
generated by custodial businesses and the level
of assets under custody) or a bankers' bank (as
referred to in section 5136 of the Revised
Statutes of the United States).''.
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 System, 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; PURPOSE.
(a) Short Title.--This subtitle may be cited as the ``Dissolution
Authority for Large, Interconnected Financial Companies Act of 2009''.
(b) Purpose.--The purpose of this subtitle is to protect the
financial system of the United States in times of severe crisis by
providing for the orderly resolution of large, interconnected financial
companies whose failure could create, or increase, the risk of
significant liquidity, credit, or other financial problems spreading
among financial institutions or markets and thereby threaten the
stability of the overall financial system of the United States. There
shall be a strong presumption that resolution under the bankruptcy laws
will remain the primary method of resolving financial companies, and
the authorities contained in this subtitle will only be used in the
most exigent circumstances.
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 financial company
is an insurance company or 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 activities 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);
(C) that is not a Farm Credit System institution
chartered under and subject to the provisions of the
Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et
seq.);
(D) that is not a Federal home loan bank, the
Federal National Mortgage Association, or the Federal
Home Loan Mortgage Corporation; and
(E) is not an insured depository institution (as
defined in section 3(c) of the Federal Deposit
Insurance act), a Federal credit union or a State-
chartered credit union (as such terms are defined in
section 101 of the Federal Credit Union Act), or a
government-sponsored enterprise (as such term is
defined in section 1004(f) of the Financial
Institutions Reform, Recovery and Enforcement Act of
1989 (12 U.S.C. 1811 note)).
(10) Fund.--The term ``Fund'' means the Systemic
Dissolution Fund established in accordance with section
1609(n).
(11) Insurance company.--The term ``insurance company''
means any entity covered by a State law designed specifically
to deal with the rehabilitation, liquidation, or insolvency of
an insurance company.
(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.--
(A) In general.--At the request of the Secretary,
the Chairman of the Federal Reserve Board, or the
appropriate regulatory agency, the Board and the
appropriate regulatory agency shall, or on their own
initiative the 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.
(B) Two-thirds agreement.--Any recommendation under
subparagraph (A) shall be made upon a vote of not less
than two-thirds of the members of the Federal Reserve
Board then serving and not less than two thirds of any
members of the board or 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 company.
(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 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
dissolution 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
companies 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 and the Committee on the
Judiciary of the Senate and the Committee on Financial Services
and the Committee on the Judiciary of the House of
Representatives. 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 company 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 company under title 11, United
States Code.
(2) The financial company is critically undercapitalized,
as such term has been or may be defined by the Federal Reserve
Board.
(3) The financial company has incurred, or is likely to
incur, losses that will deplete all or substantially all of its
capital, and there is no reasonable prospect for the company to
avoid such depletion without assistance under section 1604.
(4) The assets of the financial company are, or are likely
to be, less than its obligations to creditors and others.
(5) The financial company is, or is likely to be, unable to
pay its obligations (other than those subject to a bona fide
dispute) in the normal course of business.
SEC. 1604. DISSOLUTION; 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.
(3) Extension of time limit.--The time limit established in
paragraph (2) may be extended by the Secretary for up to 1
additional year if--
(A) the Corporation has not completed the
dissolution of the company within the time provided in
paragraph (2); and
(B) the Secretary certifies in writing that
continuation of the receivership is necessary--
(i) to protect the best interests of the
taxpayers of the United States; and
(ii) to protect the stability of the
financial system and the economy of the United
States.
(4) Further extension.--The time limit, as extended in
paragraph (3), may be extended for up to 1 additional year if--
(A) the conditions of paragraph (3) are met; and
(B) the Corporation submits a report to the
Congress, no later than 60 days before the receivership
will expire under the extended limit under paragraph
(3), that describes in detail--
(i) the basis for the determination by the
Corporation that a second extension is
necessary; and
(ii) the specific plan of the Corporation
for concluding the receivership before the end
of the proposed additional year.
(b) Dissolution Limitations.--
(1) In general.--An insolvent financial company may be
dissolved under this subtitle only if the failure and
dissolution 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 dissolution 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 dissolution 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
dissolution 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)(v) and
coordinate with such regulators regarding the treatment of such
solvent subsidiaries and the separate dissolution 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 Insurance Companies and Insurance Company
Subsidiaries.--
(1) In general.--Notwithstanding subsection (a), if an
insurance company covered by a State law designed specifically
to deal with the rehabilitation, liquidation or insolvency of
an insurance company is a covered financial company or a
subsidiary of a covered financial company, resolution of such
insurance 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, that is not itself 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 dissolution 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 dissolution
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 only from the following
sources:
(1) Dissolution 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 in accordance with section 1604, 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.
(a) Termination and Exclusion of Bankruptcy.--The Corporation's
acting as receiver for a covered financial company under this subtitle
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.
(b) Conversion to Bankruptcy.--
(1) Conversion.--The Corporation may at any time, with the
approval of the Secretary and after consulting with the
Council, convert the receivership of a covered financial
company to a proceeding under chapter 7 or 11 of title 11,
United States Code, by filing a petition against the covered
financial company under section 303(m) of such title. The
Corporation may serve as the trustee for the covered financial
company in bankruptcy.
(2) Bridge financial company.--The Corporation's exercise
of authority under paragraph (1) shall not affect any powers or
duties of the Corporation with regard to any bridge financial
company established under section 1609(h).
(c) Reporting to the Congress.--
(1) In general.--
(A) Initial report.--Upon the appointment of the
Corporation as receiver under section 1604(a), the
Corporation shall issue a report on the issue described
under paragraph (3)(A).
(B) Continuing reports.--At the end of each 180-day
period after the appointment of the Corporation as
receiver under section 1604(a), and continuing while
the Corporation is acting as receiver, the Corporation
shall issue a report on the issues described under
subparagraphs (A) through (C) of paragraph (3).
(2) Committees to receive reports.--Reports issued under
this subsection shall be issued to the Committee on Banking,
Housing, and Urban Affairs and the Committee on the Judiciary
of the Senate and the Committee on Financial Services and the
Committee on the Judiciary of the House of Representatives.
(3) Reporting issues.--
(A) Why the receivership should continue instead of
converting the receivership into a proceeding under
chapter 7 or 11 of title 11, United States Code.
(B) The extent to which unsecured creditors are
likely to receive at least as much as they would
receive if the receivership of the covered financial
company was converted to a case under chapter 7 of
title 11, United States Code.
(C) An explanation of each instance where the
Corporation as receiver of a covered financial company
waived the requirement of 12 CFR Part 366 with respect
to conflicts of interest by any person in the private
sector who was retained to provide services to the
Corporation in connection with such receivership.
SEC. 1608. RULEMAKING.
The Corporation may, after following the notice and comment
rulemaking requirements under the Administrative Procedure Act,
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
notification under section 7A of the
Clayton Act is required with respect to
such transaction, then the required
waiting period shall end on the 15th
day after the date on which the
Attorney General and the Federal Trade
Commission receive such notification,
unless the waiting period is terminated
earlier under subsection (b)(2) of such
section, or is extended pursuant to
subsection (e)(2) of such section.
(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 the covered financial
company involved, the approval and
prior notification referred to in
subclause (I) shall not be required and
the transaction may be consummated
immediately by the Corporation. The
preceding sentence shall not otherwise
modify, impair, or supercede the
operation of any of the antitrust laws
(as defined 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
relates to unfair methods of
competition).
(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 dissolution
of subsidiaries of the covered financial company that
are established in a country other than the United
States.
(M) Appointment of consumer privacy advisor.--
(i) Appointment.--Upon the appointment of
the Corporation as receiver under section
1604(a), the Corporation shall appoint a
Consumer Privacy Advisor.
(ii) Duties.--The Consumer Privacy Advisor
appointed under clause (i) shall advise the
Corporation with respect to--
(I) the covered financial company's
consumer privacy policies;
(II) the potential losses or gains
of privacy to consumers upon any sale,
lease, or other transfer of material
assets of the covered financial
company;
(III) the potential costs or
benefits to consumers upon any sale,
lease, or other transfer of material
assets of the covered financial
company; and
(IV) the potential alternatives
that would mitigate potential privacy
loses or potential costs to consumers.
(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, after following the notice and
comment rulemaking requirements under the
Administrative Procedure Act, 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 dissolution
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 in
assets of the covered financial company arising
under a qualified financial contract (as
defined under subsection (c)(8)(D)(i)) with an
original term of 30 days or less (except that,
for a contract for a term linked to a calendar
month, the original term must be less than 1
calendar month), secured by collateral other
than securities issued by the United States
Treasury, the Board of Governors of the Federal
Reserve System, any agency of the United
States, any Federal Reserve bank, or any
Government Sponsored Enterprise, that became a
legally enforceable or perfected security
interest after the date of the enactment of
this clause, and that is not a 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 specified under clause (v)
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. This clause shall not apply with
respect to debt obligations secured by real
property. This clause may only be implemented
with respect to secured creditors if, as a
result of the dissolution of the covered
financial company, no funds are available to
satisfy, in whole or in part, any claims of
unsecured creditors or shareholders.
(v) Amount specified.--For purposes of
clause (iv), the amount specified under this
clause, in the case of a secured creditor, is
the amount of up to 10 percent.
(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
(iii) 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
United States 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) Preferential transfers.--The Corporation as
receiver for any covered financial company may avoid a
transfer of an interest of the covered financial
company in property that--
(i) was made to or for the benefit of a
creditor;
(ii) was made for or on account of an
antecedent debt that was owed by the covered
financial company before the transfer was made;
(iii) was made while the covered financial
company was insolvent;
(iv) was made--
(I) on or within 90 days before the
date on which the Corporation was
appointed receiver; or
(II) between 90 days and one year
before the date that the Corporation
was appointed receiver, if such
creditor at the time of the transfer
was an insider, as that term is defined
in section 101(31) of title 11, United
States Code; and
(v) enables such creditor to receive more
than such creditor would receive in the
liquidation of the covered financial company
if--
(I) the transfer had not been made;
and
(II) such creditor received payment
of such debt to the extent provided by
the provisions of this subtitle.
(C) Post-receivership transactions.--The
Corporation as receiver for any covered financial
company may avoid a transfer of property of the
receivership that occurred after the Corporation was
appointed receiver that was not authorized under this
title.
(D) Right of recovery.--To the extent that a
transfer is avoided under subparagraph (A), (B) or (C),
the Corporation may recover, for the benefit of the
covered financial company, the property transferred or,
if a court so orders, the value of such property from--
(i) the initial transferee of such transfer
or the entity for whose benefit such transfer
was made; or
(ii) any immediate or mediate transferee of
any such initial transferee.
(E) Rights of transferee or obligee.--The
Corporation may not recover under subparagraph
(D)(ii)--
(i) from a transferee that takes for value,
including satisfaction or securing of a present
or antecedent debt, in good faith, and without
knowledge of the violability of the transfer
avoided; or
(ii) any immediate or mediate good faith
transferee of such transferee.
(F) Defenses.--A transferee or obligee from whom
the Corporation seeks to recover a transfer or avoid an
obligation under subparagraph (A), (B) or (C) shall
have the same affirmative defenses and rights to liens
on the property transferred to the extent they would be
available to a transferee or obligee from whom a
trustee under title 11 seeks to recover a transfer
under sections 547, 548, and 549 of title 11, United
States Code.
(G) Limitations on avoiding powers.--The rights of
the Corporation under subparagraph (A), (B) or (C) are
restricted to the same extent as the rights of a
trustee in bankruptcy under section 546(b)(1) of the
Bankruptcy Code.
(H) Presumption of insolvency.--For purposes of
subparagraph (B), the covered financial company is
presumed to have been insolvent on and during the 90
days immediately preceding the date on which the
Corporation is appointed as receiver.
(I) Rights under this subsection.--The rights of
the Corporation as receiver for 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 of a Federal Home Loan
Bank) under title 11, United States Code.
(J) 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.
(K) 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.
(L) 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.
(M) 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) Wages, salaries, or commissions, including
vacation, severance, and sick leave pay earned by an
individual (other than management responsible for the
failed condition of the covered financial company who
have been removed), subject to the limitations for such
payments contained in title 11, United States Code,
including the amount (11 U.S.C. 507(a)(4)) and
restrictions on severance payments to insiders (11
U.S.C. 503(c)).
(D) Contributions to employee benefit plans,
subject to the limitations in title 11, United States
Code (11 U.S.C. 507(a)(5)).
(E) Any other general or senior liability of the
covered financial company (which is not a liability
described under subparagraph (F) or (G)).
(F) Any obligation subordinated to general
creditors (which is not an obligation described under
subparagraph (G)).
(G) 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).
(5) 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.
(6) 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
dissolving 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 dissolution of the
covered financial company.
(7) Rulemaking.--The Corporation shall, after following the
notice and comment rulemaking requirements under the
Administrative Procedure Act, prescribe rules to carry out this
section.
(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.
(16) Authority regarding collective bargaining
agreements.--The Corporation as receiver for any covered
financial company shall not disaffirm or repudiate any
collective bargaining agreement to which the covered financial
company is a party unless the Corporation determines that
repudiation is necessary for the orderly resolution of the
covered financial company after taking into consideration the
cost to taxpayers and the financial stability of the United
States.
(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 dissolution 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 paragraph (1) or (2) or any
other provision of law--
(A) a bridge financial company shall assume,
acquire, or succeed to the assets or liabilities of a
covered financial company (including the assets or
liabilities associated with any trust or custody
business) only to the extent that such assets or
liabilities are transferred by the Corporation to the
bridge financial company in accordance with, and
subject to the restrictions set forth in, paragraph
(1)(B); and
(B) a bridge financial company shall not assume,
acquire, or succeed to any obligation that a covered
financial company for which 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 United States 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.--
(A) Exemption from federal income tax.--Subsection
(l) of section 501 of the Internal Revenue Code of 1986
is amended by adding at the end the following new
paragraph:
``(4) Any bridge financial company organized under section
1609(h) of the Financial Stability Improvement Act of 2009.''.
(B) Exemption from certain other taxes.--
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 any territory, dependency,
or possession of the United States, 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 notification
under section 7A of the Clayton Act is required with
respect to such transaction, then the required waiting
period shall end on the 15th day after the date on
which the Attorney General and the Federal Trade
Commission receive such notification, unless the
waiting period is terminated earlier under subsection
(b)(2) of such section, or is extended pursuant to
subsection (e)(2) of such section.
(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 approval and prior notification
referred to in subparagraph (A) shall not be required
and the transaction may be consummated immediately by
the Corporation. The preceding sentence shall not
otherwise modify, impair, or supercede the operation of
any of the antitrust laws (as defined 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
relates to unfair methods of competition).
(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
$50,000,000,000, 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).
(E) Additional authorized assessments.--The
Corporation is authorized to conduct risk-based
assessments on financial companies in such amount and
manner and subject to terms and conditions that the
Corporation determines, with the concurrence of the
Secretary of the Treasury and the Federal Reserve
Board, are necessary to pay any shortfall in the
Troubled Asset Relief Program established by the
Emergency Economic Stabilization Act of 2008 that would
add to the deficit or national debt, as identified by
the Director of the Office of Management and Budget, in
consultation with the Director of the Congressional
Budget Office pursuant to section 134 of such Act (12
U.S.C. 5239).
(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,
subject to the requirements of section 1604(g),
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 dissolution, including
a dissolution 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 of the House and in the Senate by the
majority 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, for the majority leader 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 fourth day after the applicable date of
introduction in the Senate and ending on the
sixth 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.
(u) Study of Payment of Consumer Claims.--Not later than 6 months
following the dissolution of a covered financial company under section
1603(b), the Comptroller General of the United States shall carry out a
study, and report on such study to the Committee on Banking, Housing,
and Urban Affairs and the Committee on the Judiciary of the Senate and
the Committee on Financial Services and the Committee on the Judiciary
of the House of Representatives, regarding the satisfaction of claims
arising from violations of the provisions of the Truth in Lending Act,
if any, in instances where any assets were transferred from such
covered financial company.
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
Dissolution 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 DISSOLUTION.
(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 Dissolution 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 Dissolution 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
Dissolution is the Special Deputy Inspector General for Dissolution (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 Dissolution 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.--
(1) 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,''.
(2) Section 303 of title 11, United States Code, is
amended--
(A) in subsection (h)--
(i) by striking ``or'' at the end of
paragraph (1);
(ii) by striking the period at the end of
paragraph (2) and inserting ``; or''; and
(iii) by adding at the end the following
new paragraph:
``(3) an involuntary case is filed against a covered
financial company, as defined in section 1602(5) of the
Dissolution Authority for Large, Interconnected Financial
Companies Act of 2009, by the Federal Deposit Insurance
Corporation under section 1607 of that Act.''; and
(B) by adding at the end the following new
subsection:
``(m) Notwithstanding subsections (a) and (b) of this section and
section 109(b)(2), an involuntary case may be commenced by the Federal
Deposit Insurance Corporation against a covered financial company (as
defined in section 1602(5) of the Dissolution Authority for Large,
Interconnected Financial Companies Act of 2009). Such involuntary case
may be commenced by the Federal Deposit Insurance Corporation in
accordance with section 1607 of that Act.''.
(3) Title 11, United States Code, is amended by inserting
after section 303 the following new section:
``SEC. 304. CASES INVOLVING FDIC DISSOLUTION AUTHORITY.
``(a) Appointment.--In any case commenced by the Federal Deposit
Insurance Corporation under section 303(m), on the request of the
Federal Deposit Insurance Corporation, such Corporation shall be
appointed to serve as trustee in such case, notwithstanding any other
provision of this title.
``(b) Qualification.--Sections 321, 322, 324, and 326 shall not
apply with respect to the appointment or service of such Corporation as
trustee in any case so commenced.''.
(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 Dissolution
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.
At any time that the Corporation has borrowed from the Treasury
pursuant to section 1609(o) to resolve a covered financial company, the
Corporation shall apply the executive compensation limits under section
111 of the Emergency Economic Stabilization Act of 2008 to such company
for so long as such company is in receivership.
SEC. 1615. STUDY ON THE EFFECT OF SAFE HARBOR PROVISIONS IN INSOLVENCY
CASES.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the safe harbor provisions under Federal law for
derivatives, swaps, and securities transactions addressing--
(1) how the safe harbor provisions have been applied in
insolvency cases;
(2) how such provisions impact the rights of parties in
interest in insolvency cases;
(3) whether these provisions impede or interfere with
allowing a debtor a reasonable period of time to pursue
rehabilitation and reorganization; and
(4) whether these provisions had an adverse impact on the
financial marketplace.
(b) Report to the Congress.--Not later than 180 days after the date
of the enactment of this title, the Comptroller General shall submit to
the President pro tempore of the Senate and the Speaker of the House of
Representatives a report on the results of the study conducted under
subsection (a), together with any recommendations for legislation to
address any adverse impacts presented by the Federal safe harbor
provisions.
SEC. 1616. TREASURY STUDY.
(a) Study Required.--The Secretary shall carry out a study
analyzing how the resolution authority provided under this subtitle
should be funded. Such study shall consider the following factors:
(1) The consequences of any assessments on the overall
recovery of the economy of the United States.
(2) Any immediate or continuing consequences of assessments
on other aspects of the economy of the United States, including
job creation, public and private investments, small business
loans, and general credit availability.
(3) The consequences of any assessments on individual
sectors of the financial services industry.
(4) The consequences of any assessments on the financial
integrity on individual firms within each sector of the
financial services industry.
(5) The appropriateness and effect of assessments on firms
that are subject to separate assessments under existing State
or Federal depositor, policyholder, or investor protection
mechanisms and the consequences of any such assessments on
these mechanisms themselves.
(6) The implications of assessments on all relevant
stakeholders, including taxpayers, depositors, insurance
policyholders, investors, counterparties, and creditors.
(7) Evaluation of the appropriate assessment base,
including but not limited to factors such as assets and
liabilities, assets under management, policyholder reserves,
other reserves, statutory and regulatory capital requirements,
trusteed assets, and deposits and inflationary factors.
(b) Report.--Not later than the end of the 6-month period beginning
on the date of the enactment of this subtitle, the Secretary shall
issue a report to the Congress containing all determinations and
conclusions made by the Secretary in carrying out the study required
under subsection (a).
SEC. 1617. PRIORITY OF CLAIMS IN FEDERAL DEPOSIT INSURANCE ACT.
Section 11(d)(11)(A) of the Federal Deposit Insurance Act (12
U.S.C. 1821(d)(11)(A)) is amended--
(1) by redesignating clauses (iii) through (v) as clauses
(iv) through (vi), respectively; and
(2) by inserting after clause (ii) the following new clause
(iii):
``(iii) Any obligation of the institution
owed to the Corporation as a result of the
institution's default on a Corporation-
guaranteed debt.''.
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 House of Representatives
and the Senate. 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 in the Senate by the
majority leader.
``(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
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, for the
majority leader 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
fourth day after the applicable date of
introduction of the joint resolution in
the Senate and ending on the sixth 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.
``(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 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.
``(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 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 (as such
terms are defined in subsection (c)(1)), 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 Consumer Financial Protection Agency; and
(K) the Federal Insurance Office,
and any successors to such entities.
(2) Agency administrator.--The term ``agency
administrator'' means the head of an agency.
SEC. 1802. FEDERAL HOUSING FINANCE AGENCY ADVISORY ROLE IN FIEC.
After section 1007 of the Federal Financial Institutions
Examination Council Act of 1987 (12 U.S.C. 3306) insert the following
new section:
``SEC. 1007A. FEDERAL HOUSING FINANCE AGENCY ADVISORY ROLE.
``Whenever the Council takes any actions with respect to issues
that relate to the Federal National Mortgage Association, the Federal
Home Loan Mortgage Corporation, or the Federal home loan banks, the
Federal Housing Finance Agency shall participate in the Council's
proceedings in an advisory role.''.
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 (12 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, 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 (12 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, 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, 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.''.
SEC. 1952. REDUCING TARP FUNDS TO OFFSET COSTS.
Section 115(a)(3) of the Emergency Economic Stabilization Act of
2008 (12 U.S.C. 5225(a)(3)) is amended by striking ``$700,000,000,000,
as such amount is reduced by $1,259,000,000,, as such amount is reduced
by $1,244,000,000, outstanding at any one time'' and inserting
``$700,000,000,000, as such amount is reduced by $23,625,000,000,
outstanding at any one time''.
Subtitle L--Securities Holding Companies
SEC. 1961. SECURITIES HOLDING COMPANIES.
(a) Supervision of a Securities Holding Company Not Having a Bank
or Savings Association Affiliate.--
(1) In general.--A securities holding company that is
required by a foreign regulator or foreign law to be subject to
comprehensive consolidated supervision and that is not--
(A) a financial holding company subject to stricter
standards;
(B) an affiliate of an insured bank (other than an
institution described in subparagraphs (D) or (G) of
section 2(c)(2) of the Bank Holding Company Act of
1956) or a savings association;
(C) a foreign bank, foreign company, or company
that is described in section 8(a) of the International
Banking Act of 1978;
(D) a foreign bank that controls, directly or
indirectly, a corporation chartered under section 25A
of the Federal Reserve Act (12 U.S.C. 611 et seq.); or
(E) subject to comprehensive consolidated
supervision by a foreign regulator,
may register with the Board to become supervised, pursuant to
paragraph (2). Any securities holding company filing such a
registration shall be supervised in accordance with this
section and comply with the rules and orders prescribed by the
Board applicable to supervised securities holding companies.
(2) Registration as a supervised securities holding
company.--A securities holding company described in paragraph
(1) shall register by filing with the Board such information
and documents concerning such securities holding company as the
Board, by regulation, may prescribe as necessary or appropriate
in furtherance of the purposes of this section. Such
supervision shall become effective 45 days after the date of
receipt of such registration by the Board or within such
shorter time period as the Board, by rule or order, may
determine.
(b) Supervision of Securities Holding Companies.--
(1) Recordkeeping and reporting.--
(A) In general.--Every supervised securities
holding company and each affiliate of such company
shall make and keep for prescribed periods such
records, furnish copies of records, and make such
reports, as the Board determines to be necessary or
appropriate for the Board to carry out the purposes of
this section, prevent evasions, and monitor compliance
by the company or affiliate with applicable provisions
of law.
(B) Form and contents.--Such records and reports
shall be prepared in such form and according to such
specifications (including certification by a registered
public accounting firm), as the Board may require and
shall be provided promptly at any time upon request by
the Board. Such records and reports may include--
(i) a balance sheet and income statement;
(ii) an assessment of the consolidated
capital of the supervised securities holding
company;
(iii) an independent auditor's report
attesting to the supervised securities holding
company's compliance with its internal risk
management and internal control objectives; and
(iv) reports concerning the extent to which
the company or affiliate has complied with the
provisions of this section and any regulations
prescribed and orders issued under this
section.
(2) Use of existing reports.--
(A) In general.--The Board shall, to the fullest
extent possible, accept reports in fulfillment of the
requirements under this paragraph that the supervised
securities holding company or its affiliates have been
required to provide to another appropriate regulatory
agency or self-regulatory organization.
(B) Availability.--A supervised securities holding
company or an affiliate of such company shall provide
to the Board, at the request of the Board, any report
referred to in subparagraph (A), as permitted by law.
(3) Examination authority.--
(A) Focus of examination authority.--The Board may
make examinations of any supervised securities holding
company and any affiliate of such company to carry out
the purposes of this subsection, prevent evasions
thereof, and monitor compliance by the company or
affiliate with applicable provisions of law.
(B) Deference to other examinations.--For purposes
of this subparagraph, the Board shall, to the fullest
extent possible, use the reports of examination made by
other appropriate Federal or State regulatory
authorities with respect to any functionally regulated
subsidiary, as defined under section 5(c)(1) of the
Bank Holding Company Act of 1956 (12 U.S.C.
1844(c)(1)), or an institution described in
subparagraphs (D) or (G) of section 1841(c)(2).
(c) Capital and Risk Management.--
(1) The Board shall, by regulation or order, prescribe
capital adequacy and other risk management standards for a
supervised securities holding company appropriate to protect
the safety and soundness of the company and address the risks
posed to financial stability by a supervised securities holding
company. Standards imposed under this subparagraph shall take
account of differences among types of business activities and--
(A) the amount and nature of the company's
financial assets;
(B) the amount and nature of the company's
liabilities, including the degree of reliance on short-
term funding;
(C) the extent and nature of the company's off-
balance sheet exposures;
(D) the extent and nature of the company's
transactions and relationships with other financial
companies;
(E) 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; and
(F) the nature, scope, and mix of the company's
activities.
(2) In imposing standards under this subsection, the Board
may differentiate among supervised securities holding companies
on an individual basis or by category, taking into
consideration the criteria specified above.
(3) Any capital requirements imposed under this subsection
shall not take effect until the expiration of 180 days after a
supervised securities holding company is provided notice of
such requirement.
(d) Other Provisions.--
(1) Subsections (b), (c) through (s), and (u) of section 8
of the Federal Deposit Insurance Act shall apply to any
supervised securities holding company, and to any subsidiary
(other than a bank) of a supervised securities holding company,
in the same manner as they apply to a bank holding company. For
purposes of applying such subsections to a supervised
securities holding company or a subsidiary (other than a bank)
of a supervised securities holding company, the Board shall be
considered the appropriate Federal banking agency for the
supervised securities holding company or subsidiary.
(2) Except as the Board may otherwise provide by regulation
or order, a supervised securities holding company shall be
subject to the provisions of the Bank Holding Company Act of
1956 (12 U.S.C. 1841 et seq.) in the same manner and to the
same extent that bank holding companies are subject to such
provisions, except that any such supervised securities holding
company shall not by reason of this subparagraph be deemed a
bank holding company for purposes of section 4 of the Bank
Holding Company Act of 1956.
(e) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Securities holding company.--The term ``securities
holding company'' means--
(A) any person other than a natural person that
owns or controls one or more brokers or dealers as
defined in section 3 of the Securities Exchange Act;
and
(B) the associated persons of the securities
holding company.
(2) Supervised securities holding company.--The term
``supervised securities holding company'' means any securities
holding company that is supervised by the Board pursuant to
this section.
(3) Other banking terms.--The terms ``affiliate'',
``bank'', ``bank holding company'', ``company'', ``control'',
``savings association'', and ``subsidiary'' have the same
meanings as in section 2 of the Bank Holding Company Act of
1956.
(4) Insured bank.--The term ``insured bank'' has the same
meaning as in section 13 of the Federal Deposit Insurance Act.
(5) Foreign bank.--The term ``foreign bank'' has the same
meaning as in section 1(b)(7) of the International Banking Act
of 1978.
(6) Associated persons.--The terms ``person associated with
a securities holding company'' and ``associated person of a
securities holding company'' mean any person directly or
indirectly controlling, controlled by, or under common control
with, a securities holding company.
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 paragraph (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 2008 (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--DERIVATIVE MARKETS TRANSPARENCY AND ACCOUNTABILITY ACT
SEC. 3001. SHORT TITLE.
This title may be cited as the ``Derivative Markets Transparency
and Accountability Act of 2009''.
SEC. 3002. REVIEW OF REGULATORY AUTHORITY.
(a) Consultation.--
(1) CFTC.--Before commencing any rulemaking or issuing an
order regarding swaps, swap dealers, major swap participants,
swap repositories, persons associated with a swap dealer or
major swap participant, eligible contract participants, or swap
execution facilities pursuant to subtitle A, the Commodity
Futures Trading Commission shall consult with the Securities
and Exchange Commission and the Prudential Regulators.
(2) SEC.--Before commencing any rulemaking or issuing an
order regarding security-based swaps, security-based swap
dealers, major security-based swap participants, security-based
swap repositories, persons associated with a security-based
swap dealer or major security-based swap participant, eligible
contract participants with regard to security-based swaps, or
swap execution facilities pursuant to subtitle B, the
Securities and Exchange Commission shall consult with the
Commodity Futures Trading Commission and the Prudential
Regulators.
(3) In developing and promulgating rules or orders pursuant
to this subsection, the Commodity Futures Trading Commission
and the Securities and Exchange Commission shall consider each
other's views and the views of the Prudential Regulators.
(4) In adopting a rule or order described in paragraph (1)
or (2), the Commodity Futures Trading Commission and the
Securities and Exchange Commission shall treat functionally or
economically similar products or entities similarly.
(5) Paragraph (4) shall not be construed to require the
Commodity Futures Trading Commission or the Securities Exchange
Commission to adopt a rule or order that treats functionally or
economically similar products or entities identically.
(b) Limitation.--
(1) CFTC.--Nothing in this title, unless specifically
provided, shall be construed to confer jurisdiction on the
Commodity Futures Trading Commission to issue a rule,
regulation, or order providing for oversight or regulation of--
(A) security-based swaps; or
(B) with regard to their activities or functions
concerning security-based swaps--
(i) security-based swap dealers;
(ii) major security-based swap
participants;
(iii) security-based swap repositories;
(iv) persons associated with a security-
based swap dealer or major security-based swap
participant;
(v) eligible contract participants with
respect to security-based swaps; or
(vi) swap execution facilities.
(2) SEC.--Nothing in this title, unless specifically
provided, shall be construed to confer jurisdiction on the
Securities and Exchange Commission to issue a rule, regulation,
or order providing for oversight or regulation of--
(A) swaps; or
(B) with regard to their activities or functions
concerning swaps--
(i) swap dealers;
(ii) major swap participants;
(iii) swap repositories;
(iv) persons associated with a swap dealer
or major swap participant;
(v) eligible contract participants with
respect to swaps; or
(vi) swap execution facilities.
(c) Objection to Commission Regulation.--
(1) Filing of petition for review.--If either Commission
referred to in this section believes that a final rule,
regulation, or order of the other such Commission conflicts
with subsection (a)(4) or (b), then the complaining Commission
may obtain review thereof in the United States Court of Appeals
for the District of Columbia Circuit by filing in the court,
not later than 60 days after the date of publication of the
final rule, regulation, or order, a written petition requesting
that the rule, regulation, or order be set aside. Any such
proceeding shall be expedited by the Court of Appeals.
(2) Transmittal of petition and record.--A copy of a
petition described in paragraph (1) shall be transmitted not
later than 1 business day after filing by the complaining
Commission to the Secretary of the responding Commission. On
receipt of the petition, the responding Commission shall file
with the court a copy of the rule, regulation, or order under
review and any documents referred to therein, and any other
materials prescribed by the court.
(3) Standard of review.--The court, giving deference to the
views of neither Commission, shall determine to affirm or set
aside a rule, regulation, or order of the responding Commission
under this subsection, based on the determination of the court,
as to whether the rule, regulation, or order is in conflict
with subsection (a)(4) or (b), as applicable.
(4) Judicial stay.--The filing of a petition by the
complaining Commission pursuant to paragraph (1) shall operate
as a stay of the rule, regulation, or order, until the date on
which the determination of the court is final (including any
appeal of the determination).
(d) Definitions.--In this section, the terms ``Prudential
Regulators'', ``swap'', ``swap dealer'', ``major swap participant'',
``swap repository'', ``person associated with a swap dealer or major
swap participant'', ``eligible contract participant'', ``swap execution
facility'', ``security-based swap'', ``security-based swap dealer'',
``major security-based swap participant'', ``security-based swap
repository'', and ``person associated with a security-based swap dealer
or major security-based swap participant'' shall have the meanings
provided, respectively, in the Commodity Exchange Act, including any
modification of the meanings under section 3101(b) of this Act.
(e)(1) Notwithstanding subsections (b) and (c), the Commodity
Futures Trading Commission and the Securities Exchange Commission shall
jointly adopt rules to--
(A) define the terms ``security-based swap agreement'' in
section 3(a)(76) of the Securities Exchange Act of 1934 and
``swap'' in section 1a(35)(A)(v) of the Commodity Exchange Act;
(B) require the maintenance of records of all activities
related to transactions defined in subparagraph (A) that are
not cleared; and
(C) make available to the Securities and Exchange
Commission information relating to transactions defined in
subparagraph (A) that are uncleared.
(2) In the event that the Commodity Futures Trading Commission and
the Securities Exchange Commission fail to jointly prescribe rules
pursuant to paragraph (1) in a timely manner, at the request of either
Commission, the Financial Services Oversight Council shall resolve the
dispute--
(A) within a reasonable time after receiving the request;
(B) after consideration of relevant information provided by
each Commission; and
(C) by agreeing with one of the Commissions regarding the
entirety of the matter or by determining a compromise position.
SEC. 3003. INTERNATIONAL HARMONIZATION.
(a) In order to promote effective and consistent global regulation
of contracts of sale of swaps and security-based swaps, the Commodity
Futures Trading Commission, the Securities and Exchange Commission, and
the Prudential Regulators (as defined in section 1a(42) of the
Commodity Exchange Act), as appropriate, shall consult and coordinate
with foreign regulatory authorities on the establishment of consistent
international standards with respect to the regulation of contracts of
sale of swaps and security-based 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,
swap counterparties, and security-based swap counterparties.
(b) In order to promote effective and consistent global regulation
of contracts of sale of a commodity for future delivery, the Commodity
Futures Trading Commission shall consult and coordinate with foreign
regulatory authorities on the establishment of consistent international
standards with respect to the regulation of contracts of sale of a
commodity for future delivery, and may agree to such information-
sharing arrangements as may be deemed necessary or appropriate in the
public interest for the protection users of contracts of sale of a
commodity for future delivery.
SEC. 3004. PROHIBITION AGAINST GOVERNMENT ASSISTANCE.
(a) In General.--No provision of this title shall be construed to
authorize Federal assistance to support clearing operations or
liquidation of a derivatives clearing organization described in the
Commodity Exchange Act or a clearing agency described in the Securities
Exchange Act of 1934, except where explicitly authorized by an Act of
Congress.
(b) Definition.--For the purposes of this section, the term
``Federal assistance'' means the use of public funds for the purposes
of--
(1) making loans to, or purchasing any debt obligation of,
a derivatives clearing organization, a clearing agency, or a
subsidiary of either;
(2) purchasing assets of a derivatives clearing
organization, a clearing agency, or a subsidiary of either;
(3) assuming or guaranteeing the obligations of a
derivatives clearing organization, a clearing agency, or a
subsidiary of either; or
(4) acquiring any type of equity interest or security of a
derivatives clearing organization, a clearing agency, or a
subsidiary of either.
SEC. 3005. STUDIES.
(a) Study on Effects of Position Limits on Trading on Exchanges in
the United States.--
(1) Study.--The Commodity Futures Trading Commission, in
consultation with each entity that is a designated contract
market under the Commodity Exchange Act, shall conduct a study
of the effects (if any) of the position limits imposed pursuant
to the other provisions of this title on excessive speculation
and on the movement of transactions from exchanges in the
United States to trading venues outside the United States.
(2) Report to the congress.--Within 12 months after the
imposition of position limits pursuant to the other provisions
of this title, the Commodity Futures Trading Commission, in
consultation with each entity that is a designated contract
market under the Commodity Exchange Act, shall submit to the
Congress a report on the matters described in paragraph (1).
(3) Within 30 legislative days after the submission to the
Congress of the report described in paragraph (2), the
Committee on Agriculture of the House of Representatives shall
hold a hearing examining the findings of the report.
(4) In addition to the study required in paragraph (1), the
Chairman of the Commodity Futures Trading Commission shall
prepare and submit to the Congress biennial reports on the
growth or decline of the derivatives markets in the United
States and abroad, which shall include assessments of the
causes of any such growth or decline, the effectiveness of
regulatory regimes in managing systemic risk, a comparison of
the costs of compliance at the time of the report for market
participants subject to regulation by the United States with
the costs of compliance in December 2008 for the market
participants, and the quality of the available data. In
preparing the report, the Chairman shall solicit the views of,
consult with, and address the concerns raised by, market
participants, regulators, legislators, and other interested
parties.
(b) Study on Feasibility of Requiring Use of Standardized
Algorithmic Descriptions for Financial Derivatives.--
(1) In general.--The Securities and Exchange Commission and
the Commodity Futures Trading Commission shall conduct a joint
study of the feasibility of requiring the derivatives industry
to adopt standardized computer-readable algorithmic
descriptions which may be used to describe complex and
standardized financial derivatives.
(2) Goals.--The algorithmic descriptions defined in the
study shall be designed to facilitate computerized analysis of
individual derivative contracts and to calculate net exposures
to complex derivatives. The algorithmic descriptions shall be
optimized for simultaneous use by:
(A) commercial users and traders of derivatives;
(B) derivative clearing houses, exchanges and
electronic trading platforms;
(C) trade repositories and regulator investigations
of market activities; and
(D) systemic risk regulators.
The study will also examine the extent to which the algorithmic
description, together with standardized and extensible legal
definitions, may serve as the binding legal definition of
derivative contracts. The study will examine the logistics of
possible implementations of standardized algorithmic
descriptions for derivatives contracts. The study shall be
limited to electronic formats for exchange of derivative
contract descriptions and will not contemplate disclosure of
proprietary valuation models.
(3) International coordination.--In conducting the study,
the Securities and Exchange Commission and the Commodity
Futures Trading Commission shall coordinate the study with
international financial institutions and regulators as
appropriate and practical.
(4) Report.--Within 8 months after the date of the
enactment of this Act, the Securities and Exchange Commission
and the Commodity Futures Trading Commission shall jointly
submit to the Committees on Agriculture and on Financial
Services of the House of Representatives and the Committees on
Agriculture, Nutrition, and Forestry and on Banking, Housing,
and Urban Affairs of the Senate a written report which contains
the results of the study required by paragraphs (1) through
(3).
(c) Study of Desirability and Feasibility of Establishing Single
Regulator for All Transactions Involving Financial Derivatives.--
(1) 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.
(2) 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
paragraph (1).
SEC. 3006. RECOMMENDATIONS FOR CHANGES TO INSOLVENCY LAWS.
Not later than 180 days after the date of the enactment of this
Act, 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 3111 of
this Act) 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. 3007. 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 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. 3008. AUTHORITY TO PROHIBIT PARTICIPATION IN SWAP ACTIVITIES.
If the Commodity Futures Trading Commission or the Securities and
Exchange Commission determines that the regulation of swaps or
security-based swaps markets in a foreign country undermines the
stability of the United States financial system, either Commission, in
consultation with the Secretary of the Treasury, may prohibit an entity
domiciled in that country from participating in the United States in
any swap or security-based swap activities.
SEC. 3009. MEMORANDUM.
(a)(1) The Commodity Futures Trading Commission and the Federal
Energy Regulatory Commission shall, not later than 180 days after the
date of the enactment of this section, negotiate a memorandum of
understanding to establish procedures for--
(A) applying their respective authorities in a manner so as
to ensure effective and efficient regulation in the public
interest;
(B) resolving conflicts concerning overlapping jurisdiction
between the two agencies; and
(C) avoiding, to the extent possible, conflicting or
duplicative regulation.
(2) Such memorandum and any subsequent amendments to the memorandum
shall be promptly submitted to the appropriate committees of Congress.
(b) The Commodity Futures Trading Commission and the Federal Energy
Regulatory Commission shall, not later than 180 days after the date of
the enactment of this section, negotiate a memorandum of understanding
to share information that may be requested where either Commission is
conducting an investigation into potential manipulation, fraud, or
market power abuse in markets subject to such Commission's regulation
or oversight. Shared information shall remain subject to the same
restrictions on disclosure applicable to the Commission initially
holding the information.
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) in paragraph (12)(A)--
(A) in clause (vii)(III), by striking
``$25,000,000'' and inserting ``$50,000,000''; and
(B) in clause (xi), by striking ``total assets in
an amount'' and inserting ``amounts invested on a
discretionary basis'';
(2) in paragraph (29)--
(A) in subparagraph (D), by striking ``and'';
(B) by redesignating subparagraph (E) as
subparagraph (G); and
(C) by inserting after subparagraph (D) the
following:
``(E) a swap execution facility registered under
section 5h;
``(F) a swap repository; and''; and
(3) by adding at the end 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, 1 or more
interest or other rates, currencies,
commodities, securities, instruments of
indebtedness, indices, quantitative measures,
or other financial or economic interests or
property of any kind;
``(ii) 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 1 or more payments based on the value or
level of 1 or more interest or other rates,
currencies, commodities, securities,
instruments of indebtedness, indices,
quantitative measures, or other financial or
economic interests or property of any kind, or
any interest therein or based on the value
thereof, and that transfers, as between the
parties to the transaction, in whole or in
part, the financial risk associated with a
future change in any such value or level
without also conveying a current or future
direct or indirect ownership interest in an
asset (including any enterprise or investment
pool) or liability that incorporates the
financial risk so transferred, and includes 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, or in the future becomes,
commonly known to the trade as a swap;
``(v) meets the definition of `swap
agreement' as defined in section 206A of the
Gramm-Leach-Bliley Act of which a material term
of which is based on the price, yield, value,
or volatility of any security or any group or
index of securities, or any interest therein;
or
``(vi) is any combination or permutation
of, or option on, any agreement, contract, or
transaction described in any of clauses (i)
through (v).
``(B) Exclusions.--The term `swap' does not
include--
``(i) any contract of sale of a commodity
for future delivery (or any option on such a
contract) 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
or security for deferred shipment or delivery,
so long as the transaction is intended to be
physically settled;
``(iii) any put, call, straddle, option, or
privilege on any security, certificate of
deposit, or group or index of securities,
including any interest therein or based on the
value thereof, that is subject to 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 1 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 1 or more securities on a contingent basis
that is subject to the Securities Act of 1933
(15 U.S.C. 77a et seq.) and the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.),
unless the agreement, contract, or transaction
predicates the purchase or sale on the
occurrence of a bona fide contingency that
might reasonably be expected to affect or be
affected by the creditworthiness of a party
other than a party to the agreement, contract,
or transaction;
``(vii) any note, bond, or evidence of
indebtedness that is a security as defined in
section 2(a)(1) of the Securities Act of 1933
(15 U.S.C. 77b(a)(1));
``(viii) any agreement, contract, or
transaction that is--
``(I) based on a security; and
``(II) entered into directly or
through an underwriter (as defined in
section 2(a)(11) of the Securities Act
of 1933) (15 U.S.C. 77b(a)(11)) by the
issuer of the security for the purposes
of raising capital, unless the
agreement, contract, or transaction is
entered into to manage a risk
associated with capital-raising;
``(ix) any foreign exchange forward;
``(x) any foreign exchange swap;
``(xi) any agreement, contract, or
transaction a counterparty of which is a
Federal Reserve bank, 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.
``(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).
``(D) Foreign exchange swaps and forwards
exception.--
``(i) In general.--Notwithstanding clauses
(ix) and (x) of subparagraph (B), foreign
exchange swaps and foreign exchange forwards
shall be considered swaps under this paragraph
if the Commission makes a determination that
either foreign exchange swaps or foreign
exchange forwards or both should be regulated
as swaps under this Act and the Secretary
concurs with such determination.
``(ii) Scope of authority.--
``(I) The Commission and the
Secretary shall jointly determine which
of the authorities under this Act
regarding swaps the Commission shall
exercise over foreign exchange swaps
and foreign exchange forwards. Such
authorities shall subsequently be
exercised solely by the Commission. The
Commission and the Secretary may
jointly amend any previously made
determination under this subclause.
``(II) Notwithstanding clause (i),
the Commission and the Secretary of the
Treasury may determine that either
foreign exchange swaps or foreign
exchange forwards or both should not be
regulated as swaps under this Act if
such determination is jointly made.
``(iii) Reporting.--Notwithstanding clauses
(ix) and (x) of subparagraph (B) and
subparagraph (D)(ii), all foreign exchange
swaps and foreign exchange forwards shall be
reported to either a swap repository, or, if
there is no swap repository that would accept
such swaps or forwards, to the Commission
pursuant to section 4r within such time period
as the Commission may by rule or regulation
prescribe.
``(iv) Secretary.--For purposes of this
subparagraph only, the term `Secretary' means
the Secretary of the Treasury.
``(36) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.
``(37) Security-based swap.--The term `security-based swap'
has the same meaning as in section 3(a)(68) of the Securities
and Exchange Act of 1934.
``(38) Swap dealer.--
``(A) In general.--The term `swap dealer' means any
person who--
``(i) holds itself out as a dealer in
swaps;
``(ii) makes a market in swaps;
``(iii) regularly engages in the purchase
of swaps and their resale to customers in the
ordinary course of a business; or
``(iv) engages in any activity causing the
person to be commonly known in the trade as a
dealer or market maker in swaps.
``(B) A person may be designated a swap dealer for
a single type or single class or category of swap and
considered not a swap dealer for other types, classes,
or categories of swaps.
``(C) De minimus exception.--The Commission shall
make a determination to exempt from designation as a
swap dealer an entity that engages in a de minimus
amount of swap dealing in connection with transactions
with or on the behalf of its customers.
``(39) Major swap participant.--
``(A) In general.--The term `major swap
participant' means any person who is not a swap dealer,
and--
``(i) maintains a substantial net position
in outstanding swaps, excluding positions held
primarily for hedging, reducing or otherwise
mitigating its commercial risk, including
operating and balance sheet risk; or
``(ii) whose outstanding swaps create
substantial net counterparty exposure among the
aggregate of its counterparties that could
expose those counterparties to significant
credit losses.
``(B) Definition of substantial net position.--The
Commission shall define by rule or regulation the terms
`substantial net position', `substantial net
counterparty exposure', and `significant credit losses'
at thresholds that the Commission determines prudent
for the effective monitoring, management and oversight
of entities which are systemically important or can
significantly impact the financial system through
counterparty credit risk. In setting the definitions,
the Commission shall consider the person's relative
position in uncleared as opposed to cleared swaps.
``(C) A person may be designated a major swap
participant for 1 or more individual types of swaps
without being classified as a major swap participant
for all classes of swaps.
``(40) Major security-based swap participant.--The term
`major security-based swap participant' has the same meaning as
in section 3(a)(67) of the Securities Exchange Act of 1934.
``(41) 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)).
``(42) 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.
``(43) Security-based swap dealer.--The term `security-
based swap dealer' has the same meaning as in section 3(a)(71)
of the Securities Exchange Act of 1934.
``(44) 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.
``(45) 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.
``(46) 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 3(a)(70) of the Securities
Exchange Act of 1934.
``(47) 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 a 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 a swap dealer or major swap participant, or any employee
of a 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 the term other than for purposes of
section 4s(b)(6).
``(48) Swap repository.--The term `swap repository' means
any person that collects, calculates, prepares or maintains
information or records with respect to transactions or
positions in or the terms and conditions of swaps entered into
by third parties.
``(49) Swap execution facility.--The term `swap execution
facility' means a person or entity that facilitates the
execution or trading of swaps between two persons through any
means of interstate commerce, but which is not a designated
contract market, including any electronic trade execution or
voice brokerage facility.
``(50) Derivative.--The term `derivative' means--
``(A) a contract of sale of a commodity for future
delivery; or
``(B) a swap.''.
(b) Authority to Further Define Terms.--The Commodity Futures
Trading Commission shall adopt a rule further defining the terms
``swap'', ``swap dealer'', ``major swap participant'', and ``eligible
contract participant'' for the purpose of including transactions and
entities that have been structured to evade this title.
(c) Exemptions.--Section 4(c) of the Commodity Exchange Act (7
U.S.C. 4(c)) is amended by adding at the end the following: ``The
Commission shall not have the authority to grant exemptions from the
provisions of sections 3101(a), 3101(c), 3104, 3105, 3106, 3107, 3109,
3110, 3113, 3115, 3120, and 3121 of the Derivative Markets Transparency
and Accountability Act of 2009, except as expressly authorized under
the provisions of that Act. Notwithstanding the preceding sentence, the
Commodity Futures Trading Commission may exempt from any provision of
the Commodity Exchange Act, pursuant to this subsection, an agreement,
contract, or transaction that is entered into pursuant to a tariff
approved by the Federal Energy Regulatory Commission, if the Commodity
Futures Trading Commission determines that the exemption would be
consistent with the public interest, and shall consider and not
unreasonably deny any request made by the Federal Energy Regulatory
Commission for such an exemption.''.
SEC. 3102. JURISDICTION.
(a) Exclusive Jurisdiction.--Section 2(a)(1) of the Commodity
Exchange Act (7 U.S.C. 2(a)(1)) is amended--
(1) in the 1st sentence of subparagraph (A)--
(A) by striking ``(c) through (i)'' and inserting
``(c) and (f)'';
(B) by inserting ``swaps, or'' before ``contracts
of sale'';
(C) by striking ``derivatives transaction execution
facility'' and inserting ``swap execution facility'';
and
(D) by striking ``5a'' and inserting ``5h''; and
(2) by adding at the end the following:
``(G)(i) Nothing in this paragraph shall limit the
jurisdiction conferred on the Securities and Exchange
Commission by the Derivative Markets Transparency and
Accountability Act of 2009 with regard to security-
based swap agreements as defined pursuant to section
3002(e) of such Act, and security-based swaps.
``(ii) In addition to the authority of the
Securities Exchange Commission described in clause (i),
nothing in this subparagraph shall limit or affect any
statutory authority of the Commission with respect to
an agreement, contract, or transaction described in
clause (i).
``(H)(i) Nothing in this Act shall limit or affect
any statutory authority of the Federal Energy
Regulatory Commission with respect to an agreement,
contract, or transaction that is--
``(I) not executed, traded, or cleared on a
registered entity or trading facility; and
``(II) entered into pursuant to a tariff or
rate schedule approved by the Federal Energy
Regulatory Commission.
``(ii) In addition to the authority of the Federal
Energy Regulatory Commission described in clause (i),
nothing in this subparagraph shall limit or affect any
statutory authority of the Commission with respect to
an agreement, contract, or transaction described in
clause (i).''.
(b) Additions.--Section 2(c)(2)(A) of such 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''.
(c) Section 12(e) of such Act (7 U.S.C. 16(e)) is amended--
(1) in paragraph (1)(B), by inserting ``or (3)'' after
``paragraph (2)'';
(2) in paragraph (2), by striking subparagraphs (A) and (B)
and inserting the following:
``(A) a swap; and
``(B) an agreement, contract, or transaction that
is excluded from this Act under section 2(c) or 2(f) of
this Act or title IV of the Commodity Futures
Modernization Act of 2000 or exempted under section
4(c) of this Act (regardless of whether any such
agreement, contract, or transaction is otherwise
subject to this Act).''; and
(3) by adding at the end the following:
``(3) A swap may not be regulated as an insurance contract
under State law.
``(4) The provisions of this Act relating to swaps that
were enacted by the Derivative Markets Transparency and
Accountability Act of 2009, including any rule or regulation
thereunder, shall not apply to activities outside the United
States unless those activities--
``(A) have a direct and significant connection with
activities in or effect on United States commerce; or
``(B) contravene such rules or regulations as the
Commission may prescribe as necessary or appropriate to
prevent the evasion of any provision of this Act that
was enacted by the Derivative Markets Transparency and
Accountability Act of 2009.''.
(d) Nothing in the Derivative Markets Transparency and
Accountability Act of 2009 or the amendments to the Commodity Exchange
Act made by such Act shall limit or affect any statutory enforcement
authority of the Federal Energy Regulatory Commission pursuant to
Section 222 of the Federal Power Act and Section 4A of the Natural Gas
Act that existed prior to the date of enactment of the Derivative
Markets Transparency and Accountability Act of 2009.
SEC. 3103. CLEARING AND EXECUTION TRANSPARENCY.
(a) Clearing and Execution Transparency Requirements.--
(1) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is
amended by striking subsections (d), (e), (g), and (h).
(2)(A) Prior to the final effective dates in this title, a
person may petition the Commodity Futures Trading Commission to
remain subject to paragraphs (3) through (7) of section 2(h) of
the Commodity Exchange Act.
(B) The Commodity Futures Trading Commission shall consider
any petition submitted under subparagraph (A) in a prompt
manner and may allow a person to continue operating subject to
paragraphs (3) through (7) of section 2(h) of the Commodity
Exchange Act for up to one year after the effective date of
this subtitle.
(3) Section 2 of such 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), (c)(2)(A)(ii), (e), (f), (j), and (k), sections
4a, 4b, 4b-1, 4c(a), 4c(b), 4o, 4r, 4s, 4t, 5, 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.''.
(4) Section 2 of such Act (7 U.S.C. 2) is further amended
by inserting after subsection (i) the following:
``(j) Clearing Requirement.--
``(1) In general.--
``(A) Standard for 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, and the Commission has
determined under paragraph (2)(B)(ii) that the swap is
required to be cleared.
``(B) Open access.--The rules of a derivatives
clearing organization described in subparagraph (A)
shall--
``(i) prescribe that all swaps submitted to
the derivatives clearing organization with the
same terms and conditions are economically
equivalent within the derivatives clearing
organization and may be offset with each other
within the derivatives clearing organization;
and
``(ii) provide for non-discriminatory
clearing of a swap executed bilaterally or on
or through the rules of an unaffiliated
designated contract market or swap execution
facility.
``(2) Commission review.--
``(A) Commission-initiated review.--
``(i) The Commission shall review each
swap, or any group, category, type or class of
swaps to make a determination as to whether the
swap or group, category, type, or class of
swaps should be required to be cleared.
``(ii) The Commission shall provide at
least a 30-day public comment period regarding
any determination made under clause (i).
``(B) Swap submissions.--
``(i) A derivatives clearing organization
shall submit to the Commission each swap, or
any group, category, type or class of swaps
that it plans to accept for clearing, and
provide notice to its members (in a manner to
be determined by the Commission) of the
submission.
``(ii) The Commission shall--
``(I) make available to the public
any submission received under clause
(i);
``(II) review each submission made
under clause (i), and determine whether
the swap, or group, category, type, or
class of swaps described in the
submission is required to be cleared;
and
``(III) provide at least a 30-day
public comment period regarding its
determination as to whether the
clearing requirement under paragraph
(1)(A) shall apply to the submission.
``(C) Deadline.--The Commission shall make its
determination under subparagraph (B)(ii) not later than
90 days after receiving a submission made under
subparagraph (B)(i), unless the submitting derivatives
clearing organization agrees to an extension for the
time limitation established under this subparagraph.
``(D) Determination.--
``(i) In reviewing a submission made under
subparagraph (B), the Commission shall review
whether the submission is consistent with
section 5b(c)(2).
``(ii) In reviewing a swap, group of swaps,
or class of swaps pursuant to subparagraph (A)
or a submission made under subparagraph (B),
the Commission shall take into account the
following factors:
``(I) The existence of significant
outstanding notional exposures, trading
liquidity and adequate pricing data.
``(II) The availability of rule
framework, capacity, operational
expertise and resources, and credit
support infrastructure to clear the
contract on terms that are consistent
with the material terms and trading
conventions on which the contract is
then traded.
``(III) The effect on the
mitigation of systemic risk, taking
into account the size of the market for
such contract and the resources of the
derivatives clearing organization
available to clear the contract.
``(IV) The effect on competition,
including appropriate fees and charges
applied to clearing.
``(V) The existence of reasonable
legal certainty in the event of the
insolvency of the relevant derivatives
clearing organization or 1 or more of
its clearing members with regard to the
treatment of customer and swap
counterparty positions, funds, and
property.
``(iii) In making a determination under
subparagraph (B)(ii) that the clearing
requirement shall apply, the Commission may
require such terms and conditions to the
requirement as the Commission determines to be
appropriate.
``(E) Rules.--Not later than 1 year after the date
of the enactment of the Derivative Markets Transparency
and Accountability Act of 2009, the Commission shall
adopt rules for a derivatives clearing organization's
submission for review, pursuant to this paragraph, of a
swap, or a group, category, type or class of swaps,
that it seeks to accept for clearing.
``(3) Stay of clearing requirement.--
``(A) After a determination pursuant to paragraph
(2)(B), the Commission, on application of a
counterparty to a swap or on its own initiative, may
stay the clearing requirement of paragraph (1) until
the Commission completes a review of the terms of the
swap (or the group, category, type or class of swaps)
and the clearing arrangement.
``(B) Deadline.--The Commission shall complete a
review undertaken pursuant to subparagraph (A) not
later than 90 days after issuance of the stay, unless
the derivatives clearing organization that clears the
swap, or group, category, type or class of swaps,
agrees to an extension of the time limitation
established under this subparagraph.
``(C) Determination.--Upon completion of the review
undertaken pursuant to subparagraph (A), the Commission
may--
``(i) determine, unconditionally or subject
to such terms and conditions as the Commission
determines to be appropriate, that the swap, or
group, category, type or class of swaps, must
be cleared pursuant to this subsection if it
finds that such clearing is consistent with
paragraph (2)(D); or
``(ii) determine that the clearing
requirement of paragraph (1) shall not apply to
the swap, or group, category, type or class of
swaps.
``(D) Rules.--Not later than 1 year after the date
of the enactment of the Derivative Markets Transparency
and Accountability 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 may prescribe
rules under this subsection, or issue interpretations of the
rules, as necessary to prevent evasions of this subsection.
``(5) Required reporting.--
``(A) In general.--All swaps that are not accepted
for clearing by any derivatives clearing organization
shall be reported either to 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. Counterparties to a swap
may agree which counterparty will report the swap as
required by this paragraph.
``(B) Swap dealer designation.--With regard to
swaps where only 1 counterparty is a swap dealer, the
swap dealer shall report the swap as required by this
paragraph.
``(6) Reporting transition rules.--Rules adopted by the
Commission under this section shall provide for the reporting
of data, as follows:
``(A) Swaps entered into before the date of the
enactment of this subsection shall be reported to a
registered swap repository or the Commission no later
than 180 days after the effective date of this
subsection; and
``(B) Swaps entered into on or after such date of
enactment shall be reported to a registered swap
repository or the Commission no later than the later
of--
``(i) 90 days after such effective date; or
``(ii) such other time after entering into
the swap as the Commission may prescribe by
rule or regulation.
``(7) Clearing transition rules.--
``(A) Swaps entered into before the date of the
enactment of this subsection are exempt from the
clearing requirements of this subsection if reported
pursuant to paragraph (6)(A).
``(B) Swaps entered into before application of the
clearing requirement pursuant to this subsection are
exempt from the clearing requirements of this
subsection if reported pursuant to paragraph (6)(B).
``(8) Exceptions.--
``(A) In general.--The requirements of paragraph
(1) shall not apply to a swap if one of the
counterparties to the swap--
``(i) is not a swap dealer or major swap
participant;
``(ii) is using swaps to hedge or mitigate
commercial risk, including operating or balance
sheet risk; and
``(iii) notifies the Commission, in a
manner set forth by the Commission, how it
generally meets its financial obligations
associated with entering into non-cleared
swaps.
``(B) Abuse of exception.--The Commission may
prescribe rules under this subsection, or issue
interpretations of the rules, as necessary to prevent
abuse of the exemption in subparagraph (A) by swap
dealers and major swap participants.
``(C) Option to clear.--The application of the
clearing exception in subparagraph (A) is solely at the
discretion of the counterparty to the swap that meets
the conditions of clauses (i) through (iii) of
subparagraph (A).
``(k) Execution Transparency.--
``(1) Requirement.--A swap that is subject to the clearing
requirement of subsection (j) shall not be traded except on or
through a board of trade designated as a contract market under
section 5, or on or through a swap execution facility
registered under section 5h, that makes the swap available for
trading.
``(2) Exceptions.--The requirement of paragraph (1) shall
not apply to a swap if no designated contract market or swap
execution facility makes the swap available for trading.
``(3) Agricultural swaps.--No person shall offer to enter
into, enter into or confirm the execution of, any swap in an
agricultural commodity (as defined by the Commission) that is
subject to paragraphs (1) and (2) except pursuant to a rule or
regulation of the Commission allowing the swap under such terms
and conditions as the Commission shall prescribe.
``(4) 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 that may
be prescribed by the Commission with respect to swaps subject
to the requirements of paragraph (1).
``(5) 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.''.
(b) Derivatives Clearing Organizations.--
(1) Subsections (a) and (b) of section 5b of such Act (7
U.S.C. 7a-1) are amended to read as follows:
``(a) Registration Requirement.--
``(1) In general.--It shall be unlawful for any entity,
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--
``(A) 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--
``(i) excluded from this Act by section
2(a)(1)(C)(i), 2(c), or 2(f); or
``(ii) a security futures product cleared
by a clearing agency registered with the
Securities and Exchange Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.); or
``(B) a swap.
``(2) Existing banks and clearing agencies.--A bank or a
clearing agency registered with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 required
to be registered as a derivatives clearing organization under
this section is deemed to be registered under this section to
the extent that the bank cleared swaps, as defined in this Act,
as a multilateral clearing organization or the clearing agency
cleared swaps, as defined in this Act, before the enactment of
this subsection. A bank to which this paragraph applies may, by
the vote of the shareholders owning not less than 51 percent of
the voting interests of the bank, be converted into a State
corporation, partnership, limited liability company, or other
similar legal form pursuant to a plan of conversion, if the
conversion is not in contravention of applicable State law.
``(b) Voluntary Registration.--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) Section 5b of such Act (7 U.S.C. 7a-1) is amended by
adding at the end the following:
``(g) Rules.--Not later than 1 year after the date of the enactment
of the Derivative Markets Transparency and Accountability Act of 2009,
the Commission shall adopt rules governing persons that are registered
as derivatives clearing organizations for swaps under this subsection.
``(h) Exemptions.--
``(1) In general.--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 the derivatives clearing organization
is subject to comparable, comprehensive supervision and
regulation on a consolidated basis by a Prudential Regulator or
the appropriate governmental authorities in the organization's
home country.
``(2) A person that is required to be registered as a
derivatives clearing organization under this section, whose
principal business is clearing securities and options on
securities and which is a clearing agency registered with the
Securities Exchange Commission under the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.), shall be unconditionally
exempt from registration under this section solely for the
purpose of clearing swaps, unless the Commission finds that the
clearing agency is not subject to comparable, comprehensive
supervision and regulation by the Securities and Exchange
Commission.
``(i) 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; and
``(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 this Act and
the rules and regulations issued under this
Act; and
``(C) 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. The procedures shall establish the
handling, management response, remediation, re-testing,
and closing of non-compliant issues.
``(3) Annual reports required.--The compliance officer
shall annually prepare and sign a report on the compliance of
the derivatives clearing organization with this Act and the
policies and procedures of the derivatives clearing
organization, including the code of ethics and conflict of
interest policies of the derivatives clearing organization, in
accordance with rules prescribed by the Commission. The
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 such Act (7 U.S.C. 7a-1(c)(2)) is
amended to read as follows:
``(2) Core principles for derivatives clearing
organizations.--
``(A) In general.--To be registered and to maintain
registration as a derivatives clearing organization, a
derivatives clearing organization shall comply with the
core principles specified in this paragraph 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,
a derivatives clearing organization shall have
reasonable discretion in establishing the manner in
which the organization complies with the core
principles.
``(B) Financial resources.--
``(i) The derivatives clearing organization
shall have adequate financial, operational, and
managerial resources to discharge the
responsibilities of the organization.
``(ii) The financial resources of the
derivatives clearing organization shall at a
minimum exceed the total amount that would--
``(I) enable the organization to
meet the financial obligations of the
organization to the members of, and
participants in, the organization,
notwithstanding a default by the member
or participant creating the largest
financial exposure for the organization
in extreme but plausible market
conditions; and
``(II) enable the organization to
cover the operating costs of the
organization for a period of 1 year,
calculated on a rolling basis.
``(C) Participant and product eligibility.--
``(i) The derivatives clearing organization
shall establish--
``(I) appropriate admission and
continuing eligibility standards
(including sufficient financial
resources and operational capacity to
meet obligations arising from
participation in the organization) for
members of and participants in the
organization; and
``(II) appropriate standards for
determining eligibility of agreements,
contracts, or transactions submitted to
the organization for clearing.
``(ii) The derivatives clearing
organization shall have procedures in place to
verify that participation and membership
requirements are met on an ongoing basis.
``(iii) The participation and membership
requirements of the derivatives clearing
organization shall be objective, publicly
disclosed, and permit fair and open access.
``(D) Risk management.--
``(i) The derivatives clearing organization
shall have the ability to manage the risks
associated with discharging the
responsibilities of a derivatives clearing
organization through the use of appropriate
tools and procedures.
``(ii) The derivatives clearing
organization shall measure the credit exposures
of the organization to the members of, and
participants in, the organization at least once
each business day and shall monitor the
exposures throughout the business day.
``(iii) Through margin requirements and
other risk control mechanisms, a derivatives
clearing organization shall limit the exposures
of the organization to potential losses from
defaults by the members of, and participants
in, the organization so that the operations of
the organization would not be disrupted and
non-defaulting members or participants would
not be exposed to losses that they cannot
anticipate or control.
``(iv) Margin required from all members and
participants shall be sufficient to cover
potential exposures in normal market
conditions.
``(v) The models and parameters used in
setting margin requirements shall be risk-based
and reviewed regularly.
``(E) Settlement procedures.--The derivatives
clearing organization shall--
``(i) complete money settlements on a
timely basis, and not less than once each
business day;
``(ii) employ money settlement arrangements
that eliminate or strictly limit the exposure
of the organization to settlement bank risks,
such as credit and liquidity risks from the use
of banks to effect money settlements;
``(iii) ensure money settlements are final
when effected;
``(iv) maintain an accurate record of the
flow of funds associated with each money
settlement;
``(v) have the ability to comply with the
terms and conditions of any permitted netting
or offset arrangements with other clearing
organizations; and
``(vi) for physical settlements, establish
rules that clearly state the obligations of the
organization with respect to physical
deliveries, including how risks from these
obligations shall be identified and managed.
``(F) Treatment of funds.--
``(i) The derivatives clearing organization
shall have standards and procedures designed to
protect and ensure the safety of member and
participant funds and assets.
``(ii) The derivatives clearing
organization shall hold member and participant
funds and assets in a manner whereby risk of
loss or of delay in the access of the
organization to the assets and funds is
minimized.
``(iii) Assets and funds invested by the
derivatives clearing organization shall be held
in instruments with minimal credit, market, and
liquidity risks.
``(G) Default rules and procedures.--
``(i) The derivatives clearing organization
shall have rules and procedures designed to
allow for the efficient, fair, and safe
management of events when members or
participants become insolvent or otherwise
default on their obligations to the
organization.
``(ii) The default procedures of the
derivatives clearing organization shall be
clearly stated, and they shall ensure that the
organization can take timely action to contain
losses and liquidity pressures and to continue
meeting the obligations of the organization.
``(iii) The default procedures shall be
publicly available.
``(H) Rule enforcement.--The derivatives clearing
organization shall--
``(i) maintain adequate arrangements and
resources for the effective monitoring and
enforcement of compliance with rules of the
organization and for resolution of disputes;
and
``(ii) have the authority and ability to
discipline, limit, suspend, or terminate the
activities of a member or participant for
violations of rules of the organization.
``(I) System safeguards.--The derivatives clearing
organization shall--
``(i) establish and maintain a program of
risk analysis and oversight to identify and
minimize sources of operational risk through
the development of appropriate controls and
procedures, and the development of automated
systems, that are reliable, secure, and have
adequate scalable capacity;
``(ii) establish and maintain emergency
procedures, backup facilities, and a plan for
disaster recovery that allows for the timely
recovery and resumption of operations and the
fulfillment of the responsibilities and
obligations of the organization; and
``(iii) periodically conduct tests to
verify that backup resources are sufficient to
ensure continued order processing and trade
matching, price reporting, market surveillance,
and maintenance of a comprehensive and accurate
audit trail.
``(J) Reporting.--The derivatives clearing
organization shall provide to the Commission all
information necessary for the Commission to conduct
oversight of the organization.
``(K) Recordkeeping.--The derivatives clearing
organization shall maintain records of all activities
related to the business of the organization as a
derivatives clearing organization in a form and manner
acceptable to the Commission for a period of 5 years.
``(L) Public information.--
``(i) The derivatives clearing organization
shall provide market participants with
sufficient information to identify and evaluate
accurately the risks and costs associated with
using the services of the organization.
``(ii) The derivatives clearing
organization shall make information concerning
the rules and operating procedures governing
the clearing and settlement systems (including
default procedures) of the organization
available to market participants.
``(iii) The derivatives clearing
organization shall disclose publicly and to the
Commission information concerning--
``(I) the terms and conditions of
contracts, agreements, and transactions
cleared and settled by the
organization;
``(II) clearing and other fees that
the organization charges the members
of, and participants in, the
organization;
``(III) the margin-setting
methodology and the size and
composition of the financial resource
package of the organization;
``(IV) other information relevant
to participation in the settlement and
clearing activities of the
organization; and
``(V) daily settlement prices,
volume, and open interest for all
contracts settled or cleared by the
organization.
``(M) Information-sharing.--The derivatives
clearing organization shall--
``(i) enter into and abide by the terms of
all appropriate and applicable domestic and
international information-sharing agreements;
and
``(ii) use relevant information obtained
from the agreements in carrying out the risk
management program of the organization.
``(N) Antitrust considerations.--The derivatives
clearing organization shall avoid--
``(i) adopting any rule or taking any
action that results in any unreasonable
restraint of trade; or
``(ii) imposing any material
anticompetitive burden.
``(O) Governance fitness standards.--
``(i) The derivatives clearing organization
shall establish governance arrangements that
are transparent in order to fulfill public
interest requirements and to support the
objectives of the owners of, and participants
in, the organization.
``(ii) The derivatives clearing
organization shall establish and enforce
appropriate fitness standards for the
directors, members of any disciplinary
committee, and members of the organization, and
any other persons with direct access to the
settlement or clearing activities of the
organization, including any parties affiliated
with any of the persons described in this
subparagraph.
``(P) Conflicts of interest.--The derivatives
clearing organization shall establish and enforce rules
to minimize conflicts of interest in the decision-
making process of the organization and establish a
process for resolving the conflicts of interest.
``(Q) Composition of the boards.--The derivatives
clearing organization shall ensure that the composition
of the governing board or committee includes market
participants.
``(R) Legal risk.--The derivatives clearing
organization shall have a well founded, transparent,
and enforceable legal framework for each aspect of its
activities.''.
(4) Section 5b of such Act (7 U.S.C. 7a-1) is further
amended by adding after subsection (i), as added by this
section, the following:
``(j) Reporting.--
``(1) In general.--A derivatives clearing organization that
clears swaps shall provide to the Commission all information
determined by the Commission to be necessary to perform the
responsibilities of the Commission 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. The Commission shall share
the information, upon request, with the Board, the Securities
and Exchange Commission, the appropriate Federal banking
agencies, the Financial Services Oversight Council, and the
Department of Justice or other persons the Commission deems
appropriate, including foreign financial supervisors (including
foreign futures authorities), foreign central banks, and
foreign ministries that comply with the provisions of section
8.
``(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).
``(3) A derivatives clearing organization shall keep any
such books and records relating to swaps defined in section
1a(35)(A)(v) open to inspection and examination by the
Securities and Exchange Commission.''.
(5) Section 8(e) of such Act (7 U.S.C. 12(e)) is amended in
the last sentence by inserting ``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)--
``(1) the Commodity Exchange Act shall not apply to, and
the Commodity Futures Trading Commission shall not exercise
regulatory authority under such Act with respect to, an
identified banking product; and
``(2) the definitions of `security-based swap' in section
3(a)(68) of the Securities Exchange Act of 1934 and `security-
based swap agreement' in section 3(a)(76) of the Securities
Exchange Act of 1934 do not include any identified banking
product.
``(b) Exception.--An appropriate Federal banking agency may except
an identified banking product of a bank under its regulatory
jurisdiction from the exclusions 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 3(a)(68) of the Securities and Exchange
Act of 1934; and
``(2) has become known to the trade as a swap or security-
based swap, or otherwise has been structured as an identified
banking product for the purpose of evading the provisions of
the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities
Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.).
``(c) Exception.--The exclusions in subsection (a) shall not apply
to an identified 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 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.).''.
SEC. 3104. PUBLIC REPORTING OF AGGREGATE SWAP DATA.
Section 8 of the Commodity Exchange Act (7 U.S.C. 12) is amended by
adding at the end 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(j)(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 the 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) Rules.--Not later than 1 year after the date of the enactment
of the Derivative Markets Transparency and Accountability Act of 2009,
the Commission shall adopt rules governing persons that are registered
under this section, including rules that specify the data elements that
shall be collected and maintained.
``(e) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap repository from the requirements of this
section if the Commission finds that the 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 have the swap cleared 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 timeframes)
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 the 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 the person is registered as a major
swap participant with the Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a swap dealer
or major swap participant by filing a registration application
with the Commission.
``(2) Contents.--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. The person, when registered as a swap dealer or major
swap participant, shall continue to report and furnish to the
Commission such information pertaining to the 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.
Except with regard to subsection (d)(1)(A), the Commission may
provide conditional or unconditional exemptions from some or
all of the rules or requirements prescribed under this section
for 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 1 year after the effective date of
the Derivative Markets Transparency and Accountability 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 the swap dealer or major swap participant, if the
swap dealer or major swap participant knew, or in the exercise
of reasonable care should have known, of the statutory
disqualification.
``(c) Rules.--
``(1) In general.--Not later than 1 year after the date of
the enactment of this section, the Commission shall adopt rules
for persons that are registered as swap dealers or major swap
participants under this section.
``(2) Exception for prudential requirements.--The
Commission shall not prescribe rules imposing prudential
requirements on swap dealers or major swap participants for
which there is a Prudential Regulator. This provision shall not
be construed as limiting the authority of the Commission to
prescribe appropriate business conduct, reporting, and
recordkeeping requirements to protect investors.
``(d) 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 initial and variation margin requirements
as the Prudential Regulators shall by rule or
regulation jointly prescribe that:
``(i) help ensure the safety and soundness
of the swap dealer or major swap participant;
and
``(ii) are appropriate for the risk
associated with the non-cleared swaps held as a
swap dealer or major swap participant.
``(B) Non-bank 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 initial and variation margin requirements
as the Commission shall by rule or regulation prescribe
that--
``(i) help ensure the safety and soundness
of the swap dealer or major swap participant;
and
``(ii) are appropriate for the risk
associated with the non-cleared swaps held as a
swap dealer or major swap participant.
``(2) Rules.--
``(A) Bank swap dealers and major swap
participants.--No later than 1 year after the date of
the enactment of the Derivative Markets Transparency
and Accountability Act of 2009, the Prudential
Regulators, in consultation with the Commission, shall
jointly adopt rules imposing capital and margin
requirements under this subsection for swap dealers and
major swap participants, with respect to their
activities as a swap dealer or major swap participant
for which there is a Prudential Regulator.
``(B) Non-bank swap dealers and major swap
participants.--No later than 1 year after the date of
the enactment of the Derivative Markets Transparency
and Accountability Act of 2009, the Commission shall
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) Authority.--Nothing in this section shall limit the
authority of the Commission to set capital requirements for a
registered futures commission merchant or introducing broker in
accordance with section 4f.
``(e) 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
the 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 the 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 swaps defined in section 1a(35)(A)(v) open
to inspection and examination by the Securities and
Exchange Commission.
``(2) Rules.--No later than 1 year after the date of the
enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
governing reporting and recordkeeping for swap dealers and
major swap participants.
``(f) 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.--No later than 1 year after the date of the
enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
governing daily trading records for swap dealers and major swap
participants.
``(g) 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;
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 or major 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 derivatives clearing organization,
and for non-cleared swaps, upon 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 shall prescribe rules under
this subsection governing business conduct standards for swap
dealers and major swap participants no later than 1 year after
the date of the enactment of the Derivative Markets
Transparency and Accountability Act of 2009.
``(h) Documentation 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.--No later than 1 year after the date of the
enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
governing the standards described in paragraph (1) for swap
dealers and major swap participants.
``(i) 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 or
to the Prudential Regulator for the swap dealer or major swap
participant, as applicable, information concerning--
``(A) terms and conditions of its swaps;
``(B) swap trading operations, mechanisms, and
practices;
``(C) financial integrity protections relating to
swaps; and
``(D) other information relevant to its trading in
swaps.
``(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 or
to the Prudential Regulator for the 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.--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.''.
SEC. 3108. 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. 3109. 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.--A person may not operate a swap execution
facility unless the facility is registered under this section or is
registered with the Commission as a designated contract market under
section 5 or a swap execution facility under section 5.
``(b) Requirements for Trading.--
``(1) A swap execution facility that is registered under
subsection (a) may make available for trading any swap.
``(2) Rules for trading through the facility.--Not later
than 1 year after the date of the enactment of the Derivative
Markets Transparency and Accountability Act of 2009, the
Commission shall adopt rules to allow a swap to be traded
through the facilities of a designated contract market or a
swap execution facility. Such rules shall permit an
intermediary, acting as principal or agent, to enter into or
execute a swap, notwithstanding section 2(k), if the swap is
executed, reported, recorded, or confirmed in accordance with
the rules of the designated contract market or swap execution
facility.
``(3) Agricultural swaps.--A swap execution facility may
not list for trading or confirm the execution of any swap in an
agricultural commodity (as defined by the Commission) except
pursuant to a rule or regulation of the Commission allowing the
swap under such terms and conditions as the Commission shall
prescribe.
``(c) 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) Core Principles for Swap Execution Facilities.--
``(1) In general.--To be registered as, and 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--
``(A) 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;
and
``(B) 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--
``(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) 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--
``(A) 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; and
``(B) monitor trading in swaps to prevent
manipulation, price distortion, and disruptions of the
delivery or cash settlement process through
surveillance, compliance, and disciplinary practices
and procedures, including methods for conducting real-
time monitoring of trading and comprehensive and
accurate trade reconstructions.
``(5) Ability to obtain information.--The swap execution
facility shall--
``(A) establish and enforce rules that will allow
the facility to obtain any necessary information to
perform any of the functions described in this section;
``(B) provide the information to the Commission
upon request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(6) Position limits or accountability.--
``(A) To reduce the potential threat of market
manipulation or congestion, especially during trading
in the delivery month, a swap execution facility that
is a trading facility shall adopt for each of its
contracts made available for trading on the trading
facility, where necessary and appropriate, position
limitations or position accountability for speculators
who establish positions in the contract.
``(B) For any contract of a swap execution facility
that is subject to a position limitation established by
the Commission pursuant to section 4a(a), the swap
execution facility--
``(i) may set a position limitation at a
level that is lower than the Commission
limitation; and
``(ii) shall monitor positions established
on or through the swap execution facility for
compliance with the limit set by the Commission
and the limit, if any, set by the swap
execution facility.
``(7) Financial integrity of transactions.--The swap
execution facility shall establish and enforce rules and
procedures for ensuring the financial integrity of swaps
entered on or through its facilities, including the clearance
and settlement of the swaps pursuant to section 2(j)(1).
``(8) Emergency authority.--The swap execution facility
shall adopt rules to provide for the exercise of emergency
authority, in consultation or cooperation with the Commission,
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.
``(9) 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. The Commission shall
evaluate the impact of public disclosure on market liquidity in
the relevant market, and shall seek to avoid public disclosure
of information in a manner that would significantly reduce
market liquidity. The Commission shall not disclose information
related to the internal business decisions of particular market
participants.
``(10) 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 keep any such records relating to
swaps defined in section 1a(35)(A)(v) open to inspection and
examination by the Securities and Exchange Commission. 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.
``(11) Antitrust considerations.--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.
``(12) Conflicts of interest.--The swap execution facility
shall--
``(A) establish and enforce rules to minimize
conflicts of interest in its decision-making process;
and
``(B) establish a process for resolving the
conflicts of interest.
``(13) Financial resources.--
``(A) The swap execution facility shall have
adequate financial, operational, and managerial
resources to discharge its responsibilities.
``(B) The financial resources of the swap execution
facility shall be considered adequate if their value
exceeds the total amount that would enable the facility
to cover its operating costs for a period of 1 year,
calculated on a rolling basis.
``(14) System safeguards.--The swap execution facility
shall--
``(A) establish and maintain a program of risk
analysis and oversight to identify and minimize sources
of operational risk, through the development of
appropriate controls and procedures, and the
development of automated systems, that are reliable,
secure, and have adequate scalable capacity;
``(B) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery
that allow for the timely recovery and resumption of
operations and the fulfillment of the swap execution
facility's responsibilities and obligation; and
``(C) periodically conduct tests to verify that
backup resources are sufficient to ensure continued
order processing and trade matching, price reporting,
market surveillance, and maintenance of a comprehensive
and accurate audit trail.
``(15) 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 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 this
Act and the rules and regulations
issued under this Act, 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, and for 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 this Act and its
policies and procedures, including its code of ethics
and conflict of interest policies, in accordance with
rules prescribed by the Commission. The 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.
``(e) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap execution facility from registration under this
section if the Commission finds that the facility is subject to
comparable, comprehensive supervision and regulation on a consolidated
basis by the Securities and Exchange Commission, a Prudential Regulator
or the appropriate governmental authorities in the organization's home
country.
``(f) Rules.--No later than 1 year after the date of the enactment
of the Derivative Markets Transparency and Accountability Act of 2009,
the Commission shall prescribe rules governing the regulation of swap
execution facilities under this section.''.
SEC. 3110. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND EXEMPT
BOARDS OF TRADE.
(a) Sections 5a and 5d of the Commodity Exchange Act (7 U.S.C. 1 et
seq.) are repealed.
(b)(1) Prior to the final effective dates in this title, a person
may petition the Commodity Futures Trading Commission to remain subject
to the provisions of section 5d of the Commodity Exchange Act, as such
provisions existed prior to the effective date of this subtitle.
(2) The Commodity Futures Trading Commission shall consider any
petition submitted under paragraph (1) in a prompt manner and may allow
a person to continue operating subject to the provisions of section 5d
of the Commodity Exchange Act for up to 1 year after the effective date
of this subtitle.
SEC. 3111. DESIGNATED CONTRACT MARKETS.
(a) Section 5(d) of the Commodity Exchange Act (7 U.S.C. 7(d)) is
amended by striking paragraphs (1) and (2) and inserting the following:
``(1) In general.--To be designated as, and to maintain the
designation of a board of trade as a contract market, the board
of trade 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 board of trade shall have reasonable discretion
in establishing the manner in which it complies with the core
principles.
``(2) Compliance with rules.--
``(A) The board of trade shall monitor and enforce
compliance with the rules of the contract market,
including access requirements, the terms and conditions
of any contracts to be traded on the contract market
and the contract market's abusive trade practice
prohibitions.
``(B) The board of trade shall have the capacity to
detect, investigate, and apply appropriate sanctions
to, any person or entity that violates the rules.
``(C) The rules shall provide the board of trade
with the ability and authority to obtain any necessary
information to perform any of the functions described
in this subsection, including the capacity to carry out
such international information-sharing agreements as
the Commission may require.''.
(b) Section 5(d) of such Act (7 U.S.C. 7(d)) is amended by striking
paragraphs (4) and (5) and inserting the following:
``(4) Prevention of market disruption.--The board of trade
shall have the capacity and responsibility to prevent
manipulation, price distortion, and disruptions of the delivery
or cash-settlement process through market surveillance,
compliance, and enforcement practices and procedures, including
methods for conducting real-time monitoring of trading and
comprehensive and accurate trade reconstructions.
``(5) Position limitations or accountability.--
``(A) To reduce the potential threat of market
manipulation or congestion, especially during trading
in the delivery month, the board of trade shall adopt
for each of its contracts, where necessary and
appropriate, position limitations or position
accountability for speculators.
``(B) For any contract that is subject to a
position limitation established by the Commission
pursuant to section 4a(a), the board of trade shall set
its position limitation at a level no higher than the
Commission-established limitation.''.
(c) Section 5(d) of such Act (7 U.S.C. 7(d)) is amended by striking
paragraph (7) and inserting the following:
``(7) Availability of general information.--The board of
trade shall make available to market authorities, market
participants, and the public accurate information concerning--
``(A) the terms and conditions of the contracts of
the contract market; and
``(B) the rules, regulations and mechanisms for
executing transactions on or through the facilities of
the contract market, and the rules and specifications
describing the operation of the board of trade's
electronic matching platform or other trade execution
facility.''.
(d) Section 5(d) of such 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.''.
(e) Section 5(d)(17) of such Act (7 U.S.C. 7(d)(17)) is amended by
adding at the end the following: ``The board of trade shall keep any
such records relating to swaps defined in section 1a(35)(A)(v) open to
inspection and examination by the Securities and Exchange
Commission.''.
(f) Section 5(d) of such Act (7 U.S.C. 7(d)) is amended by adding
at the end the following:
``(19) Financial resources.--The board of trade shall have
adequate financial, operational, and managerial resources to
discharge the responsibilities of a contract market. For the
financial resources of a board of trade 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 1 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.
``(21) Diversity of boards of directors.--The board of
trade, if a publicly traded company, shall endeavor to recruit
individuals to serve on the board of directors and the other
decision-making bodies (as determined by the Commission) of the
board of trade from among, and to have the composition of the
bodies reflect, a broad and culturally diverse pool of
qualified candidates.
``(22) Disciplinary procedures.--The board of trade shall
establish and enforce disciplinary procedures that authorize
the board of trade to discipline, suspend, or expel members or
market participants that violate the rules of the board of
trade, or similar methods for performing the same functions,
including delegation of the functions to third parties.''.
(g) Section 5 of such Act (7 U.S.C. 7) is amended by striking
subsection (b).
SEC. 3112. MARGIN.
(a) Section 8a(7)(C) of the Commodity Exchange Act (7 U.S.C.
12a(7)(C)) is amended by striking ``, excepting the setting of levels
of margin''.
(b) Section 8a(7) of such Act (7 U.S.C. 12a(7)) is amended by
redesignating subparagraphs (D) through (F) as subparagraphs (E)
through (G), respectively, and inserting after subparagraph (C) the
following:
``(D) margin requirements, provided that such
rules, regulations, or orders shall--
``(i) be limited to protecting the
financial integrity of the derivatives clearing
organization;
``(ii) be designed for risk management
purposes in order to protect the financial
integrity of transactions; and
``(iii) not set specific margin amounts.''.
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 registered
entities'';
(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 registered
entities,''; and
(5) inserting at the end the following:
``(2)(A) In accordance with the standards set forth in
paragraph (1) of this subsection and consistent with the good
faith exception cited in subsection (b)(2), with respect to
physical commodities other than excluded commodities as defined
by the Commission, the Commission shall by rule, regulation, or
order establish limits on the amount of positions, as
appropriate, other than bona fide hedge positions, that may be
held by any person with respect to contracts of sale for future
delivery or with respect to options on the contracts or
commodities traded on or subject to the rules of a designated
contract market.
``(B)(i) For exempt commodities, the limits shall be
established within 180 days after the date of the enactment of
this paragraph.
``(ii) For agricultural commodities, the limits shall be
established within 270 days after the date of the enactment of
this paragraph.
``(C) In establishing the limits, the Commission shall
strive to ensure that trading on foreign boards of trade in the
same commodity will be subject to comparable limits and that
any limits to be imposed by the Commission will not cause price
discovery in the commodity to shift to trading on the foreign
boards of trade.
``(3) In establishing the limits required in paragraph (2),
the Commission, as appropriate, shall set limits--
``(A) on the number of positions that may be held
by any person for the spot month, each other month, and
the aggregate number of positions that may be held by
any person for all months; and
``(B) to the maximum extent practicable, in its
discretion--
``(i) to diminish, eliminate, or prevent
excessive speculation as described under this
section;
``(ii) to deter and prevent market
manipulation, squeezes, and corners;
``(iii) to ensure sufficient market
liquidity for bona fide hedgers; and
``(iv) to ensure that the price discovery
function of the underlying market is not
disrupted.
``(4)(A) Not later than 150 days after the establishment of
position limits pursuant to paragraph (2), and biannually
thereafter, the Commission shall hold 2 public hearings, 1 for
agriculture commodities and 1 for energy commodities as such
terms are defined by the Commission, in order to receive
recommendations regarding the position limits to be established
in paragraph (2).
``(B) Each public hearing held pursuant to subparagraph (A)
shall, at a minimum providing there is sufficient interest,
receive recommendations from--
``(i) 7 predominantly commercial short hedgers of
the actual physical commodity for future delivery;
``(ii) 7 predominantly commercial long hedgers of
the actual physical commodity for future delivery;
``(iii) 4 non-commercial participants in markets
for commodities for future delivery; and
``(iv) each designated contract market upon which a
contract in the commodity for future delivery is
traded.
``(C) Within 60 days after each public hearing held
pursuant to subparagraph (A), the Commission shall publish in
the Federal Register its response to the recommendations
regarding position limits heard at the hearing.
``(5) 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; and
``(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.
``(6) Economically equivalent contracts.--
``(A) Notwithstanding any other provision of this
section, the Commission shall establish limits on the
amount of positions, including aggregate position
limits, as appropriate, other than bona fide hedge
positions, that may be held by any person with respect
to swaps that are economically equivalent to contracts
of sale for future delivery or to options on the
contracts or commodities traded on or subject to the
rules of a designated contract market subject to
paragraph (2).
``(B) In establishing limits pursuant to
subparagraph (A), the Commission shall--
``(i) develop the limits concurrently with
limits established under paragraph (2), and the
limits shall have similar requirements as under
paragraph (3)(B); and
``(ii) establish the limits simultaneously
with limits established under paragraph (2).
``(7) Aggregate position limits.--The Commission shall, by
rule or regulation, establish limits (including related hedge
exemption provisions) on the aggregate number or amount of
positions in contracts based upon the same underlying commodity
(as defined by the Commission) that may be held by any person,
including any group or class of traders, for each month
across--
``(A) contracts listed by designated contract
markets;
``(B) with respect to an agreement contract, or
transaction that settles against any price (including
the daily or final settlement price) of 1 or more
contracts listed for trading on a registered entity,
contracts traded on a foreign board of trade that
provides members or other participants located in the
United States with direct access to its electronic
trading and order matching system; and
``(C) swap contracts that perform or affect a
significant price discovery function with respect to
regulated entities.
``(8) Exemptions.--The Commission, by rule, regulation, or
order, may exempt, conditionally or unconditionally, any person
or class of persons, any swap or class of swaps, any contract
of sale of a commodity for future delivery or class of such
contracts, any option or class of options, or any transaction
or class of transactions from any requirement it may establish
under this section with respect to position limits.''.
(b) Section 4a(b) of such Act (7 U.S.C. 6a(b)) is amended--
(1) in paragraph (1), by striking ``or derivatives
transaction execution facility or facilities or electronic
trading facility'' and inserting ``or swap execution facility
or facilities''; and
(2) in paragraph (2), by striking ``or derivatives
transaction execution facility or facilities or electronic
trading facility'' and inserting ``or swap execution
facility''.
(c) Section 4a(c) of such Act is amended--
(1) by inserting ``(1)'' after ``(c)''; and
(2) by adding after and below the end the following:
``(2) For the purposes of implementation of subsection
(a)(2) for contracts of sale for future delivery or options on
the contracts or commodities, the Commission shall define what
constitutes a bona fide hedging transaction or position as a
transaction or position that--
``(A)(i) represents a substitute for transactions
made or to be made or positions taken or to be taken at
a later time in a physical marketing channel;
``(ii) is economically appropriate to the reduction
of risks in the conduct and management of a commercial
enterprise; and
``(iii) arises from the potential change in the
value of--
``(I) assets that a person owns, produces,
manufactures, processes, or merchandises or
anticipates owning, producing, manufacturing,
processing, or merchandising;
``(II) liabilities that a person owns or
anticipates incurring; or
``(III) services that a person provides,
purchases, or anticipates providing or
purchasing; or
``(B) reduces risks attendant to a position
resulting from a swap that--
``(i) was executed opposite a counterparty
for which the transaction would qualify as a
bona fide hedging transaction pursuant to
subparagraph (A); or
``(ii) meets the requirements of
subparagraph (A).''.
(d) This section shall become effective on the date of its
enactment.
SEC. 3114. ENHANCED AUTHORITY OVER REGISTERED ENTITIES.
(a) Section 5c(a) of the Commodity Exchange Act (7 U.S.C. 7a-2(a))
is amended--
(1) in paragraph (1), by striking ``5a(d) and 5b(c)(2)''
and inserting ``5b(c)(2) and 5h(e)''; and
(2) in paragraph (2), by striking ``shall not'' and
inserting ``may''.
(b) Section 5c(b) of such Act (7 U.S.C. 7a-2(b)) is amended in each
of paragraphs (1), (2), and (3) by inserting ``or swap execution
facility'' after ``contract market'' each place it appears.
(c) Section 5c(c)(1) of such Act (7 U.S.C. 7a-2(c)(1)) is amended--
(1) by inserting ``(A)'' after ``In general.--''; and
(2) by adding at the end the following:
``(B) The new rule or rule amendment shall become
effective, pursuant to the registered entity's certification
and notice of such certification to its members (in a manner to
be determined by the Commission), 10 business days after the
Commission's receipt of the certification (or such shorter
period determined by the Commission by rule or regulation)
unless the Commission notifies the registered entity within
such time that it is staying the certification because there
exist novel or complex issues that require additional time to
analyze, an inadequate explanation by the submitting registered
entity, or a potential inconsistency with this Act (including
regulations under this Act).
``(C)(i) A notification by the Commission pursuant to
subparagraph (B) shall stay the certification of the new
contract or instrument or clearing of the new contract or
instrument, new rule or new amendment for up to an additional
90 days from the date of the notification.
``(ii) The Commission shall provide at least a 30-day
public comment period, within the 90-day period in which the
stay is in effect described in clause (i), whenever it reviews
a rule or rule amendment pursuant to a notification by the
Commission under this paragraph.''.
(d) Section 5c(d) of such Act (7 U.S.C. 7a-2(d)) is repealed.
SEC. 3115. FOREIGN BOARDS OF TRADE.
(a) In General.--Section 4 of the Commodity Exchange Act (7 U.S.C.
6) is amended by adding at the end the following:
``(e) Foreign Boards of Trade.--
``(1) In general.--The Commission may not permit a foreign
board of trade to provide to the members of the foreign board
of trade or other participants located in the United States
direct access to the electronic trading and order-matching
system of the foreign board of trade with respect to an
agreement, contract, or transaction that settles against any
price (including the daily or final settlement price) of 1 or
more contracts listed for trading on a registered entity,
unless the Commission determines that--
``(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, taking into consideration the
relative sizes of the respective markets, 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 the
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.
``(2) Existing foreign boards of trade.--Paragraph (1)
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.
``(3) Persons located in the united states.--''.
(b) Liability of Registered Persons Trading on a Foreign Board of
Trade.--
(1) Section 4(a) of such 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 such Act (7 U.S.C. 6) is further amended
by adding at the end the following:
``(f)(1) A person registered with the Commission, or exempt from
registration by the Commission, under this Act may not be found to have
violated subsection (a) with respect to a transaction in, or in
connection with, a contract of sale of a commodity for future delivery
if the person--
``(A) has reason to believe that the transaction and the
contract is made on or subject to the rules of a foreign board
of trade that is--
``(i) legally organized under the laws of a foreign
country;
``(ii) authorized to act as a board of trade by a
foreign futures authority; and
``(iii) subject to regulation by the foreign
futures authority; and
``(B) has not been determined by the Commission to be
operating in violation of subsection (a).
``(2) Nothing in this subsection shall be construed as implying or
creating any presumption that a board of trade, exchange, or market is
located outside the United States, or its territories or possessions,
for purposes of subsection (a).''.
(c) Contract Enforcement for Foreign Futures Contracts.--Section
22(a) of such 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) A hybrid instrument sold to any investor
shall not be void, voidable, or unenforceable, and a
party to such a hybrid instrument shall not 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; and
``(B) An agreement, contract, or transaction
between eligible contract participants or persons
reasonably believed to be eligible contract
participants shall not be void, voidable, or
unenforceable, and a party thereto shall not be
entitled to rescind, or recover any payment made with
respect to, such an 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, be traded
in the manner set forth in section 2(k)(1), or be
cleared pursuant to 2(j)(1) or regulations of the
Commission pursuant thereto.''.
SEC. 3117. FDICIA AMENDMENTS.
Sections 408 and 409 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4421 and 4422) are repealed.
SEC. 3118. ENFORCEMENT AUTHORITY.
(a) The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4b the following:
``SEC. 4B-1. ENFORCEMENT AUTHORITY.
``(a) CFTC.--Except as provided in subsection (b), the Commission
shall have exclusive authority to enforce the provisions of subtitle A
of the Derivative Markets Transparency and Accountability 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(d) 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.--(1) If the Prudential Regulator for a swap dealer
or major swap participant has cause to believe that the 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.
``(2) If the Commission has cause to believe that a swap dealer or
major swap participant that has a Prudential Regulator may have engaged
in conduct that constitutes a violation of the prudential requirements
of section 4s or rules adopted thereunder, the Commission may recommend
in writing to the Prudential Regulator that the Prudential Regulator
initiate an enforcement proceeding as authorized under this Act. The
recommendation shall be accompanied by a written explanation of the
concerns given rise to the recommendation.''.
(b)(1) Section 4c(a) of such Act (7 U.S.C. 6c(a)) is amended by
adding at the end the following:
``(3) Disruptive practices.--It shall be unlawful for any
person to engage in any trading or practice on or subject to
the rules of a registered entity that--
``(A) violates bids and offers (intentionally
bidding at a price higher than the lowest offer, or
offering at a price lower than the highest bid);
``(B) is, is of the character of, or is commonly
known to the trade as `marking the close' (bidding or
offering during or near the market's closing period
with the intent to influence the settlement price);
``(C) is, is of the character of, or is commonly
known to the trade as `spoofing' (bidding or offering
with the intent to cancel the bid or offer before
execution); or
``(D) constitutes uneconomic trading (trading that
has no legitimate economic purpose but for the effect
on price).
``(4) The Commission may make and promulgate such rules and
regulations as, in the judgment of the Commission, are
reasonably necessary to prohibit any other trading practice
that is disruptive of fair and equitable trading.''.
(2) The amendment made by paragraph (1) shall become effective upon
enactment.
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 such 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 such 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 such 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 such Act (7 U.S.C. 13(a)(4)) is amended by
inserting ``swap repository,'' before ``or futures association''.
(f) Section 9(e)(1) of such 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 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, security-based 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 Derivative Markets Transparency and Accountability Act of
2009.''.
SEC. 3120. RETAIL COMMODITY TRANSACTIONS.
(a) Section 2(c) of the Commodity Exchange Act (7 U.S.C. 2(c)) is
amended--
(1) in paragraph (1), by striking ``(other than section 5a
(to the extent provided in section 5a(g)), 5b, 5d, or
12(e)(2)(B))'' and inserting ``(other than section 5b or
12(e)(2)(B))''; and
(2) in paragraph (2), by inserting after subparagraph (C)
the following:
``(D) Retail commodity transactions.--
``(i) This subparagraph shall apply to, and
the Commission shall have jurisdiction over,
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 longer period as the
Commission may determine by
rule or regulation based upon
the typical commercial practice
in cash or spot markets for the
commodity involved; or
``(bb) creates an
enforceable obligation to
deliver between a seller and a
buyer that have the ability to
deliver and accept delivery,
respectively, in connection
with 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.''.
(b) The amendments made by subsection (a) shall become effective on
the date of the enactment of this section.
SEC. 3121. LARGE SWAP TRADER REPORTING.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4s (as added by section 3107 of this Act) the
following:
``SEC. 4T. 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 registered entities if--
``(1) the person directly or indirectly enters into such
swaps during any 1 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 directly or indirectly has or obtains 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 the person files or causes to be filed with the properly
designated officer of the Commission such reports regarding any
transactions or positions described in 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, the person keeps
books and records of all such swaps and any transactions and positions
in any related commodity traded on or subject to the rules of any board
of trade, and of cash or spot transactions in, inventories of, and
purchase and sale commitments of, such a commodity.
``(b) The books and records shall show complete details concerning
all transactions and positions as the Commission may by rule or
regulation prescribe.
``(c) The books and records shall be open at all times to
inspection and examination by any representative of the Commission.
``(d) For the purpose of this subsection, the swaps, futures and
cash or spot transactions and positions of any person shall include the
transactions and positions of any persons directly or indirectly
controlled by the person.
``(e) 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. 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 4t the following:
``SEC. 4U. 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 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 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) Further Audit Reporting.--If a swap dealer does not segregate
funds pursuant to 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 procedures relating to margin and collateral
requirements are in compliance with the agreement of the
counterparties.''.
SEC. 3123. OTHER AUTHORITY.
Unless otherwise provided by its terms, this subtitle 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. 3124. ANTITRUST.
Nothing in the amendments made by this subtitle 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 the term in subsection (a) of the first section
of the Clayton Act, except that the term includes section 5 of the
Federal Trade Commission Act to the extent that such section 5 applies
to unfair methods of competition.
SEC. 3125. REVIEW OF PRIOR ACTIONS.
Notwithstanding any other provision of the Commodity Exchange Act,
the Commodity Futures Trading Commission shall review, as appropriate,
all regulations, rules, exemptions, exclusions, guidance, no action
letters, orders, other actions taken by or on behalf of the Commission,
and any action taken pursuant to the Commodity Exchange Act by an
exchange, self-regulatory organization, or any other registered entity,
that are currently in effect, to ensure that such prior actions are in
compliance with the provisions of this title.
SEC. 3126. EXPEDITED PROCESS.
The Commodity Futures Trading Commission may use emergency and
expedited procedures (including any administrative or other procedure
as appropriate) to carry out this title if, in its discretion, it deems
it necessary to do so.
SEC. 3127. EFFECTIVE DATE.
(a) Unless otherwise provided, the provisions of this subtitle
shall become effective the later of 270 days after the date of the
enactment of this subtitle or, to the extent a provision of this
subtitle requires rulemaking, no less than 60 days after publication of
a final rule or regulation implementing such provision of this
subtitle.
(b) Subsection (a) shall not preclude the Commodity Futures Trading
Commission from any rulemaking required or directed under this subtitle
to implement the provisions of this subtitle.
Subtitle B--Regulation of Security-Based Swap Markets
SEC. 3201. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
(a) Definitions.--Section 3(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)) is amended--
(1) in 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 the word ``securities'' in each place it appears;
(2) in paragraph (10), by inserting ``security-based
swap,'' after ``security future,'';
(3) in paragraph (13), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or
extinguishing of rights or obligations under, a security-based
swap, as the context may require.'';
(4) in paragraph (14), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or
extinguishing of rights or obligations under, a security-based
swap, as the context may require.'';
(5) in paragraph (39)--
(A) by striking ``or government securities dealer''
and adding ``government securities dealer, security-
based swap dealer or major security-based swap
participant'' in its place in subparagraph (B)(i)(I);
(B) by adding ``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 adding ``government securities dealer, security-
based swap dealer or major security-based swap
participant'' in its place in subparagraph (C); and
(D) by adding ``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(12)
of the Commodity Exchange Act (7 U.S.C. 1a(12)).
``(66) Major swap participant.--The term `major swap
participant' has the same meaning as in section 1a(39) of the
Commodity Exchange Act (7 U.S.C. 1a(39)).
``(67) Major security-based swap participant.--
``(A) In general.--The term `major security-based
swap participant' means any person who is not a
security-based swap dealer, and--
``(i) maintains a substantial net position
in outstanding security-based swaps, excluding
positions held primarily for hedging, reducing
or otherwise mitigating its commercial risk,
including operating and balance sheet risk; or
``(ii) whose outstanding security-based
swaps create substantial net counterparty
exposure among the aggregate of its
counterparties that could expose those
counterparties to significant credit losses.
``(B) Definition of `substantial net position'.--
The Commission shall define by rule or regulation the
terms `substantial net position', `substantial net
counterparty exposure', and `significant credit losses'
at thresholds that the Commission determines prudent
for the effective monitoring, management and oversight
of entities which are systemically important or can
significantly impact the financial system through
counterparty credit risk. In setting the definitions,
the Commission shall consider the person's relative
position in uncleared as opposed to cleared swaps.
``(C) A person may be designated a major security-
based swap participant for 1 or more individual types
of security-based swaps without being classified as a
major security-based swap participant for all classes
of security-based swaps.
``(68) Security-based swap.--
``(A) In general.--Except as provided in
subparagraph (B), the term `security-based swap' means
any agreement, contract, or transaction that would be a
swap under section 1a(35) of the Commodity Exchange
Act, and that--
``(i) is primarily based on an index that
is a narrow-based security index, including any
interest therein or based on the value thereof;
``(ii) is primarily based on a single
security or loan, including any interest
therein or based on the value thereof; or
``(iii) is primarily 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) Rule of construction regarding master
agreements.--The term `security-based swap' shall be
construed to include a master agreement that provides
for an agreement, contract, or transaction that is a
security-based swap pursuant to subparagraph (A),
together with all supplements to any such master
agreement, without regard to whether the master
agreement contains an agreement, contract, or
transaction that is not a security-based swap pursuant
to subparagraph (A), except that the master agreement
shall be considered to be a security-based swap only
with respect to each agreement, contract, or
transaction under the master agreement that is a
security-based swap pursuant to subparagraph (A).
``(C) Exclusion.--The term `security-based swap'
does not include any agreement, contract, or
transaction that meets the definition of a security-
based swap only because it references, is based upon,
or settles through the transfer, delivery, or receipt
of an exempted security under section 3(a)(12) of the
Securities Exchange Act of 1934 as in effect on the
date of enactment of the Futures Trading Act of 1982
(other than any municipal security as defined in
section 3(a)(29) as in effect on the date of enactment
of the Futures Trading Act of 1982), unless such
agreement, contract, or transaction is of the character
of, or is commonly known in the trade as, a put, call,
or other option.
``(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'
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).
``(71) Security-based swap dealer.--
``(A) In general.--The term `security-based swap
dealer' means any person that--
``(i) holds itself out as a dealer in
security-based swaps;
``(ii) makes a market in security-based
swaps;
``(iii) regularly engages in the purchase
of security-based swaps and their resale to
customers in the ordinary course of a business;
or
``(iv) engages in any activity causing it
to be commonly known in the trade as a dealer
or market maker in security-based swaps.
``(B) Designation by type or class.--A person may
be designated a security-based swap dealer for a single
type or single class or category of security-based swap
and considered not a security-based swap dealer for
other types, classes, or categories of security-based
swaps.
``(C) De minimus exception.--The Commission shall
make a determination to exempt from designation as a
security-based swap dealer an entity that engages in a
de minimus amount of security-based swap dealing in
connection with transactions with or on the behalf of
its customers.
``(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' 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.
``(75) Swap dealer.--The term `swap dealer' has the same
meaning as in section 1a(38) of the Commodity Exchange Act (7
U.S.C. 1a(38)).
``(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.
``(76) Security-based swap repository.--The term `security-
based swap repository' means any person that collects,
calculates, prepares or maintains information or records with
respect to transactions or positions in, or the terms and
conditions of, security-based swaps entered into by third
parties.
``(77) Swap execution facility.--The term `swap execution
facility' means a person or entity that facilitates the
execution or trading of security-based swaps between two
persons through any means of interstate commerce, but which is
not a national securities exchange, including any electronic
trade execution or voice brokerage facility.''.
(b) Authority to Further Define Terms.--The Securities and Exchange
Commission may adopt a rule further defining the terms ``security-based
swap'', ``security-based swap dealer'', ``major security-based swap
participant'', and ``eligible contract participant'' with regard to
security-based swaps (as such terms are defined in the amendments made
by subsection (a)) for the purpose of including transactions and
entities that have been structured to evade this title.
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 FOR SECURITY-BASED SWAPS.
``(a) In General.--
``(1) Standard for 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, and the Commission has determined under paragraph
(2)(B)(ii) of subsection (b) that the security-based swap is
required to be cleared.
``(2) Open access.--The rules of a clearing agency
described in paragraph (1) shall--
``(A) prescribe that all security-based swaps
submitted to the clearing agency with the same terms
and conditions are economically equivalent within the
clearing agency and may be offset with each other
within the clearing agency; and
``(B) provide for non-discriminatory clearing of a
security-based swap executed bilaterally or on or
through the rules of an unaffiliated national
securities exchange or swap execution facility.
``(b) Commission Review.--
``(1) Commission-initiated review.--
``(A) The Commission shall review each security-
based swap, or any group, category, type or class of
security-based swaps to make a determination that such
security-based swap, or group, category, type or class
of security-based swaps should be required to be
cleared.
``(B) The Commission shall provide at least a 30-
day public comment period regarding any determination
under subparagraph (A).
``(2) Swap submissions.--
``(A) A clearing agency shall submit to the
Commission each security-based swap, or any group,
category, type or class of security-based swaps that it
plans to accept for clearing and provide notice to its
members (in a manner to be determined by the
Commission) of such submission.
``(B) The Commission shall--
``(i) make available to the public any
submission received under subparagraph (A);
``(ii) review each submission made under
subparagraph (A), and determine whether the
security-based swap, or group, category, type,
or class of security-based swaps, described in
the submission is required to be cleared; and
``(iii) provide at least a 30-day public
comment period regarding its determination
whether the clearing requirement under
subsection (a)(1) shall apply to the
submission.
``(3) Deadline.--The Commission shall make its
determination under paragraph (2)(B) not later than 90 days
after receiving a submission made under paragraph (2)(A),
unless the submitting clearing agency agrees to an extension
for the time limitation established under this paragraph.
``(4) Determination.--
``(A) In reviewing a submission made under
paragraph (2), the Commission shall review whether the
submission is consistent with section 5b(c)(2).
``(B) In reviewing a security-based swap, group of
security-based swaps or class of security-based swaps
pursuant to paragraph (1) or a submission made under
paragraph (2), the Commission shall take into account
the following factors:
``(i) The existence of significant
outstanding notional exposures, trading
liquidity and adequate pricing data.
``(ii) The availability of rule framework,
capacity, operational expertise and resources,
and credit support infrastructure to clear the
contract on terms that are consistent with the
material terms and trading conventions on which
the contract is then traded.
``(iii) The effect on the mitigation of
systemic risk, taking into account the size of
the market for such contract and the resources
of the clearing agency available to clear the
contract.
``(iv) The effect on competition, including
appropriate fees and charges applied to
clearing.
``(v) The existence of reasonable legal
certainty in the event of the insolvency of the
relevant clearing agency or 1 or more of its
clearing members with regard to the treatment
of customer and security-based swap
counterparty positions, funds, and property.
``(C) In making a determination under paragraph
(2)(B) that the clearing requirement shall apply, the
Commission may require such terms and conditions to the
requirement as the Commission determines to be
appropriate.
``(5) Rules.--Not later than 1 year after the date of the
enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
for a clearing agency's submission for review, pursuant to this
subsection, of a security-based swap, or a group, category,
type or class of security-based swaps, that it seeks to accept
for clearing.
``(c) Stay of Clearing Requirement.--
``(1) After an determination pursuant to subsection (b)(2),
the Commission, on application of a counterparty to a security-
based swap or on its own initiative, may stay the clearing
requirement of subsection (a)(1) until the Commission completes
a review of the terms of the security-based swap (or the group,
category, type or class of security-based swaps) and the
clearing arrangement.
``(2) Deadline.--The Commission shall complete a review
undertaken pursuant to paragraph (1) not later than 90 days
after issuance of the stay, unless the clearing agency that
clears the security-based swap, or group, category, type or
class of security-based swaps, agrees to an extension of the
time limitation established under this paragraph.
``(3) Determination.--Upon completion of the review
undertaken pursuant to paragraph (1), the Commission may--
``(A) determine, unconditionally or subject to such
terms and conditions as the Commission determines to be
appropriate, that the security-based swap, or group,
category, type or class of security-based swaps, must
be cleared pursuant to this subsection if it finds that
such clearing is consistent with subsection (b)(4); or
``(B) determine that the clearing requirement of
subsection (a)(1) shall not apply to the security-based
swap, or group, category, type or class of security-
based swaps.
``(4) Rules.--Not later than 1 year after the date of the
enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
for reviewing, pursuant to this subsection, a clearing agency's
clearing of a security-based swap, or a group, category, type
or class of security-based swaps, that it has accepted for
clearing.
``(d) Prevention of Evasion.--The Commission may prescribe rules
under this subsection, or issue interpretations of the rules, as
necessary to prevent evasions of this section.
``(e) Required Reporting.--
``(1) In general.--All security-based swaps that are not
accepted for clearing by any clearing agency shall be reported
either to a security-based swap repository described in
subsection 13(n) or, if there is no security-based swap
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 or regulation prescribe.
Counterparties to a security-based swap may agree which
counterparty will report the security-based swap as required by
this paragraph.
``(2) Swap dealer designation.--With regard to security-
based swaps where only 1 counterparty is a security-based swap
dealer, the security-based swap dealer shall report the
security-based swap as required by this subsection.
``(f) Reporting Transition Rules.--Rules adopted by the Commission
under this section shall provide for the reporting of data, as follows:
``(1) Security-based swaps entered into before the date of
the enactment of this section shall be reported to a registered
security-based swap repository or the Commission no later than
180 days after the effective date of this section; and
``(2) Security-based swaps entered into on or after such
date of enactment shall be reported to a registered security-
based swap repository or the Commission no later than the later
of--
``(A) 90 days after such effective date; or
``(B) such other time after entering into the
security-based swap as the Commission may prescribe by
rule or regulation.
``(g) Clearing Transition Rules.--
``(1) Security-based swaps entered into before the date of
the enactment of this section are exempt from the clearing
requirements of this subsection if reported pursuant to
subsection (f)(1).
``(2) Security-based swaps entered into before application
of the clearing requirement pursuant to this section are exempt
from the clearing requirements of this section if reported
pursuant to subsection (f)(2).
``(h) Exceptions.--
``(1) In general.--The requirements of subsection (a)(1)
shall not apply to a security-based swap if one of the
counterparties to the security-based swap--
``(A) is not a security-based swap dealer or major
security-based swap participant;
``(B) is using security-based swaps to hedge or
mitigate commercial risk, including operating or
balance sheet risk; and
``(C) notifies the Commission, in a manner set
forth by the Commission, how it generally meets its
financial obligations associated with entering into
non-cleared security-based swaps.
``(2) Abuse of exception.--The Commission may prescribe
rules under this subsection, or issue interpretations of the
rules, as necessary to prevent abuse of the exemption in
paragraph (1) by security-based swap dealers and major
security-based swap participants.
``(3) Option to clear.--The application of the clearing
exception in paragraph (1) is solely at the discretion the
counterparty to the swap that meets the conditions of
subparagraphs (A) through (C) of paragraph (1).''.
(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.--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.
``(i) Existing Banks and Derivatives Clearing Organizations.--A
bank or a derivatives clearing organization registered with the
Commodity Futures Trading Commission under the Commodity Exchange Act
required to be a registered as a clearing agency under this title,
solely because it clears security-based swaps, is deemed to be a
registered clearing agency under this title solely for the purpose of
clearing security-based swaps to the extent that the bank cleared
security-based swaps, as defined in this Act, as a multilateral
clearing organization or the derivatives clearing organization cleared
security-based swaps, as defined in this title pursuant to an exemption
from registration as a clearing agency, before the enactment of this
section. A bank or derivative clearing organization to which this
subsection applies shall continue to comply with the requirements in
section 17A(b)(3) of this title. A bank to which this subsection
applies may, by the vote of the shareholders owning not less than 51
percent of the voting interests of such bank, be converted into a State
corporation, partnership, limited liability company, or other similar
legal form pursuant to a plan of conversion, if the conversion is not
in contravention of applicable State law.
``(j) Reporting.--
``(1) In general.--A clearing agency that clears security-
based swaps shall provide to the Commission 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. Subject to section 24, 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 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.
``(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) Rules.--Not later than 1 year after the date of the enactment
of the Derivative Markets Transparency and Accountability Act of 2009,
the Commission shall adopt rules governing persons that are registered
as clearing agencies for security-based swaps under this Act.
``(n) Exemptions.--
``(1) In general.--The Commission may exempt, conditionally
or unconditionally, a clearing agency from registration under
this section for the clearing of security-based swaps if the
Commission finds that such clearing agency 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 or if necessary
or appropriate in the public interest and consistent with the
purpose of this Act.
``(2) A person that is required to be registered as
clearing agency under this section, whose principal business is
clearing commodity futures and options on commodity futures
transactions and which is a derivatives clearing organization
registered with the Commodity Futures Trading Commission under
the Commodity Exchange Act (7 U.S.C. 1 et seq.), shall be
unconditionally exempt from registration under this section
solely for the purpose of clearing security-based swaps, unless
the Commission finds that such derivatives clearing
organization is not subject to comparable, comprehensive
supervision and regulation by the Commodity Futures Trading
Commission.''.
(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) Execution Transparency.--
``(1) Requirement.--A security-based swap that is subject
to the clearing requirement of section 3B shall not be traded
except on or through a national securities exchange or on or
through an swap execution facility registered under section 5h,
that makes the security-based swap available for trading.
``(2) Exceptions.--The requirement of paragraph (1) shall
not apply to a security-based swap if no national securities
exchange or swap execution facility makes the security-based
swap available for trading.
``(3) Required reporting.--If the exception of paragraph
(2) applies and there is no national securities exchange or
swap execution facility that makes the security-based 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 paragraph (1).
``(b) Exchange Trading.--In adopting rules and regulations, the
Commission shall endeavor to eliminate unnecessary impediments to the
trading on national securities exchanges of contracts, agreements, or
transactions that would be swaps but for the trading of such contracts,
agreements or transactions on such a national securities exchange.''.
(d) Swap Execution Facilities.--The Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.) is amended by adding after section 3B (as added
by subsection (a)) the following:
``SEC. 3C. SWAP EXECUTION FACILITIES.
``(a) Registration.--No person may operate a facility for the
trading of security-based swaps unless the facility is registered as a
swap execution facility under this section.
``(b) Requirements for Trading.--
``(1) In general.--A swap execution facility that is
registered under subsection (a) may list for trading any
security-based swap.
``(2) Rules for trading through the facility.--Not later
than 1 year after the date of the enactment of the Derivative
Markets Transparency and Accountability Act of 2009, the
Commission shall adopt rules to allow a security-based swap to
be traded through the facilities of an exchange or a swap
execution facility. Such rules shall permit an intermediary,
acting as principal or agent, to enter into or execute a
security-based swap, notwithstanding section 3B(b), if the
security-based swap is reported, recorded, or confirmed in
accordance with the rules of the exchange or swap execution
facility.
``(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) Core Principles for Swap Execution Facilities.--
``(1) In general.--To be registered as, and 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--
``(A) 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;
and
``(B) 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--
``(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) 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--
``(A) 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; and
``(B) monitor trading in swaps to prevent
manipulation, price distortion, and disruptions of the
delivery or cash settlement process through
surveillance, compliance, and disciplinary practices
and procedures, including methods for conducting real-
time monitoring of trading and comprehensive and
accurate trade reconstructions.
``(5) Ability to obtain information.--The swap execution
facility shall--
``(A) establish and enforce rules that will allow
the facility to obtain any necessary information to
perform any of the functions described in this section;
``(B) provide the information to the Commission
upon request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(6) Financial integrity of transactions.--The 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 pursuant
to section 3B.
``(7) 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.
``(8) 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. The Commission shall evaluate the
impact of public disclosure on market liquidity in the relevant
market, and shall seek to avoid public disclosure of
information in a manner that would significantly reduce market
liquidity. The Commission shall not disclose information
related to the internal business decisions of particular market
participants.
``(9) 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.
``(10) Conflicts of interest.--The swap execution facility
shall--
``(A) establish and enforce rules to minimize
conflicts of interest in its decision-making process;
and
``(B) establish a process for resolving the
conflicts of interest.
``(11) Financial resources.--The swap execution facility
shall have adequate financial, operational, and managerial
resources to discharge its responsibilities. Such financial
resources shall be considered adequate if their value exceeds
the total amount that would enable the facility to cover its
operating costs for a period of one year, calculated on a
rolling basis.
``(12) System safeguards.--The swap execution facility
shall--
``(A) establish and maintain a program of risk
analysis and oversight to identify and minimize sources
of operational risk, through the development of
appropriate controls and procedures, and the
development of automated systems, that are reliable,
secure, and have adequate scalable capacity;
``(B) establish and maintain emergency procedures,
backup facilities, and a plan for disaster recovery
that allow for the timely recovery and resumption of
operations and the fulfillment of the swap execution
facility's responsibilities and obligation; and
``(C) periodically conduct tests to verify that
backup resources are sufficient to ensure continued
order processing and trade matching, price reporting,
market surveillance, and maintenance of a comprehensive
and accurate audit trail.
``(13) 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; and
``(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 and to 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 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.
``(e) 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 or if necessary or appropriate in the
public interest and consistent with the purpose of this Act.
``(f) Rules.--Not later than 1 year after the date of the enactment
of the Derivative Markets Transparency and Accountability Act of 2009,
the Commission shall prescribe rules governing the regulation of swap
execution facilities under this section.''.
(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 SECURITY-BASED
SWAP TRANSACTIONS.
``(a) Over-the-counter Swaps.--At the request of a counterparty to
a security-based swap who provides funds or other property to a
security-based swap dealer as initial margin or collateral to secure
the obligations of the counterparty under a security-based swap between
the counterparty and the security-based swap dealer that is not
submitted for clearing to a derivatives clearing agency, the security-
based swap dealer shall segregate the funds or other property for the
benefit of the counterparty, and maintain the funds or other property
in an account which is carried by a 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 security-based swap counterparty is a
security-based swap dealer or major security-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 security-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) Further Audit Reporting.--If a security-based swap dealer
does not segregate funds pursuant to 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 procedures relating to margin and collateral requirements are in
compliance with the agreement of the counterparties.''.
(f) Trading in Security-based Swaps.--Section 6 of the Securities
Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding at the end
the following:
``(l) 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; or
``(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 any (A) such put,
call, straddle, option, or privilege; (B) such security futures
product with relation to such security; or (C) any security-
based swap involving such security or the issuer of such
security.''.
(h) Rulemaking Authority to Prevent Fraud, Manipulation and
Deceptive Conduct in Security-based Swaps.--Section 9 of the Securities
Exchange Act of 1934 (15 U.S.C. 78i) is amended by adding at the end
the following:
``(i) It shall be unlawful for any person, directly or indirectly,
by the use of any means or instrumentality of interstate commerce or of
the mails, or of any facility of any national securities exchange, to
effect any transaction in, or to induce or attempt to induce the
purchase or sale of, any security-based swap, in connection with which
such person engages in any fraudulent, deceptive, or manipulative act
or practice, makes any fictitious quotation, or engages in any
transaction, practice, or course of business which operates as a fraud
or deceit upon any person. The Commission shall, for the purposes of
this paragraph, 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 amended by inserting
after section 10A (15 U.S.C. 78j-1) the following new section:
``SEC. 10B. POSITION LIMITS AND POSITION ACCOUNTABILITY FOR SECURITY-
BASED SWAPS AND LARGE TRADER REPORTING.
``(a) Position Limits.--As a means reasonably designed to prevent
fraud and manipulation, the Commission 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 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 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; and
``(B) to adopt rules reasonably designed to ensure
compliance with requirements prescribed by the
Commission under subsection (c)(1)(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 other instrument relating to such security or loan
or group or index of securities or loans; or
``(B)(i) any security-based swap; and
``(ii) any security-based swap and any other
instrument relating to the same security or group or
index of securities.
``(d) Large Trader Reporting.--The Commission, by rule or
regulation, may require any person that effects transactions for such
person's own account or the account of others in any securities-based
swap or uncleared security-based swap 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) under this section to report
such information as the Commission may prescribe regarding any position
or positions in any security-based swap or uncleared security-based
swap 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) under this section.''.
(j) Public Reporting and Repositories for Security-based Swaps.--
Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is
amended by adding at the end the following:
``(m) Public 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) Rules.--Not later than 1 year after the date of the
enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
governing persons that are registered under this section,
including rules that specify the data elements that shall be
collected and maintained.
``(5) 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 or if necessary or appropriate in
the public interest and consistent with the purpose of this
Act.''.
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) and
(d), 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 subsection (d)(1)(A), the Commission may provide
conditional or unconditional exemptions from some or all of the
rules or requirements prescribed under this section for
security-based swap dealers and major security-based swap
participants.
``(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 Derivative Markets Transparency
and Accountability Act of 2009.
``(c) Rules.--
``(1) In general.--Not later than 1 year after the date of
the enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
for persons that are registered as security-based swap dealers
or major security-based swap participants under this Act.
``(2) Exception for prudential requirements.--The
Commission shall not prescribe rules imposing prudential
requirements 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 to prescribe appropriate
business conduct, reporting, and recordkeeping requirements to
protect investors.
``(d) 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 initial and variation margin requirements
as the Prudential Regulators shall by rule or
regulation jointly prescribe that--
``(i) help ensure the safety and soundness
of the security-based swap dealer or major
security-based swap participant; and
``(ii) are appropriate for the risk
associated with the non-cleared swaps held as a
swap dealer or major swap participant.
``(B) Non-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 not
a Prudential Regulator shall meet such minimum capital
requirements and minimum initial and variation margin
requirements as the Commission shall by rule or
regulation prescribe that--
``(i) help ensure the safety and soundness
of the security-based swap dealer or major
security-based swap participant; and
``(ii) are appropriate for the risk
associated with the non-cleared swaps held as
the swap dealer or major swap participant.
``(2) Rules.--
``(A) Bank security-based swap dealers and major
security-based swap participants.--Not later than 1
year after the date of the enactment of the Derivative
Markets Transparency and Accountability Act of 2009,
the Prudential Regulators, in consultation with the
Commission, shall jointly adopt rules imposing capital
and margin requirements under this subsection for
security-based swap dealers and major security-based
swap participants, with respect to their activities as
a security-based swap dealer or major security-based
swap participant for which there is a Prudential
Regulator.
``(B) Non-bank security-based swap dealers and
major security-based swap participants.--Not later than
1 year after the date of the enactment of the
Derivative Markets Transparency and Accountability Act
of 2009, the Commission shall 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) Authority.--Nothing in this section shall limit the
authority of the Commission to set capital requirements for a
broker or dealer registered in accordance with section 15 of
this Act.
``(e) 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;
``(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; and
``(C) shall keep such books and records open to
inspection and examination by any representative of the
Commission.
``(2) Rules.--Not later than 1 year after the date of
enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
governing reporting and recordkeeping for security-based swap
dealers and major security-based swap participants.
``(f) 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 the
enactment of the Derivative Markets Transparency and
Accountability Act of 2009, the Commission shall adopt rules
governing daily trading records for security-based swap dealers
and major security-based swap participants.
``(g) 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;
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
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
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 security-based swaps,
upon the request of the counterparty, the daily
mark from the appropriate clearing agency, and
for non-cleared security-based swaps, upon
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.--The Commission shall prescribe rules under
this subsection governing business conduct standards for
security-based swap dealers and major security-based swap
participants not later than 1 year after the date of enactment
of the Derivative Markets Transparency and Accountability Act
of 2009.
``(h) Documentation 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 Derivative Markets Transparency and
Accountability Act of 2009, the Commission and the appropriate
Federal banking agencies, shall adopt rules governing the
standards described in paragraph (1) for security-based swap
dealers and major security-based swap participants.
``(i) 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 or 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 or
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.
``(j) 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.
``(k) Enforcement and Administrative Proceeding Authority.--
``(1) Primary enforcement authority.--
``(A) SEC.--Except as provided in subparagraph (B),
the Commission shall have exclusive authority to
enforce the amendments made by subtitle B of the
Derivative Markets Transparency and Accountability Act
of 2009 with respect to any person.
``(B) Prudential regulators.--The Prudential
Regulators shall have exclusive authority to enforce
the provisions of section 15F(d) 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.--
``(i) Violations of nonprudential
requirements.--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.
``(ii) Violations of prudential
requirements.--If the Commission has cause to
believe that a securities-based swap dealer or
major securities-based swap participant that
has a Prudential Regulator may have engaged in
conduct that constitute a violation of the
prudential requirements of section 15F(e) or
rules adopted thereunder, the Commission may
recommend in writing to the Prudential
Regulator that the Prudential Regulator
initiate an enforcement proceeding as
authorized under this Act. The recommendation
shall be accompanied by a written explanation
of the concerns giving rise to the
recommendation.
``(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) Associated persons.--With respect to any person who
is associated, who is seeking to become associated, or, at the
time of the alleged misconduct, who was associated or was
seeking to become associated with a security-based swap dealer
or major security-based swap participant for the purpose of
effecting or being involved in effecting security-based swaps
on behalf of such security-based swap dealer or major security-
based swap participant, the Commission, by order, shall
censure, place limitations on the activities or functions of
such person, or suspend for a period not exceeding 12 months,
or bar such person from being associated with a security-based
swap dealer or major security-based swap participant, if the
Commission finds, on the record after notice and opportunity
for a hearing, that such censure, placing of limitations,
suspension, or bar is in the public interest and that such
person--
``(A) has committed or omitted any act, or is
subject to an order or finding, enumerated in
subparagraph (A), (D), or (E) of paragraph (4) of
section 15(b);
``(B) has been convicted of any offense specified
in subparagraph (B) of such paragraph (4) within 10
years of the commencement of the proceedings under this
subsection;
``(C) is enjoined from any action, conduct, or
practice specified in subparagraph (C) of such
paragraph (4);
``(D) is subject to an order or a final order
specified in subparagraph (F) or (H), respectively, of
such paragraph (4); or
``(E) has been found by a foreign financial
regulatory authority to have committed or omitted any
act, or violated any foreign statute or regulation,
enumerated in subparagraph (G) of such paragraph (4).
``(4) Unlawful conduct.--It shall be unlawful--
``(A) for any person as to whom an order under
paragraph (3) is in effect, without the consent of the
Commission, willfully to become, or to be, associated
with a security-based swap dealer or major security-
based swap participant in contravention of such order;
or
``(B) for any security-based swap dealer or major
security-based swap participant to permit such a
person, without the consent of the Commission, to
become or remain a person associated with the security-
based swap dealer or major security-based swap
participant in contravention of such order, if such
security-based swap dealer or major security-based swap
participant knew, or in the exercise of reasonable care
should have known, of such order.''.
SEC. 3205. REPORTING AND RECORDKEEPING.
(a) 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 that the Commission may define by
rule, and'' after ``Alaska Native Claims Settlement Act,''; and
(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 that the Commission may define by rule'' after
``subsection (d)(1) of this section''.
(c) Reports by Institutional Investment Managers.--Section 13(f)(1)
of the Securities Exchange Act of 1934 (15 U.S.C. 78m(f)(1)) is amended
by inserting ``or otherwise becomes or is deemed to become a beneficial
owner of any security of a class described in subsection (d)(1) upon
the purchase or sale of a security-based swap or other derivative
instrument that the Commission may define by rule,'' after ``subsection
(d)(1) of this section''.
(d) Administrative Proceeding Authority.--Section 15(b)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is amended--
(1) in subparagraph (C), by adding ``security-based swap
dealer, major security-based swap participant,'' after
``government securities dealer,''; and
(2) in subparagraph (F), by adding ``, 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. 3206. 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 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. A security-based swap may not
be regulated as an insurance contract under State law.''.
SEC. 3207. 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) of the Commodity
Exchange Act (7 U.S.C. 1a(35)) and section 3(a)(68) of the
Securities Exchange Act of 1934.
``(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 Derivative Markets Transparency and
Accountability 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(12) of the Commodity
Exchange Act (7 U.S.C. 1a(12)).''.
SEC. 3208. 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. 3209. JURISDICTION.
(a) 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) Derivatives.--The Commission shall not grant exemptions from
the security-based swap provisions of the Derivative Markets
Transparency and Accountability Act of 2009, except as expressly
authorized under the provisions of that Act.''.
(b) Section 30 of the Securities Exchange Act of 1934 is amended by
adding at the end the following:
``(c) No provision of this Act that was added by the Derivative
Markets Transparency and Accountability Act of 2009 or any rule or
regulation thereunder shall apply to any person insofar as such person
transacts a business in security-based swaps without the jurisdiction
of the United States unless he transacts such business in contravention
of such rules and regulations as the Commission may prescribe as
necessary or appropriate to prevent the evasion of any provision of
this Act that was added by the Derivative Markets Transparency and
Accountability Act of 2009. This subsection shall not be construed to
limit the jurisdiction of the Commission under any provision of this
Act as in effect prior to enactment of the Derivative Markets
Transparency and Accountability Act of 2009.''.
SEC. 3210. EFFECTIVE DATE.
(a) Unless otherwise provided, the provisions of this subtitle
shall become effective the later of 270 days after the date of the
enactment of this subtitle or, to the extent a provision of this
subtitle requires rulemaking, no less than 60 days after publication of
a final rule or regulation implementing such provision of this
subtitle.
(b) Subsection (a) shall not preclude the Securities Exchange
Commission from any rulemaking required to implement the provisions of
this subtitle.
Subtitle C--Improved Financial and Commodity Markets Oversight and
Accountability
SEC. 3301. ELEVATION OF CERTAIN INSPECTORS GENERAL TO APPOINTMENT
PURSUANT TO SECTION 3 OF THE INSPECTOR GENERAL ACT OF
1978.
(a) Inclusion in Certain Definitions.--Section 12 of the Inspector
General Act of 1978 (5 U.S.C. App.) is amended--
(1) in paragraph (1), by striking ``or the Federal
Cochairpersons of the Commissions established under section
15301 of title 40, United States Code;'' and inserting ``the
Federal Cochairpersons of the Commissions established under
section 15301 of title 40, United States Code; the Chairman of
the Board of Governors of the Federal Reserve System; the
Chairman of the Commodity Futures Trading Commission; the
Chairman of the National Credit Union Administration; the
Director of the Pension Benefit Guaranty Corporation; the
Chairman of the Securities and Exchange Commission; or the
Director of the Consumer Financial Protection Agency;''; and
(2) in paragraph (2), by striking ``or the Commissions
established under section 15301 of title 40, United States
Code,'' and inserting ``the Commissions established under
section 15301 of title 40, United States Code, the Board of
Governors of the Federal Reserve System, the Commodity Futures
Trading Commission, the National Credit Union Administration,
the Pension Benefit Guaranty Corporation, the Securities and
Exchange Commission, or the Director of the Consumer Financial
Protection Agency,''.
(b) Exclusion From Definition of Designated Federal Entity.--
Section 8G(a)(2) of the Inspector General Act of 1978 (5 U.S.C. App.)
is amended--
(1) by striking ``the Board of Governors of the Federal
Reserve System,'';
(2) by striking ``the Commodity Futures Trading
Commission,'';
(3) by striking ``the National Credit Union
Administration,''; and
(4) by striking ``the Pension Benefit Guaranty Corporation,
the Securities and Exchange Commission,''.
SEC. 3302. CONTINUATION OF PROVISIONS RELATING TO PERSONNEL.
(a) In General.--The Inspector General Act of 1978 (5 U.S.C. App.)
is amended by inserting after section 8L the following:
``SEC. 8M. SPECIAL PROVISIONS CONCERNING CERTAIN ESTABLISHMENTS.
``(a) Definition.--For purposes of this section, the term `covered
establishment' means the Board of Governors of the Federal Reserve
System, the Commodity Futures Trading Commission, the National Credit
Union Administration, the Pension Benefit Guaranty Corporation, and the
Securities and Exchange Commission.
``(b) Provisions Relating to All Covered Establishments.--
``(1) Provisions relating to inspectors general.--In the
case of the Inspector General of a covered establishment,
subsections (b) and (c) of section 4 of the Inspector General
Reform Act of 2008 (Public Law 110-409) shall apply in the same
manner as if such covered establishment were a designated
Federal entity under section 8G. An Inspector General who is
subject to the preceding sentence shall not be subject to
section 3(e).
``(2) Provisions relating to other personnel.--
Notwithstanding paragraphs (7) and (8) of section 6(a), the
Inspector General of a covered establishment may select,
appoint, and employ such officers and employees as may be
necessary for carrying out the functions, powers, and duties of
the Office of Inspector General of such establishment and to
obtain the temporary or intermittent services of experts or
consultants or an organization of experts or consultants,
subject to the applicable laws and regulations that govern such
selections, appointments, and employment, and the obtaining of
such services, within such establishment.
``(c) Provision Relating to the Board of Governors of the Federal
Reserve System.--The provisions of subsection (a) of section 8D (other
than the provisions of subparagraphs (A), (B), (C), and (E) of
paragraph (1) of such subsection (a)) shall apply to the Inspector
General of the Board of Governors of the Federal Reserve System and the
Chairman of the Board of Governors of the Federal Reserve System in the
same manner as such provisions apply to the Inspector General of the
Department of the Treasury and the Secretary of the Treasury,
respectively.''.
(b) Conforming Amendment.--Paragraph (3) of section 8G(g) of the
Inspector General Act of 1978 (5 U.S.C. App.) is repealed.
SEC. 3303. CORRECTIVE RESPONSES BY HEADS OF CERTAIN ESTABLISHMENTS TO
DEFICIENCIES IDENTIFIED BY INSPECTORS GENERAL.
The Chairman of the Board of Governors of the Federal Reserve
System, the Chairman of the Commodity Futures Trading Commission, the
Chairman of the National Credit Union Administration, the Director of
the Pension Benefit Guaranty Corporation, and the Chairman of the
Securities and Exchange Commission shall each--
(1) take action to address deficiencies identified by a
report or investigation of the Inspector General of the
establishment concerned; or
(2) certify to both Houses of Congress that no action is
necessary or appropriate in connection with a deficiency
described in paragraph (1).
SEC. 3304. EFFECTIVE DATE; TRANSITION RULE.
(a) Effective Date.--This subtitle and the amendments made by this
subtitle shall take effect 30 days after the date of the enactment of
this subtitle.
(b) Transition Rule.--An individual serving as Inspector General of
the Board of Governors of the Federal Reserve System, the Commodity
Futures Trading Commission, the National Credit Union Administration,
the Pension Benefit Guaranty Corporation, or the Securities and
Exchange Commission on the effective date of this subtitle pursuant to
an appointment made under section 8G of the Inspector General Act of
1978 (5 U.S.C. App.)--
(1) may continue so serving until the President makes an
appointment under section 3(a) of such Act with respect to the
Board of Governors of the Federal Reserve System, the Commodity
Futures Trading Commission, the National Credit Union
Administration, the Pension Benefit Guaranty Corporation, or
the Securities and Exchange Commission, as the case may be,
consistent with the amendments made by section 301; and
(2) shall, while serving under paragraph (1), remain
subject to the provisions of section 8G of such Act which,
immediately before the effective date of this subtitle, applied
with respect to the Inspector General of the Board of Governors
of the Federal Reserve System, the Commodity Futures Trading
Commission, the National Credit Union Administration, the
Pension Benefit Guaranty Corporation, or the Securities and
Exchange Commission, as the case may be, and suffer no
reduction in pay.
SEC. 3305. AUTHORITY OF THE COMMODITY FUTURES TRADING COMMISSION TO
DEFINE ``COMMERCIAL RISK'', ``OPERATING RISK'', AND
``BALANCE SHEET RISK''.
(a) In General.--Section 1a of the Commodity Exchange Act (7 U.S.C.
1a), as amended by the preceding provisions of this Act, is amended by
adding at the end the following:
``(51) Commercial risk; operating risk; balance sheet
risk.--The terms `commercial risk', `operating risk', and
`balance sheet risk' shall have such meanings as the Commission
may prescribe.''.
(b) Effective Date.--The amendment made by subsection (a) shall
take effect as if included in subtitle A.
SEC. 3306. CONFLICTS OF INTEREST IN CLEARING ORGANIZATIONS.
(a) Commodity Exchange Act.--
(1) Definition of restricted owner.--Section 1a of the
Commodity Exchange Act (7 U.S.C. 1a) (as amended by the
preceding provisions of this Act) is further amended by adding
at the end the following:
``(51) Restricted owner.--The term `restricted owner' means
any swap dealer, security-based swap dealer, major swap
participant, or major security-based swap participant, that is
an identified financial holding company as defined in Section
1000(b)(5) of the Financial Stability Improvement Act of 2009,
or a person associated with a swap dealer or a major swap
participant that is an identified financial holding company, or
a person associated with a security-based swap dealer or major
security-based swap participant that is an identified financial
holding company.''.
(2) Conflicts of interest.--
(A) Subparagraph (P) of section 5b(c)(2) of the
Commodity Exchange Act (as added by the preceding
provisions of this Act) is amended by adding at the end
of such subparagraph the following: ``The rules of the
derivatives clearing organization that clears swaps
shall provide that a restricted owner shall not be
permitted directly or indirectly to acquire beneficial
ownership of interests in the organization or in
persons with a controlling interest in the
organization, to the extent that such an acquisition
would result in restricted owners being entitled to
vote, cause the voting of, or cause the withholding of
votes of, more than 20 percent of the votes entitled to
be cast on any matter by the holders of the ownership
interests. The rules of the derivatives clearing
organization shall provide that a majority of the
directors of the organization shall not be associated
with a restricted owner. This subparagraph shall not be
construed to require divestiture of any interest of a
restricted owner in an established and operational
derivatives clearing organization acquired prior to
January 1, 2010, provided that acquisitions by such
restricted owner after such date shall be subject to
this subparagraph. The Commission may determine whether
any acquisition by a restricted owner during any
interim period prior to the date of the enactment of
this Act has been made for the purpose of avoiding the
effect of this subparagraph.''.
(B) Section 4s(g)(1) of the Commodity Exchange Act
(as added by the preceding provisions of this Act) is
amended--
(i) by striking ``and'' at the end of
subparagraph (C); and
(ii) by redesignating subparagraph (D) as
subparagraph (E) and insert after subparagraph
(C) the following:
``(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''.
(C) Paragraph (12) of section 5h(d) of the
Commodity Exchange Act (as added by the preceding
provisions of this Act) is amended by adding at the end
the following new subparagraph:
``(C) 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 being entitled to vote, cause the
voting of, or cause the withholding of votes of, more
than 20 percent of the votes entitled to be cast on any
matter by the holders of the ownership interests. This
subparagraph shall not be construed to require
divestiture of any interest of a restricted owner in an
established and operational swap execution facility
acquired prior to January 1, 2010, provided that
acquisitions by such restricted owner after such date
shall be subject to this subparagraph. The Commission
may determine whether any acquisition by a restricted
owner during any interim period prior to the date of
the enactment of this Act has been made for the purpose
of avoiding the effect of this subparagraph.
``(D) 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.''.
(D) Section 5(d) of the Commodity Exchange Act (as
amended by the preceding provisions of this Act) is
further 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 being entitled to vote,
cause the voting of, or cause the withholding of votes
of, more than 20 percent of the votes entitled to be
cast on any matter by the holders of the ownership
interests. This paragraph shall not be construed to
require divestiture of any interest of a restricted
owner in an established and operational board of trade
acquired prior to January 1, 2010, provided that
acquisitions by such restricted owner after such date
shall be subject to this paragraph. The Commission may
determine whether any acquisition by a restricted owner
during any interim period prior to the date of the
enactment of this Act has been made for the purpose of
avoiding the effect of this paragraph.
``(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.''.
(b) Securities Exchange Act of 1934.--
(1) Definition of restricted owner.--Section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) (as amended
by the preceding provisions of this Act) is further amended by
adding at the end the following:
``(78) Restricted owner.--The term `restricted owner' has
the same meaning as in section 1a(51) of the Commodity Exchange
Act.''.
(2) Conflicts of interest.--
(A) Paragraph (10) of section 3C(d) of the
Securities Exchange Act of 1934 (as added by the
preceding provisions of this Act) is amended by adding
after subparagraph (B) the following:
``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 being entitled to vote,
cause the voting of, or cause the withholding of votes of, more than 20
percent of the votes entitled to be cast on any matter by the holders
of the ownership interests. 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. This paragraph shall not be
construed to require divestiture of any interest of a restricted owner
in an established and operational swap execution facility acquired
prior to January 1, 2010, provided that acquisitions by such restricted
owner after such date shall be subject to this paragraph. The
Commission may determine whether any acquisition by a restricted owner
during any interim period prior to the date of the enactment of this
Act has been made for the purpose of avoiding the effect of this
paragraph.''.
(B) Section 15F(g)(1) of the Securities Exchange
Act of 1934 (as added by the preceding provisions of
this Act) is amended--
(i) in subparagraph (C), strike ``and'';
and
(ii) insert after subparagraph (C) the
following (and redesignate the succeeding
subparagraph accordingly):
``(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''.
(C) 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 being entitled to
vote, cause the voting of, or cause the withholding of votes
of, more than 20 percent of the votes entitled to be cast on
any matter by the holders of the ownership interests. This
paragraph shall not be construed to require divestiture of any
interest of a restricted owner in an established and
operational exchange acquired prior to January 1, 2010,
provided that acquisitions by such restricted owner after such
date shall be subject to this paragraph. The Commission may
determine whether any acquisition by a restricted owner during
any interim period prior to the date of the enactment of this
Act has been made for the purpose of avoiding the effect of
this paragraph.''.
(D) Section 17A(b)(3) of the Securities Exchange
Act of 1934 (15 U.S.C. 78f(b)) is amended by adding at
the end the following new subparagraphs:
``(J) The rules of a clearing agency that clears
security-based swaps shall provide that a restricted
owner shall not be permitted directly or indirectly to
acquire beneficial ownership of interests in the agency
or in persons with a controlling interest in the
agency, to the extent that such an acquisition would
result in restricted owners being entitled to vote,
cause the voting of, or cause the withholding of votes
of, more than 20 percent of the votes entitled to be
cast on any matter by the holders of the ownership
interests. This subparagraph shall not be construed to
require divestiture of any interest of a restricted
owner in an established and operational clearing agency
acquired prior to January 1, 2010, provided that
acquisitions by such restricted owner after such date
shall be subject to this subparagraph. The Commission
may determine whether any acquisition by a restricted
owner during any interim period prior to the date of
the enactment of this Act has been made for the purpose
of avoiding the effect of this subparagraph.
``(K) The rules of the clearing agency shall
provide that a majority of the directors of the agency
shall not be associated with a restricted owner.''.
SEC. 3307. DEFINITIONS OF MAJOR SWAP PARTICIPANT AND MAJOR SECURITY-
BASED SWAP PARTICIPANT.
(a) Major Swap Participant.--Section 1a(39) of the Commodity
Exchange Act (7 U.S.C. 1a), as added by the preceding provisions of
this Act, is amended to read as follows:
``(39) Major swap participant.--
``(A) In general.--The term `major swap
participant' means any person who is not a swap dealer,
and--
``(i) maintains a substantial net position
in outstanding swaps, excluding positions held
primarily for hedging, reducing or otherwise
mitigating its commercial risk; or
``(ii) whose outstanding swaps create
substantial net counterparty exposure that
could have serious adverse effects on the
financial stability of the United States
banking system or financial markets.
``(B) Definition of substantial net position.--The
Commission shall define by rule or regulation the term
`substantial net position' at a threshold that the
Commission determines prudent for the effective
monitoring, management, and oversight of entities which
are systemically important or can significantly impact
the financial system. In setting the definitions, the
Commission shall consider the person's relative
position in uncleared as opposed to cleared swaps.
``(C) A person may be designated a major swap
participant for 1 or more individual types of swaps
without being classified as a major swap participant
for all classes of swaps.''.
(b) Major Security-based Swap Participant.--Section 3(a)(67) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)), as added by the
preceding provisions of this Act, is amended to read as follows:
``(67) Major security-based swap participant.--
``(A) In general.--The term `major security-based
swap participant' means any person who is not a
security-based swap dealer, and--
``(i) maintains a substantial net position
in outstanding security-based swaps, excluding
positions held primarily for hedging, reducing
or otherwise mitigating its commercial risk; or
``(ii) whose outstanding security-based
swaps create substantial net counterparty
exposure that could have serious adverse
effects on the financial stability of the
United States banking system or financial
markets.
``(B) Definition of substantial net position.--The
Commission shall define by rule or regulation the term
`substantial net position' at a threshold that the
Commission determines prudent for the effective
monitoring, management, and oversight of entities which
are systemically important or can significantly impact
the financial system. In setting the definitions, the
Commission shall consider the person's relative
position in uncleared as opposed to cleared security-
based swaps.
``(C) A person may be designated a major security-
based swap participant for 1 or more individual types
of security-based swaps without being classified as a
major security-based swap participant for all classes
of security-based swaps.''.
(c) Effective Dates.--
(1) Major swap participant.--The amendment made by
subsection (a)(1) shall take effect as if included in subtitle
A.
(2) Major security-based swap participant.--The amendment
made by subsection (a)(2) shall take effect as if included in
subtitle B.
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--
(A) before the Agency conversion date, the Consumer
Financial Protection Agency; and
(B) on and after the Agency conversion date, the
commission established under section 4103.
(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, money acceptance, or money movement
activity.--The term ``deposit-taking, money acceptance, or
money movement activities'' 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--
(A) before the Agency conversion date, the Director
of the Agency; and
(B) on and after the Agency conversion date, the
commission established under section 4103.
(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 (b), (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.) except for section 505 as it applies to section
501(b).
(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.).
(N) Section 626 of the Omnibus Appropriations Act,
2009 (Public Law 111-8).
(O) The Unlawful Internet Gambling Enforcement Act
of 2006.
(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, money acceptance, or
money movement activities.
(ii) Extending credit and servicing loans,
including--
(I) acquiring, purchasing, selling,
brokering, or servicing loans or other
extensions of credit; and
(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,
except that furnishing a consumer report to
another person that it has reason to believe
intends to use the information for employment
purposes, including for security
investigations, government licensing and
evaluating a consumer's residential or tenant
history shall not be considered a financial
activity.
(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 a person regulated as
an investment adviser by 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'' with
respect to financial data processing--
(I) to the extent the person is
providing interactive computer service,
as defined in section 230 of the
Communications Act of 1934 (47 U.S.C.
230); or
(II) if the person--
(aa) 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;
(bb) 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
(cc) 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 is
financial in nature or is
otherwise a permissible
activity for a bank or bank
holding company, including a
financial holding company,
under any provision of Federal
law or regulation applicable to
a bank or bank holding company,
including a financial holding
company;
(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) Exceptions.--The term ``financial activity''
shall not include the business of insurance or the
provision of electronic data transmission, routing,
intermediate or transient storage, or connections to a
system or network, where the person providing such
services does not select or modify the content of the
electronic data, is not the sender or the intended
recipient of the data, and such person transmits,
routes, stores, or provides connections for electronic
data, including financial data, in a manner that such
financial data is undifferentiated from other types of
data that such person transmits, routes, stores, or
provides connections.
(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 and shall include any
uninsured branch or agency of a foreign bank or a commercial
lending company owned or controlled by a foreign bank.
(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 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, multilateral clearing organizations, retail
foreign exchange dealer, or swap execution facility 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--
(i) is required to be registered under the
Investment Company Act of 1940; or
(ii) is excepted from the definition of
investment company under section 3(c) of such
Act, or any successor provision;
(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 any person described in any
subparagraph of this paragraph, or the employee agent, or
contractor of such person, acts in a registered capacity, or,
with respect to a person described in subparagraph (C)(ii), any
employee, agent, or contractor acting on behalf of, or
providing services to any such person, but only to the extent
that such person, or the employee, agent, or contractor of such
person acts in such exempt 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 or any federally recognized Indian tribe as
defined by the Secretary of the Interior under section 104(a)
of the Federally Recognized Indian Tribe List Act of 1994 (25
U.S.C. 479a-1(a)).
(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.
(38) Agency conversion date.--The term ``Agency conversion
date'' means the date that is 2 years after the designated
transfer date.
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) Agency Structure.--
(1) Initial structure.--The Agency shall be led by a
Director or Acting Director, established pursuant to section
4102, until the day before the Agency conversion date.
(2) Subsequent structure.--On and after the Agency
conversion date, the Agency shall consist of the commission
established under section 4103.
(c) 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 and shall exercise any authorities
granted under this title and all other laws within the
Director's jurisdiction.
(b) Appointment; Term.--
(1) Nomination.--Within 60 days after the date of enactment
of this title, the President shall nominate the Director, from
among individuals who--
(A) are citizens of the United States; and
(B) have strong competencies and experiences
related to consumer financial protection.
(2) Appointment subject to confirmation.--The Director
nominated under paragraph (1) shall be appointed by and with
the advice and consent of the Senate.
(3) Acting director before senate confirmation.--The
individual nominated pursuant to paragraph (1) shall serve as
Acting Director with full authorities granted to the Director
under this title until the Director is confirmed by the Senate.
(4) Term.--The Director shall be appointed for a term that
ends on the Agency conversion date.
(5) Removal.--The Director may be removed before the end of
a term only for cause.
(6) 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 (2) 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 vacancy or
during the absence of the Director (who has
been confirmed by the Senate pursuant to
paragraph (2)), 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.
(7) 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. ESTABLISHMENT AND COMPOSITION OF THE COMMISSION.
(a) Establishment of the Commission.--
(1) In general.--On the Agency conversion date, there shall
be established a commission (hereinafter in this section
referred to as the ``Commission'') that shall by operation of
law succeed to all of the authorities of the Director of the
Agency granted under this title and any other law.
(2) Authority to prescribe regulations.--The Commission may
prescribe such regulations and issue such orders in accordance
with this title as the Commission may determine to be necessary
for carrying out this title and all other laws within the
Commission's jurisdiction and shall exercise any authorities
granted under this title and all other laws within the
Commission's jurisdiction.
(b) Composition of the Commission.--
(1) In general.--The Commission shall be composed of 5
members who shall be appointed by the President, by and with
the advice and consent of the Senate, from among individuals
who--
(A) are citizens of the United States; and
(B) have strong competencies and experiences
related to consumer financial protection.
(2) Initial appointments.--
(A) In general.--The initial members of the
Commission, other than the initial Chair, may be
appointed by the President, by and with the advice and
consent of the Senate, prior to the Agency conversion
date, but may not serve in their positions until such
date.
(B) Staggering.--Except as provided under
subsection (d)(1), the members of the Commission shall
serve staggered terms, which initially shall be
established by the President for terms of 1, 2, 4, and
5 years, respectively.
(3) Terms.--
(A) In general.--Except as provided in subsection
(d)(1), each member of the Commission, including the
Chair, shall serve for a term of 5 years.
(B) Removal for cause.--The President may remove
any member of the Commission only for inefficiency,
neglect of duty, or malfeasance in office.
(C) Vacancies.--Any member of the Commission
appointed to fill a vacancy occurring before the
expiration of the term to which that member's
predecessor was appointed (including the Chair) shall
be appointed only for the remainder of the term.
(D) Continuation of service.--Each member of the
Commission may continue to serve after the expiration
of the term of office to which that member was
appointed until a successor has been appointed by the
President and confirmed by the Senate, except that a
member may not continue to serve more than 1 year after
the date on which that member's term would otherwise
expire.
(E) Other employment prohibited.--No member of the
Commission shall engage in any other business,
vocation, or employment.
(c) Affiliation.--With respect to members appointed pursuant to
subsection (b), not more than 3 shall be members of any one political
party.
(d) Chair of the Commission.--
(1) Appointment.--
(A) Initial chair.--The first Chair of the
Commission shall be the Director or Acting Director
serving on the day before the Agency conversion date,
and such individual shall serve in the position of
Chair for a period of 3 years.
(B) Subsequent chairs.--Subsequent chairs shall be
appointed by the President from among the members of
the Commission to serve as the Chair.
(2) Authority.--The Chair shall be the principal executive
officer of the Agency, and shall exercise all of the executive
and administrative functions of the Agency, including with
respect to--
(A) the appointment and supervision of personnel
employed under the Agency (other than personnel
employed regularly and full time in the immediate
offices of members of the Commission other than the
Chair);
(B) the distribution of business among personnel
appointed and supervised by the Chair and among
administrative units of the Agency; and
(C) the use and expenditure of funds.
(3) Limitation.--In carrying out any of the Chair's
functions under the provisions of this subsection the Chair
shall be governed by general policies of the Commission and by
such regulatory decisions, findings, and determinations as the
Commission may by law be authorized to make.
(4) Requests or estimates related to appropriations.--
Requests or estimates for regular, supplemental, or deficiency
appropriations on behalf of the Commission may not be submitted
by the Chair without the prior approval of the commission.
(e) No Impairment by Reason of Vacancies.--No vacancy in the
members of the Commission shall impair the right of the remaining
members of the Commission to exercise all the powers of the Commission.
Three members of the Commission shall constitute a quorum for the
transaction of business, except that if there are only 3 members
serving on the Commission because of vacancies in the Commission, 2
members of the Commission shall constitute a quorum for the transaction
of business. If there are only 2 members serving on the Commission
because of vacancies in the Commission, 2 members shall constitute a
quorum for the 6-month period beginning on the date of the vacancy
which caused the number of Commission members to decline to 2.
(f) Seal.--The Commission shall have an official seal.
(g) Compensation.--
(1) Chair.--The Chair shall receive compensation at the
rate prescribed for level I of the Executive Schedule under
section 5313 of title 5, United States Code.
(2) Other members of the commission.--The 4 other members
of the Commission shall each receive compensation at the rate
prescribed for level II of the Executive Schedule under section
5314 of title 5, United States Code.
(h) Initial Quorum Established.--During any time period prior to
the confirmation of at least two members of the Commission under
subsection (b)(2), one member of the Commission shall constitute a
quorum for the transaction of business. Following the confirmation of
at least 2 additional commissioners, the quorum requirements of
subsection (e) shall apply.
(i) Definitions.--Notwithstanding section 4002, for purposes of
this section:
(1) Agency.--The term ``Agency'' means the Consumer
Financial Protection Agency.
(2) Director.--The term ``Director'' means the Director of
the Agency.
SEC. 4104. 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. 4105. 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, except that
the Director shall not exercise any authorities that are
granted to State insurance authorities under section 505(a)(6)
of the Gramm-Leach-Bliley Act;
(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. 4106. 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 an establishment 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.--The Director may fix the number of, and
appoint and direct, all employees of the Agency.
(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;
(v) experiences of traditionally
underserved consumers, including un-banked and
under-banked consumers, regarding consumer
financial products or services, and the impact
of Federal policies, including resource limits
in means-tested Federal benefit programs (as
defined in section 318 of the Higher Education
Act of 1965; 20 U.S.C. 1059e), on such
consumers in influencing banking behavior; and
(vi) the nature, range, and size of
variations between the credit scores sold to
creditors and those sold to consumers by
consumer reporting agencies that compile and
maintain files on consumers on a nationwide
basis (as defined in section 603(p) of the Fair
Credit Reporting Act; 15 U.S.C. 1681a(p)), and
whether such variations disadvantage consumers;
(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, the
Federal Trade Commission, 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, the Federal
Trade Commission, 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.
(D) Consumer complaint web site.--The Director
shall establish an Internet Web site for consumer
complaints and inquiries concerning institutions
regulated by the Agency. The Web site shall be
interoperable with the database established under
subparagraph (A).
(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 Financial Protection for Older Americans.--
(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
Financial Protection for Older Americans, whose functions shall
include activities designed to facilitate the financial
literacy of individuals who have attained the age of 62 years
or more (in this paragraph, referred to as ``seniors'') on
protection from unfair and deceptive practices and on current
and future financial choices, including through the
dissemination of materials to seniors on such topics.
(2) Director.--The Office of Financial Protection for Older
Americans shall be headed by a director.
(3) Duties.--Such unit shall perform the following duties:
(A) Develop goals for programs that provide seniors
financial literacy and counseling, including programs
that--
(i) help seniors recognize warning signs of
unfair and deceptive practices, protect
themselves from such practices;
(ii) provide one-on-one financial
counseling on issues including long-term
savings and later-life economic security; and
(iii) provide personal consumer credit
advocacy to respond to consumer problems caused
by unfair and deceptive practices.
(B) Monitor certifications or designations of
financial advisors who advise seniors and alert the
Securities and Exchange Commission and State regulators
of certifications or designations that are identified
as unfair or deceptive.
(C) Not later than 18 months after the date of the
establishment of the Office of Financial Protection for
Older Americans, submit to Congress and the Securities
and Exchange Commission recommendations of the best
practices for any legislative and regulatory--
(i) disseminating information regarding the
legitimacy of certifications of financial
advisers who advise seniors;
(ii) methods in which a senior can identify
the financial advisor most appropriate for the
senior's needs; and
(iii) methods in which a senior can verify
a financial advisor's credentials.
(D) Conduct research to identify best practices and
effective methods, tools, technology and strategies to
educate and counsel seniors about personal finance
management with a focus on--
(i) protecting themselves from unfair and
deceptive practices;
(ii) long-term savings; and
(iii) planning for retirement and long-term
care.
(E) Coordinate consumer protection efforts of
seniors with other Federal agencies and State
regulators, as appropriate, to promote consistent,
effective, and efficient enforcement.
(F) Work with community organizations, non-profit
organizations, and other entities that are involved
with educating or assisting seniors (including the
National Education and Resource Center on Women and
Retirement Planning).
(g) 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. 4107. 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. 4108. 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, the Federal Trade Commission, 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. 4109. 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 the major problems consumers of
financial products and services were confronted with during the
preceding year, including a description of the nature of such
problems, and recommendations for such administrative and
legislative action as may be appropriate to resolve such
problems;
(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 increase
workforce and contracting diversity consistent with subtitle I
of title I of this Act;
(7) an analysis of the Agency's efforts to fulfill the fair
lending mission of the Agency; and
(8) 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 and the House
Committee on Energy and Commerce 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. 4110. GAO SMALL BUSINESS STUDIES.
(a) Studies Required.--Not later than the end of the 3-year period
beginning on the designated transfer date, and also 3 years thereafter,
the Comptroller General of the United States shall carry out a study to
examine the effects that regulations issued by the Agency have on small
businesses.
(b) Report.--At the conclusion of each study required under
subsection (a), the Comptroller General of the United States shall
issue a report to the Congress containing the finding and
determinations made by the Comptroller General in carrying out such
study.
SEC. 4111. 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, complexity of, risk posed by, 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, complexity of,
risk posed by, 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 in each of the
first 3 years following the date of enactment of this
Act shall be no more than the assessments such
depository institution covered person was required to
pay for the calendar year immediately preceding the
designated transfer date.
(D) Marginal assessment rate.--
(i) In general.--In setting assessment
rates for depository institution covered
persons, the Director shall not impose
assessments that, on a risk-adjusted basis,
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 or to
set assessments that would result in higher
marginal assessments on the depository
institution covered persons with assets of less
than $25,000,000,000 if based on the compliance
record of or higher risks posed by such 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, or enforcement
activities 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 so that levels of assessments under
this subparagraph combined with levels of
assessments by an agency responsible for
chartering and/or supervising the depository
institution covered person shall be no more
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.
(D) Offsetting collections.--Fees assessed under
this paragraph--
(i) shall not be collected for any fiscal
year except to the extent provided in advance
in appropriation Acts; and
(ii) shall be deposited and credited as
offsetting collections to the account providing
appropriations to the Agency.
(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 $200,000,000 for each of fiscal years 2010, 2011,
2012, 2013, and 2014.
(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 or the CFPA
Nondepository Fund, at the discretion of the Agency.
(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 that are reasonably
related as a general matter to 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) Exception.--Notwithstanding paragraph (1), an
attorney's activities related to assisting another person in
preventing a foreclosure shall be subject to this title except
to the extent such activities constitute, or are incidental to,
the provision of legal services to a client of the attorney.
(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.
(4) Financial education and counseling program.--
(A) In general.--To the extent such victims cannot
be located or such payments are otherwise not
practicable, 5 percent of the Victims Relief Fund shall
be transferred, up to $10,000,000 on an annual basis,
to the Secretary of the Treasury so that the Secretary
may carry out the Financial Education and Counseling
Grant Program established under section 1132 of the
Housing and Economic Recovery Act of 2008 (12 U.S.C.
1701).
(B) Memorandum of understanding.--Not later than 12
months after the date of enactment of this subtitle,
the Director shall enter into a memorandum of
understanding with the Secretary of the Treasury to
coordinate the release of Civil Penalty Fund amounts
under subparagraph (A).
(C) Assistance for individuals at financial risk.--
Section 1132 of the Housing and Economic Recovery Act
of 2008 (12 U.S.C. 1701) is amended--
(i) in subsection (a), by striking
``prospective homebuyers'' each place that term
appears and inserting ``individuals at
financial risk'';
(ii) in subsection (b)--
(I) in paragraph (1), by striking
``prospective homebuyers'' and
inserting ``individuals at financial
risk''; and
(II) by adding at the end the
following:
``(3) Determination of financial risk.--For purposes of
this section, the Director of the Consumer Financial Protection
Agency shall establish the criteria used to determine whether
an individual is at financial risk, and the Secretary shall use
such criteria when selecting organizations under paragraph
(2).''; and
(iii) in subsection (c)(1)--
(I) in subparagraph (A), by
striking ``or'';
(II) in subparagraph (B), by
striking the period and inserting ``;
or''; and
(III) by adding at the end the
following:
``(C) a nonprofit corporation that--
``(i) is exempt from taxation under section
501(c)(3) of the Internal Revenue Code of 1986;
and
``(ii) specializes or has expertise in
working with individuals at financial risk.''.
(h) Assessments for Certain Nondepository Institution Covered
Persons.--
(1) In general.--Notwithstanding any other provision of
this Act, a nondepository institution covered person shall not
be subject to assessments by the Agency if--
(A) the assets that are financial activities of
that nondepository covered person represent less than a
substantial portion of its total assets; and
(B) the gross revenues derived from financial
activities of that nondepository covered person are
less than a substantial portion of its gross revenues.
(2) Extensive consumer financial products or services
operations.--Paragraph (1) shall not apply to nondepository
institution covered person that the Director determines has a
level of assets or revenues derived from financial activities,
a number of transactions in consumer financial products or
services, or a number of accounts relating to consumer
financial products or services that the Director determines
represents an extensive consumer financial products or services
operation.
SEC. 4112. 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. 4113. OVERSIGHT BY GAO.
(a) Authority.--The Comptroller General may audit the programs,
activities, receipts, expenditures, and financial transactions of the
Agency and of any agents and representatives of the Agency as related
to the agent's or representative's activities on behalf of or under
authority of the Agency.
(b) Access.--Notwithstanding any other provision of law, the
Comptroller General shall have access, upon request, to any
information, data, schedules, books, accounts, financial records,
reports, files, electronic communications, or other papers, things, or
property belonging to or in use by the Agency, or any vehicles
established by the Agency under this Act, and to the directors,
officers, employees, independent public accountants, financial
advisors, staff, working groups, and agents and representatives of the
Agency (as related to the agent's or representative's activities on
behalf of the Agency) or any vehicle established by the Agency at such
reasonable time as the Comptroller General may request. The Comptroller
General may make and retain copies of such books, accounts, and other
records as the Comptroller General deems appropriate.
SEC. 4114. 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, covered persons, and the Federal Government,
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 and whether such regulation will have an
inconsistent effect on nondepository institution
covered persons and depository institution covered
persons.
(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 a provision of that law for purposes of assuring
compliance with this title, a provision of any enumerated consumer law,
any provision of 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 under that provision of law 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 a provision of a law, the Agency
shall have primary enforcement authority to enforce the
provision of that Federal law with respect to any person in
accordance with this subsection.
(2) Coordination with the federal trade commission.--
(A) Notice.--If the Federal Trade Commission is
authorized to enforce any Federal law described in
paragraph (1), or a regulation prescribed under any
such Federal law, either the Agency or the Federal
Trade Commission shall serve written notice to the
other of any enforcement action prior to initiating
such an enforcement action, except that if the agency
or commission filing the action determines that prior
notice is not feasible, that agency or commission may
provide notice immediately upon initiating such
enforcement action.
(B) Intervention by either entity.--Upon receiving
any notice under subparagraph (A) with respect to an
enforcement action, the Agency or Federal Trade
Commission 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 action.--Whenever a civil action
has been instituted by or on behalf of the Agency or
the Federal Trade Commission for any violation of any
Federal law described in paragraph (1), or a regulation
prescribed under any such Federal law, the other entity
may not, during the pendency of that action, institute
a civil action under such law or regulation against any
defendant named in the complaint in such pending action
for any violation alleged in the complaint.
(D) Agreements between entities.--
(i) Negotiations authorized.--The Agency
and the Federal Trade Commission may negotiate
an agreement 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.
(i) Preservation of Farm Credit Administration Authority.--No
provision of this title shall be construed as modifying, limiting, or
otherwise affecting the authority of the Farm Credit Administration.
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
$10,000,000,000 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.
(h) Assistive Division for Community Financial Institutions.--
(1) Establishment; purpose.--There is established in the
Agency an office to be known as the ``Assistive Division for
Community Financial Institutions'' to advise the Director on
the impact of Agency policies and regulations on community
financial institutions and to help ensure that the policies and
regulations of the Agency do not unduly burden community
financial institutions.
(2) Additional duties.--The Assistive Division for
Community Financial Institutions shall also--
(A) provide assistance to and respond to inquiries
from community financial institutions regarding
policies of the Agency and the effects of such policies
on community financial institutions;
(B) provide educational materials, training aides,
and support to community financial institutions with
respect to any new regulatory obligations the Agency
establishes during the initial rule-making period;
(C) establish and maintain a toll-free telephone
number, to be available at least 8 hours a day and 7
days a week, at which community financial institution
may make inquiries and receive assistance under
subparagraph (A); and
(D) perform other duties and exercise such other
powers set by the Director.
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 goods or 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 such 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.
In the application of this paragraph, the extension of credit
and the collection of debt described in subparagraphs (A) and
(B), respectively, shall not be considered a consumer financial
product or service.
(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 agency other
than the Agency with respect to credit extended, or the
collection of debt arising from such extension, directly by a
merchant or retailer to a consumer exclusively for the purpose
of enabling that consumer to purchase goods or services
directly from the merchant or retailer.
(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;
(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; or
(C) any credit transaction involving a person who
operates a line of business that involves the extension
of retail credit or retail leases involving motor
vehicles, if--
(i) the extension of retail credit or
retail leases is provided directly to
consumers; and
(ii) the contracts governing such extension
of retail credit or retail leases are not
assigned to a third party finance or leasing
source, except on a de minimis basis.
(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 rulemaking,
supervisory, enforcement or other authority, including the
authority to order assessments, under 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) Persons Regulated by a State Securities Commission.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
any securities commission (or any agency or office performing
like functions) of any State to adopt rules, initiate
enforcement proceedings, or take any other action with respect
to a person regulated by any securities commission (or any
agency or office performing like functions) of any State.
Except as permitted in paragraph (2) and subsection (m), the
Director and the Agency shall have no authority to exercise any
power to enforce this title with respect to a person regulated
by any securities commission (or any agency or office
performing like functions) of any State, but only to the extent
that the person acts in such regulated capacity.
(2) Description of activities.--Paragraph (1) shall not
apply to any person to the extent such person is engaged in any
financial activity described in any subparagraph of section
101(19) or is otherwise subject to any enumerated consumer law
or any law or authority transferred under subtitle F or H.
(e) 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.--No provision of
this title shall be construed as limiting the authority of the
Director and the Agency from exercising powers under this Act
with respect to a person, other than a person regulated by a
State insurance regulator, who provides a product or service
for or on behalf of a person regulated by a State insurance
regulator in connection with a financial activity.
(f) 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 Finance 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.
(g) Exclusion for Persons Regulated by the Farm Credit
Administration.--No provision of this title shall be constructed as
altering, amending, or affecting the authority of the Farm Credit
Administration to adopt rules, institute enforcement proceedings, or
take any other action with respect to a person regulated by the Farm
Credit Administration. The Director and Agency shall have no authority
to exercise any power to enforce this title, compel registration, or to
order assessments with respect to a person regulated by the Farm Credit
Administration. For purposes of this subsection, the term ``person
regulated by the Farm Credit Administration'' means any Farm Credit
System Institution.
(h) Employee Benefit and Compensation Plans and Certain Other
Arrangements Under the Internal Revenue Code of 1986.--
(1) Authority retained by other agencies.--No provision of
this title shall be construed as altering, amending, or
affecting the authority of the Secretary of the Treasury, the
Secretary of Labor, or the Commissioner of Internal Revenue to
adopt regulations, initiate enforcement proceedings, or take
any actions with respect to any specified plan or arrangement.
(2) Activities not constituting financial activities.--For
the purposes of this title, a person shall not be treated as
having engaged in a financial activity, as defined in section
4002(19), solely because such person is a specified plan or
arrangement or is engaged in the activity of establishing or
maintaining, for the benefit of employees of such person (or
for members of an employee organization), any specified plan or
arrangement.
(3) Regulatory coordination.--In the case of regulations
promulgated under this title that address any financial
activity specifically pertaining to the administration and
maintenance of a specified plan or arrangement, the Director
shall coordinate with the Secretary of Labor and the Secretary
of Treasury, as appropriate.
(4) Specified plan or arrangement.--For purposes of this
subsection, the term ``specified plan or arrangement'' means
any plan, account, or arrangement described in section 220,
223, 401(a), 403(a), 403(b), 408, 408A, 529, or 530 of the
Internal Revenue Code of 1986, or any employee benefit or
compensation plan or arrangement, including a plan that is
subject to title I of the Employee Retirement Income Security
Act of 1974.
(i) Exclusion for Accountants and Tax Preparers.--
(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; or
(B) any person other than a person described in
subparagraph (A) that performs income tax preparation
activities for consumers.
(2) Certain activities not excluded.--
(A) In general.--In no event shall paragraph (1)
apply to any activity which involves the sale of
securities or extension of credit which is provided by
a person described in paragraph (1)(A).
(B) Definition.--For purposes of subparagraph (A),
the term ``extension of credit'' shall not include an
ordinary account receivable.
(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) 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) or
(1)(B) that is otherwise subject to any of the
enumerated consumer laws or the authorities transferred
under subtitle F or H.
(j) 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.
(k) 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
motor vehicle dealer that is primarily engaged in the sale and
servicing of motor vehicles, the leasing and servicing of motor
vehicles, or both.
(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.
(l) 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.
(m) 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
subparagraph (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.
(n) Exclusion for Practice of Law.--
(1) In general.--Except as provided under paragraph (2),
nothing in this title shall apply with respect to an activity
engaged in by an attorney, or engaged in under the direction of
an attorney, as part of the practice of law under the laws of a
State in which the attorney is licensed to practice law.
(2) Rule of construction.--
(A) In general.--Paragraph (1) shall not be
construed to limit the exercise by the Director and the
Agency of any rulemaking, supervisory, enforcement, or
other authority, including authority to order
assessments, regarding any activity that is a financial
activity described in any subparagraph of section
4002(19) and is not engaged in as--
(i) part of the practice of law; or
(ii) incidental to the practice of law, to
the extent that such activity is provided
exclusively within the scope of the attorney-
client relationship and is not otherwise
provided by or under the direction of the
attorney to any consumer who is not receiving
legal advice or services from the attorney in
connection with such activity.
(B) Construction.--Paragraph (1) shall not be
construed to limit the authority of the Director and
the Agency with respect to any activity to the extent
that such activity is otherwise subject to any of the
enumerated consumer laws or the authorities transferred
under subtitle F or H.
(3) Exception.--Notwithstanding paragraph (1), an
individual who provides legal advice or services related to
preventing a foreclosure shall be subject to this title unless
such individual provides foreclosure prevention services in
connection with--
(A) the preparation and filing of a bankruptcy
petition; or
(B) court proceedings to avoid a foreclosure.
(o) Exclusion for Pawnbrokers.--
(1) In general.--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 any pawnbroker licensed by a State or
political subdivision thereof, a territory of the United
States, or the District of Columbia, but only to the extent
that such person acts in such capacity and provides either--
(A) non-recourse credit secured by a possessory
security interest in tangible goods physically
delivered by the consumer to the pawnbroker for which
the consumer does not provide a written or electronic
promise, order or authorization to pay, or in any other
manner authorize a debit of a deposit account, prior to
or contemporaneously with the disbursement of the
original proceeds; or
(B) credit or any other financial activity issued
directly by a pawnbroker 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 pawnbroker.
(2) Rule of construction.--
(A) FTC authority preserved.--Except as provided in
subparagraph (B), no provision of this title shall be
construed as modifying, limiting, or superseding the
authority of the Federal Trade Commission with respect
to the activities described under paragraph (1).
(B) Exercise of rulemaking authority.--The Director
may exercise any rulemaking authority regarding the
activities described in paragraph (1) only as may be
authorized by the enumerated consumer laws or any law
or authority transferred under subtitle F or H.
(p) Exclusion for Certain Consumer Reporting Agencies.--
(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 a
consumer reporting agency, as such term is defined in section
603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)),
but only to the extent that such consumer reporting agency
furnishes a consumer report to another person that it has
reason to believe intends to use the information for employment
purposes, including for security investigations, government
licensing and evaluating a consumer's residential or tenant
history.
(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.
(q) Limited Authority of the Agency to Obtain Information.--
Notwithstanding subsections (a), (f), (g), (h), (i), and (k), the
Director may request or require information from any person subject to
or described in any such subsection in order to carry out the
responsibilities and functions of the Agency and in accordance with
section 4206, 4501, or 4502.
(r) Exclusion for Activities Relating to Charitable
Contributions.--
(1) The Director and the Agency may not exercise any
rulemaking, supervisory, enforcement, or other authority,
including authority to order assessments or penalties, over any
activities related to the solicitation or making of voluntary
contributions to or through a tax-exempt organization as
recognized by the Internal Revenue Service, by any agent,
volunteer or representative of such organizations to the extent
the organization, agent, volunteer or representative thereof is
soliciting or providing advice, information, education or
instruction to donor(s) or potential donor(s) relating to a
contribution to or through the organization.
(2) This exclusion shall not apply to other activities not
described in the paragraph above and are financial activities
as described in any subparagraph of section 4002(19), or
otherwise subject to any of the enumerated consumer laws, or
the authorities transferred under subtitle F or H.
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 comment 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. This authority shall not prohibit or restrict
a consumer from entering into a voluntary arbitration agreement with a
covered person after a dispute has arisen.
(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) Consultation with the federal trade commission.--In
developing and implementing report requirements under this
subsection, the Agency shall consult with the Federal Trade
Commission, where appropriate.
(5) 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) Unfair, Deceptive, or Abusive Acts or Practices Defined.--
(1) Unfair acts or practices.--Any determination by the
Director and the Agency that an act or practice is unfair shall
be consistent with the standard set forth under section 5 of
the Federal Trade Commission Act and with the policy statement
adopted by the Federal Trade Commission pursuant to section 5
of the Federal Trade Commission Act and dated December 17,
1980.
(2) Deceptive acts or practices.--Any determination by the
Director and the Agency that an act or practice is deceptive
shall be consistent with the policy statement adopted by the
Federal Trade Commission pursuant to section 5 of the Federal
Trade Commission Act and dated October 14, 1983.
(3) Abusive acts or practices.--The Director and the Agency
may determine that an act or practice is abusive only if the
Director finds that--
(A) the act or practice is reasonably likely to
result in a consumer's inability to understand the
terms and conditions of a financial product or service
or to protect their own interests in selecting or using
a financial product or service; and
(B) the widespread use of the act or practice is
reasonably likely to contribute to instability and
greater risk in the financial system.
(4) Consider as unfair certain practices with regard to the
provision of credit scores.--Subject to regulations prescribed
by the Director, it shall be considered unfair for any consumer
reporting agency that compiles and maintains files on consumers
on a nationwide basis (as defined in section 603(p) of the Fair
Credit Reporting Act; 15 U.S.C. 1681a(p)) to make available for
purchase by creditors any credit score for a consumer that is
not also available for purchase by that consumer at the same
price as other credit scores sold to consumers by such agency.
(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 (other than by the Agency, or by a State
regulator, as may be necessary to enforce an administrative
order 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, notwithstanding any other provision of
this title, 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.
Nothing in this section shall be construed as limiting or superseding
the protection provided to any provider or user qualifying for
protection under section 230(c)(1) of the Communications Act of 1934
(47 U.S.C. 230(c)(1)).
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 10 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 United States 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 to be effected or used primarily for
personal, family, or household purposes 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.
SEC. 4313. OVERDRAFT PROTECTION NOTICE REQUIREMENTS.
Not later than 180 days after the date of the enactment of this
Act, the Director shall promulgate a new rule that requires banks to
prominently place in each consumer branch office information regarding
the fees and charges associated with enrollment in the bank's overdraft
protection program.
SEC. 4314. REVIEW, REPORT, AND PROGRAM WITH RESPECT TO EXCHANGE
FACILITATORS.
(a) Review.--The Director shall review all Federal laws and
regulations relating to the protection of persons who utilize exchange
facilitators.
(b) Report.--Not later than 180 days after the effective date of
this subtitle, the Director shall submit to Congress a report
describing--
(1) recommendations for legislation to ensure the
appropriate protection of persons who utilize exchange
facilitators;
(2) recommendations for updating the regulations of Federal
departments and agencies to ensure the appropriate protection
of such persons; and
(3) recommendations for Agency regulations to ensure the
appropriate protection of such persons.
(c) Program.--Not later than 180 days after the date of the
submission of the report under subsection (b), the Director shall
establish and carry out a program, utilizing the authorities of the
Agency, to protect persons who utilize exchange facilitators.
(d) Exchange Facilitator Defined.--In this section, the term
``exchange facilitator'' means a person that--
(1) facilitates, for a fee, an exchange of like-kind
property by entering into an agreement with a taxpayer by which
the exchange facilitator acquires from the taxpayer the
contractual rights to sell the taxpayer's relinquished property
and transfers a replacement property to the taxpayer as a
qualified intermediary (within the meaning of Treasury
Regulations section 1.1031(k)-1(g)(4)) or enters into an
agreement with the taxpayer to take title to a property as an
exchange accommodation titleholder (within the meaning of
Revenue Procedure 2000-37) or enters into an agreement with a
taxpayer to act as a qualified trustee or qualified escrow
holder (within the meaning of Treasury Regulations section
1.1031(k)-1(g)(3));
(2) maintains an office for the purpose of soliciting
business as an exchange facilitator; or
(3) purports to be an exchange facilitator by advertising
any of the services listed in paragraph (1) or soliciting
clients in printed publications, direct mail, television or
radio advertisements, telephone calls, facsimile transmissions,
or other electronic communications directed to the general
public for purposes of providing any such services.
SEC. 4315. REGULATION OF PERSON-TO-PERSON LENDING.
(a) Scope of Exemption From Federal Securities Regulation.--Section
3(a) of the Securities Act of 1933 (15 U.S.C. 77c(a)) is amended by
adding at the end the following new paragraph:
``(15) Person-to-person lending.--
``(A) In general.--Any consumer loan, and any note
representing a whole or fractional interest in any such
loan, funded or sold through a person-to-person lending
platform.
``(B) Definitions.--For purposes of this paragraph:
``(i) Consumer loan.--The term `consumer
loan' means a loan made to a natural person,
the proceeds of which are intended primarily
for personal, family, educational, household,
or business use.
``(ii) Person-to-person lending platform.--
``(I) In general.--The term
`person-to-person lending platform'
means an Internet website, the primary
purpose of which is to provide a
transaction platform for the funding or
sale of individual consumer loans, or
the sale of notes representing whole or
fractional interests in individual
consumer loans, by matching natural
persons who wish to obtain such loans
with persons who wish to fund them, or
by matching persons who wish to sell
such loans or notes with persons who
wish to purchase them.
``(II) Prohibition on multiple
loans in a single transaction.--The
term `person-to-person lending
platform' does not include any platform
on which multiple loans may be funded
or sold in a single transaction, or on
which a note representing an interest
in multiple loans or other debt
obligations may be sold.''.
(b) Regulation by the Agency.--
(1) In general.--Primary jurisdiction for the regulation of
the lending activities of person-to-person lending and person-
to-person lending platforms is hereby vested in the Agency.
(2) Interim requirements.--Until the Director issues and
adopts disclosure requirements with respect to the sale of
consumer loans, or notes representing whole or fractional
interests therein, on person-to-person lending platforms, a
person-to-person lending platform that registers the offer and
sale of any such notes under the Securities Act of 1933 shall,
with respect to such registered offer and sale, provide the
disclosure required under the Securities Act of 1933 to be
contained in the registration statement and prospectus and
provide such disclosure required in any periodic reports
required to be filed by such person-to-person lender pursuant
to section 13 or section 15(d) of the Securities Exchange Act
of 1934.
(3) Definitions.--For purposes of this subsection, the
terms ``consumer loan'', ``person-to-person lending platform'',
``prospectus'', and ``registration statement'' shall have the
meaning given such term under the Securities Act of 1933.
(c) Rulemaking.--The Director may prescribe such regulations and
issue such orders as the Director considers necessary or appropriate to
implement the provisions of this section and to provide borrower
protection, lender protection, consumer choice, and expanded consumer
access to fair and reasonable credit choices.
(d) Effective Date.--Notwithstanding section 4310, this section
shall take effect on the date of the enactment of this title.
SEC. 4316. TREATMENT OF REVERSE MORTGAGES.
(a) In General.--The Director shall examine the practices of
covered persons in connection with any reverse mortgage transaction (as
defined in section 103(bb) of the Truth in Lending Act (15 U.S.C.
1602)) and shall prescribe regulations identifying any acts or
practices as unlawful, unfair, deceptive, or abusive in connection with
a reverse mortgage transaction or the offering of a reverse mortgage.
(b) Regulations.--In prescribing regulations under subsection (a),
the Director shall ensure that such regulations shall--
(1) include requirements for--
(A) the purpose of preventing unlawful, unfair,
deceptive or abusive acts and practices in connection
with a reverse mortgage transaction; and
(B) the purpose of providing timely, appropriate,
and effective disclosure to consumers in connection
with a reverse mortgage transaction that are consistent
with requirements prescribed by the Director in
connection with other consumer mortgage products or
services under this title;
(2) with respect to the requirements under paragraph (1),
be consistent with requirements prescribed by the Director in
connection with other consumer mortgage products or services
under this title; and
(3) provide for an integrated disclosure standard and model
disclosures for reverse mortgage transactions, consistent with
section 4302(d), that combines the relevant disclosures
required under the Truth in Lending Act (15 U.S.C. 1601 et
seq.) and the Real Estate Settlement Procedures Act, with the
disclosures required to be provided to consumers for Home
Equity Conversion Mortgages under section 255 of the National
Housing Act.
(c) Consultation.--In connection with the issuance of any
regulations under this section, the Director shall consult with the
Federal banking agencies, State bank supervisors, the Federal Trade
Commission, and the Department of Housing and Urban Development, as
appropriate, to ensure that any proposed regulation--
(1) imposes substantially similar requirements on all
covered persons; and
(2) is consistent with prudential, consumer protection,
civil rights, market or systemic objectives administered by
such agencies or supervisors.
(d) Deadline for Rulemaking.--The Director shall commence the
rulemaking required under subsection (a) not later than 12 months after
the date of the enactment of this Act.
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.
(c) Additional Consumer Protection Regulations in Response to State
Action.--
(1) Notice of proposed rule required.--The Agency shall
issue a notice of proposed rulemaking whenever a majority of
the States has enacted a resolution in support of the
establishment or modification of a consumer protection
regulation by the Agency.
(2) Agency considerations required for issuance of final
regulation.--Before prescribing a final regulation based upon a
notice issued pursuant to paragraph (1), the Agency shall take
into account whether--
(A) the proposed regulation would afford greater
protection to consumers than any existing regulation;
(B) the intended benefits of the proposed
regulation for consumers would outweigh any increased
costs or inconveniences for consumers, and would not
discriminate unfairly against any category or class of
consumers; and
(C) a Federal banking agency has advised that the
proposed regulation is likely to present an
unacceptable safety and soundness risk to insured
depository institutions.
(3) Explanation of considerations.--The Agency--
(A) shall include a discussion of the
considerations required in subsection (b) in the
Federal Register notice of a final regulation
prescribed pursuant to this section; and
(B) whenever the Agency determines not to prescribe
a final regulation, shall publish an explanation of
such determination in the Federal Register, and provide
a copy of such explanation to each State that enacted a
resolution in support of the proposed regulation, the
Committee on Financial Services of the House of
Representatives, and the Committee on Banking, Housing,
and Urban Affairs of the Senate.
(4) Reservation of authority.--No provision of this section
shall be construed as limiting or restricting the authority of
the Agency to enhance consumer protection standards established
pursuant to this title in response to its own motion or in
response to a request by any other interested person.
(5) Rule of construction.--No provision of this section
shall be construed as exempt the Agency from complying with
subchapter II of chapter 5 of title 5, United States Code.
(6) Definition.--For purposes of this section, the term
``consumer protection regulation'' means a regulation that the
Agency is authorized to prescribe under this title, the
enumerated consumer laws, or any law or authority transferred
under subtitle F or H.
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 enforce and secure remedies
under provisions of this title or regulations issued
thereunder, or otherwise provided under other law.
(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 directly and specifically regulates the manner, content,
or terms and conditions of any financial transaction (as may be
authorized for national banks to engage in), or any account
related thereto, with respect to a consumer.
``(3) Other definitions.--The terms `affiliate',
`subsidiary', `includes', and `including' have the same meaning
as in section 3 of the Federal Deposit Insurance Act.
``(b) Preemption Standard.--
``(1) In general.--State consumer financial laws are
preempted only if--
``(A) application of a State consumer financial law
would have a discriminatory effect on national banks in
comparison with the effect of the law on a bank
chartered by that State;
``(B) the State consumer financial law prevents,
significantly interferes with, or materially impairs
the ability of an institution chartered as a national
bank to engage in the business of banking. Any
preemption determination under this subparagraph may be
made by a court or by regulation or order of the
Comptroller of the Currency in accordance with
applicable law, on a case-by-case basis. Any such
determination by a court shall comply with the
standards set forth in subsection (d) of this section,
with the court making the subsection (d) finding de
novo; or
``(C) the State consumer financial 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 subsidiary or
affiliate of a national bank (other than an institution
chartered as a national bank) that is not a depository
institution.
``(3) Case-by-case determination.--
``(A) Definition.--The term `case-by-case
determination pursuant to this section' means a
determination made by the Comptroller concerning the
impact of a particular State consumer financial law on
any national bank that is subject to that law, or the
law of any other State with substantively equivalent
terms.
``(B) Consultation.--When making case-by-case
determination pursuant to this section that a State
consumer financial law of another State has a
substantively equivalent terms as one that the
Comptroller is preempting, the Comptroller shall first
consult with the Consumer Financial Protection Agency
and shall take such Agency's views into account when
making the determination.
``(4) Rule of construction.--This Act does not occupy the
field in any area of State law.
``(5) Standards of review.--
``(A) Preemption.--A court reviewing any
determinations made by the Comptroller regarding
preemption of a State law by this Act shall assess the
validity of such determinations depending upon the
thoroughness evident in the agency's consideration, the
validity of the agency's reasoning, the consistency
with other valid determinations made by the agency, and
other factors which the court finds persuasive and
relevant to its decision.
``(B) Savings clause.--Except as provided in
subparagraph (A), nothing in this section shall affect
the deference that a court may afford to the
Comptroller in making determinations regarding the
meaning or interpretation of title LXII of the Revised
Statutes of the United States or other Federal laws.
``(6) Comptroller determination not delegable.--Any
regulation, order or determination made by the Comptroller of
the Currency under subsection (b)(1)(B) shall be made by the
Comptroller and shall not be delegable to another officer or
employee of the Comptroller of the Currency.
``(c) Substantial Evidence.--No regulation or order of the
Comptroller of the Currency prescribed under subsection (b)(1)(B),
shall be interpreted or applied so as to invalidate, or otherwise
declare inapplicable to a national bank, the provision of the State
consumer financial law unless substantial evidence, made on the record
of the proceeding, supports the specific finding that the provision
prevents, significantly interferes with, or materially impairs the
ability of a national bank to engage in the business of banking.
``(d) Other Federal Laws.--Notwithstanding any other provision of
law, the Comptroller of the Currency may not prescribe a regulation or
order 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) and (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.
``(g) Preservation of Powers Related to Charging Interest.--No
provision of this title shall be construed as altering or otherwise
affecting the authority conferred by section 5197 of the Revised
Statutes of the United States (12 U.S.C. 85) for the charging of
interest by a national bank at the rate allowed by the laws of the
State, territory or district where the bank is located, including with
respect to the meaning of `interest' under such provision.
``(h) Transparency of Occ Preemption Determinations.--The
Comptroller of the Currency shall publish and update no less frequently
than quarterly, a list of preemption determinations by the Comptroller
of the Currency then in effect that identifies the activities and
practices covered by each determination and the requirements and
constraints determined to be preempted.''.
(b) Clerical Amendment.--The table of sections for chapter one of
title LXII of the Revised Statutes of the United States is amended by
inserting after the item relating to section 5136B the following new
item:
``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 visitorial authority to which any national bank
is subject shall be construed as limiting or restricting the
authority of any attorney general (or other chief law
enforcement officer) of any State to bring any action in any
court of appropriate jurisdiction--
``(A) to enforce any applicable Federal or State
law, as authorized by such law; or
``(B) on behalf of residents of such State, to
enforce any applicable provision of any Federal or
nonpreempted State law against a national bank, as
authorized by such law, or to seek relief as authorized
by such law.
``(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 directly and specifically 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.--State consumer financial laws are
preempted only if--
``(A) application of a State consumer financial 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 State consumer financial law prevents,
significantly interferes with, or materially impairs
the ability of an institution chartered as a Federal
savings association to engage in the business of
banking. Any preemption determination under this
subparagraph may be made by a court or by regulation or
order of the Director of the Office of Thrift
Supervision in accordance with applicable law, on a
case-by-case basis. Any such determination by a court
shall comply with the standards set forth in subsection
(d) of this section, with the court making the
subsection (d) finding de novo; or
``(C) the State consumer financial 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 subsidiary or
affiliate of a Federal savings association (other than an
institution chartered as a Federal savings association) that is
not a depository institution.
``(3) Case-by-case determination.--
``(A) Definition.--The term `case-by-case
determination pursuant to this section' means a
determination made by the Director concerning the
impact of a particular State consumer financial law on
any Federal savings association that is subject to that
law, or the law of any other State with substantively
equivalent terms.
``(B) Consultation.--When making case-by-case
determination pursuant to this section that a State
consumer financial law of another State has a
substantively equivalent terms as one that the Director
of the Office of Thrift Supervision is preempting, the
Director shall first consult with the Consumer
Financial Protection Agency and shall take such
Agency's views into account when making the
determination.
``(4) Rule of construction.--This Act does not occupy the
field in any area of State law.
``(5) Standards of review.--
``(A) Preemption.--A court reviewing any
determinations made by the Director regarding
preemption of a State law by this Act shall assess the
validity of such determinations depending upon the
thoroughness evident in the agency's consideration, the
validity of the agency's reasoning, the consistency
with other valid determinations made by the agency, and
other factors which the court finds persuasive and
relevant to its decision.
``(B) Savings clause.--Except as provided in
subparagraph (A), nothing in this section shall affect
the deference that a court may afford to the Director
in making determinations regarding the meaning or
interpretation of the Home Owners' Loan Act or other
Federal laws.
``(6) OTS determination not delegable.--Any regulation,
order, or determination made by the Director of the Office of
Thrift Supervision under subsection (b)(1)(B) shall be made by
the Director and shall not be delegable to another officer or
employee of the Director of the Office of Thrift Supervision.
``(c) Other Federal Law.--Notwithstanding any other provision of
law, the Director of the Office of Thrift Supervision may not prescribe
any regulation or order 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 or order 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, significantly
interferes with, or materially impairs the ability of a Federal savings
association to engage in the business of banking.
``(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) and (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.
``(g) Preservation of Powers Related to Charging of Interest.--No
provision of this title shall be construed as altering or otherwise
affecting the authority conferred by section 4(g) of the Home Owners'
Loan Act (12 U.S.C. 1463(g)) for the charging of interest by a Federal
savings association at the rate allowed by the laws of the State,
territory, or district where the bank is located, including with
respect to the meaning of `interest' under such provision.
``(h) Transparency of OTS Preemption Determinations.--The Director
of the Office of Thrift Supervision shall publish and update no less
frequently than quarterly, a list of preemption determinations by such
Director then in effect that identifies the activities and practices
covered by each determination and the requirements and constraints
determined to be preempted.''.
(b) Clerical Amendment.--The table of sections for 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 enforce any applicable Federal or State
law, as authorized by such law; or
``(B) 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 as authorized
by such law.
``(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) 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.
(2) 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.
(3) Covered employee.--The term ``covered employee'' means
any individual performing tasks related to the provision of a
financial product or service to a consumer.
(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, an appropriate United States district court
may, upon application by the Agency or an Agency investigator
and after notice to such person, issue an order requiring such
person to appear and give testimony or to appear and produce
documents or other material, or both.
(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.
(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.--The examination
of any person pursuant to a demand for oral
testimony served under this subsection shall be
taken before an officer authorized to
administer oaths and affirmations by the laws
of the United States or of the place where the
examination is held. The officer before whom
oral testimony is to be taken shall put the
witness on oath or affirmation and shall
personally, or by any individual acting under
the direction of and in the presence of the
officer, record the testimony of the witness.
(ii) Transcriptions.--The testimony shall
be taken stenographically and transcribed.
(iii) Copy to custodian.--After the
testimony is fully transcribed, the officer
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
officer or 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 officer
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 officer or 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 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 shall 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) No covered person 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) has--
(1) provided information to the Agency or to any other
state, local, Federal, or tribal government entity, filed,
instituted or caused to be filed or instituted any proceeding
under this title, any enumerated consumer law, any law for
which authorities were transferred by subtitles F and H, or has
testified or is about to testify in any proceeding resulting
from the administration or enforcement of the provisions of
this title; or
(2) objected to, or refused to participate in, any
activity, policy, practice, or assigned task that the employee
(or other such person) reasonably believed to be in violation
of any law, rule, or regulation, or to be unfair, deceptive, or
abusive and likely to cause specific and substantial injury to
one or more consumers.
(b)(1) A person who believes that he or she has been discharged or
otherwise discriminated against by any person in violation of
subsection (a) may, not later than 180 days after the date on which
such violation occurs, file (or have any person file on his or her
behalf) a complaint with the Secretary of Labor alleging such discharge
or discrimination and identifying the person responsible for such act.
Upon receipt of such a complaint, the Secretary shall notify, in
writing, the person named in the complaint of the filing of the
complaint, of the allegations contained in the complaint, of the
substance of evidence supporting the complaint, and of the
opportunities that will be afforded to such person under paragraph (2).
(2)(A) Not later than 60 days after the date of receipt of a
complaint filed under paragraph (1) and after affording the complainant
and the person named in the complaint 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. 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). Not later than 30
days after the date of notification of findings under this paragraph,
either the person alleged to have committed the violation or the
complainant may file objections to the findings or preliminary order,
or both, and request a hearing on the record. The filing of such
objections shall not operate to stay any reinstatement remedy contained
in the preliminary order. Any such hearing shall be conducted
expeditiously. If a hearing is not requested in such 30-day period, the
preliminary order shall be deemed a final order that is not subject to
judicial review.
(B)(i) The Secretary shall dismiss a complaint filed under this
subsection and shall not conduct an investigation otherwise required
under subparagraph (A) unless the complainant makes a prima facie
showing that any behavior described in paragraphs (1) through (4) of
subsection (a) was a contributing factor in the unfavorable personnel
action alleged in the complaint.
(ii) Notwithstanding a finding by the Secretary that the
complainant has made the showing required under clause (i), no
investigation otherwise required under subparagraph (A) 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.
(iii) The Secretary may determine that a violation of subsection
(a) has occurred only if the complainant demonstrates that any behavior
described in paragraphs (1) through (4) of subsection (a) was a
contributing factor in the unfavorable personnel action alleged in the
complaint.
(iv) Relief may not be ordered under subparagraph (A) if the
employer demonstrates by clear and convincing evidence that the
employer would have taken the same unfavorable personnel action in the
absence of that behavior.
(3)(A) Not later than 120 days after the date of conclusion of any
hearing under paragraph (2), the Secretary shall issue a final order
providing the relief prescribed by this paragraph or denying the
complaint. At any time before issuance of a final order, a proceeding
under this subsection may be terminated on the basis of a settlement
agreement entered into by the Secretary, the complainant, and the
person alleged to have committed the violation.
(B) 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 his or her former
position together with compensation (including back pay) and
restore the terms, conditions, and privileges associated with
his or her employment; and
(iii) to provide compensatory damages to the complainant.
If such 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.
(C) 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.
(4) 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 may bring an action
at law or equity for de novo review in the appropriate district court
of the United States with jurisdiction, which shall have jurisdiction
over such an action without regard to the amount in controversy, and
which action shall, at the request of either party to such action, be
tried by the court with a jury. The proceedings shall be governed by
the same legal burdens of proof specified in paragraph (2)(B). The
court shall have jurisdiction to grant all relief necessary to make the
employee whole, including injunctive relief and compensatory damages,
including--
(A) reinstatement with the same seniority status that the
employee would have had, but for the discharge or
discrimination;
(B) the amount of back pay, with interest; and
(C) 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.
(5)(A) Unless the complainant brings an action under paragraph (4),
any person adversely affected or aggrieved by a final order issued
under paragraph (3) 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. The
petition for review must be filed not later than 60 days after the date
of the issuance of the final order of the Secretary. Review shall
conform to chapter 7 of title 5, United States Code. The commencement
of proceedings under this subparagraph shall not, unless ordered by the
court, operate as a stay of the order.
(B) 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.
(6) Whenever any person has failed to comply with an order issued
under paragraph (3), 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. In actions brought under
this paragraph, the district courts shall have jurisdiction to grant
all appropriate relief including, but not limited to, injunctive relief
and compensatory damages.
(7)(A) A person on whose behalf an order was issued under paragraph
(3) may commence a civil action against the person to whom such order
was issued to require compliance with such order. The appropriate
United States district court shall have jurisdiction, without regard to
the amount in controversy or the citizenship of the parties, to enforce
such order.
(B) 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.
(c) Any nondiscretionary duty imposed by this section shall be
enforceable in a mandamus proceeding brought under section 1361 of
title 28, United States Code.
(d)(1) 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) Except as provided under paragraph (3), no predispute
arbitration agreement shall be valid or enforceable if it requires
arbitration of a dispute arising under this section.
(e) Notwithstanding paragraphs (1) and (2), an arbitration
provision in a collective bargaining agreement shall be enforceable as
to disputes arising under paragraph (a)(2) of this section unless the
Agency determines by rule that such provision is inconsistent with the
purposes of this Act.
(f) Any employer receiving covered funds shall post notice of the
rights and remedies provided under this section.
SEC. 4508. NO PRIVATE RIGHT OF ACTION.
Nothing in this title shall be construed to create a private right
of action, but this section shall not be construed or interpreted to
deny any private right of action arising under the enumerated consumer
laws or the authorities transferred under subtitle F or H.
SEC. 4509. 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.
(C) Retention of consumer advisory council.--
(i) Retention and continuation.--
Notwithstanding the transfer of functions under
subparagraph (A), the Consumer Advisory Council
established by the Board of Governors pursuant
to section 703(b) of Public Law 90-321 (15
U.S.C. 1691b(b)) shall continue as an entity
within the Federal Reserve System.
(ii) Additional functions.--In addition to
the functions performed by the Consumer
Advisory Council as of the designated transfer
date, the Consumer Advisory Council shall--
(I) submit to the Director (and
make available to the public) an annual
set of recommendations for consumer
protection regulations and meet with
the Director to discuss the annual
recommendations;
(II) meet with the Board of
Governors of the Federal Reserve System
at least once a year and provide oral
or written representations concerning
matters within the jurisdiction of the
Board; and
(III) call for information and make
recommendations in regard to consumer
protection regulations.
(iii) Response to recommendations.--When
the Chair of the Federal Reserve testifies
before Congress, the Chair shall also testify
about the recommendations of the Consumer
Advisory Council under clause (ii)(II) and its
recommendations for consumer protection
regulations.
(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). This transfer shall not be subject to
the provisions of section 3503 of title 5, United
States Code.
(B) Federal trade commission authority.--The Agency
shall have all powers and duties that were vested in
the Federal Trade Commission that were contained within
the enumerated statutes, except as provided in section
4202(e), on the day before the designated transfer
date.
(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 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 paragraph (2) or (3) of section
4202(e).
(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
transferred under subsection (a) 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.
The designated transfer date shall be 180 days after the date of
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.--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--
(1) 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
(2) existed on the day before 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 the
Board of Governors, a Federal reserve bank, the Federal
Deposit Insurance Corporation, the National Credit
Union Administration, or the Federal Home Loan Bank
Board or any successor to such Board 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 the
Board of Governors, a Federal reserve bank, the Federal
Deposit Insurance Corporation, the National Credit
Union Administration, or the Federal Home Loan Bank
Board or any successor to such Board 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, the Federal Home Loan Bank Board or any successor to such
Board, 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, the
Federal Home Loan Bank Board or any successor to such Board, 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 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 during the 24-month period
beginning on the date of the enactment of this title.
(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;
(iii) data on the number and dollar amounts
of the accounts, presented by census tract
location of the residential and commercial
customers; and
(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.
SEC. 4704. REPORTING OF MORTGAGE DATA BY STATE.
(a) In General.--Section 104(a) of the Helping Families Save Their
Homes Act of 2009 (division A of Public Law 111-22) is amended--
(1) in paragraph (2), by striking ``resulting'' and
inserting ``in each State that result'';
(2) in paragraph (3), by inserting ``each State for'' after
``modifications in''; and
(3) in paragraph (4), by inserting ``in each State'' after
``total number of loans''.
(b) Conforming Amendment.--Section 104(b)(1)(A) of such Act is
amended by adding at the end the following sentence: ``Not later than
60 days after the date of the enactment of the Wall Street Reform and
Consumer Protection Act of 2009, the Comptroller of the Currency and
the Director of the Office of Thrift Supervision shall update such
requirements to reflect amendments made to this section by such Act.''.
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) and shall not
apply to the term ``Board'' when used in reference to
the Federal Deposit Insurance Corporation or the
National Credit Union Administration.
(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 25A 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 (other than the Consumer Financial Protection 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) (and except for any insertion of ``Federal Trade
Commission'' made by this subtitle), 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)) 129(m) (as amended by
paragraph (7)), 140A, or 149 (as amended by paragraph
(8)).
(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.''.
(8) Section 149.--Section 149(b) of the Truth in Lending
Act (15 U.S.C. 1665d(b)) is amended by inserting ``the Federal
Trade Commission,'' after ``in consultation with''.
(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 paragraphs (7)(B), (8)(A), (8)(C), and (8)(D) of this
subsection (and except for any insertion of ``Federal Trade
Commission'' made by this subtitle), 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 609.--Section 609(d)(1) of the Fair Credit
Reporting Act (15 U.S.C. 1681g(d)(1)) is amended by inserting
``the Federal Trade Commission,'' after ``in consultation
with''.
(6) Section 611.--Section 611(e) of the Fair Credit
Reporting Act (15 U.S.C. 1681i(e)) is amended--
(A) by amending paragraph (2) 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).''; and
(B) in the heading of paragraph (3) by inserting
``Consumer reporting'' before ``agency''.
(7) Section 615.--Section 615 of the Fair Credit Reporting
Act (15 U.S.C. 1681m) is amended--
(A) in subsection (d)(2)(B), by inserting ``the
Federal Trade Commission,'' after ``in consultation
with'';
(B) in subsection (e)(1), by striking ``and the
Commission'' and inserting ``the Federal Trade
Commission, the Securities and Exchange Commission, and
the Commodities Futures Trading Commission''; and
(C) by striking subparagraph (A) of subsection
(h)(6) and inserting the following:
``(A) Rules required.--The Agency shall prescribe
rules.''.
(8) 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 (other
than the Consumer Financial Protection 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) in paragraph (2) of subsection (c)--
(i) by inserting ``the Agency and'' before
``the Federal Trade Commission'' in the first
sentence;
(ii) by inserting ``Agency and the Federal
Trade'' after ``provide the''; and
(iii) by inserting ``Agency,'' before
``Federal Trade Commission'' in the second
sentence;
(D) in paragraph (4) of subsection (c)--
(i) by inserting ``Agency'', before ``the
Federal Trade Commission''; and
(ii) inserting ``Agency, the Federal
Trade'' after ``complaint of the'';
(E) in paragraph (2) of subsection (f), by
inserting ``the Federal Trade Commission'' after ``in
consultation with'';
(F) 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, except
that, with respect to sections 615(e) and 628 of this title, the
agencies identified in subsections (a) and (b) of this section shall
prescribe such regulations as necessary to carry out the purposes of
such sections with respect to entities within their enforcement
authority under such subsections.''; and
(G) 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)--
(I) by inserting ``of Governors of
the Federal Reserve System'' after
``Board''; and
(II) 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
(other than the Consumer Financial Protection 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 (other than the Consumer
Financial Protection 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'';
(iii) in paragraph (l)(B), by inserting
``of Governors of the Federal Reserve System''
after ``Board''; and
(iv) 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 (other than the Consumer Financial Protection 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 note) (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 note) 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 501.--Section 501(b) of the Gramm-Leach-Bliley Act (15
U.S.C. 6801(b)) is amended by inserting ``(other than the Consumer
Financial Protection Agency)'' after ``title''.
(b) Section 502.--Section 502(e)(5) of the Gramm-Leach-Bliley Act
(15 U.S.C. 6802(e)(5)) is amended by inserting ``the Consumer Financial
Protection Agency,'' after ``(including''.
(c) Section 503.--Section 503(e)(1) of the Gramm-Leach-Bliley Act
(15 U.S.C. 6803(e)(1)) is amended--
(1) by inserting ``Consumer Financial Protection Agency in
consultation with the other'' before ``agencies''; and
(2) by striking ``jointly''.
(d) 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'';
(2) by striking ``, and the Federal Trade Commission''; and
(3) by inserting ``the Federal banking agencies, the
National Credit Union Administration, the Secretary of the
Treasury, the Federal Trade Commission, and'' before
``representatives of State insurance authorities''.
(e) 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)''.
(f) Section 507.--Subsection 507(b) of the Gramm-Leach-Bliley Act
(15 U.S.C. 6807(b)) is amended by striking ``Federal Trade Commission''
and inserting ``Consumer Financial Protection Agency, or in the case of
a rule under section 501(b), the Federal Trade Commission or the
Securities and Exchange Commission''.
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 subparagraph (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 25A 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 note) (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 note) (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 ABUSE AND
PREVENTION ACT.
(a) Section 4 of the Telemarketing and Consumer Fraud Abuse and
Prevention Act (15 U.S.C. 6102) is amended--
(1) in subsection (b)--
(A) by inserting ``and the Consumer Financial
Protection Agency with respect to a person subject to
the authority of that Agency under the Consumer
Financial Protection Agency Act'' after ``Commission''
each of the first 2 places it appears; and
(B) by inserting ``or the Consumer Financial
Protection Agency'' after ``Commission'' the last place
it appears; and
(2) in subsection (d), by inserting ``or the Consumer
Financial Protection Agency'' after ``Commission'' each place
such term appears.
(b) Section 5 of the Telemarketing and Consumer Fraud Abuse and
Prevention Act (15 U.S.C. 6102) is amended--
(1) in subsection (b)--
(A) by inserting ``and the Consumer Financial
Protection Agency with respect to a person subject to
the authority of that Agency under the Consumer
Financial Protection Agency Act'' after ``Commission''
each of the first 2 places it appears; and
(B) by inserting ``or the Consumer Financial
Protection Agency'' after ``Commission'' the last place
it appears; and
(2) in subsection (c), by inserting ``or the Consumer
Financial Protection Agency'' after ``Commission'' each place
such term appears.
(c) Section 6 of the Telemarketing and Consumer Fraud Abuse and
Prevention Act (15 U.S.C. 6102) is amended by redesignating subsection
(c) as subsection (d) and inserting after subsection (b) the following:
``(c) Enforcement by the Consumer Financial Protection Agency.--
Subject to section 4202 of the Consumer Financial Protection Agency Act
of 2009, this Act shall be enforced by the Consumer Financial
Protection Agency, under subtitle E of that Act, with respect to a
person subject to the authority of that Agency under that Act. For the
purpose of the exercise by the Consumer Financial Protection Agency of
its powers under subtitle E, a violation of any requirement imposed
under this Act shall be deemed to be a violation of a requirement
imposed under the Consumer Financial Protection Agency Act. In addition
to its powers under subtitle E of that Act, the Agency may exercise,
for the purpose of enforcing compliance with any requirement imposed
under this Act, any other authority conferred on it by law.''.
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.
SEC. 4818. AMENDMENTS TO TRUTH IN LENDING ACT.
(a) In General.--Section 128(e) of the Truth in Lending Act is
amended--
(1) by striking paragraph (3) and inserting the following
new paragraph (3):
``(3) Institutional certification required.--(A) Except as
provided in subparagraph (B), before a creditor may issue any
funds with respect to an extension of credit described in
paragraph (1), the creditor shall obtain from the relevant
institution of higher education such institution's
certification--
``(i) of the enrollment status of the borrower;
``(ii) of the borrower's cost of attendance at the
institution as determined by the institution under part
F of title IV of the Higher Education Act of 1965;
``(iii) of the difference between the borrower's
cost of attendance and the borrower's estimated
financial assistance received under title IV of the
Higher Education Act of 1965 and other assistance known
to the institution, as applicable; and
``(iv) that the institution has--
``(I) informed the borrower--
``(aa) about the availability of,
and the borrower's potential
eligibility for, Federal financial
assistance under this title, including
disclosing the terms, conditions, and
interest rates of Federal student
loans;
``(bb) of the borrower's ability to
select a private educational lender of
the borrower's choice;
``(cc) about the impact of a
proposed private education loan on the
borrowers' potential eligibility for
other financial assistance, including
Federal financial assistance under the
Higher Education Act of 1965; and
``(dd) about a borrower's right to
accept or reject a private education
loan within the 30-day period following
a private educational lender's approval
of a borrower's application and about a
borrower's 3-day right to cancel
altogether;
``(II) determined whether the borrower has
applied for and exhausted the Federal financial
assistance available to the borrower under the
Higher Education Act of 1965 and informed the
borrower accordingly; and
``(III) counseled the borrower on the
borrower's financial aid options.
``(B) A creditor may issue funds with respect to an
extension of credit described in paragraph (1) without
obtaining from the relevant institution of higher education
such institution's certification if such institution fails to
provide such certification within 21 calendar days or 15
business days, whichever comes first, of the creditor's request
for such certification.'';
(2) by redesignating paragraphs (9), (10), and (11) as
paragraphs (10), (11), and (12), respectively; and
(3) by inserting after paragraph (8) the following new
paragraph (9):
``(9) Provision of information.--On or before the date a
creditor issues any funds with respect to an extension of
credit described in paragraph (1), the creditor shall notify
the relevant institution of higher education, in writing, of
the amount of the extension of credit and the student on whose
behalf credit is extended. The form of such written
notification shall be subject to the regulations of the
Agency.''.
(b) Regulations.--
(1) Deadline for regulations.--Not later than 365 days
after the date of enactment of this Act, the Agency shall issue
regulations in final form to implement paragraphs (3) and (9)
of section 128(e) of the Truth in Lending Act, as amended by
subsection (a). Such regulations shall become effective not
later than 6 months after their date of issuance.
(2) Effective date.--The regulations in effect pursuant to
section 128(e) of the Truth in Lending Act as of the date of
the enactment of this Act shall remain in effect until the
effective date of the regulations issued under paragraph (1).
(c) Study and Report on Private Education Loans and Private
Educational Lenders.--
(1) Report.--Not later than 2 years after the date of
enactment of this Act, the Director and the Secretary of
Education, in consultation with the Commissioners of the
Federal Trade Commission, and the Attorney General, shall
submit a report to the Committee on Financial Services and the
Committee on Education and Labor of the House of
Representatives and the Committee on Banking, Housing, and
Urban Affairs and the Committee on Health Education, Labor, and
Pensions of the Senate on private education loans (as that term
is defined in section 140 of the Truth in Lending Act (15
U.S.C. 1650)) and private educational lenders (as that term is
defined in such section).
(2) Content.--The report required by this subsection shall
examine, at a minimum, the following:
(A) the growth and changes of the private education
loan market in the United States;
(B) factors influencing such growth and changes;
(C) the extent to which students and parents of
students rely on private education loans to finance
postsecondary education and the private education loan
indebtedness of borrowers;
(D) the characteristics of private education loan
borrowers, including the types of institutions of
higher education they attend, socioeconomic
characteristics (including income and education levels,
racial characteristics, geographical background, age,
and gender), what other forms of financing borrowers
use to pay for education, whether they exhaust their
Federal loan options before taking out a private loan,
whether such borrowers are dependent or independent
students (as determined under part F of title IV of the
Higher Education Act of 1965) or parents of such
students, whether such borrowers are students enrolled
in a program leading to a certificate, license or
credential other than a degree, an associates degree, a
baccalaureate degree, or a graduate or professional
degree and, if practicable, employment and repayment
behaviors;
(E) the characteristics of private educational
lenders, including whether such creditors are for-
profit, non-profit, or institutions of higher
education;
(F) the underwriting criteria used by private
educational lenders, including the use of cohort
default rate (as such term is defined in section 435(m)
of the Higher Education Act of 1965);
(G) the terms, conditions, and pricing of private
education loans;
(H) the consumer protections available to private
education loan borrowers, including the effectiveness
of existing disclosures and requirements and borrowers'
awareness and understanding about terms and conditions
of various financial products;
(I) whether Federal regulators and the public have
access to information sufficient to provide them with
assurances that private education loans are provided in
accord with the Nation's fair lending laws and that
allows public officials to determine lenders'
compliance with fair lending laws; and
(J) any statutory or legislative recommendations
necessary to improve consumer protections for private
education loan borrowers and to better enable Federal
regulators and the public to ascertain private
educational lender compliance with fair lending laws.
(d) Report.--Not later than 18 months after the issuance of
regulations under subsection (b)(1), the Consumer Financial Protection
Agency and the Secretary of Education shall jointly submit to Congress
a report on the compliance of institutions and private educational
lenders with the amendments made by this section. The report shall
include the degree to which specific institutions utilize
certifications in effectively encouraging the exhaustion of Federal
student loan eligibility and lowering student debt.
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;
(2) by inserting a comma after ``under this Act'';
(3) by inserting a comma after ``subsection (a)(1))''; and
(4) 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,
partnership, or corporation, 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. Nothing in this section shall be construed as
limiting or superseding the protection provided to any provider or user
qualifying for protection under section 230(c)(1) of the Communications
Act of 1934 (47 U.S.C. 230(c)(1)).''.
(c) Section 18 of the Federal Trade Commission Act (15 U.S.C. 57a)
is amended--
(1) in subsection (a)(1), by striking ``(h)'' and inserting
``(f)'';
(2) 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.'';
(3) by striking subsection (c);
(4) in subsection (d), by striking ``(d)(1) The
Commission's'' and all that follows through the end of
paragraph (2) and by redesignating paragraph (3) of such
subsection as subsection (c);
(5) In such subsection (c) (as so redesignated), by
inserting ``prescribed'' after ``any rule'';
(6) by striking subsections (f), (i), and (j) and
redesignating subsections (e), (g), and (h) as subsections (d),
(e), and (f), respectively;
(7) in subsection (c) (as redesignated), by inserting
``prescribed'' after ``rule''; and
(8) in subsection (d) (as redesignated)--
(A) in paragraph (1)(A) by striking ``promulgated''
and inserting ``prescribed'';
(B) in paragraph (1)(B), by striking ``the
transcript required by subsection (c)(5),'';
(C) in paragraph (3), by striking ``The court shall
hold unlawful'' and all that follows through the end of
the paragraph; and
(D) by striking paragraphs (4) and (5) and
inserting the following:
``(4) The procedure set forth in this subsection for judicial
review of a rule prescribed under subsection (a)(1)(B) is the exclusive
means for such review, other than in an enforcement proceeding.''; and
(9) in subsection (e)(2) (as so redesignated), by striking
``class or persons'' and inserting ``class of persons''.
(d) Section 16(a)(2) of the Federal Trade Commission Act (15 U.S.C.
56(a)(2)) is amended--
(1) in subparagraph (D), by striking ``; or'' and inserting
a semicolon; and
(2) by inserting after subparagraph (E) the following:
``(F) to obtain a civil penalty authorized under
any provision of law enforced by the Commission.''.
(e) Section 5(l) of the Federal Trade Commission Act (15 U.S.C.
45(l)) is amended in the first sentence by inserting ``the Commission
or'' after ``brought by''.
Subtitle J--Miscellaneous
SEC. 4951. REQUIREMENTS FOR STATE-LICENSED LOAN ORIGINATORS.
Paragraph (2) of section 1505 (b) of the S.A.F.E. Mortgage
Licensing Act of 2008 (12 U.S.C. 5104(b)(2)) is amended by inserting
after and below subparagraph (B), the following:
``Notwithstanding the preceding sentence, a State loan
originator supervisory authority may provide for review of
applicants and for granting exceptions, on a case-by-case
basis, to the minimum standard under subparagraph (B), but only
to the extent that any such exception otherwise complies with
the purposes of this title.''.
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) in total, fewer than 15 clients and
investors in the United States in private funds
advised by the investment adviser; and
``(ii) aggregate assets under management
attributable to clients and investors in the
United States in private funds advised by the
investment adviser of less than $25,000,000, or
such higher amount as the Commission may, by
rule, deem appropriate in 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.
(a) 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.''.
(b) Consideration of Risk.--Section 203(c) of the Investment
Advisers Act of 1940 (15 U.S.C. 80b-3(c)) is amended by adding at the
end the following:
``(3) The Commission shall take into account the relative
risk profile of different classes of private funds as it
establishes, by rule or regulation, the registration
requirements for private funds.''.
SEC. 5004. COLLECTION OF 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 the Financial
Services Oversight Council, 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 the Financial Services Oversight Council, copies
of all reports, documents, records, and information filed with
or provided to the Commission by an investment adviser under
this subsection as the Board, or the Financial Services
Oversight Council, 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) Applicable privileges not waived.--An investment
advisor, and investment advisor to a private fund, a private
fund, foreign private fund advisor, a foreign private fund, an
advisor to a venture capital fund, a venture capital fund, or
other person shall not be compelled to waive and 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 Financial Services Oversight Council;
``(B) the Commission;
``(C) any Federal financial regulator or State
financial regulator, in any capacity; or
``(D) any other agency of the Federal Government
(as defined in section 6 of title 18, United States
Code).
``(9) Non-disclosure of certain proprietary information and
confidentiality of reports.--Any proprietary information of an
investment adviser ascertained by the Commission from any
report required to be filed with the Commission pursuant to
this section 204(b) shall be subject to the same limitations on
public disclosure as any facts ascertained during an
examination as provided by section 210(b) of this title. The
Commission may not compel the private fund to disclose such
proprietary information to counterparties and creditors. For
purposes of this section, proprietary information shall include
sensitive, non-public information regarding the investment
adviser's investment or trading strategies, analytical or
research methodologies, trading data, computer hardware or
software containing intellectual property, and any additional
information that the Commission determines to be proprietary.
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 to 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
investment adviser acts solely as an adviser to private funds
and has assets under management in the United States of less
than $150,000,000.
``(2) Reporting.--The Commission shall require investment
advisers exempted by reason of this subsection to maintain such
records and provide to the Commission such annual or other
reports as the Commission determines necessary or appropriate
in the public interest or for the protection of investors.
``(n) Registration and Examination of Mid-sized Private Fund
Advisers.--In prescribing regulations to carry out the requirements of
this section with respect to investment advisers acting as investment
advisers to mid-sized private funds, the Commission shall take into
account the size, governance, and investment strategy of such funds to
determine whether they pose systemic risk, and shall provide for
registration and examination procedures with respect to the investment
advisers of such funds which reflect the level of systemic risk posed
by such funds.''.
SEC. 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), 203(m),
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 the extent necessary 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 in any rule or regulation by the Commission in
making a determination under this subsection, if the Commission uses a
dollar amount test in connection with such factor, such as a net asset
threshold, the Commission shall, by order, not later than 1 year after
the date of 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 $100,000 shall be rounded to the nearest multiple of
$100,000.''.
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.
(a) In General.--Section 15E of the Securities Exchange Act of 1934
(15 U.S.C. 78o-7) is amended--
(1) in subsection (a)--
(A) by amending paragraph (1)(A) to read as
follows:
``(A) In general.--Each credit rating agency shall
register as a nationally recognized statistical rating
organization for the purposes of this title (in this
section referred to as the `applicant'), and shall file
with the Commission an application for registration, in
such form as the Commission shall require, by rule or
regulation issued in accordance with subsection (n),
and containing the information described in
subparagraph (B).''.
(B) in paragraph (2)(A), by striking ``furnished
to'' and inserting ``filed with'';
(C) in paragraph (2)(B)(i)(II), by striking
``furnished to'' and inserting ``filed with''; and
(D) by adding at the end of paragraph (1) the
following:
``(F) Exemptions.--The registration requirement in
subparagraph (A) shall not apply to--
``(i) a credit rating agency if the credit
rating agency--
``(I) does not engage in the
provision of credit ratings to issuers
of securities for a fee; and
``(II) issues credit ratings only
in any bona fide newspaper, news
magazine, or business or financial
publication of general and regular
circulation; or
``(ii) such other persons as the Commission
may designate by rules and regulations or order
when in the public interest and for the
protection of investors.''.
(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
disclosure of 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''; and
(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, as applicable.'';
(5) in subsection (e), by striking paragraph (1) and
inserting the following new paragraph (1):
``(1) Voluntary withdrawal.--A nationally recognized
statistical rating organization may, upon such terms and
conditions as the Commission may establish as necessary in the
public interest or for the protection of investors, withdraw
from registration by furnishing a written notice of withdrawal
to the Commission, provided that such nationally recognized
statistical rating organization certifies that it received less
than $250,000,000 during its last full fiscal year in net
revenue for providing credit ratings on securities and money
market instruments issued in the United States.'';
(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 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; and
``(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.
``(2) Symbols.--The Commission may prescribe rules that
require nationally recognized statistical rating organizations
to establish 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, provided such rules do not prevent public pension
funds or other State regulated entities from investing in rated
products.
``(3) 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
certify that they 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 to that issuer,
underwriter, or placement agent in determining a credit rating,
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.''.
(b) Conforming Amendment.--Section 3(a)(62) of the Securities
Exchange Act of 1934 is amended by striking subparagraph (A) and
redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B),
respectively.
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 was grossly negligent in violating 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 the securities laws, the same pleading standards
with respect to gross negligence shall apply to the nationally
recognized statistical rating organization as would apply to any other
person in the same private right of action against such person.''.
(c) Requirements for Liability.--Section 21D of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-4) is amended--
(1) by redesignating subsections (c) through (f) as
subsections (d) through (g), respectively; and
(2) by inserting after subsection (b) the following:
``(c) Requirements for Liability.--A purchaser of a security given
a rating by a nationally recognized statistical rating organization
shall have the right to recover for damages if the process of
determining the credit rating was--
``(1) grossly negligent, based on the facts and
circumstances at the time the rating was issued; and
``(2) a substantial factor in the economic loss suffered by
the investor.
No action shall be maintained to enforce any liability created under
this subsection unless brought within 2 years after the discovery of
the facts constituting the violation and within 3 years after the
initial issuance of the rating.''.
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 CFR 243.100) to remove from such regulation the exemption for
entities whose primary business is the issuance of credit ratings (17
CFR 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 18 months 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;
(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).
(3) Access.--
(A) In general.--For purposes of conducting the
study described in paragraph (1), the Comptroller
General shall have access, upon request and with the
consent of the Securities and Exchange Commission, to
any information, data, schedules, books, accounts,
financial records, reports, files, electronic
communications, or other papers, things, or property
belonging to or in use by each nationally recognized
statistical rating organization, and to the officers,
directors, employees, independent public accountants,
financial advisors, staff and agents and
representatives of the organization (as related to the
agent's or representative's activities on behalf of the
organization) at such reasonable times as the
Comptroller General may request. The Comptroller
General may make and retain copies of books, records,
accounts, and other records as the Comptroller General
deems appropriate.
(B) Confidentiality.--The Comptroller General may
not disclose reasonably designated proprietary, trade
secret or business confidential information obtained
from the organization except that such information
shall be disclosed by the Comptroller General--
(i) to other Federal Government
departments, agencies, and officials for
official use upon request;
(ii) to committees of Congress upon
request; and
(iii) to a court in any judicial proceeding
under court order.
Nothing in this provision shall be construed to limit
the requirements imposed by section 1905 of title 18,
United States Code.
(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 section 211 of the Investment Advisers
Act of 1940. The receipt of compensation based on commission or
other standard compensation for the sale of securities shall
not, in and of itself, be considered a violation of such
standard applied to a broker or dealer. Nothing in this section
shall require a broker or dealer or registered representative
to have a continuing duty of care or loyalty to the customer
after providing personalized investment advice about
securities.
``(2) Disclosure of range of products offered.--Where a
broker or dealer sells only proprietary or other limited range
of products, as determined by the Commission, the Commission
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.''.
(2) 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 AND RULEMAKING 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 provision of documents or
information to retail customers prior to the purchase of investment
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 rules
that require the provision of documents or information
to retail customers prior to 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 ADVISER EXAMINATIONS.
(a) Study Required.--
(1) In general.--The Commission shall review and analyze
the need for enhanced examination and enforcement resources for
investment advisers.
(2) Areas of consideration.--The study required by this
subsection shall examine--
(A) the number and frequency of examinations of
investment advisers by the Commission over the 5 years
preceding the date of the enactment of this subtitle;
(B) the extent to which having Congress authorize
the Commission to designate one or more self-regulatory
organizations to augment the Commission's efforts in
overseeing investment advisers would improve the
frequency of examinations of investment advisers; and
(C) current and potential approaches to examining
the investment advisory activities of dually registered
broker-dealers and investment advisers or affiliated
broker-dealers and investment advisers.
(b) Report Required.--The Commission shall report its findings to
the Committee on Financial Services of the House of Representatives and
the Committee on Banking, Housing, and Urban Affairs of the Senate, not
later than 180 days after the date of enactment of this subtitle, and
shall use such findings to revise its rules and regulations, as
necessary. The report shall include a discussion of regulatory or
legislative steps that are recommended or that may be necessary to
address concerns identified in the study.
SEC. 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, law enforcement agency, 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;
``(C) to any whistleblower who gains the
information through the performance of an audit of
financial statements required under the securities
laws; or
``(D) 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), the Commission and any officer or
employee of the Commission shall not disclose any
information, including information provided by a
whistleblower to the Commission, which could reasonably
be expected to reveal the identity of a whistleblower,
except in accordance with the provisions of section
552a of title 5, United States Code, unless and until
required to be disclosed to a defendant or respondent
in connection with a public proceeding instituted by
the Commission or any entity described in subparagraph
(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.
``(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) State attorneys general in
connection with any criminal investigation, and
``(v) any appropriate State regulatory
authority,
each of which shall not disclose such information in
accordance with subparagraph (A).
``(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.
``(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 subsections (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, municipal financial adviser, 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, municipal financial adviser, 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, municipal financial adviser, 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, municipal
financial adviser, 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.''.
(b) Under the Investment Company Act of 1940.--Section 48 of the
Investment Company Act of 1940 (15 U.S.C. 80a-48) is amended by
redesignating subsection (b) as subsection (c) and inserting after
subsection (a) the following:
``(b) For purposes of any action brought by the Commission under
subsection (d) or (e) of section 42, any person that knowingly or
recklessly provides substantial assistance to another person in
violation of a provision of this Act, or of any rule or regulation
issued under this Act, shall be deemed to be in violation of such
provision to the same extent as the person to whom such assistance is
provided.''.
SEC. 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 subsection:
``(f) Aiding and Abetting.--For purposes of any action brought by
the Commission under subsection (e), any person that knowingly or
recklessly has aided, abetted, counseled, commanded, induced, or
procured a violation of any provision of this Act, or of any rule,
regulation, or order hereunder, shall be deemed to be in violation of
such provision, rule, regulation, or order to the same extent as the
person that committed such violation.''.
SEC. 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 Director of the Division
of Enforcement of the Commission or the Director's designee
determines that a particular enforcement investigation is
sufficiently complex such that a determination regarding the
filing of an action against a person cannot be completed within
the deadline specified in paragraph (1), the Director of the
Division of Enforcement of the Commission or the Director's
designee may, after providing notice to the Chairman of the
Commission, extend such deadline as needed for one additional
180-day period. If after the additional 180-day period the
Director of the Division of Enforcement of the Commission or
the Director's designee determines that a particular
enforcement investigation is sufficiently complex such that a
determination regarding the filing of an action against a
person cannot be completed within the additional 180-day
period, the Director of the Division of Enforcement of the
Commission or the Director's designee may, after providing
notice to and receiving approval of the Commission, extend such
deadline as needed for one or more additional successive 180-
day periods.
``(b) Compliance Examinations and Inspections.--
``(1) In general.--Not later than 180 days after the date
on which Commission staff completes the on-site portion of its
compliance examination or inspection or receives all records
requested from the entity being examined or inspected,
whichever is later, Commission staff shall provide the entity
being examined or inspected with written notification
indicating either that the examination or inspection has
concluded, has concluded without findings, or that the staff
requests the entity undertake corrective action.
``(2) Exception for certain complex actions.--
Notwithstanding paragraph (1), if the head of any division or
office within the Commission responsible for compliance
examinations and inspections or his designee determines that a
particular compliance examination or inspection is sufficiently
complex such that a determination regarding concluding the
examination or inspection, or regarding the staff requests the
entity undertake corrective action, cannot be completed within
the deadline specified in paragraph (1), the head of any
division or office within the Commission responsible for
compliance examinations and inspections or his designee may,
after providing notice to the Chairman of the Commission,
extend such deadline as needed for one additional 180-day
period.''.
SEC. 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 civil action 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 any hearing or trial may be served at any place within the United
States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure
does not apply to a subpoena so issued.''.
(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 civil action 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 any hearing or trial may be served at any place within the United
States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure
does not apply to a subpoena so issued.''.
(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 civil action 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 any hearing or trial may be served at any place within the United
States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure
does not apply to a subpoena so issued.''.
(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 civil action 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 any hearing or trial may be served at any place within the United
States. Rule 45(c)(3)(A)(ii) of the Federal Rules of Civil Procedure
does not apply to a subpoena so issued.''.
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 Monetary 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 Monetary 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.--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 INFORMATION.
Subsection (b) of section 3322 of title 18, United States Code, is
amended--
(1) in paragraph (1), by striking ``matters occurring
before a grand jury'' and inserting ``grand jury information
obtained'';
(2) by redesignating paragraph (2) as paragraph (3);
(3) in paragraph (3) (as so redesignated), by inserting
``or (2)'' after ``(1)''; and
(4) by inserting after paragraph (1), the following new
paragraph:
``(2) Upon motion of an attorney for the government, a
court may direct disclosure of grand jury information obtained
during an investigation of a securities law violation to
identified personnel of the Securities and Exchange
Commission--
``(A) for use in relation to any matter within the
jurisdiction of the Commission; or
``(B) to assist an attorney for the government to
whom matters have been disclosed under subsection
(a).''.
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.--With respect to any actions
or proceedings brought or instituted by the Commission or the United
States, this jurisdiction includes violations of section 17(a) of this
title, 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.--With respect to any actions
or proceedings brought or instituted by the Commission or the United
States, this jurisdiction 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.--With respect to any actions
or proceedings brought or instituted by the Commission or the United
States, this jurisdiction 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 and the reliance on self-regulatory
organizations and other entities relevant to the regulation of
securities and the protection of securities investors that are
under the SEC's oversight.
(2) Specific areas for study.--The study required under
paragraph (1) shall, at a minimum, include the study of--
(A) the possible elimination of unnecessary or
redundant units at the SEC;
(B) improving communications between SEC offices
and divisions;
(C) the need to put in place a clear chain-of-
command structure, particularly for enforcement
examinations and compliance inspections;
(D) the effect of high-frequency trading and other
technological advances on the market and what the SEC
requires to monitor the effect of such trading and
advances on the market;
(E) the SEC's hiring authorities, workplace
policies, and personal practices, including--
(i) whether there is a need to further
streamline hiring authorities for those who are
not lawyers, accountants, compliance examiners,
or economists;
(ii) whether there is a need for further
pay reforms;
(iii) the diversity of skill sets of SEC
employees and whether the present skill set
diversity efficiently and effectively fosters
the SEC's mission of investor protection; and
(iv) the application of civil service laws
by the SEC;
(F) whether the SEC's oversight and reliance on
self-regulatory organizations promotes efficient and
effective governance for the securities markets; and
(G) whether adjusting the SEC's reliance on self-
regulatory organizations is necessary to promote more
efficient and effective governance for the securities
markets.
(b) Consultant Report.--Not later than the end of the 150-day
period after being retained, the independent consultant hired pursuant
to subsection (a)(1) shall issue a report to the SEC and the Congress
containing--
(1) a detailed description of any findings and conclusions
made while carrying out the study required under subsection
(a)(1); and
(2) recommendations for legislative, regulatory, or
administrative action that the consultant determines
appropriate to enable the SEC and other entities on which 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
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 shall
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. 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;
(2) determine the efficacy of the Securities and Exchange
Commission's measures to limit the cost of compliance on
smaller issuers;
(3) determine how to reduce the burden of complying with
section 404(b) of the Sarbanes-Oxley Act of 2002 for companies
whose market capitalization is less than $250,000,000 for the
relevant reporting period while maintaining investor
protections for such companies; and
(4) determine whether various methods of reducing the
compliance burden or a complete exemption for such companies
(whose market capitalization is less than $250,000,000 for the
relevant reporting period) from such compliance would encourage
companies to list on exchanges in the United States in their
initial public offerings.
(b) Reports Required.--Not later than 9 months after the date of
the enactment of this subtitle, the Government Accountability Office
shall submit a report 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.
SEC. 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 is
not exempt from registration under section 203 and--
``(A) is regulated and examined, or required to be
regulated and examined, in the State where it maintains
its principal office and place of business; 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. If no State in
which an investment adviser described in subparagraph
(B) is registered conducts such an examination, the
investment adviser must register with the Commission.
If, pursuant to this paragraph, an investment adviser
would be required to register with 5 or more States,
then the adviser may maintain its registration with the
Commission.''.
SEC. 7419. CUSTODIAL REQUIREMENTS.
(a) In General.--Not later than 180 days after the date of the
enactment of this title, 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 that Act for an investment adviser registered under such Act to have
custody of funds or securities of a client the value of which exceeds
$10,000,000, 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.
(b) Exceptions.--The rule adopted under subsection (a) shall
include such exceptions as the Commission determines in the public
interest and consistent with the protection of investors. Any exemption
granted under this subsection shall ensure that at least once per year,
a client described in subsection (a) shall receive a report from an
independent entity with a fiduciary responsibility to the client to
verify that the assets in the client's account are in accord with those
stated on the client's account statement.
(c) No Limits on Other Actions.--Nothing in this section shall be
construed to limit other actions the Securities and Exchange Commission
may take under this Act to require the protection of client assets.
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) assure that safeguards exist to 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 regard to the
effectiveness of the Ombudsman.
SEC. 7421. NOTICE TO MISSING SECURITY HOLDERS.
Section 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78q-
1) is amended by adding at the end the following new subsection:
``(g) Due Diligence for the Delivery of Dividends, Interest, and
Other Valuable Property Rights.--
``(1) Revision of rules required.--The Commission shall
revise its regulations in section 240.17Ad-17 of title 17, Code
of Federal Regulations, as in effect on December 8, 1997, to
extend the application of such section to brokers and dealers
and to provide for the following:
``(A) A requirement that the paying agent provide a
single written notification to each missing security
holder that the missing security holder has been sent a
check that has not yet been negotiated. The written
notification may be sent along with a check or other
mailing subsequently sent to the missing security
holder but must be provided no later than 7 months
after the sending of the not yet negotiated check.
``(B) An exclusion for paying agents from the
notification requirements when the value of the not yet
negotiated check is less than $25.
``(C) A provision clarifying that the requirements
described in subparagraph (A) shall have no effect on
State escheatment laws.
``(D) For purposes of such revised regulations--
``(i) a security holder shall be considered
a `missing security holder' if a check is sent
to the security holder and the check is not
negotiated before the earlier of the paying
agent sending the next regularly scheduled
check or the elapsing of 6 months after the
sending of the not yet negotiated check; and
``(ii) the term `paying agent' includes any
issuer, transfer agent, broker, dealer,
investment adviser, indenture trustee,
custodian, or any other person that accepts
payments from the issuer of a security and
distributes the payments to the holders of the
security.
``(2) Rulemaking.--The Commission shall adopt such rules,
regulations, and orders necessary to implement this subsection
no later than 1 year after the date of enactment of this
subsection. In proposing such rules, the Commission shall seek
to minimize disruptions to current systems used by or on behalf
of paying agents to process payment to account holders and
avoid requiring multiple paying agents to send written
notification to a missing security holder regarding the same
not yet negotiated check.''.
SEC. 7422. SHORT SALE REFORMS.
(a) Short Sale Disclosure.--Section 13(f) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(f)) is amended by redesignating
paragraphs (2), (3), (4), and (5) as paragraphs (3), (4), (5), and (6),
respectively, and inserting after paragraph (1) the following:
``(2)(A) Every institutional investment manager that
effects a short sale of an equity security shall also file a
report on a daily basis with the Commission in such form as the
Commission, by rule, may prescribe. Such report shall include,
as applicable, the name of the institution, the name of the
institutional investment manager and the title, class, CUSIP
number, number of shares or principal amount, aggregate fair
market value of each security, and any additional information
requested by the Commission. For purposes of section 552 of
title 5, United States Code, this subparagraph shall be
considered a statute described in subsection (b)(3)(B) of such
section. The information contained in reports of an
institutional investment manager filed with the Commission
pursuant to this section, shall be subject to the same non-
disclosure and confidentiality protection provided under
section 204(b)(8) of the Investment Advisers Act of 1940.
``(B) The Commission shall prescribe rules providing for
the public disclosure of the name of the issuer and the title,
class, CUSIP number, aggregate amount of the number of short
sales of each security, and any additional information
determined by the Commission following the end of the reporting
period. At a minimum, such public disclosure shall occur every
month.''.
(b) Short Selling Enforcement.--Section 9 of the Securities
Exchange Act of 1934 (15 U.S.C. 78i) is amended--
(1) by redesignating subsections (d), (e), (f), (g), (h),
and (i) as subsections (e), (f), (g), (h), (i), and (j),
respectively; and
(2) inserting after subsection (c), the following new
subsection:
``(d) Transactions Relating to Short Sales of Securities.--It shall
be unlawful for any person, directly or indirectly, by the use of the
mails or any means or instrumentality of interstate commerce, or of any
facility of any national securities exchange, or for any member of a
national securities exchange to effect, alone or with one or more other
persons, a manipulative short sale of any security. The Commission
shall issue such other rules as are necessary or appropriate to ensure
that the appropriate enforcement options and remedies are available for
violations of this subsection in the public interest or for the
protection of investors.''.
(c) Investor Notification.--Section 15 of the Securities Exchange
Act of 1934 (15 U.S.C. 78o) is amended--
(1) by redesignating subsections (e), (f), (g), (h), and
(i) as subsections (f), (g), (h), (i), and (j), respectively;
and
(2) inserting after subsection (d) the following new
subsection:
``(e) Notices to Customers Regarding Securities Lending.--Every
registered broker or dealer shall provide notice to its customers that
they may elect not to allow their fully paid securities to be used in
connection with short sales. If a broker or dealer uses a customer's
securities in connection with short sales, the broker or dealer shall
provide notice to its customer that the broker or dealer may receive
compensation in connection with lending the customer's securities. The
Commission, by rule, as it deems necessary or appropriate in the public
interest and for the protection of investors, may prescribe the form,
content, time, and manner of delivery of any notice required under this
paragraph.''.
SEC. 7423. STREAMLINING OF SEC FILING PROCEDURES.
(a) Approval Process.--Section 19(b)(2) of the Securities Exchange
Act of 1934 (15 U.S.C. 78s(b)(2)) is amended to read as follows:
``(2) Filing procedures.--
``(A) In general.--Within thirty-five days of the
date of publication of notice of the filing of a
proposed rule change in accordance with paragraph (1)
of this subsection, or within such longer period as the
Commission may designate up to ninety days of such date
if it finds such longer period to be appropriate and
publishes its reasons for so finding or as to which the
self-regulatory organization consents, the Commission
shall--
``(i) by order approve such proposed rule
change; or
``(ii) institute proceedings under
subparagraph (B) to determine whether the
proposed rule change should be disapproved.
``(B) Proceedings.--Proceedings to determine
whether the proposed rule change should be disapproved
shall include notice of the grounds for disapproval
under consideration and opportunity for hearing and be
concluded within 200 days from the date of receipt of a
proper filing. At the conclusion of such proceedings
the Commission, by order, shall approve or disapprove
such proposed rule change. The Commission may extend
the time for conclusion of such proceedings for up to
60 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 self-regulatory organization
consents. The Commission shall approve a proposed rule
change of a self-regulatory organization if it finds
that such proposed rule change is consistent with the
requirements of this title and the rules and
regulations thereunder applicable to such organization.
The Commission shall disapprove a proposed rule change
of a self-regulatory organization if it does not make
such finding. The Commission shall not approve any
proposed rule change prior to the thirtieth day after
the date of publication of notice of the filing
thereof, unless the Commission finds good cause for so
doing and publishes its reasons for so finding.''.
(b) Rules.--Not later than 12 months after the date of enactment of
this Act, the Commission shall issue rules implementing a disapproval
process for filings submitted on or after the effective date of such
rules.
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 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 5 years.
``(2) Injunctions.--Any court having jurisdiction of a
civil action arising under this Act may grant temporary
injunctions and final injunctions on such terms as the court
deems reasonable to prevent or restrain any violation of
paragraph (1). Any such injunction may be served anywhere in
the United States on the person enjoined, shall be operative
throughout the United States, and shall be enforceable, by
proceedings in contempt or otherwise, by any United States
court having jurisdiction over that person. The clerk of the
court granting the injunction shall, when requested by any
other court in which enforcement of the injunction is sought,
transmit promptly to the other court a certified copy of all
papers in the case on file in such clerk's office.''.
SEC. 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
and to provide additional levels of coverage on an optional basis.
(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;
(5) examine the impact that risk-based assessments could
have on institutional and retail brokers and dealers; and
(6) examine the feasibility of SIPC providing additional
levels of coverage on an optional basis, what those additional
levels of coverage should be, and the appropriate risked-based
premium for providing additional coverage.
(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 1 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.
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 by Registered Accounting Firms.--Subsection (a) of
Section 104 of such Act is amended--
(1) by striking ``(a) In General.--The Board shall'' and
inserting the following:
``(a) In General.--
``(1) The Board shall''; and
(2) by adding at the end of such subsection the following:
``(2) Inspections of audit report for brokers and
dealers.--
``(A) The Board may, by rule, conduct and require a
program of inspection in accordance with paragraph
(a)(1), on a basis to be determined by the Board, of
registered public accounting firms that provide one or
more audit reports for a broker or dealer. The Board,
in establishing such a program, may allow for
differentiation among classes of brokers and dealers,
as appropriate.
``(B) If the Board determines to establish a
program of inspection pursuant to subparagraph (A), the
Board shall consider in establishing any inspection
schedules whether differing schedules would be
appropriate with respect to registered public
accounting firms that issue audit reports only for one
or more brokers or dealers that do not receive, handle,
or hold customer securities or cash or are not a member
of the Securities Investor Protection Corporation.
``(C) Any rules of the Board pursuant to this
paragraph shall be subject to prior approval by the
Commission pursuant to section 107(b) before the rules
become effective, including an opportunity for public
notice and comment.
``(D) Notwithstanding anything to the contrary in
section 102 of this Act, a public accounting firm shall
not be required to register with the Board if the
public accounting firm is exempt from the inspection
program which may be established by the Board under
subparagraph (a)(2)(A) of this section.
``(3) Conforming amendment.--Section 17 (e)(1)(A) of the
Securities Exchange Act of 1934 (15 U.S.C. 78q(e)(1)(A)) is
amended by striking `registered public accounting firm' and
inserting `independent public accounting firm or by a
registered public accounting firm if registration is required
under the Sarbanes-Oxley Act of 2002 as amended.'.''.
(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 dealers, 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 domestically registered public
accounting firm shall furnish to the domestically 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.C.
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 CFR 240.12b-2).''.
(b) Study.--The Securities and Exchange Commission shall conduct a
study to determine how the Commission could reduce the burden of
complying with section 404(b) of the Sarbanes-Oxley Act of 2002 for
companies whose market capitalization is between $75,000,000 and
$250,000,000 for the relevant reporting period while maintaining
investor protections for such companies. The study shall also consider
whether any such methods of reducing the compliance burden or a
complete exemption for such companies from compliance with such section
would encourage companies to list on exchanges in the United States in
their initial public offerings. Not later than 9 months after the date
of the enactment of this subtitle, the Commission shall transmit a
report of such study to Congress.
SEC. 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 prevent the Board from responding to requests for reports from
the Committee's specified under subsection (h) about the activities or
programs of the Board, provided that any confidential information
contained therein shall be subject to the provisions of section
105(b)(5).''.
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;
``(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 MISLED 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 $1,000,000 per fiscal year per State, if all
requirements of paragraphs (2), (3), (4), and (5) are met. Such
amount shall be limited to $250,000 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) Application of fiduciary duty for personalized
investment advice about securities.--Nothing in this section
shall diminish in any manner nor supersede the standard of
conduct applicable to all brokers, dealers and investment
advisers providing personalized investment advice about
securities as set forth in section 7103 of this Act.
(5) 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
meet or exceed 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.
(6) Suitability and supervision rules for annuity
products.--A State shall have adopted rules that govern
suitability requirements in the sale of annuities which shall
meet or exceed the minimum requirements established by the
National Association of Insurance Commissioners Suitability in
Annuity Transactions Model Regulation in effect on the date of
the enactment of this Act, or any successor thereto.
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 seniors who are
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,
$16,000,000 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, United
States Code, 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 the rules of the Municipal Securities Rulemaking
Board, 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 the rules of the Municipal
Securities Rulemaking Board, 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 broker, dealer, investment adviser, municipal
securities dealer, transfer agent, nationally recognized statistical
rating organization, or 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), (E),
(G), or (H) 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 subclause (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. 77b(a)(11));
``(iv) a State or any political subdivision
thereof; or
``(v) the independent accountant that
audits the financial statements of the
municipal securities issuer.
``(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 monitor the extent to which traditionally
underserved communities and consumers, minorities (as
such term is defined in 24 section 1204(c) of the
Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 1811 note)), and
low- and moderate-income persons have access to
affordable insurance products regarding all lines of
insurance, except health insurance.
``(D) To recommend to the Financial Services
Oversight Council that it designate an insurer,
including its affiliates, as an entity subject to
stricter standards.
``(E) 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).
``(F) 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.
``(G) To determine, in accordance with subsection
(f), whether State insurance measures are preempted by
covered agreements.
``(H) To consult with the States regarding
insurance matters of national importance and prudential
insurance matters of international importance.
``(I) 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.
``(3) Advisory capacity on council.--The Director shall
serve in an advisory capacity on the Financial Services
Oversight Council established under the Financial Stability
Improvement Act of 2009.
``(d) Scope.--The authority of the Office shall extend to all lines
of insurance except health insurance, as determined by the Secretary in
coordination with the Secretary of the Department of Health and Human
Services 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, including financial 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 writes insurance or reinsures risks and issues
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 regulation of insurance companies and
affiliates on a consolidated basis, including affiliates
outside of the traditional insurance business.
(6) International coordination.
(7) Geographic disparities in access to and cost of
insurance products.
(b) Report.--Not later than 1 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 Federal or State legislative, administrative, or
regulatory recommendations that the Director considers
appropriate with respect to such study 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.
SEC. 8005. SENSE OF CONGRESS REGARDING SIMPLIFIED MORTGAGE CONTRACT
SUMMARIES.
It is the sense of Congress that mortgage lenders should provide
loan applicants with a simplified summary of their loan contracts,
including an easy-to-read list of the basic loan terms, payment
information, the existence of prepayment penalties or balloon payments,
and escrow information.
TITLE VII--MORTGAGE REFORM AND ANTI-PREDATORY LENDING ACT
SEC. 9000. SHORT TITLE; DESIGNATION AS ENUMERATED CONSUMER LAW.
(a) Short Title.--This title may be cited as the ``Mortgage Reform
and Anti-Predatory Lending Act''.
(b) Designation as Enumerated Consumer Law Under the Purview of the
Consumer Financial Protection Agency.--Subtitles A, B, C, and E and
sections 9501, 9502, and 9506, and the amendments made by such
subtitles and sections, shall be enumerated consumer laws, as defined
in section 4002(16), and come under the purview of the Consumer
Financial Protection Agency for purposes of title IV, including the
transfer of functions and personnel under subtitle F of title IV and
the savings provisions of such subtitle.
Subtitle A--Residential Mortgage Loan Origination Standards
SEC. 9001. DEFINITIONS.
Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended
by adding at the end the following new subsection:
``(cc) Definitions Relating to Mortgage Origination and Residential
Mortgage Loans.--
``(1) Commission.--Unless otherwise specified, the term
`Commission' means the Federal Trade Commission.
``(2) Federal banking agencies.--The term `Federal banking
agencies' means the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Director of the
Office of Thrift Supervision, the Federal Deposit Insurance
Corporation, and the National Credit Union Administration
Board. All rule writing by the `Federal banking agencies' as
designated by the Mortgage Reform and Anti-Predatory Lending
Act will be coordinated through the Financial Institutions
Examination Council in consultation with the Chairman of the
State Liaison Committee.
``(3) Mortgage originator.--The term `mortgage
originator'--
``(A) means any person who, for direct or indirect
compensation or gain, or in the expectation of direct
or indirect compensation or gain--
``(i) takes a residential mortgage loan
application;
``(ii) assists a consumer in obtaining or
applying to obtain a residential mortgage loan;
or
``(iii) offers or negotiates terms of a
residential mortgage loan;
``(B) includes any person who represents to the
public, through advertising or other means of
communicating or providing information (including the
use of business cards, stationery, brochures, signs,
rate lists, or other promotional items), that such
person can or will provide any of the services or
perform any of the activities described in subparagraph
(A);
``(C) does not include any person who is (i) not
otherwise described in subparagraph (A) or (B) and who
performs purely administrative or clerical tasks on
behalf of a person who is described in any such
subparagraph, or (ii) an employee of a retailer of
manufactured homes who is not described in clause (i)
or (iii) of subparagraph (A) and who does not advise a
consumer on loan terms (including rates, fees, and
other costs);
``(D) does not include a person or entity that only
performs real estate brokerage activities and is
licensed or registered in accordance with applicable
State law, unless such person or entity is compensated
for performing such brokerage activities by a lender, a
mortgage broker, or other mortgage originator or by any
agent of such lender, mortgage broker, or other
mortgage originator;
``(E) does not include, with respect to a
residential mortgage loan, a person, estate, or trust
that provides mortgage financing for the sale of 1
property in any 36-month period, provided that such
loan--
``(i) is fully amortizing;
``(ii) is with respect to a sale for which
the seller determines in good faith and
documents that the buyer has a reasonable
ability to repay the loan;
``(iii) has a fixed rate or an adjustable
rate that is adjustable after 5 or more years,
subject to reasonable annual and lifetime
limitations on interest rate increases; and
``(iv) meets any other criteria the Federal
banking agencies may prescribe; and
``(F) does not include a servicer or servicer
employees, agents and contractors, including but not
limited to those who offer or negotiate terms of a
residential mortgage loan for purposes of
renegotiating, modifying, replacing and subordinating
principal of existing mortgages where borrowers are
behind in their payments, in default or have a
reasonable likelihood of being in default or falling
behind.
``(4) Nationwide mortgage licensing system and registry.--
The term `Nationwide Mortgage Licensing System and Registry'
has the same meaning as in the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008.
``(5) Other definitions relating to mortgage originator.--
For purposes of this subsection, a person `assists a consumer
in obtaining or applying to obtain a residential mortgage loan'
by, among other things, advising on residential mortgage loan
terms (including rates, fees, and other costs), preparing
residential mortgage loan packages, or collecting information
on behalf of the consumer with regard to a residential mortgage
loan.
``(6) Residential mortgage loan.--The term `residential
mortgage loan' means any consumer credit transaction that is
secured by a mortgage, deed of trust, or other equivalent
consensual security interest on a dwelling or on residential
real property that includes a dwelling, other than a consumer
credit transaction under an open end credit plan or, for
purposes of sections 129B and 129C and section 128(a) (16),
(17), and (18), and 128(f) and any regulations promulgated
thereunder, an extension of credit relating to a plan described
in section 101(53D) of title 11, United States Code.
``(7) Secretary.--The term `Secretary', when used in
connection with any transaction or person involved with a
residential mortgage loan, means the Secretary of Housing and
Urban Development.
``(8) Securitization vehicle.--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 mortgage pass-through certificates, participation
certificates, mortgage-backed securities, or other
similar securities backed by a pool of assets that
includes residential mortgage loans; and
``(B) holds such loans.
``(9) Securitizer.--The term `securitizer' means the person
that transfers, conveys, or assigns, or causes the transfer,
conveyance, or assignment of, residential mortgage loans,
including through a special purpose vehicle, to any
securitization vehicle, excluding any trustee that holds such
loans solely for the benefit of the securitization vehicle.
``(10) Servicer.--The term `servicer' has the same meaning
as in section 6(i)(2) of the Real Estate Settlement Procedures
Act of 1974.''.
SEC. 9002. RESIDENTIAL MORTGAGE LOAN ORIGINATION.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129A the following
new section:
``Sec. 129B. Residential mortgage loan origination
``(a) Finding and Purpose.--
``(1) Finding.--The Congress finds that economic
stabilization would be enhanced by the protection, limitation,
and regulation of the terms of residential mortgage credit and
the practices related to such credit, while ensuring that
responsible, affordable mortgage credit remains available to
consumers.
``(2) Purpose.--It is the purpose of this section and
section 129C to assure that consumers are offered and receive
residential mortgage loans on terms that reasonably reflect
their ability to repay the loans and that are understandable
and not unfair, deceptive or abusive.
``(b) Duty of Care.--
``(1) Standard.--Subject to regulations prescribed under
this subsection, each mortgage originator shall, in addition to
the duties imposed by otherwise applicable provisions of State
or Federal law--
``(A) be qualified and, when required, registered
and licensed as a mortgage originator in accordance
with applicable State or Federal law, including the
Secure and Fair Enforcement for Mortgage Licensing Act
of 2008;
``(B) with respect to each consumer seeking or
inquiring about a residential mortgage loan, diligently
work to present the consumer with a range of
residential mortgage loan products for which the
consumer likely qualifies and which are appropriate to
the consumer's existing circumstances, based on
information known by, or obtained in good faith by, the
originator;
``(C) make full, complete, and timely disclosure to
each such consumer in writing, the receipt and
understanding of which shall be acknowledged by the
signature of the mortgage originator and the consumer,
of--
``(i) the comparative costs and benefits of
each residential mortgage loan product offered,
discussed, or referred to by the originator
(and such comparative costs and benefits for
each such product shall be presented side by
side and the disclosures for each such product
shall have equal prominence);
``(ii) the nature of the originator's
relationship to the consumer (including the
cost of the services to be provided by the
originator and a statement that the mortgage
originator is or is not acting as an agent for
the consumer, as the case may be); and
``(iii) any relevant conflicts of interest
between the originator and the consumer;
``(D) certify to the creditor, with respect to any
transaction involving a residential mortgage loan, that
the mortgage originator has fulfilled all requirements
applicable to the originator under this section with
respect to the transaction; and
``(E) include on all loan documents any unique
identifier of the mortgage originator provided by the
Nationwide Mortgage Licensing System and Registry.
``(2) Clarification of extent of duty to present range of
products and appropriate products.--
``(A) No duty to offer products for which
originator is not authorized to take an application.--
Paragraph (1)(B) shall not be construed as requiring--
``(i) a mortgage originator to present to
any consumer any specific residential mortgage
loan product that is offered by a creditor
which does not accept consumer referrals from,
or consumer applications submitted by or
through, such originator; or
``(ii) a creditor to offer products that
the creditor does not offer to the general
public.
``(B) Appropriate loan product.--For purposes of
paragraph (1)(B), a residential mortgage loan shall be
presumed to be appropriate for a consumer if--
``(i) the mortgage originator determines in
good faith, based on then existing information
and without undergoing a full underwriting
process, that the consumer has a reasonable
ability to repay and, in the case of a
refinancing of an existing residential mortgage
loan, receives a net tangible benefit, as
determined in accordance with regulations
prescribed under subsections (a) and (b) of
section 129C; and
``(ii) the loan does not have predatory
characteristics or effects (such as equity
stripping and excessive fees and abusive terms)
as determined in accordance with regulations
prescribed under paragraph (4).
``(3) Rules of construction.--No provision of this
subsection shall be construed as--
``(A) creating an agency or fiduciary relationship
between a mortgage originator and a consumer if the
originator does not hold himself or herself out as such
an agent or fiduciary; or
``(B) restricting a mortgage originator from
holding himself or herself out as an agent or fiduciary
of a consumer subject to any additional duty,
requirement, or limitation applicable to agents or
fiduciaries under any Federal or State law.
``(4) Regulations.--
``(A) In general.--The Federal banking agencies, in
consultation with the Secretary, and the Commission,
shall jointly prescribe regulations to--
``(i) further define the duty established
under paragraph (1);
``(ii) implement the requirements of this
subsection;
``(iii) establish the time period within
which any disclosure required under paragraph
(1) shall be made to the consumer; and
``(iv) establish such other requirements
for any mortgage originator as such regulatory
agencies may determine to be appropriate to
meet the purposes of this subsection.
``(B) Complementary and nonduplicative
disclosures.--The agencies referred to in subparagraph
(A) shall endeavor to make the required disclosures to
consumers under this subsection complementary and
nonduplicative with other disclosures for mortgage
consumers to the extent such efforts--
``(i) are practicable; and
``(ii) do not reduce the value of any such
disclosure to recipients of such disclosures.
``(5) Compliance procedures required.--The Federal banking
agencies shall prescribe regulations requiring depository
institutions to establish and maintain procedures reasonably
designed to assure and monitor the compliance of such
depository institutions, the subsidiaries of such institutions,
and the employees of such institutions or subsidiaries with the
requirements of this section and the registration procedures
established under section 1507 of the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129 the following new items:
``129A. Fiduciary duty of servicers of pooled residential mortgages.
``129B. Residential mortgage loan origination.''.
SEC. 9003. PROHIBITION ON STEERING INCENTIVES.
Section 129B of the Truth in Lending Act (as added by section
102(a)) is amended by inserting after subsection (b) the following new
subsection:
``(c) Prohibition on Steering Incentives.--
``(1) In general.--For any mortgage loan, the total amount
of direct and indirect compensation from all sources permitted
to a mortgage originator may not vary based on the terms of the
loan (other than the amount of the principal).
``(2) Restructuring of financing origination fee.--
``(A) In general.--For any mortgage loan, a
mortgage originator may not arrange for a consumer to
finance through rate any origination fee or cost except
bona fide third party settlement charges not retained
by the creditor or mortgage originator.
``(B) Exception.--Notwithstanding paragraph
subparagraph (A), a mortgage originator may arrange for
a consumer to finance through rate an origination fee
or cost if--
``(i) the mortgage originator does not
receive any other compensation from the
consumer except the compensation that is
financed through rate; and
``(ii) the mortgage is a qualified
mortgage.
``(3) Regulations.--The Federal banking agencies, in
consultation with the Secretary and the Commission, shall
jointly prescribe regulations to prohibit--
``(A) mortgage originators from steering any
consumer to a residential mortgage loan that--
``(i) the consumer lacks a reasonable
ability to repay (in accordance with
regulations prescribed under section 129C(a));
``(ii) in the case of a refinancing of a
residential mortgage loan, does not provide the
consumer with a net tangible benefit (in
accordance with regulations prescribed under
section 129C(b)); or
``(iii) has predatory characteristics or
effects (such as equity stripping, excessive
fees, or abusive terms);
``(B) mortgage originators from steering any
consumer from a residential mortgage loan for which the
consumer is qualified that is a qualified mortgage (as
defined in section 129C(c)(3)) to a residential
mortgage loan that is not a qualified mortgage;
``(C) abusive or unfair lending practices that
promote disparities among consumers of equal credit
worthiness but of different race, ethnicity, gender, or
age;
``(D) mortgage originators from assessing excessive
points and fees (as such term is described under
section 103(aa)(4) of the Truth in Lending Act (15
U.S.C. 1602(aa)(4))) to a consumer for the origination
of a residential mortgage loan based on such consumer's
decision to finance all or part of the payment through
the rate for such points and fees; and
``(E) mortgage originators from--
``(i) mischaracterizing the credit history
of a consumer or the residential mortgage loans
available to a consumer;
``(ii) mischaracterizing or suborning the
mischaracterization of the appraised value of
the property securing the extension of credit;
or
``(iii) if unable to suggest, offer, or
recommend to a consumer a loan that is not more
expensive than a loan for which the consumer
qualifies, discouraging a consumer from seeking
a home mortgage loan secured by a consumer's
principal dwelling from another mortgage
originator.
``(4) Rules of construction.--No provision of this
subsection shall be construed as--
``(A) permitting any yield spread premium or other
similar compensation that would, for any mortgage loan,
permit the total amount of direct and indirect
compensation from all sources permitted to a mortgage
originator to vary based on the terms of the loan
(other than the amount of the principal);
``(B) affecting the mechanism for providing the
total amount of direct and indirect compensation
permitted to a mortgage originator;
``(C) limiting or affecting the amount of
compensation received by a creditor upon the sale of a
consummated loan to a subsequent purchaser;
``(D) restricting a consumer's ability to finance,
at the option of the consumer, including through
principal or rate, any origination fees or costs
permitted under this subsection, or the mortgage
originator's ability to receive such fees or costs
(including compensation) from any person, so long as
such fees or costs were limited by agreement with the
consumer and were fully and clearly disclosed to the
consumer earlier in the application process as required
by 129B(b)(1)(C)(i) and do not vary based on the terms
of the loan (other than the amount of the principal) or
the consumer's decision about whether to finance such
fees or costs; or
``(E) prohibiting incentive payments to a mortgage
originator based on the number of residential mortgage
loans originated within a specified period of time.''.
SEC. 9004. LIABILITY.
Section 129B of the Truth in Lending Act is amended by inserting
after subsection (c) (as added by section 103) the following new
subsection:
``(d) Liability for Violations.--
``(1) In general.--For purposes of providing a cause of
action for any failure by a mortgage originator to comply with
any requirement imposed under this section and any regulation
prescribed under this section, subsections (a) and (b) of
section 130 shall be applied with respect to any such failure
by substituting `mortgage originator' for `creditor' each place
such term appears in each such subsection.
``(2) Maximum.--The maximum amount of any liability of a
mortgage originator under paragraph (1) to a consumer for any
violation of this section shall not exceed the greater of
actual damages or an amount equal to 3 times the total amount
of direct and indirect compensation or gain accruing to the
mortgage originator in connection with the residential mortgage
loan involved in the violation, plus the costs to the consumer
of the action, including a reasonable attorney's fee.''.
SEC. 9005. REGULATIONS.
(a) Discretionary Regulatory Authority.--Section 129B of the Truth
in Lending Act is amended by inserting after subsection (d) (as added
by section 104) the following new subsection:
``(e) Discretionary Regulatory Authority.--
``(1) In general.--The Federal banking agencies shall, by
regulations issued jointly, prohibit or condition terms, acts
or practices relating to residential mortgage loans that the
agencies find to be abusive, unfair, deceptive, predatory,
inconsistent with reasonable underwriting standards, necessary
or proper to ensure that responsible, affordable mortgage
credit remains available to consumers in a manner consistent
with the purposes of this section and section 129B, necessary
or proper to effectuate the purposes of this section and
section 129C, to prevent circumvention or evasion thereof, or
to facilitate compliance with such sections, or are not in the
interest of the borrower.
``(2) Application.--The regulations prescribed under
paragraph (1) shall be applicable to all residential mortgage
loans and shall be applied in the same manner as regulations
prescribed under section 105.
``(f) Section 129B and any regulations promulgated thereunder do
not apply to an extension of credit relating to a plan described in
section 101(53D) of title 11, United States Code.''.
(b) Effective Date.--The regulations required or authorized to be
prescribed under this subtitle or the amendments made by this
subtitle--
(1) shall be prescribed in final form before the end of the
12-month period beginning on the date of the enactment of this
Act; and
(2) shall take effect not later than 18 months after the
date of the enactment of this Act.
(c) Technical and Conforming Amendments.--Section 129(l)(2) of the
Truth in Lending Act (15 U.S.C. 1639(l)(2)) is amended by inserting
``referred to in section 103(aa)'' after ``loans'' each place such term
appears.
SEC. 9006. STUDY OF SHARED APPRECIATION MORTGAGES.
(a) Study.--The Secretary of Housing and Urban Development, in
consultation with the Secretary of the Treasury and other relevant
agencies, shall conduct a comprehensive study to determine prudent
statutory and regulatory requirements sufficient to provide for the
widespread use of shared appreciation mortgages to strengthen local
housing markets, provide new opportunities for affordable
homeownership, and enable homeowners at risk of foreclosure to
refinance or modify their mortgages.
(b) Report.--Not later than the expiration of the 6-month period
beginning on the date of the enactment of this Act, the Secretary of
Housing and Urban Development shall submit a report to the Congress on
the results of the study, which shall include recommendations for the
regulatory and legislative requirements referred to in subsection (a).
Subtitle B--Minimum Standards For Mortgages
SEC. 9101. ABILITY TO REPAY.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129B (as added by
section 102(a)) the following new section:
``Sec. 129C. Minimum standards for residential mortgage loans
``(a) Ability To Repay.--
``(1) In general.--In accordance with regulations
prescribed jointly by the Federal banking agencies, in
consultation with the Commission, no creditor may make a
residential mortgage loan unless the creditor makes a
reasonable and good faith determination based on verified and
documented information that, at the time the loan is
consummated, the consumer has a reasonable ability to repay the
loan, according to its terms, and all applicable taxes,
insurance, and assessments.
``(2) Multiple loans.--If the creditor knows, or has reason
to know, that 1 or more residential mortgage loans secured by
the same dwelling will be made to the same consumer, the
creditor shall make a reasonable and good faith determination,
based on verified and documented information, that the consumer
has a reasonable ability to repay the combined payments of all
loans on the same dwelling according to the terms of those
loans and all applicable taxes, insurance, and assessments.
``(3) Basis for determination.--A determination under this
subsection of a consumer's ability to repay a residential
mortgage loan shall include consideration of the consumer's
credit history, current income, expected income the consumer is
reasonably assured of receiving, current obligations, debt-to-
income ratio, employment status, and other financial resources
other than the consumer's equity in the dwelling or real
property that secures repayment of the loan.
``(4) Income verification.--In order to safeguard against
fraudulent reporting, any consideration of a consumer's income
history in making a determination under this subsection shall
include the verification of such income by the use of--
``(A) Internal Revenue Service transcripts of tax
returns provided by a third party; or
``(B) such other similar method that quickly and
effectively verifies income documentation by a third
party as the Federal banking agencies may jointly
prescribe.
``(5) Nonstandard loans.--
``(A) Variable rate loans that defer repayment of
any principal or interest.--For purposes of
determining, under this subsection, a consumer's
ability to repay a variable rate residential mortgage
loan that allows or requires the consumer to defer the
repayment of any principal or interest, the creditor
shall use a fully amortizing repayment schedule.
``(B) Interest-only loans.--For purposes of
determining, under this subsection, a consumer's
ability to repay a residential mortgage loan that
permits or requires the payment of interest only, the
creditor shall use the payment amount required to
amortize the loan by its final maturity.
``(C) Calculation for negative amortization.--In
making any determination under this subsection, a
creditor shall also take into consideration any balance
increase that may accrue from any negative amortization
provision.
``(D) Calculation process.--For purposes of making
any determination under this subsection, a creditor
shall calculate the monthly payment amount for
principal and interest on any residential mortgage loan
by assuming--
``(i) the loan proceeds are fully disbursed
on the date of the consummation of the loan;
``(ii) the loan is to be repaid in
substantially equal monthly amortizing payments
for principal and interest over the entire term
of the loan with no balloon payment, unless the
loan contract requires more rapid repayment
(including balloon payment), in which case the
calculation shall be made (I) in accordance
with regulations prescribed by the Federal
banking agencies, with respect to any loan
which has an annual percentage rate that does
not exceed the average prime offer rate for a
comparable transaction, as of the date the
interest rate is set, by 1.5 or more percentage
points for a first lien residential mortgage
loan; and by 3.5 or more percentage points for
a subordinate lien residential mortgage loan;
or (II) using the contract's repayment
schedule, with respect to a loan which has an
annual percentage rate, as of the date the
interest rate is set, that is at least 1.5
percentage points above the average prime offer
rate for a first lien residential mortgage
loan; and 3.5 percentage points above the
average prime offer rate for a subordinate lien
residential mortgage loan; and
``(iii) the interest rate over the entire
term of the loan is a fixed rate equal to the
fully indexed rate at the time of the loan
closing, without considering the introductory
rate.
``(E) Refinance of hybrid loans with current
lender.--In considering any application for refinancing
an existing hybrid loan by the creditor into a standard
loan to be made by the same creditor in any case in
which the sole net-tangible benefit to the mortgagor
would be a reduction in monthly payment and the
mortgagor has not been delinquent on any payment on the
existing hybrid loan, the creditor may--
``(i) consider the mortgagor's good
standing on the existing mortgage;
``(ii) consider if the extension of new
credit would prevent a likely default should
the original mortgage reset and give such
concerns a higher priority as an acceptable
underwriting practice; and
``(iii) offer rate discounts and other
favorable terms to such mortgagor that would be
available to new customers with high credit
ratings based on such underwriting practice.
``(6) Fully-indexed rate defined.--For purposes of this
subsection, the term `fully indexed rate' means the index rate
prevailing on a residential mortgage loan at the time the loan
is made plus the margin that will apply after the expiration of
any introductory interest rates.
``(7) Reverse mortgages.--This subsection shall not apply
with respect to any reverse mortgage''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129B (as added by section 102(b)) the following new item:
``129C. Minimum standards for residential mortgage loans.''.
SEC. 9102. NET TANGIBLE BENEFIT FOR REFINANCING OF RESIDENTIAL MORTGAGE
LOANS.
Section 129C of the Truth in Lending Act (as added by section
9101(a)) is amended by inserting after subsection (a) the following new
subsection:
``(b) Net Tangible Benefit for Refinancing of Residential Mortgage
Loans.--
``(1) In general.--In accordance with regulations
prescribed under paragraph (3), no creditor may extend credit
in connection with any residential mortgage loan that involves
a refinancing of a prior existing residential mortgage loan
unless the creditor reasonably and in good faith determines, at
the time the loan is consummated and on the basis of
information known by or obtained in good faith by the creditor,
that the refinanced loan will provide a net tangible benefit to
the consumer.
``(2) Certain loans providing no net tangible benefit.--A
residential mortgage loan that involves a refinancing of a
prior existing residential mortgage loan shall not be
considered to provide a net tangible benefit to the consumer if
the costs of the refinanced loan, including points, fees and
other charges, exceed the amount of any newly advanced
principal without any corresponding changes in the terms of the
refinanced loan that are advantageous to the consumer.
``(3) Net tangible benefit.--The Federal banking agencies
shall jointly prescribe regulations defining the term `net
tangible benefit' for purposes of this subsection.''.
SEC. 9103. SAFE HARBOR AND REBUTTABLE PRESUMPTION.
Section 129C of the Truth in Lending Act is amended by inserting
after subsection (b) (as added by section 9102) the following new
subsection:
``(c) Presumption of Ability To Repay and Net Tangible Benefit.--
``(1) In general.--Any creditor with respect to any
residential mortgage loan, and any assignee or securitizer of
such loan, may presume that the loan has met the requirements
of subsections (a) and (b), if the loan is a qualified
mortgage.
``(2) Definitions.--For purposes of this subsection, the
following definitions shall apply:
``(A) Qualified mortgage.--The term `qualified
mortgage' means any residential mortgage loan--
``(i) that does not allow a consumer to
defer repayment of principal or interest, or is
not otherwise deemed a `non-traditional
mortgage' under guidance, advisories, or
regulations prescribed by the Federal Banking
Agencies;
``(ii) that does not provide for a
repayment schedule that results in negative
amortization at any time;
``(iii) for which the terms are fully
amortizing and which does not result in a
balloon payment, where a `balloon payment' is a
scheduled payment that is more than twice as
large as the average of earlier scheduled
payments;
``(iv) which has an annual percentage rate
that does not exceed the average prime offer
rate for a comparable transaction, as of the
date the interest rate is set--
``(I) by 1.5 or more percentage
points, in the case of a first lien
residential mortgage loan having a
original principal obligation amount
that is equal to or less than the
amount of the maximum limitation on the
original principal obligation of
mortgage in effect for a residence of
the applicable size, as of the date of
such interest rate set, pursuant to the
sixth sentence of section 305(a)(2) the
Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a)(2));
``(II) by 2.5 or more percentage
points, in the case of a first lien
residential mortgage loan having a
original principal obligation amount
that is more than the amount of the
maximum limitation on the original
principal obligation of mortgage in
effect for a residence of the
applicable size, as of the date of such
interest rate set, pursuant to the
sixth sentence of section 305(a)(2) the
Federal Home Loan Mortgage Corporation
Act (12 U.S.C. 1454(a)(2)); and
``(III) by 3.5 or more percentage
points, in the case of a subordinate
lien residential mortgage loan;
``(v) for which the income and financial
resources relied upon to qualify the obligors
on the loan are verified and documented;
``(vi) in the case of a fixed rate loan,
for which the underwriting process is based on
a payment schedule that fully amortizes the
loan over the loan term and takes into account
all applicable taxes, insurance, and
assessments;
``(vii) in the case of an adjustable rate
loan, for which the underwriting is based on
the maximum rate permitted under the loan
during the first seven years, and a payment
schedule that fully amortizes the loan over the
loan term and takes into account all applicable
taxes, insurance, and assessments;
``(viii) that does not cause the consumer's
total monthly debts, including amounts under
the loan, to exceed a percentage established by
regulation of the consumer's monthly gross
income or such other maximum percentage of such
income as may be prescribed by regulation under
paragraph (4), and such rules shall also take
into consideration the consumer's income
available to pay regular expenses after payment
of all installment and revolving debt;
``(ix) for which the total points and fees
payable in connection with the loan do not
exceed 2 percent of the total loan amount,
where `points and fees' means points and fees
as defined by Section 103(aa)(4) of the Truth
in Lending Act (15 U.S.C. 1602(aa)(4)); and
``(x) for which the term of the loan does
not exceed 30 years, except as such term may be
extended under paragraph (4).
``(B) Average prime offer rate.--The term `average
prime offer rate' means an annual percentage rate that
is derived from average interest rates, points, and
other loan pricing terms currently offered to consumers
by a representative sample of creditors for mortgage
transactions that have low risk pricing
characteristics.
``(C) Reverse mortgages.--For purposes of this
subsection, the term `qualified mortgage' includes any
reverse mortgage that is insured by the Federal Housing
Administration or complies with the condition
established in subparagraph (A)(iv).
``(3) Publication of average prime offer rate and apr
thresholds.--The Board--
``(A) shall publish, and update at least weekly,
average prime offer rates;
``(B) may publish multiple rates based on varying
types of mortgage transactions; and
``(C) shall adjust the thresholds of 1.50
percentage points in paragraph (2)(A)(iv)(I), 2.50
percentage points in paragraph (2)(A)(iv)(II), and 3.50
percentage points in paragraph (2)(A)(v)(III), as
necessary to reflect significant changes in market
conditions and to effectuate the purposes of the
Mortgage Reform and Anti-Predatory Lending Act.
``(4) Regulations.--
``(A) In general.--The Federal banking agencies
shall jointly prescribe regulations to carry out the
purposes of this subsection.
``(B) Revision of safe harbor criteria.--
``(i) In general.--The Federal banking
agencies may jointly prescribe regulations that
revise, add to, or subtract from the criteria
that define a qualified mortgage upon a finding
that such regulations are necessary or proper
to ensure that responsible, affordable mortgage
credit remains available to consumers in a
manner consistent with the purposes of this
section, necessary and appropriate to
effectuate the purposes of this section and
section 129B, to prevent circumvention or
evasion thereof, or to facilitate compliance
with such sections.
``(ii) Loan definition.--The following
agencies shall, in consultation with the
Federal banking agencies, prescribe rules
defining the types of loans they insure,
guarantee or administer, as the case may be,
that are Qualified Mortgages for purposes of
subsection (c)(1)(A) upon a finding that such
rules are consistent with the purposes of this
section and section 129B, to prevent
circumvention or evasion thereof, or to
facilitate compliance with such sections--
``(I) The Department of Housing and
Urban Development, with regard to
mortgages insured under title II of the
National Housing Act (12 U.S.C. 1707 et
seq.);
``(II) The Secretary of Veterans
Affairs, with regard to a loan made or
guaranteed by the Secretary of Veterans
Affairs;
``(III) The Secretary of
Agriculture, with regard loans
guaranteed by the Secretary of
Agriculture pursuant to 42 U.S.C.
1472(h);
``(IV) The Federal Housing Finance
Agency, with regard to loans meeting
the conforming loan standards of the
Federal National Mortgage Corporation
or the Federal Home Loan Mortgage
Corporation; and
``(V) The Rural Housing Service,
with regard to loans insured by the
Rural Housing Service.''.
SEC. 9104. LIABILITY.
Section 129C of the Truth in Lending Act is amended by inserting
after subsection (c) (as added by section 9103) the following new
subsection:
``(d) Liability for Violations.--
``(1) In general.--
``(A) Rescission.--In addition to any other
liability under this title for a violation by a
creditor of subsection (a) or (b) (for example under
section 130) and subject to the statute of limitations
in paragraph (9), a civil action may be maintained
against a creditor for a violation of subsection (a) or
(b) with respect to a residential mortgage loan for the
rescission of the loan, and such additional costs as
the obligor may have incurred as a result of the
violation and in connection with obtaining a rescission
of the loan, including a reasonable attorney's fee.
``(B) Cure.--A creditor shall not be liable for
rescission under subparagraph (A) with respect to a
residential mortgage loan if, no later than 90 days
after the receipt of notification from the consumer
that the loan violates subsection (a) or (b), the
creditor, acting in good faith, a cure.
``(2) Limited assignee and securitizer liability.--
Notwithstanding sections 125(e) and 131 and except as provided
in paragraph (3), a civil action which may be maintained
against a creditor with respect to a residential mortgage loan
for a violation of subsection (a) or (b) may be maintained
against any assignee or securitizer of such residential
mortgage loan, who has acted in good faith, for the following
liabilities only:
``(A) Rescission of the loan.
``(B) Such additional costs as the obligor may have
incurred as a result of the violation and in connection
with obtaining a rescission of the loan, including a
reasonable attorney's fee.
``(3) Assignee and securitizer exemption.--No assignee or
securitizer of a residential mortgage loan that has exercised
reasonable due diligence in complying with the requirements of
subsections (a) and (b), consistent with reasonable due
diligence practices prescribed by the Federal banking agencies,
shall be liable under paragraph (2) with respect to such loan
if, no later than 90 days after the receipt of notification
from the consumer that the loan violates subsection (a) or (b),
the assignee or securitizer provides a cure so that the loan
satisfies the requirements of subsections (a) and (b).
``(4) Absent parties.--
``(A) Absent creditor.--Notwithstanding the
exemption provided in paragraph (3), if the creditor
with respect to a residential mortgage loan made in
violation of subsection (a) or (b) has ceased to exist
as a matter of law or has filed for bankruptcy
protection under title 11, United States Code, or has
had a receiver, conservator, or liquidating agent
appointed, a consumer may maintain a civil action
against an assignee to cure the residential mortgage
loan, plus the costs and reasonable attorney's fees
incurred in obtaining such remedy.
``(B) Absent creditor and assignee.--
Notwithstanding the exemption provided in paragraph
(3), if the creditor with respect to a residential
mortgage loan made in violation of subsection (a) or
(b) and each assignee of such loan have ceased to exist
as a matter of law or have filed for bankruptcy
protection under title 11, United States Code, or have
had receivers, conservators, or liquidating agents
appointed, the consumer may maintain the civil action
referred to in subparagraph (A) against the
securitizer.
``(5) Cure defined.--For purposes of this subsection, the
term `cure' means, with respect to a residential mortgage loan
that violates subsection (a) or (b), the modification or
refinancing, at no cost to the consumer, of the loan to provide
terms that satisfy the requirements of subsections (a) and (b)
and the payment of such additional costs as the obligor may
have incurred in connection with obtaining a cure of the loan,
including a reasonable attorney's fee.
``(6) Disagreement over cure.--If any creditor, assignee,
or securitizer and a consumer fail to reach agreement on a cure
with respect to a residential mortgage loan that violates
subsection (a) or (b), or the consumer fails to accept a cure
proffered by a creditor, assignee, or securitizer--
``(A) the creditor, assignee, or securitizer may
provide the cure; and
``(B) the consumer may challenge the adequacy of
the cure during the 6-month period beginning when the
cure is provided.
If the consumer's challenge, under this paragraph, of a cure is
successful, the creditor, assignee, or securitizer shall be
liable to the consumer for rescission of the loan and such
additional costs under paragraph (2).
``(7) Inability to provide or obtain rescission.--If a
creditor, assignee, or securitizer cannot provide, or a
consumer cannot obtain, rescission under paragraph (1) or (2),
the liability of such creditor, assignee, or securitizer shall
be met by providing the financial equivalent of a rescission,
together with such additional costs as the obligor may have
incurred as a result of the violation and in connection with
obtaining a rescission of the loan, including a reasonable
attorney's fee.
``(8) No class actions against assignee or securitizer
under paragraph (2).--Only individual actions may be brought
against an assignee or securitizer of a residential mortgage
loan for a violation of subsection (a) or (b).
``(9) Statute of limitations.--The liability of a creditor,
assignee, or securitizer under this subsection shall apply in
any original action against a creditor under paragraph (1) or
an assignee or securitizer under paragraph (2) which is brought
before--
``(A) in the case of any residential mortgage loan
other than a loan to which subparagraph (B) applies,
the end of the 3-year period beginning on the date the
loan is consummated; or
``(B) in the case of a residential mortgage loan
that provides for a fixed interest rate for an
introductory period and then resets or adjusts to a
variable rate or that provides for a nonamortizing
payment schedule and then converts to an amortizing
payment schedule, the earlier of--
``(i) the end of the 1-year period
beginning on the date of such reset,
adjustment, or conversion; or
``(ii) the end of the 6-year period
beginning on the date the loan is consummated.
``(10) Trustees, pools, and investors in pools excluded.--
In the case of residential mortgage loans acquired or
aggregated for the purpose of including such loans in a pool of
assets held for the purpose of issuing or selling instruments
representing interests in such pools including through a
securitization vehicle, the terms `assignee' and `securitizer',
as used in this section, do not include the securitization
vehicle, any trustee that holds such loans solely for the
benefit of the securitization vehicle, the pools of such loans
or any original or subsequent purchaser of any interest in the
securitization vehicle or any instrument representing a direct
or indirect interest in such pool.
``(e) Obligation of Securitizers, and Preservation of Borrower
Remedies.--
``(1) Obligation to retain access.--Any securitizer of a
residential mortgage loan sold or to be sold as part of a
securitization vehicle shall, in any document or contract
providing for the transfer, conveyance, or the establishment of
such securitization vehicle, reserve the right and preserve the
ability--
``(A) to identify and obtain access to any such
loan;
``(B) to acquire any such loan in the event of a
violation of subsection (a) or (b) of this section; and
``(C) to provide to the consumer any and all
remedies provided for under this title for any
violation of this title.
``(2) Additional damages.--Any creditor, assignee, or
securitizer of a residential mortgage loan that is subject to a
remedy under subsection (d) and has failed to comply with
paragraph (1) shall be subject to additional exemplary or
punitive damages not to exceed the original principal balance
of such loan.
``(3) Contact information notice.--The servicer with
respect to a residential mortgage loan shall provide a written
notice to a consumer identifying the name and contact
information of the creditor or any assignee or securitizer who
should be contacted by the consumer for any reason concerning
the consumer's rights with respect to the loan. Such notice
shall be provided--
``(A) upon request of the consumer;
``(B) whenever there is a change in ownership of a
residential mortgage loan; or
``(C) on a regular basis, not less than annually.
``(f) Rules To Establish Process.--The Board shall promulgate rules
to govern the rescission process established for violations of
subsections (a) and (b) of this section. Such rules shall provide that
notice given to a servicer or holder is sufficient notice regardless of
the identity of the party or the parties liable under this title.''.
SEC. 9105. DEFENSE TO FORECLOSURE.
Section 129C of the Truth in Lending Act is amended by inserting
after subsection (f) (as added by section 9104) the following new
subsections:
``(g) Defense to Foreclosure.--Notwithstanding any other provision
of law--
``(1) when the holder of a residential mortgage loan or
anyone acting for such holder initiates a judicial or
nonjudicial foreclosure--
``(A) a consumer who has the right to rescind under
this section with respect to such loan against the
creditor or any assignee or securitizer may assert such
right as a defense to foreclosure or counterclaim to
such foreclosure against the holder, or
``(B) if the foreclosure proceeding begins after
the end of the period during which a consumer may bring
an action for rescission under subsection (d) and the
consumer would have had a valid basis for such an
action if it had been brought before the end of such
period, the consumer may seek actual damages incurred
by reason of the violation which gave rise to the right
of rescission, together with costs of the action,
including a reasonable attorney's fee against the
creditor or any assignee or securitizer; and
``(2) such holder or anyone acting for such holder or any
other applicable third party may sell, transfer, convey, or
assign a residential mortgage loan to a creditor, any assignee,
or any securitizer, or their designees, subject to the rights
of the consumer described in this subsection, to effect a
rescission or cure.''.
SEC. 9106. ADDITIONAL STANDARDS AND REQUIREMENTS.
(a) In General.--Section 129C of the Truth in Lending Act is
amended by inserting after subsection (g) (as added by section 9105)
the following new subsections:
``(h) Prohibition on Certain Prepayment Penalties.--
``(1) Prohibited on certain loans.--A residential mortgage
loan that is not a `qualified mortgage' may not contain terms
under which a consumer must pay a prepayment penalty for paying
all or part of the principal after the loan is consummated. For
purposes of this subsection, a `qualified mortgage' may not
include a residential mortgage loan that has an adjustable
rate.
``(2) Phased-out penalties on qualified mortgages.--A
qualified mortgage (as defined in subsection (c)) may not
contain terms under which a consumer must pay a prepayment
penalty for paying all or part of the principal after the loan
is consummated in excess of the following limitations:
``(A) During the 1-year period beginning on the
date the loan is consummated, the prepayment penalty
shall not exceed an amount equal to 3 percent of the
outstanding balance on the loan.
``(B) During the 1-year period beginning after the
period described in subparagraph (A), the prepayment
penalty shall not exceed an amount equal to 2 percent
of the outstanding balance on the loan.
``(C) During the 1-year period beginning after the
1-year period described in subparagraph (B), the
prepayment penalty shall not exceed an amount equal to
1 percent of the outstanding balance on the loan.
``(D) After the end of the 3-year period beginning
on the date the loan is consummated, no prepayment
penalty may be imposed on a qualified mortgage.
``(3) Option for no prepayment penalty required.--A
creditor may not offer a consumer a residential mortgage loan
product that has a prepayment penalty for paying all or part of
the principal after the loan is consummated as a term of the
loan without offering the consumer a residential mortgage loan
product that does not have a prepayment penalty as a term of
the loan.
``(i) Single Premium Credit Insurance Prohibited.--No creditor may
finance, directly or indirectly, in connection with any residential
mortgage loan or with any extension of credit under an open end
consumer credit plan secured by the principal dwelling of the consumer
(other than a reverse mortgage), any credit life, credit disability,
credit unemployment or credit property insurance, or any other
accident, loss-of-income, life or health insurance, or any payments
directly or indirectly for any debt cancellation or suspension
agreement or contract, except that--
``(1) insurance premiums or debt cancellation or suspension
fees calculated and paid in full on a monthly basis shall not
be considered financed by the creditor; and
``(2) this subsection shall not apply to credit
unemployment insurance for which the unemployment insurance
premiums are reasonable, the creditor receives no direct or
indirect compensation in connection with the unemployment
insurance premiums, and the unemployment insurance premiums are
paid pursuant to another insurance contract and not paid to an
affiliate of the creditor.
``(j) Arbitration.--
``(1) In general.--No residential mortgage loan and no
extension of credit under an open end consumer credit plan
secured by the principal dwelling of the consumer, other than a
reverse mortgage, may include terms which require arbitration
or any other nonjudicial procedure as the method for resolving
any controversy or settling any claims arising out of the
transaction.
``(2) Post-controversy agreements.--Subject to paragraph
(3), paragraph (1) shall not be construed as limiting the right
of the consumer and the creditor, any assignee, or any
securitizer to agree to arbitration or any other nonjudicial
procedure as the method for resolving any controversy at any
time after a dispute or claim under the transaction arises.
``(3) No waiver of statutory cause of action.--No provision
of any residential mortgage loan or of any extension of credit
under an open end consumer credit plan secured by the principal
dwelling of the consumer (other than a reverse mortgage), and
no other agreement between the consumer and the creditor
relating to the residential mortgage loan or extension of
credit referred to in paragraph (1), shall be applied or
interpreted so as to bar a consumer from bringing an action in
an appropriate district court of the United States, or any
other court of competent jurisdiction, pursuant to section 130
or any other provision of law, for damages or other relief in
connection with any alleged violation of this section, any
other provision of this title, or any other Federal law.
``(k) Mortgages With Negative Amortization.--No creditor may extend
credit to a borrower in connection with a consumer credit transaction
under an open or closed end consumer credit plan secured by a dwelling
or residential real property that includes a dwelling, other than a
reverse mortgage, that provides or permits a payment plan that may, at
any time over the term of the extension of credit, result in negative
amortization unless, before such transaction is consummated--
``(1) the creditor provides the consumer with a statement
that--
``(A) the pending transaction will or may, as the
case may be, result in negative amortization;
``(B) describes negative amortization in such
manner as the Federal banking agencies shall prescribe;
``(C) negative amortization increases the
outstanding principal balance of the account; and
``(D) negative amortization reduces the consumer's
equity in the dwelling or real property; and
``(2) in the case of a first-time borrower with respect to
a residential mortgage loan that is not a qualified mortgage,
the first-time borrower provides the creditor with sufficient
documentation to demonstrate that the consumer received
homeownership counseling from organizations or counselors
certified by the Secretary of Housing and Urban Development as
competent to provide such counseling.''.
(b) Conforming Amendment Relating to Enforcement.--Section 108(a)
of the Truth in Lending Act (15 U.S.C. 1607(a)) is amended by inserting
after paragraph (6) the following new paragraph:
``(7) sections 21B and 21C of the Securities Exchange Act
of 1934, in the case of a broker or dealer, other than a
depository institution, by the Securities and Exchange
Commission.''.
(c) Protection Against Loss of Anti-deficiency Protection.--Section
129C of the Truth in Lending Act is amended by inserting after
subsection (k) (as added by subsection (a) of this section) the
following new subsection (and designated succeeding subsections
accordingly):
``(l) Protection Against Loss of Anti-deficiency Protection.--
``(1) Definition.--For purposes of this subsection, the
term `anti-deficiency law' means the law of any State which
provides that, in the event of foreclosure on the residential
property of a consumer securing a mortgage, the consumer is not
liable, in accordance with the terms and limitations of such
State law, for any deficiency between the sale price obtained
on such property through foreclosure and the outstanding
balance of the mortgage.
``(2) Notice at time of consummation.--In the case of any
residential mortgage loan that is, or upon consummation will
be, subject to protection under an anti-deficiency law, the
creditor or mortgage originator shall provide a written notice
to the consumer describing the protection provided by the anti-
deficiency law and the significance for the consumer of the
loss of such protection before such loan is consummated.
``(3) Notice before refinancing that would cause loss of
protection.--In the case of any residential mortgage loan that
is subject to protection under an anti-deficiency law, if a
creditor or mortgage originator provides an application to a
consumer, or receives an application from a consumer, for any
type of refinancing for such loan that would cause the loan to
lose the protection of such anti-deficiency law, the creditor
or mortgage originator shall provide a written notice to the
consumer describing the protection provided by the anti-
deficiency law and the significance for the consumer of the
loss of such protection before any agreement for any such
refinancing is consummated.''.
(d) Policy Regarding Acceptance of Partial Payment.--Section 129C
of the Truth in Lending Act is amended by inserting after subsection
(l) (as added by subsection (c)) the following new subsection:
``(m) Policy Regarding Acceptance of Partial Payment.--In the case
of any residential mortgage loan, a creditor shall disclose prior to
settlement or, in the case of a person becoming a creditor with respect
to an existing residential mortgage loan, at the time such person
becomes a creditor--
``(1) the creditor's policy regarding the acceptance of
partial payments; and
``(2) if partial payments are accepted, how such payments
will be applied to such mortgage and if such payments will be
placed in escrow.''.
SEC. 9107. RULE OF CONSTRUCTION.
Except as otherwise expressly provided in section 129B or 129C of
the Truth in Lending Act (as added by this subtitle), no provision of
such section 129B or 129C shall be construed as superseding, repealing,
or affecting any duty, right, obligation, privilege, or remedy of any
person under any other provision of the Truth in Lending Act or any
other provision of Federal or State law.
SEC. 9108. EFFECT ON STATE LAWS.
(a) In General.--Except as provided in subsection (b), section
129C(d) of the Truth in Lending Act (as added by section 9104) shall
supersede any State law to the extent that it provides additional
remedies against any assignee, securitizer, or securitization vehicle
for a violation of subsection (a) or (b) of section 129C of such Act or
any other State law the terms of which address the specific subject
matter of subsection (a) (determination of ability to repay) or (b)
(requirement of a net tangible benefit) of section 129C of such Act,
and the remedies described in section 129C(d) shall constitute the sole
remedies against any assignee, securitizer, or securitization vehicle
for such violations.
(b) Rules of Construction.--No provision of this section shall be
construed as limiting--
(1) the application of any State law, or the availability
of remedies under such law, against a creditor for a particular
residential mortgage loan regardless of whether such creditor
also acts as an assignee, securitizer, or securitization
vehicle for such loan;
(2) the application of any State law, or the availability
of remedies under such law, against an assignee, securitizer,
or securitization vehicle under State law, other than a
provision of such law the terms of which address the specific
subject matter of subsection (a) (determination of ability to
repay) or (b) (requirement of a net tangible benefit) of
section 129C of such Act;
(3)(A) the application of any State law, or the
availability of remedies under such law, against an assignee,
securitizer or securitization vehicle for its participation in
or direction of the credit or underwriting decisions of a
creditor relating to the making of a residential mortgage loan;
or
(B) the ability of a consumer to assert any rights against
or obtain any remedies from an assignee, securitizer or
securitization vehicle with respect to a residential mortgage
loan as a defense to foreclosure under section 129C(g);
(4) the availability of any equitable remedies, including
injunctive relief, under State law; or
(5) notwithstanding paragraph (2), the availability of any
remedies under State law against any assignee, securitizer or
securitization vehicle that--
(A) are in addition to those remedies provided for
in section 129C; and
(B) were in effect on the date of enactment of this
Act.
SEC. 9109. REGULATIONS.
Regulations required or authorized to be prescribed under this
subtitle or the amendments made by this subtitle--
(1) shall be prescribed in final form before the end of the
12-month period beginning on the date of the enactment of this
Act; and
(2) shall take effect not later than 18 months after the
date of the enactment of this Act.
SEC. 9110. AMENDMENTS TO CIVIL LIABILITY PROVISIONS.
(a) Increase in Amount of Civil Money Penalties for Certain
Violations.--Section 130(a)(2) of the Truth in Lending Act (15 U.S.C.
1640(a)(2)) is amended--
(1) by striking ``$100'' and inserting ``$200'';
(2) by striking ``$1,000'' and inserting ``$2,000''; and
(3) by striking ``$500,000'' and inserting ``$1,000,000''.
(b) Statute of Limitations Extended for Section 129 Violations.--
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is
amended--
(1) in the first sentence, by striking ``Any action'' and
inserting ``Except as provided in the subsequent sentence, any
action''; and
(2) by inserting after the first sentence the following new
sentence: ``Any action under this section with respect to any
violation of section 129 may be brought in any United States
district court, or in any other court of competent
jurisdiction, before the end of the 3-year period beginning on
the date of the occurrence of the violation.''.
SEC. 9111. LENDER RIGHTS IN THE CONTEXT OF BORROWER DECEPTION.
Section 130 of the Truth in Lending Act is amended by adding at the
end the following new subsection:
``(k) Exemption From Liability and Rescission in Case of Borrower
Fraud or Deception.--In addition to any other remedy available by law
or contract, no creditor, assignee, or securitizer shall be liable to
an obligor under this section, nor shall it be subject to the right of
rescission of any obligor under 129B, if such obligor, or co-obligor,
knowingly, or willfully and with actual knowledge furnished material
information known to be false for the purpose of obtaining such
residential mortgage loan.''.
SEC. 9112. SIX-MONTH NOTICE REQUIRED BEFORE RESET OF HYBRID ADJUSTABLE
RATE MORTGAGES.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 128 the following
new section:
``Sec. 128A. Reset of hybrid adjustable rate mortgages
``(a) Hybrid Adjustable Rate Mortgages Defined.--For purposes of
this section, the term `hybrid adjustable rate mortgage' means a
consumer credit transaction secured by the consumer's principal
residence with a fixed interest rate for an introductory period that
adjusts or resets to a variable interest rate after such period.
``(b) Notice of Reset and Alternatives.--During the 1-month period
that ends 6 months before the date on which the interest rate in effect
during the introductory period of a hybrid adjustable rate mortgage
adjusts or resets to a variable interest rate or, in the case of such
an adjustment or resetting that occurs within the first 6 months after
consummation of such loan, at consummation, the creditor or servicer of
such loan shall provide a written notice, separate and distinct from
all other correspondence to the consumer, that includes the following:
``(1) Any index or formula used in making adjustments to or
resetting the interest rate and a source of information about
the index or formula.
``(2) An explanation of how the new interest rate and
payment would be determined, including an explanation of how
the index was adjusted, such as by the addition of a margin.
``(3) A good faith estimate, based on accepted industry
standards, of the creditor or servicer of the amount of the
monthly payment that will apply after the date of the
adjustment or reset, and the assumptions on which this estimate
is based.
``(4) A list of alternatives consumers may pursue before
the date of adjustment or reset, and descriptions of the
actions consumers must take to pursue these alternatives,
including--
``(A) refinancing;
``(B) renegotiation of loan terms;
``(C) payment forbearances; and
``(D) pre-foreclosure sales.
``(5) The names, addresses, telephone numbers, and Internet
addresses of counseling agencies or programs reasonably
available to the consumer that have been certified or approved
and made publicly available by the Secretary of Housing and
Urban Development or a State housing finance authority (as
defined in section 1301 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989).
``(6) The address, telephone number, and Internet address
for the State housing finance authority (as so defined) for the
State in which the consumer resides.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 128 the following new item:
``128A. Reset of hybrid adjustable rate mortgages.''.
SEC. 9113. REQUIRED DISCLOSURES.
Section 128(a) of Truth in Lending Act (15 U.S.C. 1638(a)) is
amended by adding at the end the following new paragraphs:
``(16) In the case of a variable rate residential mortgage
loan for which an escrow or impound account will be established
for the payment of all applicable taxes, insurance, and
assessments--
``(A) the amount of initial monthly payment due
under the loan for the payment of principal and
interest, and the amount of such initial monthly
payment including the monthly payment deposited in the
account for the payment of all applicable taxes,
insurance, and assessments; and
``(B) the amount of the fully indexed monthly
payment due under the loan for the payment of principal
and interest, and the amount of such fully indexed
monthly payment including the monthly payment deposited
in the account for the payment of all applicable taxes,
insurance, and assessments.
``(17) In the case of a residential mortgage loan, the
aggregate amount of settlement charges for all settlement
services provided in connection with the loan, the amount of
charges that are included in the loan and the amount of such
charges the borrower must pay at closing, the approximate
amount of the wholesale rate of funds in connection with the
loan, and the aggregate amount of other fees or required
payments in connection with the loan.
``(18) In the case of a residential mortgage loan, the
aggregate amount of fees paid to the mortgage originator in
connection with the loan, the amount of such fees paid directly
by the consumer, and any additional amount received by the
originator from the creditor.
``(19) In the case of a residential mortgage loan, the
total amount of interest that the consumer will pay over the
life of the loan as a percentage of the principal of the loan.
Such amount shall be computed assuming the consumer makes each
monthly payment in full and on-time, and does not make any
over-payments.''.
SEC. 9114. DISCLOSURES REQUIRED IN MONTHLY STATEMENTS FOR RESIDENTIAL
MORTGAGE LOANS.
Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended
by adding at the end the following new subsection:
``(f) Periodic Statements for Residential Mortgage Loans.--
``(1) In general.--The creditor, assignee, or servicer with
respect to any residential mortgage loan shall transmit to the
obligor, for each billing cycle, a statement setting forth each
of the following items, to the extent applicable, in a
conspicuous and prominent manner:
``(A) The amount of the principal obligation under
the mortgage.
``(B) The current interest rate in effect for the
loan.
``(C) The date on which the interest rate may next
reset or adjust.
``(D) The amount of any prepayment fee to be
charged, if any.
``(E) A description of any late payment fees.
``(F) A telephone number and electronic mail
address that may be used by the obligor to obtain
information regarding the mortgage.
``(G) The names, addresses, telephone numbers, and
Internet addresses of counseling agencies or programs
reasonably available to the consumer that have been
certified or approved and made publicly available by
the Secretary of Housing and Urban Development or a
State housing finance authority (as defined in section
1301 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989).
``(H) Such other information as the Board may
prescribe in regulations.
``(2) Development and use of standard form.--The Federal
banking agencies shall jointly develop and prescribe a standard
form for the disclosure required under this subsection, taking
into account that the statements required may be transmitted in
writing or electronically.''.
SEC. 9115. LEGAL ASSISTANCE FOR FORECLOSURE-RELATED ISSUES.
(a) Establishment.--The Secretary of Housing and Urban Development
(hereafter in this section referred to as the ``Secretary'' shall
establish a program for making grants for providing a full range of
foreclosure legal assistance to low- and moderate-income homeowners and
tenants related to home ownership preservation, home foreclosure
prevention, and tenancy associated with home foreclosure.
(b) Competitive Allocation.--The Secretary shall allocate amounts
made available for grants under this section to State and local legal
organizations on the basis of a competitive process. For purposes of
this subsection ``State and local legal organizations'' are those State
and local organizations whose primary business or mission is to provide
legal assistance.
(c) Priority to Certain Areas.--In allocating amounts in accordance
with subsection (b), the Secretary shall give priority consideration to
State and local legal organizations that are operating in the 100
metropolitan statistical areas (as that term is defined by the Director
of the Office of Management and Budget) with the highest home
foreclosure rates.
(d) Legal Assistance.--
(1) In general.--Any State or local legal organization that
receives financial assistance pursuant to this section may use
such amounts only to assist--
(A) homeowners of owner-occupied homes with
mortgages in default, in danger of default, or subject
to or at risk of foreclosure; and
(B) tenants at risk of or subject to eviction as a
result of foreclosure of the property in which such
tenant resides.
(2) Commence use within 90 days.--Any State or local legal
organization that receives financial assistance pursuant to
this section shall begin using any financial assistance
received under this section within 90 days after receipt of the
assistance.
(3) Prohibition on class actions.--No funds provided to a
State or local legal organization under this section may be
used to support any class action litigation.
(4) Limitation on legal assistance.--Legal assistance
funded with amounts provided under this section shall be
limited to mortgage-related default, eviction, or foreclosure
proceedings, without regard to whether such foreclosure is
judicial or nonjudicial.
(5) Effective date.--Notwithstanding section 9116, this
subsection shall take effect on the date of the enactment of
this Act.
(e) Limitation on Distribution of Assistance.--
(1) In general.--None of the amounts made available under
this section shall be distributed to--
(A) any organization which has been convicted for a
violation under Federal law relating to an election for
Federal office; or
(B) any organization which employs applicable
individuals.
(2) Definition of applicable individuals.--In this
subsection, the term ``applicable individual'' means an
individual who--
(A) is--
(i) employed by the organization in a
permanent or temporary capacity;
(ii) contracted or retained by the
organization; or
(iii) acting on behalf of, or with the
express or apparent authority of, the
organization; and
(B) has been convicted for a violation under
Federal law relating to an election for Federal office.
(f) Authorization of Appropriations.--There are authorized to be
appropriated to the Secretary $35,000,000 for each of fiscal years 2009
through 2012 for grants under this section.
SEC. 9116. EFFECTIVE DATE.
The amendments made by this subtitle shall apply to transactions
consummated on or after the effective date of the regulations specified
in section 9109.
SEC. 9117. REPORT BY THE GAO.
(a) Report Required.--The Comptroller General shall conduct a study
to determine the effects the enactment of this Act will have on the
availability and affordability of credit for consumers, small
businesses, homebuyers, and mortgage lending, including the effect--
(1) on the mortgage market for mortgages that are not
within the safe harbor provided in the amendments made by this
subtitle;
(2) on the ability of prospective homebuyers to obtain
financing;
(3) on the ability of homeowners facing resets or
adjustments to refinance--for example, do they have fewer
refinancing options due to the unavailability of certain loan
products that were available before the enactment of this Act;
(4) on minorities' ability to access affordable credit
compared with other prospective borrowers;
(5) on home sales and construction;
(6) of extending the rescission right, if any, on
adjustable rate loans and its impact on litigation;
(7) of State foreclosure laws and, if any, an investor's
ability to transfer a property after foreclosure;
(8) of expanding the existing provisions of the Home
Ownership and Equity Protection Act of 1994;
(9) of prohibiting prepayment penalties on high-cost
mortgages; and
(10) of establishing counseling services under the
Department of Housing and Urban Development and offered through
the Office of Housing Counseling.
(b) Report.--Before the end of the 1-year period beginning on the
date of the enactment of this Act, the Comptroller General shall submit
a report to the Congress containing the findings and conclusions of the
Comptroller General with respect to the study conducted pursuant to
subsection (a).
(c) Examination Related to Certain Credit Risk Retention
Provisions.--The report required by subsection (b) shall also include
an analysis by the Comptroller General of the effect on the capital
reserves and funding of lenders of credit risk retention provisions for
non-qualified mortgages, including an analysis of the exceptions and
adjustments authorized in section 129C(l)(3)(A) of the Truth in Lending
Act and a recommendation on whether a uniform standard is needed.
(d) Analysis of Credit Risk Retention Provisions.--The report
required by subsection (b) shall also include--
(1) an analysis by the Comptroller General of whether the
credit risk retention provisions have significantly reduced
risks to the larger credit market of the repackaging and
selling of securitized loans on a secondary market; and
(2) recommendations to the Congress on adjustments that
should be made, or additional measures that should be
undertaken.
SEC. 9118. STATE ATTORNEY GENERAL ENFORCEMENT AUTHORITY.
Section 130(e) of the Truth in Lending Act (15 U.S.C. 1640(e)) is
amended by striking ``section 129 may also'' and inserting ``section
129, 129B, or 129C of this Act may also''.
Subtitle C--High-Cost Mortgages
SEC. 9201. DEFINITIONS RELATING TO HIGH-COST MORTGAGES.
(a) High-cost Mortgage Defined.--Section 103(aa) of the Truth in
Lending Act (15 U.S.C. 1602(aa)) is amended by striking all that
precedes paragraph (2) and inserting the following:
``(aa) High-cost Mortgage.--
``(1) Definition.--
``(A) In general.--The term `high-cost mortgage',
and a mortgage referred to in this subsection, means a
consumer credit transaction that is secured by the
consumer's principal dwelling, other than a reverse
mortgage transaction, if--
``(i) in the case of a credit transaction
secured--
``(I) by a first mortgage on the
consumer's principal dwelling, the
annual percentage rate at consummation
of the transaction will exceed by more
than 6.5 percentage points (8.5
percentage points, if the dwelling is
personal property and the transaction
is for less than $50,000) the average
prime offer rate, as defined in section
129C(c)(2)(B), for a comparable
transaction; or
``(II) by a subordinate or junior
mortgage on the consumer's principal
dwelling, the annual percentage rate at
consummation of the transaction will
exceed by more than 8.5 percentage
points the average prime offer rate, as
defined in section 129C(c)(2)(B), for a
comparable transaction;
``(ii) the total points and fees payable in
connection with the transaction exceed--
``(I) in the case of a transaction
for $20,000 or more, 5 percent of the
total transaction amount; or
``(II) in the case of a transaction
for less than $20,000, the lesser of 8
percent of the total transaction amount
or $1,000 (or such other dollar amount
as the Board shall prescribe by
regulation); or
``(iii) the credit transaction documents
permit the creditor to charge or collect
prepayment fees or penalties more than 36
months after the transaction closing or such
fees or penalties exceed, in the aggregate,
more than 2 percent of the amount prepaid.
``(B) Introductory rates taken into account.--For
purposes of subparagraph (A)(i), the annual percentage
rate of interest shall be determined based on the
following interest rate:
``(i) In the case of a fixed-rate
transaction in which the annual percentage rate
will not vary during the term of the loan, the
interest rate in effect on the date of
consummation of the transaction.
``(ii) In the case of a transaction in
which the rate of interest varies solely in
accordance with an index, the interest rate
determined by adding the index rate in effect
on the date of consummation of the transaction
to the maximum margin permitted at any time
during the transaction agreement.
``(iii) In the case of any other
transaction in which the rate may vary at any
time during the term of the loan for any
reason, the interest charged on the transaction
at the maximum rate that may be charged during
the term of the transaction.''.
(b) Adjustment of Percentage Points.--Section 103(aa)(2) of the
Truth in Lending Act (15 U.S.C. 1602(aa)(2)) is amended by striking
subparagraph (B) and inserting the following new subparagraph:
``(B) An increase or decrease under subparagraph
(A)--
``(i) may not result in the number of
percentage points referred to in paragraph
(1)(A)(i)(I) being less than 6 percentage
points or greater than 10 percentage points;
and
``(ii) may not result in the number of
percentage points referred to in paragraph
(1)(A)(i)(II) being less than 8 percentage
points or greater than 12 percentage points.''.
(c) Points and Fees Defined.--
(1) In general.--Section 103(aa)(4) of the Truth in Lending
Act (15 U.S.C. 1602(aa)(4)) is amended--
(A) by striking subparagraph (B) and inserting the
following:
``(B) all compensation paid directly or indirectly
by a consumer or creditor to a mortgage originator from
any source, including a mortgage originator that
originates a loan in the name of the creditor in a
table-funded transaction;'';
(B) in subparagraph (C)(ii), by inserting ``except
where applied to the charges set forth in section
106(e)(1) where a creditor may receive indirect
compensation solely as a result of obtaining
distributions of profits from an affiliated entity
based on its ownership interest in compliance with
section 8(c)(4) of the Real Estate Settlement
Procedures Act of 1974'' before the semicolon at the
end;
(C) in subparagraph (C)(iii), by striking ``; and''
and inserting ``, except as provided for in clause
(ii);'';
(D) by redesignating subparagraph (D) as
subparagraph (G); and
(E) by inserting after subparagraph (C) the
following new subparagraphs:
``(D) premiums or other charges payable at or
before closing for any credit life, credit disability,
credit unemployment, or credit property insurance, or
any other accident, loss-of-income, life or health
insurance, or any payments directly or indirectly for
any debt cancellation or suspension agreement or
contract, except that insurance premiums or debt
cancellation or suspension fees calculated and paid in
full on a monthly basis shall not be considered
financed by the creditor;
``(E) except as provided in subsection (cc), the
maximum prepayment fees and penalties which may be
charged or collected under the terms of the credit
transaction;
``(F) all prepayment fees or penalties that are
incurred by the consumer if the loan refinances a
previous loan made or currently held by the same
creditor or an affiliate of the creditor; and''.
(2) Calculation of points and fees for open-end consumer
credit plans.--Section 103(aa) of the Truth in Lending Act (15
U.S.C. 1602(aa)) is amended--
(A) by redesignating paragraph (5) as paragraph
(6); and
(B) by inserting after paragraph (4) the following
new paragraph:
``(5) Calculation of points and fees for open-end consumer
credit plans.--In the case of open-end consumer credit plans,
points and fees shall be calculated, for purposes of this
section and section 129, by adding the total points and fees
known at or before closing, including the maximum prepayment
penalties which may be charged or collected under the terms of
the credit transaction, plus the minimum additional fees the
consumer would be required to pay to draw down an amount equal
to the total credit line.''.
(d) Bona Fide Discount Loan Discount Points.--Section 103 of the
Truth in Lending Act (15 U.S.C. 1602) is amended by inserting after
subsection (cc) (as added by section 101) the following new subsection:
``(dd) Bona Fide Discount Points and Prepayment Penalties.--For the
purposes of determining the amount of points and fees for purposes of
subsection (aa), either the amounts described in paragraph (1) or (2)
of the following paragraphs, but not both, shall be excluded:
``(1) Up to and including 2 bona fide discount points
payable by the consumer in connection with the mortgage, but
only if the interest rate from which the mortgage's interest
rate will be discounted does not exceed by more than 1
percentage point--
``(A) the required net yield for a 90-day standard
mandatory delivery commitment for a reasonably
comparable loan from either the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation, whichever is greater; or
``(B) if secured by a personal property loan, the
average rate on a loan in connection with which
insurance is provided under title I of the National
Housing Act (12 U.S.C. 1702 et seq.).
``(2) Unless 2 bona fide discount points have been excluded
under paragraph (1), up to and including 1 bona fide discount
point payable by the consumer in connection with the mortgage,
but only if the interest rate from which the mortgage's
interest rate will be discounted does not exceed by more than 2
percentage points--
``(A) the required net yield for a 90-day standard
mandatory delivery commitment for a reasonably
comparable loan from either the Federal National
Mortgage Association or the Federal Home Loan Mortgage
Corporation, whichever is greater; or
``(B) if secured by a personal property loan, the
average rate on a loan in connection with which
insurance is provided under title I of the National
Housing Act (12 U.S.C. 1702 et seq.).
``(3) For purposes of paragraph (1), the term `bona fide
discount points' means loan discount points which are knowingly
paid by the consumer for the purpose of reducing, and which in
fact result in a bona fide reduction of, the interest rate or
time-price differential applicable to the mortgage.
``(4) Paragraphs (1) and (2) shall not apply to discount
points used to purchase an interest rate reduction unless the
amount of the interest rate reduction purchased is reasonably
consistent with established industry norms and practices for
secondary mortgage market transactions.''.
SEC. 9202. AMENDMENTS TO EXISTING REQUIREMENTS FOR CERTAIN MORTGAGES.
(a) Prepayment Penalty Provisions.--Section 129(c)(2) of the Truth
in Lending Act (15 U.S.C. 1639(c)(2)) is hereby repealed.
(b) No Balloon Payments.--Section 129(e) of the Truth in Lending
Act (15 U.S.C. 1639(e)) is amended to read as follows:
``(e) No Balloon Payments.--No high-cost mortgage may contain a
scheduled payment that is more than twice as large as the average of
earlier scheduled payments. This subsection shall not apply when the
payment schedule is adjusted to the seasonal or irregular income of the
consumer or in the case of a balance due under the customary terms of a
reverse mortgage.''.
SEC. 9203. ADDITIONAL REQUIREMENTS FOR CERTAIN MORTGAGES.
(a) Additional Requirements for Certain Mortgages.--Section 129 of
the Truth in Lending Act (15 U.S.C. 1639) is amended--
(1) by redesignating subsections (j), (k) and (l) as
subsections (n), (o) and (p) respectively; and
(2) by inserting after subsection (i) the following new
subsections:
``(j) Recommended Default.--No creditor shall recommend or
encourage default on an existing loan or other debt prior to and in
connection with the closing or planned closing of a high-cost mortgage
that refinances all or any portion of such existing loan or debt.
``(k) Late Fees.--
``(1) In general.--No creditor may impose a late payment
charge or fee in connection with a high-cost mortgage--
``(A) in an amount in excess of 4 percent of the
amount of the payment past due;
``(B) unless the loan documents specifically
authorize the charge or fee;
``(C) before the end of the 15-day period beginning
on the date the payment is due, or in the case of a
loan on which interest on each installment is paid in
advance, before the end of the 30-day period beginning
on the date the payment is due; or
``(D) more than once with respect to a single late
payment.
``(2) Coordination with subsequent late fees.--If a payment
is otherwise a full payment for the applicable period and is
paid on its due date or within an applicable grace period, and
the only delinquency or insufficiency of payment is
attributable to any late fee or delinquency charge assessed on
any earlier payment, no late fee or delinquency charge may be
imposed on such payment.
``(3) Failure to make installment payment.--If, in the case
of a loan agreement the terms of which provide that any payment
shall first be applied to any past due principal balance, the
consumer fails to make an installment payment and the consumer
subsequently resumes making installment payments but has not
paid all past due installments, the creditor may impose a
separate late payment charge or fee for any principal due
(without deduction due to late fees or related fees) until the
default is cured.
``(l) Acceleration of Debt.--No high-cost mortgage may contain a
provision which permits the creditor to accelerate the indebtedness,
except when repayment of the loan has been accelerated by default in
payment, or pursuant to a due-on-sale provision, or pursuant to a
material violation of some other provision of the loan document
unrelated to payment schedule.
``(m) Restriction on Financing Points and Fees.--No creditor may
directly or indirectly finance, in connection with any high-cost
mortgage, any of the following:
``(1) Any prepayment fee or penalty payable by the consumer
in a refinancing transaction if the creditor or an affiliate of
the creditor is the noteholder of the note being refinanced.
``(2) Any points or fees.''.
(b) Prohibitions on Evasions.--Section 129 of the Truth in Lending
Act (15 U.S.C. 1639) is amended by inserting after subsection (p) (as
so redesignated by subsection (a)(1)) the following new subsection:
``(q) Prohibitions on Evasions, Structuring of Transactions, and
Reciprocal Arrangements.--A creditor may not take any action in
connection with a high-cost mortgage--
``(1) to structure a loan transaction as an open-end credit
plan or another form of loan for the purpose and with the
intent of evading the provisions of this title; or
``(2) to divide any loan transaction into separate parts
for the purpose and with the intent of evading provisions of
this title.''.
(c) Modification or Deferral Fees.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection
(q) (as added by subsection (b) of this section) the following new
subsection:
``(r) Modification and Deferral Fees Prohibited.--
``(1) Creditors.--A creditor may not charge a consumer any
fee to modify, renew, extend, or amend a high-cost mortgage, or
to defer any payment due under the terms of such mortgage,
unless the modification, renewal, extension or amendment
results in a lower annual percentage rate on the mortgage for
the consumer and then only if the amount of the fee is
comparable to fees imposed for similar transactions in
connection with consumer credit transactions that are secured
by a consumer's principal dwelling and are not high-cost
mortgages.
``(2) Third parties.--A third-party may not charge a
consumer any fee to--
``(A) modify, renew, extend, or amend a high-cost
mortgage, or defer any payment due under the terms of
such mortgage;
``(B) negotiate with a creditor on behalf of a
consumer, the modification, renewal, extension, or
amendment of a high-cost mortgage; or
``(C) negotiate with a creditor on behalf of a
consumer, the deferral of any payment due under the
terms of such mortgage,
unless the modification renewal, extension or amendment results
in a significantly lower annual percentage rate on the
mortgage, or a significant reduction in the amount of the
outstanding principal on the mortgage, for the consumer and
then only if the amount of the fee is comparable to fees
imposed for similar transactions in connection with consumer
credit transactions that are secured by a consumer's principal
dwelling and are not high-cost mortgages.
``(3) Enforcement.--Section 130 shall be applied for
purposes of paragraph (2) by--
``(A) substituting `third party' for `creditor'each
place such term appears; and
``(B) substituting `any fee charged by a third
party' for `finance charge' each place such term
appears.''.
(d) Payoff Statement.--Section 129 of the Truth in Lending Act (15
U.S.C. 1639) is amended by inserting after subsection (r) (as added by
subsection (c) of this section) the following new subsection:
``(s) Payoff Statement.--
``(1) Fees.--
``(A) In general.--Except as provided in
subparagraph (B), no creditor or servicer may charge a
fee for informing or transmitting to any person the
balance due to pay off the outstanding balance on a
high-cost mortgage.
``(B) Transaction fee.--When payoff information
referred to in subparagraph (A) is provided by
facsimile transmission or by a courier service, a
creditor or servicer may charge a processing fee to
cover the cost of such transmission or service in an
amount not to exceed an amount that is comparable to
fees imposed for similar services provided in
connection with consumer credit transactions that are
secured by the consumer's principal dwelling and are
not high-cost mortgages.
``(C) Fee disclosure.--Prior to charging a
transaction fee as provided in subparagraph (B), a
creditor or servicer shall disclose that payoff
balances are available for free pursuant to
subparagraph (A).
``(D) Multiple requests.--If a creditor or servicer
has provided payoff information referred to in
subparagraph (A) without charge, other than the
transaction fee allowed by subparagraph (B), on 4
occasions during a calendar year, the creditor or
servicer may thereafter charge a reasonable fee for
providing such information during the remainder of the
calendar year.
``(2) Prompt delivery.--Payoff balances shall be provided
within 5 business days after receiving a request by a consumer
or a person authorized by the consumer to obtain such
information.
``(3) Services considered assignee.--For the purposes of
this subsection, a servicer shall be considered an assignee
under the Truth in Lending Act.''.
(e) Pre-Loan Counseling Required.--Section 129 of the Truth in
Lending Act (15 U.S.C. 1639) is amended by inserting after subsection
(s) (as added by subsection (d) of this section) the following new
subsection:
``(t) Pre-Loan Counseling.--
``(1) In general.--A creditor may not extend credit to a
consumer under a high-cost mortgage without first receiving
certification from a counselor that is approved by the
Secretary of Housing and Urban Development, or at the
discretion of the Secretary, a State housing finance authority,
that the consumer has received counseling on the advisability
of the mortgage. Such counselor shall not be employed by the
creditor or an affiliate of the creditor or be affiliated with
the creditor.
``(2) Disclosures required prior to counseling.--No
counselor may certify that a consumer has received counseling
on the advisability of the high-cost mortgage unless the
counselor can verify that the consumer has received each
statement required (in connection with such loan) by this
section or the Real Estate Settlement Procedures Act of 1974
with respect to the transaction.
``(3) Regulations.--The Board may prescribe such
regulations as the Board determines to be appropriate to carry
out the requirements of paragraph (1).''.
(f) Flipping Prohibited.--Section 129 of the Truth in Lending Act
(15 U.S.C. 1639) is amended by inserting after subsection (t) (as added
by subsection (e)) the following new subsection:
``(u) Flipping.--
``(1) In general.--No creditor may knowingly or
intentionally engage in the unfair act or practice of flipping
in connection with a high-cost mortgage.
``(2) Flipping defined.--For purposes of this subsection,
the term `flipping' means the making of a loan or extension of
credit in the form a high-cost mortgage to a consumer which
refinances an existing mortgage when the new loan or extension
of credit does not have reasonable, net tangible benefit (as
determined in accordance with regulations prescribed under
section 129C(b)) to the consumer considering all of the
circumstances, including the terms of both the new and the
refinanced loans or credit, the cost of the new loan or credit,
and the consumer's circumstances.
``(v) Corrections and Unintentional Violations.--A creditor or
assignee in a high cost loan who, when acting in good faith, fails to
comply with any requirement under this section will not be deemed to
have violated such requirement if the creditor or assignee establishes
that either--
``(1) within 30 days of the loan closing and prior to the
institution of any action, the consumer is notified of or
discovers the violation, appropriate restitution is made, and
whatever adjustments are necessary are made to the loan to
either, at the choice of the consumer--
``(A) make the loan satisfy the requirements of
this chapter; or
``(B) in the case of a high-cost mortgage, change
the terms of the loan in a manner beneficial to the
consumer so that the loan will no longer be a high-cost
mortgage; or
``(2) within 60 days of the creditor's discovery or receipt
of notification of an unintentional violation or bona fide
error as described in subsection (c) and prior to the
institution of any action, the consumer is notified of the
compliance failure, appropriate restitution is made, and
whatever adjustments are necessary are made to the loan to
either, at the choice of the consumer--
``(A) make the loan satisfy the requirements of
this chapter; or
``(B) in the case of a high-cost mortgage, change
the terms of the loan in a manner beneficial so that
the loan will no longer be a high-cost mortgage.''.
SEC. 9204. REGULATIONS.
(a) In General.--The Board of Governors of the Federal Reserve
System shall publish regulations implementing this subtitle and the
amendments made by this subtitle in final form before the end of the 6-
month period beginning on the date of the enactment of this Act.
(b) Consumer Mortgage Education.--
(1) Regulations.--The Board of Governors of the Federal
Reserve System may prescribe regulations requiring or
encouraging creditors to provide consumer mortgage education to
prospective customers or direct such customers to qualified
consumer mortgage education or counseling programs in the
vicinity of the residence of the consumer.
(2) Coordination with state law.--No requirement
established by the Board of Governors of the Federal Reserve
System pursuant to paragraph (1) shall be construed as
affecting or superseding any requirement under the law of any
State with respect to consumer mortgage counseling or
education.
SEC. 9205. EFFECTIVE DATE.
The amendments made by this subtitle shall take effect at the end
of the 6-month period beginning on the date of the enactment of this
Act and shall apply to mortgages referred to in section 103(aa) of the
Truth in Lending Act (15 U.S.C. 1602(aa)) for which an application is
received by the creditor after the end of such period.
Subtitle D--Office of Housing Counseling
SEC. 9301. SHORT TITLE.
This subtitle may be cited as the ``Expand and Preserve Home
Ownership Through Counseling Act''.
SEC. 9302. ESTABLISHMENT OF OFFICE OF HOUSING COUNSELING.
Section 4 of the Department of Housing and Urban Development Act
(42 U.S.C. 3533) is amended by adding at the end the following new
subsection:
``(g) Office of Housing Counseling.--
``(1) Establishment.--There is established, in the
Department, the Office of Housing Counseling.
``(2) Director.--There is established the position of
Director of Housing Counseling. The Director shall be the head
of the Office of Housing Counseling and shall be appointed by,
and shall report to, the Secretary. Such position shall be a
career-reserved position in the Senior Executive Service.
``(3) Functions.--
``(A) In general.--The Director shall have primary
responsibility within the Department for all activities
and matters relating to homeownership counseling and
rental housing counseling, including--
``(i) research, grant administration,
public outreach, and policy development
relating to such counseling; and
``(ii) establishment, coordination, and
administration of all regulations,
requirements, standards, and performance
measures under programs and laws administered
by the Department that relate to housing
counseling, homeownership counseling (including
maintenance of homes), mortgage-related
counseling (including home equity conversion
mortgages and credit protection options to
avoid foreclosure), and rental housing
counseling, including the requirements,
standards, and performance measures relating to
housing counseling.
``(B) Specific functions.--The Director shall carry
out the functions assigned to the Director and the
Office under this section and any other provisions of
law. Such functions shall include establishing rules
necessary for--
``(i) the counseling procedures under
section 106(g)(1) of the Housing and Urban
Development Act of 1968 (12 U.S.C.
1701x(h)(1));
``(ii) carrying out all other functions of
the Secretary under section 106(g) of the
Housing and Urban Development Act of 1968,
including the establishment, operation, and
publication of the availability of the toll-
free telephone number under paragraph (2) of
such section;
``(iii) contributing to the preparation and
distribution of home buying information
booklets pursuant to section 5 of the Real
Estate Settlement Procedures Act of 1974 (12
U.S.C. 2604);
``(iv) carrying out the certification
program under section 106(e) of the Housing and
Urban Development Act of 1968 (12 U.S.C.
1701x(e));
``(v) carrying out the assistance program
under section 106(a)(4) of the Housing and
Urban Development Act of 1968, including
criteria for selection of applications to
receive assistance;
``(vi) carrying out any functions regarding
abusive, deceptive, or unscrupulous lending
practices relating to residential mortgage
loans that the Secretary considers appropriate,
which shall include conducting the study under
section 6 of the Expand and Preserve Home
Ownership Through Counseling Act;
``(vii) providing for operation of the
advisory committee established under paragraph
(4) of this subsection;
``(viii) collaborating with community-based
organizations with expertise in the field of
housing counseling; and
``(ix) providing for the building of
capacity to provide housing counseling services
in areas that lack sufficient services,
including underdeveloped areas that lack basic
water and sewer systems, electricity services,
and safe, sanitary housing.
``(4) Advisory committee.--
``(A) In general.--The Secretary shall appoint an
advisory committee to provide advice regarding the
carrying out of the functions of the Director.
``(B) Members.--Such advisory committee shall
consist of not more than 12 individuals, and the
membership of the committee shall equally represent the
mortgage and real estate industry, including consumers
and housing counseling agencies certified by the
Secretary.
``(C) Terms.--Except as provided in subparagraph
(D), each member of the advisory committee shall be
appointed for a term of 3 years. Members may be
reappointed at the discretion of the Secretary.
``(D) Terms of initial appointees.--As designated
by the Secretary at the time of appointment, of the
members first appointed to the advisory committee, 4
shall be appointed for a term of 1 year and 4 shall be
appointed for a term of 2 years.
``(E) Prohibition of pay; travel expenses.--Members
of the advisory committee shall serve without pay, but
shall receive travel expenses, including per diem in
lieu of subsistence, in accordance with applicable
provisions under subchapter I of chapter 57 of title 5,
United States Code.
``(F) Advisory role only.--The advisory committee
shall have no role in reviewing or awarding housing
counseling grants.
``(5) Scope of homeownership counseling.--In carrying out
the responsibilities of the Director, the Director shall ensure
that homeownership counseling provided by, in connection with,
or pursuant to any function, activity, or program of the
Department addresses the entire process of homeownership,
including the decision to purchase a home, the selection and
purchase of a home, issues arising during or affecting the
period of ownership of a home (including refinancing, default
and foreclosure, and other financial decisions), and the sale
or other disposition of a home.''.
SEC. 9303. COUNSELING PROCEDURES.
(a) In General.--Section 106 of the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701x) is amended by adding at the end the
following new subsection:
``(g) Procedures and Activities.--
``(1) Counseling procedures.--
``(A) In general.--The Secretary shall establish,
coordinate, and monitor the administration by the
Department of Housing and Urban Development of the
counseling procedures for homeownership counseling and
rental housing counseling provided in connection with
any program of the Department, including all
requirements, standards, and performance measures that
relate to homeownership and rental housing counseling.
``(B) Homeownership counseling.--For purposes of
this subsection and as used in the provisions referred
to in this subparagraph, the term `homeownership
counseling' means counseling related to homeownership
and residential mortgage loans. Such term includes
counseling related to homeownership and residential
mortgage loans that is provided pursuant to--
``(i) section 105(a)(20) of the Housing and
Community Development Act of 1974 (42 U.S.C.
5305(a)(20));
``(ii) in the United States Housing Act of
1937--
``(I) section 9(e) (42 U.S.C.
1437g(e));
``(II) section 8(y)(1)(D) (42
U.S.C. 1437f(y)(1)(D));
``(III) section 18(a)(4)(D) (42
U.S.C. 1437p(a)(4)(D));
``(IV) section 23(c)(4) (42 U.S.C.
1437u(c)(4));
``(V) section 32(e)(4) (42 U.S.C.
1437z-4(e)(4));
``(VI) section 33(d)(2)(B) (42
U.S.C. 1437z-5(d)(2)(B));
``(VII) sections 302(b)(6) and
303(b)(7) (42 U.S.C. 1437aaa-1(b)(6),
1437aaa-2(b)(7)); and
``(VIII) section 304(c)(4) (42
U.S.C. 1437aaa-3(c)(4));
``(iii) section 302(a)(4) of the American
Homeownership and Economic Opportunity Act of
2000 (42 U.S.C. 1437f note);
``(iv) sections 233(b)(2) and 258(b) of the
Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12773(b)(2), 12808(b));
``(v) this section and section 101(e) of
the Housing and Urban Development Act of 1968
(12 U.S.C. 1701x, 1701w(e));
``(vi) section 220(d)(2)(G) of the Low-
Income Housing Preservation and Resident
Homeownership Act of 1990 (12 U.S.C.
4110(d)(2)(G));
``(vii) sections 422(b)(6), 423(b)(7),
424(c)(4), 442(b)(6), and 443(b)(6) of the
Cranston-Gonzalez National Affordable Housing
Act (42 U.S.C. 12872(b)(6), 12873(b)(7),
12874(c)(4), 12892(b)(6), and 12893(b)(6));
``(viii) section 491(b)(1)(F)(iii) of the
McKinney-Vento Homeless Assistance Act (42
U.S.C. 11408(b)(1)(F)(iii));
``(ix) sections 202(3) and 810(b)(2)(A) of
the Native American Housing and Self-
Determination Act of 1996 (25 U.S.C. 4132(3),
4229(b)(2)(A));
``(x) in the National Housing Act--
``(I) in section 203 (12 U.S.C.
1709), the penultimate undesignated
paragraph of paragraph (2) of
subsection (b), subsection (c)(2)(A),
and subsection (r)(4);
``(II) subsections (a) and (c)(3)
of section 237 (12 U.S.C. 1715z-2); and
``(III) subsections (d)(2)(B) and
(m)(1) of section 255 (12 U.S.C. 1715z-
20);
``(xi) section 502(h)(4)(B) of the Housing
Act of 1949 (42 U.S.C. 1472(h)(4)(B));
``(xii) section 508 of the Housing and
Urban Development Act of 1970 (12 U.S.C. 1701z-
7); and
``(xiii) section 106 of the Energy Policy
Act of 1992 (42 U.S.C. 12712 note).
``(C) Rental housing counseling.--For purposes of
this subsection, the term `rental housing counseling'
means counseling related to rental of residential
property, which may include counseling regarding future
homeownership opportunities and providing referrals for
renters and prospective renters to entities providing
counseling and shall include counseling related to such
topics that is provided pursuant to--
``(i) section 105(a)(20) of the Housing and
Community Development Act of 1974 (42 U.S.C.
5305(a)(20));
``(ii) in the United States Housing Act of
1937--
``(I) section 9(e) (42 U.S.C.
1437g(e));
``(II) section 18(a)(4)(D) (42
U.S.C. 1437p(a)(4)(D));
``(III) section 23(c)(4) (42 U.S.C.
1437u(c)(4));
``(IV) section 32(e)(4) (42 U.S.C.
1437z-4(e)(4));
``(V) section 33(d)(2)(B) (42
U.S.C. 1437z-5(d)(2)(B)); and
``(VI) section 302(b)(6) (42 U.S.C.
1437aaa-1(b)(6));
``(iii) section 233(b)(2) of the Cranston-
Gonzalez National Affordable Housing Act (42
U.S.C. 12773(b)(2));
``(iv) section 106 of the Housing and Urban
Development Act of 1968 (12 U.S.C. 1701x);
``(v) section 422(b)(6) of the Cranston-
Gonzalez National Affordable Housing Act (42
U.S.C. 12872(b)(6));
``(vi) section 491(b)(1)(F)(iii) of the
McKinney-Vento Homeless Assistance Act (42
U.S.C. 11408(b)(1)(F)(iii));
``(vii) sections 202(3) and 810(b)(2)(A) of
the Native American Housing and Self-
Determination Act of 1996 (25 U.S.C. 4132(3),
4229(b)(2)(A)); and
``(viii) the rental assistance program
under section 8 of the United States Housing
Act of 1937 (42 U.S.C. 1437f).
``(2) Standards for materials.--The Secretary, in
consultation with the advisory committee established under
subsection (g)(4) of the Department of Housing and Urban
Development Act, shall establish standards for materials and
forms to be used, as appropriate, by organizations providing
homeownership counseling services, including any recipients of
assistance pursuant to subsection (a)(4).
``(3) Mortgage software systems.--
``(A) Certification.--The Secretary shall provide
for the certification of various computer software
programs for consumers to use in evaluating different
residential mortgage loan proposals. The Secretary
shall require, for such certification, that the
mortgage software systems take into account--
``(i) the consumer's financial situation
and the cost of maintaining a home, including
insurance, taxes, and utilities;
``(ii) the amount of time the consumer
expects to remain in the home or expected time
to maturity of the loan; and
``(iii) such other factors as the Secretary
considers appropriate to assist the consumer in
evaluating whether to pay points, to lock in an
interest rate, to select an adjustable or fixed
rate loan, to select a conventional or
government-insured or guaranteed loan and to
make other choices during the loan application
process.
If the Secretary determines that available existing
software is inadequate to assist consumers during the
residential mortgage loan application process, the
Secretary shall arrange for the development by private
sector software companies of new mortgage software
systems that meet the Secretary's specifications.
``(B) Use and initial availability.--Such certified
computer software programs shall be used to supplement,
not replace, housing counseling. The Secretary shall
provide that such programs are initially used only in
connection with the assistance of housing counselors
certified pursuant to subsection (e).
``(C) Availability.--After a period of initial
availability under subparagraph (B) as the Secretary
considers appropriate, the Secretary shall take
reasonable steps to make mortgage software systems
certified pursuant to this paragraph widely available
through the Internet and at public locations, including
public libraries, senior-citizen centers, public
housing sites, offices of public housing agencies that
administer rental housing assistance vouchers, and
housing counseling centers.
``(D) Budget compliance.--This paragraph shall be
effective only to the extent that amounts to carry out
this paragraph are made available in advance in
appropriations Acts.
``(4) National public service multimedia campaigns to
promote housing counseling.--
``(A) In general.--The Director of Housing
Counseling shall develop, implement, and conduct
national public service multimedia campaigns designed
to make persons facing mortgage foreclosure, persons
considering a subprime mortgage loan to purchase a
home, elderly persons, persons who face language
barriers, low-income persons, minorities, and other
potentially vulnerable consumers aware that it is
advisable, before seeking or maintaining a residential
mortgage loan, to obtain homeownership counseling from
an unbiased and reliable sources and that such
homeownership counseling is available, including
through programs sponsored by the Secretary of Housing
and Urban Development.
``(B) Contact information.--Each segment of the
multimedia campaign under subparagraph (A) shall
publicize the toll-free telephone number and website of
the Department of Housing and Urban Development through
which persons seeking housing counseling can locate a
housing counseling agency in their State that is
certified by the Secretary of Housing and Urban
Development and can provide advice on buying a home,
renting, defaults, foreclosures, credit issues, and
reverse mortgages.
``(C) Authorization of appropriations.--There are
authorized to be appropriated to the Secretary, not to
exceed $3,000,000 for fiscal years 2009, 2010, and
2011, for the development, implementation, and conduct
of national public service multimedia campaigns under
this paragraph.
``(D) Foreclosure rescue education programs.--
``(i) In general.--Ten percent of any funds
appropriated pursuant to the authorization
under subparagraph (C) shall be used by the
Director of Housing Counseling to conduct an
education program in areas that have a high
density of foreclosure. Such program shall
involve direct mailings to persons living in
such areas describing--
``(I) tips on avoiding foreclosure
rescue scams;
``(II) tips on avoiding predatory
lending mortgage agreements;
``(III) tips on avoiding for-profit
foreclosure counseling services; and
``(IV) local counseling resources
that are approved by the Department of
Housing and Urban Development.
``(ii) Program emphasis.--In conducting the
education program described under clause (i),
the Director of Housing Counseling shall also
place an emphasis on serving communities that
have a high percentage of retirement
communities or a high percentage of low-income
minority communities.
``(iii) Terms defined.--For purposes of
this subparagraph:
``(I) High density of
foreclosures.--An area has a `high
density of foreclosures' if such area
is one of the metropolitan statistical
areas (as that term is defined by the
Director of the Office of Management
and Budget) with the highest home
foreclosure rates.
``(II) High percentage of
retirement communities.--An area has a
`high percentage of retirement
communities' if such area is one of the
metropolitan statistical areas (as that
term is defined by the Director of the
Office of Management and Budget) with
the highest percentage of residents
aged 65 or older.
``(III) High percentage of low-
income minority communities.--An area
has a `high percentage of low-income
minority communities' if such area
contains a higher-than-normal
percentage of residents who are both
minorities and low-income, as defined
by the Director of Housing Counseling.
``(5) Education programs.--The Secretary shall provide
advice and technical assistance to States, units of general
local government, and nonprofit organizations regarding the
establishment and operation of, including assistance with the
development of content and materials for, educational programs
to inform and educate consumers, particularly those most
vulnerable with respect to residential mortgage loans (such as
elderly persons, persons facing language barriers, low-income
persons, minorities, and other potentially vulnerable
consumers), regarding home mortgages, mortgage refinancing,
home equity loans, home repair loans, and where appropriate by
region, any requirements and costs associated with obtaining
flood or other disaster-specific insurance coverage.''.
(b) Conforming Amendments to Grant Program for Homeownership
Counseling Organizations.--Section 106(c)(5)(A)(ii) of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x(c)(5)(A)(ii)) is
amended--
(1) in subclause (III), by striking ``and'' at the end;
(2) in subclause (IV) by striking the period at the end and
inserting ``; and''; and
(3) by inserting after subclause (IV) the following new
subclause:
``(V) notify the housing or
mortgage applicant of the availability
of mortgage software systems provided
pursuant to subsection (g)(3).''.
SEC. 9304. GRANTS FOR HOUSING COUNSELING ASSISTANCE.
Section 106(a) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(a)(3)) is amended by adding at the end the following new
paragraph:
``(4) Homeownership and Rental Counseling Assistance.--
``(A) In general.--The Secretary shall make financial
assistance available under this paragraph to HUD-approved
housing counseling agencies and State housing finance agencies.
``(B) Qualified entities.--The Secretary shall establish
standards and guidelines for eligibility of organizations
(including governmental and nonprofit organizations) to receive
assistance under this paragraph, in accordance with
subparagraph (D).
``(C) Distribution.--Assistance made available under this
paragraph shall be distributed in a manner that encourages
efficient and successful counseling programs and that ensures
adequate distribution of amounts for rural areas having
traditionally low levels of access to such counseling services,
including areas with insufficient access to the Internet. In
distributing such assistance, the Secretary may give priority
consideration to entities serving areas with the highest home
foreclosure rates.
``(D) Limitation on distribution of assistance.--
``(i) In general.--None of the amounts made
available under this paragraph shall be distributed
to--
``(I) any organization which has been
convicted for a violation under Federal law
relating to an election for Federal office; or
``(II) any organization which employs
applicable individuals.
``(ii) Definition of applicable individuals.--In
this subparagraph, the term `applicable individual'
means an individual who--
``(I) is--
``(aa) employed by the organization
in a permanent or temporary capacity;
``(bb) contracted or retained by
the organization; or
``(cc) acting on behalf of, or with
the express or apparent authority of,
the organization; and
``(II) has been convicted for a violation
under Federal law relating to an election for
Federal office.
``(E) Grantmaking process.--In making assistance available
under this paragraph, the Secretary shall consider appropriate
ways of streamlining and improving the processes for grant
application, review, approval, and award.
``(F) Authorization of appropriations.--There are
authorized to be appropriated $45,000,000 for each of fiscal
years 2009 through 2012 for--
``(i) the operations of the Office of Housing
Counseling of the Department of Housing and Urban
Development;
``(ii) the responsibilities of the Director of
Housing Counseling under paragraphs (2) through (5) of
subsection (g); and
``(iii) assistance pursuant to this paragraph for
entities providing homeownership and rental
counseling.''.
SEC. 9305. REQUIREMENTS TO USE HUD-CERTIFIED COUNSELORS UNDER HUD
PROGRAMS.
Section 106(e) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(e)) is amended--
(1) by striking paragraph (1) and inserting the following
new paragraph:
``(1) Requirement for assistance.--An organization may not
receive assistance for counseling activities under subsection
(a)(1)(iii), (a)(2), (a)(4), (c), or (d) of this section, or
under section 101(e), unless the organization, or the
individuals through which the organization provides such
counseling, has been certified by the Secretary under this
subsection as competent to provide such counseling.'';
(2) in paragraph (2)--
(A) by inserting ``and for certifying
organizations'' before the period at the end of the
first sentence; and
(B) in the second sentence by striking ``for
certification'' and inserting ``, for certification of
an organization, that each individual through which the
organization provides counseling shall demonstrate,
and, for certification of an individual,'';
(3) in paragraph (3), by inserting ``organizations and''
before ``individuals'';
(4) by redesignating paragraph (3) as paragraph (5); and
(5) by inserting after paragraph (2) the following new
paragraphs:
``(3) Requirement under hud programs.--Any homeownership
counseling or rental housing counseling (as such terms are
defined in subsection (g)(1)) required under, or provided in
connection with, any program administered by the Department of
Housing and Urban Development shall be provided only by
organizations or counselors certified by the Secretary under
this subsection as competent to provide such counseling.
``(4) Outreach.--The Secretary shall take such actions as
the Secretary considers appropriate to ensure that individuals
and organizations providing homeownership or rental housing
counseling are aware of the certification requirements and
standards of this subsection and of the training and
certification programs under subsection (f).''.
SEC. 9306. STUDY OF DEFAULTS AND FORECLOSURES.
The Secretary of Housing and Urban Development shall conduct an
extensive study of the root causes of default and foreclosure of home
loans, using as much empirical data as are available. The study shall
also examine the role of escrow accounts in helping prime and nonprime
borrowers to avoid defaults and foreclosures, and the role of computer
registries of mortgages, including those used for trading mortgage
loans. Not later than 12 months after the date of the enactment of this
Act, the Secretary shall submit to the Congress a preliminary report
regarding the study. Not later than 24 months after such date of
enactment, the Secretary shall submit a final report regarding the
results of the study, which shall include any recommended legislation
relating to the study, and recommendations for best practices and for a
process to identify populations that need counseling the most.
SEC. 9307. DEFAULT AND FORECLOSURE DATABASE.
(a) Establishment.--The Secretary of Housing and Urban Development,
in consultation with the Federal agencies responsible for regulation of
banking and financial institutions involved in residential mortgage
lending and servicing, shall establish and maintain a database of
information on foreclosures and defaults on mortgage loans for one- to
four-unit residential properties and shall make such information
publicly available.
(b) Census Tract Data.--Information in the database shall be
collected, aggregated, and made available on a census tract basis.
(c) Requirements.--Information collected and made available through
the database shall include--
(1) the number and percentage of such mortgage loans that
are delinquent by more than 30 days;
(2) the number and percentage of such mortgage loans that
are delinquent by more than 90 days;
(3) the number and percentage of such properties that are
real estate-owned;
(4) number and percentage of such mortgage loans that are
in the foreclosure process;
(5) the number and percentage of such mortgage loans that
have an outstanding principal obligation amount that is greater
than the value of the property for which the loan was made; and
(6) such other information as the Secretary considers
appropriate.
SEC. 9308. DEFINITIONS FOR COUNSELING-RELATED PROGRAMS.
Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x), as amended by the preceding provisions of this subtitle,
is further amended by adding at the end the following new subsection:
``(h) Definitions.--For purposes of this section:
``(1) Nonprofit organization.--The term `nonprofit
organization' has the meaning given such term in section 104(5)
of the Cranston-Gonzalez National Affordable Housing Act (42
U.S.C. 12704(5)), except that subparagraph (D) of such section
shall not apply for purposes of this section.
``(2) State.--The term `State' means each of the several
States, the Commonwealth of Puerto Rico, the District of
Columbia, the Commonwealth of the Northern Mariana Islands,
Guam, the Virgin Islands, American Samoa, the Trust Territories
of the Pacific, or any other possession of the United States.
``(3) Unit of general local government.--The term `unit of
general local government' means any city, county, parish, town,
township, borough, village, or other general purpose political
subdivision of a State.
``(4) HUD-approved counseling agency.--The term `HUD-
approved counseling agency' means a private or public nonprofit
organization that is--
``(A) exempt from taxation under section 501(c) of
the Internal Revenue Code of 1986; and
``(B) certified by the Secretary to provide housing
counseling services.
``(5) State housing finance agency.--The term `State
housing finance agency' means any public body, agency, or
instrumentality specifically created under State statute that
is authorised to finance activities designed to provide housing
and related facilities throughout an entire State through land
acquisition, construction, or rehabilitation.''.
SEC. 9309. ACCOUNTABILITY AND TRANSPARENCY FOR GRANT RECIPIENTS.
Section 106 of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x), as amended by the preceding provisions of this subtitle,
is further amended by adding at the end the following:
``(i) Accountability for Recipients of Covered Assistance.--
``(1) Tracking of funds.--The Secretary shall--
``(A) develop and maintain a system to ensure that
any organization or entity that receives any covered
assistance uses all amounts of covered assistance in
accordance with this section or section 9115 of the
Mortgage Reform and Anti-Predatory Lending Act, as
applicable, the regulations issued under this section
or such section 9115, as applicable, and any
requirements or conditions under which such amounts
were provided; and
``(B) require any organization or entity, as a
condition of receipt of any covered assistance, to
agree to comply with such requirements regarding
covered assistance as the Secretary shall establish,
which shall include--
``(i) appropriate periodic financial and
grant activity reporting, record retention, and
audit requirements for the duration of the
covered assistance to the organization or
entity to ensure compliance with the
limitations and requirements of this section or
section 9115 of the Mortgage Reform and Anti-
Predatory Lending Act, as applicable, the
regulations under this section or such section
9115, as applicable, and any requirements or
conditions under which such amounts were
provided; and
``(ii) any other requirements that the
Secretary determines are necessary to ensure
appropriate administration and compliance.
``(2) Misuse of funds.--If any organization or entity that
receives any covered assistance is determined by the Secretary
to have used any covered assistance in a manner that is
materially in violation of this section or section 9115 of the
Mortgage Reform and Anti-Predatory Lending Act, as applicable,
the regulations issued under this section or such section 9115,
as applicable, or any requirements or conditions under which
such assistance was provided--
``(A) the Secretary shall require that, within 12
months after the determination of such misuse, the
organization or entity shall reimburse the Secretary
for such misused amounts and return to the Secretary
any such amounts that remain unused or uncommitted for
use; and
``(B) such organization or entity shall be
ineligible, at any time after such determination, to
apply for or receive any further covered assistance.
The remedies under this paragraph are in addition to any other
remedies that may be available under law.
``(3) Covered assistance.--For purposes of this subsection,
the term `covered assistance' means any grant or other
financial assistance provided under--
``(A) this section; or
``(B) section 9115 of the Mortgage Reform and Anti-
Predatory Lending Act.''.
SEC. 9310. UPDATING AND SIMPLIFICATION OF MORTGAGE INFORMATION BOOKLET.
Section 5 of the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2604) is amended--
(1) in the section heading, by striking ``special'' and
inserting ``home buying'';
(2) by striking subsections (a) and (b) and inserting the
following new subsections:
``(a) Preparation and Distribution.--The Director of the Consumer
Financial Protection Agency (hereafter in this section referred to as
the `Director') shall prepare, at least once every 5 years, a booklet
to help consumers applying for federally related mortgage loans to
understand the nature and costs of real estate settlement services. The
Director shall prepare the booklet in various languages and cultural
styles, as the Director determines to be appropriate, so that the
booklet is understandable and accessible to homebuyers of different
ethnic and cultural backgrounds. The Director shall distribute such
booklets to all lenders that make federally related mortgage loans. The
Director shall also distribute to such lenders lists, organized by
location, of homeownership counselors certified under section 106(e) of
the Housing and Urban Development Act of 1968 (12 U.S.C. 1701x(e)) for
use in complying with the requirement under subsection (c) of this
section.
``(b) Contents.--Each booklet shall be in such form and detail as
the Director shall prescribe and, in addition to such other information
as the Director may provide, shall include in plain and understandable
language the following information:
``(1) A description and explanation of the nature and
purpose of the costs incident to a real estate settlement or a
federally related mortgage loan. The description and
explanation shall provide general information about the
mortgage process as well as specific information concerning, at
a minimum--
``(A) balloon payments;
``(B) prepayment penalties;
``(C) the advantages of prepayment; and
``(D) the trade-off between closing costs and the
interest rate over the life of the loan.
``(2) An explanation and sample of the uniform settlement
statement required by section 4.
``(3) A list and explanation of lending practices,
including those prohibited by the Truth in Lending Act or other
applicable Federal law, and of other unfair practices and
unreasonable or unnecessary charges to be avoided by the
prospective buyer with respect to a real estate settlement.
``(4) A list and explanation of questions a consumer
obtaining a federally related mortgage loan should ask
regarding the loan, including whether the consumer will have
the ability to repay the loan, whether the consumer
sufficiently shopped for the loan, whether the loan terms
include prepayment penalties or balloon payments, and whether
the loan will benefit the borrower.
``(5) An explanation of the right of rescission as to
certain transactions provided by sections 125 and 129 of the
Truth in Lending Act.
``(6) A brief explanation of the nature of a variable rate
mortgage and a reference to the booklet entitled `Consumer
Handbook on Adjustable Rate Mortgages', published by the
Director, or to any suitable substitute of such booklet that
the Director may subsequently adopt pursuant to such section.
``(7) A brief explanation of the nature of a home equity
line of credit and a reference to the pamphlet required to be
provided under section 127A of the Truth in Lending Act.
``(8) Information about homeownership counseling services
made available pursuant to section 106(a)(4) of the Housing and
Urban Development Act of 1968 (12 U.S.C. 1701x(a)(4)), a
recommendation that the consumer use such services, and
notification that a list of certified providers of
homeownership counseling in the area, and their contact
information, is available.
``(9) An explanation of the nature and purpose of escrow
accounts when used in connection with loans secured by
residential real estate and the requirements under section 10
of this Act regarding such accounts.
``(10) An explanation of the choices available to buyers of
residential real estate in selecting persons to provide
necessary services incidental to a real estate settlement.
``(11) An explanation of a consumer's responsibilities,
liabilities, and obligations in a mortgage transaction.
``(12) An explanation of the nature and purpose of real
estate appraisals, including the difference between an
appraisal and a home inspection.
``(13) Notice that the Office of Housing of the Department
of Housing and Urban Development has made publicly available a
brochure regarding loan fraud and a World Wide Web address and
toll-free telephone number for obtaining the brochure.
The booklet prepared pursuant to this section shall take into
consideration differences in real estate settlement procedures that may
exist among the several States and territories of the United States and
among separate political subdivisions within the same State and
territory.'';
(3) in subsection (c), by inserting at the end the
following new sentence: ``Each lender shall also include with
the booklet a reasonably complete or updated list of
homeownership counselors who are certified pursuant to section
106(e) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(e)) and located in the area of the lender.''; and
(4) in subsection (d), by inserting after the period at the
end of the first sentence the following: ``The lender shall
provide the HUD-issued booklet in the version that is most
appropriate for the person receiving it.''.
SEC. 9311. HOME INSPECTION COUNSELING.
(a) Public Outreach.--
(1) In general.--The Secretary of Housing and Urban
Development (in this section referred to as the ``Secretary'')
shall take such actions as may be necessary to inform potential
homebuyers of the availability and importance of obtaining an
independent home inspection. Such actions shall include--
(A) publication of the HUD/FHA form HUD 92564-CN
entitled ``For Your Protection: Get a Home
Inspection'', in both English and Spanish languages;
(B) publication of the HUD/FHA booklet entitled
``For Your Protection: Get a Home Inspection'', in both
English and Spanish languages;
(C) development and publication of a HUD booklet
entitled ``For Your Protection--Get a Home Inspection''
that does not reference FHA-insured homes, in both
English and Spanish languages; and
(D) publication of the HUD document entitled ``Ten
Important Questions To Ask Your Home Inspector'', in
both English and Spanish languages.
(2) Availability.--The Secretary shall make the materials
specified in paragraph (1) available for electronic access and,
where appropriate, inform potential homebuyers of such
availability through home purchase counseling public service
announcements and toll-free telephone hotlines of the
Department of Housing and Urban Development. The Secretary
shall give special emphasis to reaching first-time and low-
income homebuyers with these materials and efforts.
(3) Updating.--The Secretary may periodically update and
revise such materials, as the Secretary determines to be
appropriate.
(b) Requirement for FHA-approved Lenders.--Each mortgagee approved
for participation in the mortgage insurance programs under title II of
the National Housing Act shall provide prospective homebuyers, at first
contact, whether upon pre-qualification, pre-approval, or initial
application, the materials specified in subparagraphs (A), (B), and (D)
of subsection (a)(1).
(c) Requirements for HUD-approved Counseling Agencies.--Each
counseling agency certified pursuant by the Secretary to provide
housing counseling services shall provide each of their clients, as
part of the home purchase counseling process, the materials specified
in subparagraphs (C) and (D) of subsection (a)(1).
(d) Training.--Training provided the Department of Housing and
Urban Development for housing counseling agencies, whether such
training is provided directly by the Department or otherwise, shall
include--
(1) providing information on counseling potential
homebuyers of the availability and importance of getting an
independent home inspection;
(2) providing information about the home inspection
process, including the reasons for specific inspections such as
radon and lead-based paint testing;
(3) providing information about advising potential
homebuyers on how to locate and select a qualified home
inspector; and
(4) review of home inspection public outreach materials of
the Department.
SEC. 9312. WARNINGS TO HOMEOWNERS OF FORECLOSURE RESCUE SCAMS.
(a) Assistance to NRC.--Notwithstanding any other provision of law,
of any amounts made available for any fiscal year pursuant to section
106(a)(4)(F) of the Housing and Urban Development Act of 1968 (12
U.S.C. 1701x(a)(4)(F)) (as added by section 9304 of this title), 10
percent shall be used only for assistance to the Neighborhood
Reinvestment Corporation for activities, in consultation with servicers
of residential mortgage loans, to provide notice to borrowers under
such loans who are delinquent with respect to payments due under such
loans that makes such borrowers aware of the dangers of fraudulent
activities associated with foreclosure.
(b) Notice.--The Neighborhood Reinvestment Corporation, in
consultation with servicers of residential mortgage loans, shall use
the amounts provided pursuant to subsection (a) to carry out activities
to inform borrowers under residential mortgage loans--
(1) that the foreclosure process is complex and can be
confusing;
(2) that the borrower may be approached during the
foreclosure process by persons regarding saving their home and
they should use caution in any such dealings;
(3) that there are Federal Government and nonprofit
agencies that may provide information about the foreclosure
process, including the Department of Housing and Urban
Development;
(4) that they should contact their lender immediately,
contact the Department of Housing and Urban Development to find
a housing counseling agency certified by the Department to
assist in avoiding foreclosure, or visit the Department's
website regarding tips for avoiding foreclosure; and
(5) of the telephone number of the loan servicer or
successor, the telephone number of the Department of Housing
and Urban Development housing counseling line, and the Uniform
Resource Locators (URLs) for the Department of Housing and
Urban Development Web sites for housing counseling and for tips
for avoiding foreclosure.
Subtitle E--Mortgage Servicing
SEC. 9401. ESCROW AND IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER
CREDIT TRANSACTIONS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129C (as added by
section 9101) the following new section:
``SEC. 129D. ESCROW OR IMPOUND ACCOUNTS RELATING TO CERTAIN CONSUMER
CREDIT TRANSACTIONS.
``(a) In General.--Except as provided in subsection (b), (c), or
(d) , a creditor, in connection with the formation or consummation of a
consumer credit transaction secured by a first lien on the principal
dwelling of the consumer, other than a consumer credit transaction
under an open end credit plan or a reverse mortgage, shall establish,
before the consummation of such transaction, an escrow or impound
account for the payment of taxes and hazard insurance, and, if
applicable, flood insurance, mortgage insurance, ground rents, and any
other required periodic payments or premiums with respect to the
property or the loan terms, as provided in, and in accordance with,
this section.
``(b) When Required.--No impound, trust, or other type of account
for the payment of property taxes, insurance premiums, or other
purposes relating to the property may be required as a condition of a
real property sale contract or a loan secured by a first deed of trust
or mortgage on the principal dwelling of the consumer, other than a
consumer credit transaction under an open end credit plan or a reverse
mortgage, except when--
``(1) any such impound, trust, or other type of escrow or
impound account for such purposes is required by Federal or
State law;
``(2) a loan is made, guaranteed, or insured by a State or
Federal governmental lending or insuring agency;
``(3) the transaction is secured by a first mortgage or
lien on the consumer's principal dwelling having an original
principal obligation amount that--
``(A) does not exceed the amount of the maximum
limitation on the original principal obligation of
mortgage in effect for a residence of the applicable
size, as of the date such interest rate set, pursuant
to the sixth sentence of section 305(a)(2) the Federal
Home Loan Mortgage Corporation Act (12 U.S.C.
1454(a)(2)), and the annual percentage rate will exceed
the average prime offer rate for a comparable
transaction by 1.5 or more percentage points; or
``(B) exceeds the amount of the maximum limitation
on the original principal obligation of mortgage in
effect for a residence of the applicable size, as of
the date such interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home Loan
Mortgage Corporation Act (12 U.S.C. 1454(a)(2)), and
the annual percentage rate will exceed the average
prime offer rate for a comparable transaction by 2.5 or
more percentage points; or
``(4) so required pursuant to regulation.
``(c) Duration of Mandatory Escrow or Impound Account.--An escrow
or impound account established pursuant to subsection (b), shall remain
in existence for a minimum period of 5 years, beginning with the date
of the consummation of the loan, and until such borrower has sufficient
equity in the dwelling securing the consumer credit transaction so as
to no longer be required to maintain private mortgage insurance, or
such other period as may be provided in regulations to address
situations such as borrower delinquency, unless the underlying mortgage
establishing the account is terminated.
``(d) Limited Exemptions for Loans Secured by Shares in a
Cooperative and for Certain Condominium Units.--Escrow accounts need
not be established for loans secured by shares in a cooperative.
Insurance premiums need not be included in escrow accounts for loans
secured by condominium units, where the condominium association has an
obligation to the condominium unit owners to maintain a master policy
insuring condominium units.
``(e) Clarification on Escrow Accounts for Loans Not Meeting
Statutory Test.--For mortgages not covered by the requirements of
subsection (b), no provision of this section shall be construed as
precluding the establishment of an impound, trust, or other type of
account for the payment of property taxes, insurance premiums, or other
purposes relating to the property--
``(1) on terms mutually agreeable to the parties to the
loan;
``(2) at the discretion of the lender or servicer, as
provided by the contract between the lender or servicer and the
borrower; or
``(3) pursuant to the requirements for the escrowing of
flood insurance payments for regulated lending institutions in
section 102(d) of the Flood Disaster Protection Act of 1973.
``(f) Administration of Mandatory Escrow or Impound Accounts.--
``(1) In general.--Except as may otherwise be provided for
in this title or in regulations prescribed by the Board, escrow
or impound accounts established pursuant to subsection (b)
shall be established in a federally insured depository
institution.
``(2) Administration.--Except as provided in this section
or regulations prescribed under this section, an escrow or
impound account subject to this section shall be administered
in accordance with--
``(A) the Real Estate Settlement Procedures Act of
1974 and regulations prescribed under such Act;
``(B) the Flood Disaster Protection Act of 1973 and
regulations prescribed under such Act; and
``(C) the law of the State, if applicable, where
the real property securing the consumer credit
transaction is located.
``(3) Applicability of payment of interest.--If prescribed
by applicable State or Federal law, each creditor shall pay
interest to the consumer on the amount held in any impound,
trust, or escrow account that is subject to this section in the
manner as prescribed by that applicable State or Federal law.
``(4) Penalty coordination with respa.--Any action or
omission on the part of any person which constitutes a
violation of the Real Estate Settlement Procedures Act of 1974
or any regulation prescribed under such Act for which the
person has paid any fine, civil money penalty, or other damages
shall not give rise to any additional fine, civil money
penalty, or other damages under this section, unless the action
or omission also constitutes a direct violation of this
section.
``(g) Disclosures Relating to Mandatory Escrow or Impound
Account.--In the case of any impound, trust, or escrow account that is
subject to this section, the creditor shall disclose by written notice
to the consumer at least 3 business days before the consummation of the
consumer credit transaction giving rise to such account or in
accordance with timeframes established in prescribed regulations the
following information:
``(1) The fact that an escrow or impound account will be
established at consummation of the transaction.
``(2) The amount required at closing to initially fund the
escrow or impound account.
``(3) The amount, in the initial year after the
consummation of the transaction, of the estimated taxes and
hazard insurance, including flood insurance, if applicable, and
any other required periodic payments or premiums that reflects,
as appropriate, either the taxable assessed value of the real
property securing the transaction, including the value of any
improvements on the property or to be constructed on the
property (whether or not such construction will be financed
from the proceeds of the transaction) or the replacement costs
of the property.
``(4) The estimated monthly amount payable to be escrowed
for taxes, hazard insurance (including flood insurance, if
applicable) and any other required periodic payments or
premiums.
``(5) The fact that, if the consumer chooses to terminate
the account at the appropriate time in the future, the consumer
will become responsible for the payment of all taxes, hazard
insurance, and flood insurance, if applicable, as well as any
other required periodic payments or premiums on the property
unless a new escrow or impound account is established.
``(6) Such other information as the Federal banking
agencies jointly determine necessary for the protection of the
consumer.
``(h) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Flood insurance.--The term `flood insurance' means
flood insurance coverage provided under the national flood
insurance program pursuant to the National Flood Insurance Act
of 1968.
``(2) Hazard insurance.--The term `hazard insurance' shall
have the same meaning as provided for `hazard insurance',
`casualty insurance', `homeowner's insurance', or other similar
term under the law of the State where the real property
securing the consumer credit transaction is located.''.
(b) Implementation.--
(1) Regulations.--The Board of Governors of the Federal
Reserve System, the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, the Federal Deposit
Insurance Corporation, the National Credit Union Administration
Board, (hereafter in this title referred to as the ``Federal
banking agencies'') and the Federal Trade Commission shall
prescribe, in final form, such regulations as determined to be
necessary to implement the amendments made by subsection (a)
before the end of the 180-day period beginning on the date of
the enactment of this Act.
(2) Effective date.--The amendments made by subsection (a)
shall only apply to covered mortgage loans consummated after
the end of the 1-year period beginning on the date of the
publication of final regulations in the Federal Register.
(c) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129C (as added by section 9101) the following new item:
``129D. Escrow or impound accounts relating to certain consumer credit
transactions.''.
SEC. 9402. DISCLOSURE NOTICE REQUIRED FOR CONSUMERS WHO WAIVE ESCROW
SERVICES.
(a) In General.--Section 129D of the Truth in Lending Act (as added
by section 9401) is amended by adding at the end the following new
subsection:
``(i) Disclosure Notice Required for Consumers Who Waive Escrow
Services.--
``(1) In general.--If--
``(A) an impound, trust, or other type of account
for the payment of property taxes, insurance premiums,
or other purposes relating to real property securing a
consumer credit transaction is not established in
connection with the transaction; or
``(B) a consumer chooses, and provides written
notice to the creditor or servicer of such choice, at
any time after such an account is established in
connection with any such transaction and in accordance
with any statute, regulation, or contractual agreement,
to close such account,
the creditor or servicer shall provide a timely and clearly
written disclosure to the consumer that advises the consumer of
the responsibilities of the consumer and implications for the
consumer in the absence of any such account.
``(2) Disclosure requirements.--Any disclosure provided to
a consumer under paragraph (1) shall include the following:
``(A) Information concerning any applicable fees or
costs associated with either the non-establishment of
any such account at the time of the transaction, or any
subsequent closure of any such account.
``(B) A clear and prominent notice that the
consumer is responsible for personally and directly
paying the non-escrowed items, in addition to paying
the mortgage loan payment, in the absence of any such
account, and the fact that the costs for taxes,
insurance, and related fees can be substantial.
``(C) A clear explanation of the consequences of
any failure to pay non-escrowed items, including the
possible requirement for the forced placement of
insurance by the creditor or servicer and the
potentially higher cost (including any potential
commission payments to the servicer) or reduced
coverage for the consumer in the event of any such
creditor-placed insurance.
``(D) Such other information as the Federal banking
agencies jointly determine necessary for the protection
of the consumer.''.
(b) Implementation.--
(1) Regulations.--The Federal banking agencies and the
Federal Trade Commission shall prescribe, in final form, such
regulations as such agencies determine to be necessary to
implement the amendments made by subsection (a) before the end
of the 180-day period beginning on the date of the enactment of
this Act.
(2) Effective date.--The amendments made by subsection (a)
shall only apply in accordance with the regulations established
in paragraph (1) and beginning on the date occurring 180-days
after the date of the publication of final regulations in the
Federal Register.
SEC. 9403. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENTS.
(a) Servicer Prohibitions.--Section 6 of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end
the following new subsections:
``(k) Servicer Prohibitions.--
``(1) In general.--A servicer of a federally related
mortgage shall not--
``(A) obtain force-placed hazard insurance unless
there is a reasonable basis to believe the borrower has
failed to comply with the loan contract's requirements
to maintain property insurance;
``(B) charge fees for responding to valid qualified
written requests (as defined in regulations which the
Secretary shall prescribe) under this section;
``(C) fail to take timely action to respond to a
borrower's requests to correct errors relating to
allocation of payments, final balances for purposes of
paying off the loan, or avoiding foreclosure, or other
standard servicer's duties;
``(D) fail to respond within 10 business days to a
request from a borrower to provide the identity,
address, and other relevant contact information about
the owner assignee of the loan; or
``(E) fail to comply with any other obligation
found by the Secretary, by regulation, to be
appropriate to carry out the consumer protection
purposes of this Act.
``(2) Force-placed insurance defined.--For purposes of this
subsection and subsections (l) and (m), the term `force-placed
insurance' means hazard insurance coverage obtained by a
servicer of a federally related mortgage when the borrower has
failed to maintain or renew hazard insurance on such property
as required of the borrower under the terms of the mortgage.
``(l) Requirements for Force-placed Insurance.--A servicer of a
federally related mortgage shall not be construed as having a
reasonable basis for obtaining force-placed insurance unless the
requirements of this subsection have been met.
``(1) Written notices to borrower.--A servicer may not
impose any charge on any borrower for force-placed insurance
with respect to any property securing a federally related
mortgage unless--
``(A) the servicer has sent, by first-class mail, a
written notice to the borrower containing--
``(i) a reminder of the borrower's
obligation to maintain hazard insurance on the
property securing the federally related
mortgage;
``(ii) a statement that the servicer does
not have evidence of insurance coverage of such
property;
``(iii) a clear and conspicuous statement
of the procedures by which the borrower may
demonstrate that the borrower already has
insurance coverage; and
``(iv) a statement that the servicer may
obtain such coverage at the borrower's expense
if the borrower does not provide such
demonstration of the borrower's existing
coverage in a timely manner;
``(B) the servicer has sent, by first-class mail, a
second written notice, at least 30 days after the
mailing of the notice under subparagraph (A) that
contains all the information described in each clause
of such subparagraph; and
``(C) the servicer has not received from the
borrower any demonstration of hazard insurance coverage
for the property securing the mortgage by the end of
the 15-day period beginning on the date the notice
under subparagraph (B) was sent by the servicer.
``(2) Sufficiency of demonstration.--A servicer of a
federally related mortgage shall accept any reasonable form of
written confirmation from a borrower of existing insurance
coverage, which shall include the existing insurance policy
number along with the identity of, and contact information for,
the insurance company or agent.
``(3) Termination of force-placed insurance.--Within 15
days of the receipt by a servicer of confirmation of a
borrower's existing insurance coverage, the servicer shall--
``(A) terminate the force-placed insurance; and
``(B) refund to the consumer all force-placed
insurance premiums paid by the borrower during any
period during which the borrower's insurance coverage
and the force-placed insurance coverage were each in
effect, and any related fees charged to the consumer's
account with respect to the force-placed insurance
during such period.
``(4) Clarification with respect to flood disaster
protection act.--No provision of this section shall be
construed as prohibiting a servicer from providing simultaneous
or concurrent notice of a lack of flood insurance pursuant to
section 102(e) of the Flood Disaster Protection Act of 1973.
``(m) Limitations on Force-placed Insurance Charges.--All charges
for force-placed insurance premiums shall be bona fide and reasonable
in amount.''.
(b) Increase in Penalty Amounts.--Section 6(f) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(f)) is amended--
(1) in paragraphs (1)(B) and (2)(B), by striking ``$1,000''
each place such term appears and inserting ``$2,000''; and
(2) in paragraph (2)(B)(i), by striking ``$500,000'' and
inserting ``$1,000,000''.
(c) Decrease in Response Times.--Section 6(e) of the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2605(e)) is amended--
(1) in paragraph (1)(A), by striking ``20 days'' and
inserting ``5 days'';
(2) in paragraph (2), by striking ``60 days'' and inserting
``30 days''; and
(3) by adding at the end the following new paragraph:
``(4) Limited extension of response time.--The 30-day
period described in paragraph (2) may be extended for not more
than 15 days if, before the end of such 30-day period, the
servicer notifies the borrower of the extension and the reasons
for the delay in responding.''.
(d) Prompt Refund of Escrow Accounts Upon Payoff.--Section 6(g) of
the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605(g))
is amended by adding at the end the following new sentence: ``Any
balance in any such account that is within the servicer's control at
the time the loan is paid off shall be promptly returned to the
borrower within 20 business days or credited to a similar account for a
new mortgage loan to the borrower with the same lender.''.
SEC. 9404. TRUTH IN LENDING ACT AMENDMENTS.
(a) Requirements for Prompt Crediting of Home Loan Payments.--
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by inserting after section 129E (as added by section 9502) the
following new section (and by amending the table of contents
accordingly):
``SEC. 129F. REQUIREMENTS FOR PROMPT CREDITING OF HOME LOAN PAYMENTS.
``(a) In General.--In connection with a consumer credit transaction
secured by a consumer's principal dwelling, no servicer shall fail to
credit a payment to the consumer's loan account as of the date of
receipt, except when a delay in crediting does not result in any charge
to the consumer or in the reporting of negative information to a
consumer reporting agency, except as required in subsection (b).
``(b) Exception.--If a servicer specifies in writing requirements
for the consumer to follow in making payments, but accepts a payment
that does not conform to the requirements, the servicer shall credit
the payment as of 5 days after receipt.''.
(b) Requests for Payoff Amounts.--Chapter 2 of such Act is further
amended by inserting after section 129F (as added by subsection (a))
the following new section (and by amending the table of contents
accordingly):
``SEC. 129G. REQUESTS FOR PAYOFF AMOUNTS OF HOME LOAN.
``A creditor or servicer of a home loan shall send an accurate
payoff balance within a reasonable time, but in no case more than 7
business days, after the receipt of a written request for such balance
from or on behalf of the borrower.''.
SEC. 9405. ESCROWS INCLUDED IN REPAYMENT ANALYSIS.
Section 128(b) of the Truth in Lending Act (15 U.S.C. 1638(b)) is
amended by adding at the end the following new paragraph:
``(4) Repayment analysis required to include escrow
payments.--
``(A) In general.--In the case of any consumer
credit transaction secured by a first mortgage or lien
on the principal dwelling of the consumer, other than a
consumer credit transaction under an open end credit
plan or a reverse mortgage, for which an impound,
trust, or other type of account has been or will be
established in connection with the transaction for the
payment of property taxes, hazard and flood (if any)
insurance premiums, or other periodic payments or
premiums with respect to the property, the information
required to be provided under subsection (a) with
respect to the number, amount, and due dates or period
of payments scheduled to repay the total of payments
shall take into account the amount of any monthly
payment to such account for each such repayment in
accordance with section 10(a)(2) of the Real Estate
Settlement Procedures Act of 1974.
``(B) Assessment value.--The amount taken into
account under subparagraph (A) for the payment of
property taxes, hazard and flood (if any) insurance
premiums, or other periodic payments or premiums with
respect to the property shall reflect the taxable
assessed value of the real property securing the
transaction after the consummation of the transaction,
including the value of any improvements on the property
or to be constructed on the property (whether or not
such construction will be financed from the proceeds of
the transaction), if known, and the replacement costs
of the property for hazard insurance, in the initial
year after the transaction.''.
Subtitle F--Appraisal Activities
SEC. 9501. PROPERTY APPRAISAL REQUIREMENTS.
Chapter 2 of the Truth in Lending Act (15 U.S.C. 1631 et seq.) is
amended by inserting after 129G (as added by section 9404(b)) the
following new section:
``SEC. 129H PROPERTY APPRAISAL REQUIREMENTS.
``(a) In General.--A creditor may not extend credit in the form of
a subprime mortgage to any consumer without first obtaining a written
appraisal of the property to be mortgaged prepared in accordance with
the requirements of this section.
``(b) Appraisal Requirements.--
``(1) Physical property visit.--An appraisal of property to
be secured by a subprime mortgage does not meet the requirement
of this section unless it is performed by a qualified appraiser
who conducts a physical property visit of the interior of the
mortgaged property.
``(2) Second appraisal under certain circumstances.--
``(A) In general.--If the purpose of a subprime
mortgage is to finance the purchase or acquisition of
the mortgaged property from a person within 180 days of
the purchase or acquisition of such property by that
person at a price that was lower than the current sale
price of the property, the creditor shall obtain a
second appraisal from a different qualified appraiser.
The second appraisal shall include an analysis of the
difference in sale prices, changes in market
conditions, and any improvements made to the property
between the date of the previous sale and the current
sale.
``(B) No cost to applicant.--The cost of any second
appraisal required under subparagraph (A) may not be
charged to the applicant.
``(3) Qualified appraiser defined.--For purposes of this
section, the term `qualified appraiser' means a person who--
``(A) is, at a minimum, certified or licensed by
the State in which the property to be appraised is
located; and
``(B) performs each appraisal in conformity with
the Uniform Standards of Professional Appraisal
Practice and title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989, and the
regulations prescribed under such title, as in effect
on the date of the appraisal.
``(c) Free Copy of Appraisal.--A creditor shall provide 1 copy of
each appraisal conducted in accordance with this section in connection
with a subprime mortgage to the applicant without charge, and at least
3 days prior to the transaction closing date.
``(d) Consumer Notification.--At the time of the initial mortgage
application, the applicant shall be provided with a statement by the
creditor that any appraisal prepared for the mortgage is for the sole
use of the creditor, and that the applicant may choose to have a
separate appraisal conducted at their own expense.
``(e) Violations.--In addition to any other liability to any person
under this title, a creditor found to have willfully failed to obtain
an appraisal as required in this section shall be liable to the
applicant or borrower for the sum of $2,000.
``(f) Subprime Mortgage Defined.--For purposes of this section, the
term `subprime mortgage' means a residential mortgage loan, other than
a reverse mortgage loan insured by the Federal Housing Administration,
secured by a principal dwelling with an annual percentage rate that
exceeds the average prime offer rate for a comparable transaction, as
of the date the interest rate is set--
``(1) by 1.5 or more percentage points, in the case of a
first lien residential mortgage loan having an original
principal obligation amount that does not exceed the amount of
the maximum limitation on the original principal obligation of
mortgage in effect for a residence of the applicable size, as
of the date of such interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2));
``(2) by 2.5 or more percentage points, in the case of a
first lien residential mortgage loan having an original
principal obligation amount that exceeds the amount of the
maximum limitation on the original principal obligation of
mortgage in effect for a residence of the applicable size, as
of the date of such interest rate set, pursuant to the sixth
sentence of section 305(a)(2) the Federal Home Loan Mortgage
Corporation Act (12 U.S.C. 1454(a)(2)); and
``(3) by 3.5 or more percentage points for a subordinate
lien residential mortgage loan.''.
SEC. 9502. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO CERTAIN
CONSUMER CREDIT TRANSACTIONS.
(a) In General.--Chapter 2 of the Truth in Lending Act (15 U.S.C.
1631 et seq.) is amended by inserting after section 129D (as added by
section 9401(a)) the following new section:
``SEC. 129E. UNFAIR AND DECEPTIVE PRACTICES AND ACTS RELATING TO
CERTAIN CONSUMER CREDIT TRANSACTIONS.
``(a) In General.--It shall be unlawful, in extending credit or in
providing any services for a consumer credit transaction secured by the
principal dwelling of the consumer, to engage in any unfair or
deceptive act or practice as described in or pursuant to regulations
prescribed under this section.
``(b) Appraisal Independence.--For purposes of subsection (a),
unfair and deceptive practices shall include--
``(1) any appraisal of a property offered as security for
repayment of the consumer credit transaction that is conducted
in connection with such transaction in which a person with an
interest in the underlying transaction compensates, coerces,
extorts, colludes, instructs, induces, bribes, or intimidates a
person conducting or involved in an appraisal, or attempts, to
compensate, coerce, extort, collude, instruct, induce, bribe,
or intimidate such a person, for the purpose of causing the
appraised value assigned, under the appraisal, to the property
to be based on any factor other than the independent judgment
of the appraiser;
``(2) mischaracterizing, or suborning any
mischaracterization of, the appraised value of the property
securing the extension of the credit;
``(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the making or
pricing of the transaction; and
``(4) withholding or threatening to withhold timely payment
for an appraisal report or for appraisal services rendered.
``(c) Exceptions.--The requirements of subsection (b) shall not be
construed as prohibiting a mortgage lender, mortgage broker, mortgage
banker, real estate broker, appraisal management company, employee of
an appraisal management company, consumer, or any other person with an
interest in a real estate transaction from asking an appraiser to
provide 1 or more of the following services:
``(1) Consider additional, appropriate property
information, including the consideration of additional
comparable properties to make or support an appraisal.
``(2) Provide further detail, substantiation, or
explanation for the appraiser's value conclusion.
``(3) Correct errors in the appraisal report.
``(d) Prohibitions on Conflicts of Interest.--No certified or
licensed appraiser conducting, and no appraisal management company
procuring or facilitating, an appraisal in connection with a consumer
credit transaction secured by the principal dwelling of a consumer may
have a direct or indirect interest, financial or otherwise, in the
property or transaction involving the appraisal.
``(e) Mandatory Reporting.--Any mortgage lender, mortgage broker,
mortgage banker, real estate broker, appraisal management company,
employee of an appraisal management company, or any other person
involved in a real estate transaction involving an appraisal in
connection with a consumer credit transaction secured by the principal
dwelling of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable laws, or is
otherwise engaging in unethical or unprofessional conduct, shall refer
the matter to the applicable State appraiser certifying and licensing
agency.
``(f) No Extension of Credit.--In connection with a consumer credit
transaction secured by a consumer's principal dwelling, a creditor who
knows, at or before loan consummation, of a violation of the appraisal
independence standards established in subsections (b) or (d) shall not
extend credit based on such appraisal unless the creditor documents
that the creditor has acted with reasonable diligence to determine that
the appraisal does not materially misstate or misrepresent the value of
such dwelling.
``(g) Rulemaking Proceedings.--The Board, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the Federal
Deposit Insurance Corporation, the National Credit Union Administration
Board, and the Federal Trade Commission--
``(1) shall, for purposes of this section, jointly
prescribe regulations no later than 180 days after the date of
the enactment of this section, and where such regulations have
an effective date of no later than 1 year after the date of the
enactment of this section, defining with specificity acts or
practices which are unfair or deceptive in the provision of
mortgage lending services for a consumer credit transaction
secured by the principal dwelling of the consumer or mortgage
brokerage services for such a transaction and defining any
terms in this section or such regulations; and
``(2) may jointly issue interpretive guidelines and general
statements of policy with respect to unfair or deceptive acts
or practices in the provision of mortgage lending services for
a consumer credit transaction secured by the principal dwelling
of the consumer and mortgage brokerage services for such a
transaction, within the meaning of subsections (a), (b), (c),
(d), (e), and (f).
``(h) Penalties.--
``(1) First violation.--In addition to the enforcement
provisions referred to in section 130, each person who violates
this section shall forfeit and pay a civil penalty of not more
than $10,000 for each day any such violation continues.
``(2) Subsequent violations.--In the case of any person on
whom a civil penalty has been imposed under paragraph (1),
paragraph (1) shall be applied by substituting `$20,000' for
`$10,000' with respect to all subsequent violations.
``(3) Assessment.--The agency referred to in subsection (a)
or (c) of section 108 with respect to any person described in
paragraph (1) shall assess any penalty under this subsection to
which such person is subject.''.
(b) Clerical Amendment.--The table of sections for chapter 2 of the
Truth in Lending Act is amended by inserting after the item relating to
section 129D (as added by section 9401(c)) the following new item:
``129E. Unfair and deceptive practices and acts relating to certain
consumer credit transactions.''.
SEC. 9503. AMENDMENTS RELATING TO APPRAISAL SUBCOMMITTEE OF FIEC,
APPRAISER INDEPENDENCE MONITORING, APPROVED APPRAISER
EDUCATION, APPRAISAL MANAGEMENT COMPANIES, APPRAISER
COMPLAINT HOTLINE, AUTOMATED VALUATION MODELS, AND BROKER
PRICE OPINIONS.
(a) Consumer Protection Mission.--
(1) Purposes.--Section 1101 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331)
is amended by inserting ``and to provide the Appraisal
Subcommittee with a consumer protection mandate'' before the
period at the end.
(2) Functions of appraisal subcommittee.--Section 1103(a)
of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3332(a)) is amended--
(A) by striking ``and'' at the end of paragraph
(3); and
(B) by amending paragraph (4) to read as follows:
``(4) monitor the efforts of, and requirements established
by, States and the Federal financial institutions regulatory
agencies to protect consumers from improper appraisal practices
and the predations of unlicensed appraisers in consumer credit
transactions that are secured by a consumer's principal
dwelling; and''.
(3) Threshold levels.--Section 1112(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3341(b)) is amended by inserting before the period the
following: ``, and that such threshold level provides
reasonable protection for consumers who purchase 1-4 unit
single-family residences. In determining whether a threshold
level provides reasonable protection for consumers, each
Federal financial institutions regulatory agency shall consult
with consumer groups and convene a public hearing''.
(b) Annual Report of Appraisal Subcommittee.--Section 1103(a) of
the Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (12 U.S.C. 3332(a)) is amended at the end by inserting the
following new paragraph:
``(5) transmit an annual report to the Congress not later
than January 31 of each year that describes the manner in which
each function assigned to the Appraisal Subcommittee has been
carried out during the preceding year. The report shall also
detail the activities of the Appraisal Subcommittee, including
the results of all audits of State appraiser regulatory
agencies, and provide an accounting of disapproved actions and
warnings taken in the previous year, including a description of
the conditions causing the disapproval and actions taken to
achieve compliance.''.
(c) Open Meetings.--Section 1104(b) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3333(b)) is
amended by inserting ``in public session after notice in the Federal
Register'' after ``shall meet''.
(d) Regulations.--Section 1106 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3335) is
amended--
(1) by inserting ``prescribe regulations after notice and
opportunity for comment,'' after ``hold hearings''; and
(2) at the end by inserting ``Any regulations prescribed by
the Appraisal Subcommittee shall (unless otherwise provided in
this title) be limited to the following functions: temporary
practice, national registry, information sharing, and
enforcement. For purposes of prescribing regulations, the
Appraisal Subcommittee shall establish an advisory committee of
industry participants, including appraisers, lenders, consumer
advocates, and government agencies, and hold meetings as
necessary to support the development of regulations.''.
(e) Appraisals and Appraisal Reviews.--Section 1113 of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3342) is amended--
(1) by striking ``In determining'' and inserting ``(a) In
General.--In determining'';
(2) in subsection (a) (as designated by paragraph (1)), by
inserting before the period the following: ``, where a complex
1-to-4 unit single family residential appraisal means an
appraisal for which the property to be appraised, the form of
ownership, the property characteristics, or the market
conditions are atypical''; and
(3) by adding at the end the following new subsection:
``(b) Appraisals and Appraisal Reviews.--All appraisals performed
at a property within a State shall be prepared by appraisers licensed
or certified in the State where the property is located. All appraisal
reviews, including appraisal reviews by a lender, appraisal management
company, or other third party organization, shall be performed by an
appraiser who is duly licensed or certified by a State appraisal
board.''.
(f) Appraisal Management Services.--
(1) Supervision of third party providers of appraisal
management services.--Section 1103(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3332(a)) (as previously amended by this section) is
further amended--
(A) by amending paragraph (1) to read as follows:
``(1) monitor the requirements established by States--
``(A) for the certification and licensing of
individuals who are qualified to perform appraisals in
connection with federally related transactions,
including a code of professional responsibility; and
``(B) for the registration and supervision of the
operations and activities of an appraisal management
company;''; and
(B) by adding at the end the following new
paragraph:
``(7) maintain a national registry of appraisal management
companies that either are registered with and subject to
supervision of a State appraiser certifying and licensing
agency or are operating subsidiaries of a Federally regulated
financial institution.''.
(2) Appraisal management company minimum qualifications.--
Title XI of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by
adding at the end the following new section (and amending the
table of contents accordingly):
``SEC. 1124. APPRAISAL MANAGEMENT COMPANY MINIMUM QUALIFICATIONS.
``(a) In General.--The Appraiser Qualifications Board of the
Appraisal Foundation shall establish minimum qualifications to be
applied by a State in the registration of appraisal management
companies. Such qualifications shall include a requirement that such
companies--
``(1) register with and be subject to supervision by a
State appraiser certifying and licensing agency in each State
in which such company operates;
``(2) verify that only licensed or certified appraisers are
used for federally related transactions;
``(3) require that appraisals coordinated by an appraisal
management company comply with the Uniform Standards of
Professional Appraisal Practice; and
``(4) require that appraisals are conducted independently
and free from inappropriate influence and coercion pursuant to
the appraisal independence standards established under section
129E of the Truth in Lending Act.
``(b) Exception for Federally Regulated Financial Institutions.--
The requirements of subsection (a) shall not apply to an appraisal
management company that is a subsidiary owned and controlled by a
financial institution and regulated by a federal financial institution
regulatory agency. In such case, the appropriate federal financial
institutions regulatory agency shall, at a minimum, develop regulations
affecting the operations of the appraisal management company to--
``(1) verify that only licensed or certified appraisers are
used for federally related transactions;
``(2) require that appraisals coordinated by an institution
or subsidiary providing appraisal management services comply
with the Uniform Standards of Professional Appraisal Practice;
and
``(3) require that appraisals are conducted independently
and free from inappropriate influence and coercion pursuant to
the appraisal independence standards established under section
129E of the Truth in Lending Act.
``(c) Registration Limitations.--An appraisal management company
shall not be registered by a State if such company, in whole or in
part, directly or indirectly, is owned by any person who has had an
appraiser license or certificate refused, denied, cancelled,
surrendered in lieu of revocation, or revoked in any State.
Additionally, each person that owns more than 10 percent of an
appraisal management company shall be of good moral character, as
determined by the State appraiser certifying and licensing agency, and
shall submit to a background investigation carried out by the State
appraiser certifying and licensing agency.
``(d) Regulations.--The Appraisal Subcommittee shall promulgate
regulations to implement the minimum qualifications developed by the
Appraiser Qualifications Board under this section, as such
qualifications relate to the State appraiser certifying and licensing
agencies. The Appraisal Subcommittee shall also promulgate regulations
for the reporting of the activities of appraisal management companies
in determining the payment of the annual registry fee.
``(e) Effective Date.--
``(1) In general.--No appraisal management company may
perform services related to a federally related transaction in
a State after the date that is 36 months after the date of the
enactment of this section unless such company is registered
with such State or subject to oversight by a federal financial
institutions regulatory agency.
``(2) Extension of effective date.--Subject to the approval
of the Council, the Appraisal Subcommittee may extend by an
additional 12 months the requirements for the registration and
supervision of appraisal management companies if it makes a
written finding that a State has made substantial progress in
establishing a State appraisal management company registration
and supervision system that appears to conform with the
provisions of this title.''.
(3) State appraiser certifying and licensing agency
authority.--Section 1117 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3346) is
amended by adding at the end the following: ``The duties of
such agency may additionally include the registration and
supervision of appraisal management companies.''.
(4) Appraisal management company definition.--Section 1121
of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3350) is amended by adding at the end
the following:
``(11) Appraisal management company.--The term `appraisal
management company' means, in connection with valuing
properties collateralizing mortgage loans or mortgages
incorporated into a securitization, any external third party
authorized either by a creditor of a consumer credit
transaction secured by a consumer's principal dwelling or by an
underwriter of or other principal in the secondary mortgage
markets, that oversees a network or panel of more than 15
certified or licensed appraisers in a State or 25 or more
nationally within a given year--
``(A) to recruit, select, and retain appraisers;
``(B) to contract with licensed and certified
appraisers to perform appraisal assignments;
``(C) to manage the process of having an appraisal
performed, including providing administrative duties
such as receiving appraisal orders and appraisal
reports, submitting completed appraisal reports to
creditors and underwriters, collecting fees from
creditors and underwriters for services provided, and
reimbursing appraisers for services performed; or
``(D) to review and verify the work of
appraisers.''.
(g) State Agency Reporting Requirement.--Section 1109(a) of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3338(a)) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(1);
(2) by redesignating paragraph (2) as paragraph (4); and
(3) by inserting after paragraph (1) the following new
paragraphs:
``(2) transmit reports on sanctions, disciplinary actions,
license and certification revocations, and license and
certification suspensions on a timely basis to the national
registry of the Appraisal Subcommittee;
``(3) transmit reports on a timely basis of supervisory
activities involving appraisal management companies or other
third-party providers of appraisals and appraisal management
services, including investigations initiated and disciplinary
actions taken; and''.
(h) Registry Fees Modified.--
(1) In general.--Section 1109(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 3338(a)) is amended--
(A) by amending paragraph (4) (as modified by
section 9503(g)) to read as follows:
``(4) collect--
``(A) from such individuals who perform or seek to
perform appraisals in federally related transactions,
an annual registry fee of not more than $40, such fees
to be transmitted by the State agencies to the Council
on an annual basis; and
``(B) from an appraisal management company that
either has registered with a State appraiser certifying
and licensing agency in accordance with this title or
operates as a subsidiary of a federally regulated
financial institution, an annual registry fee of--
``(i) in the case of such a company that
has been in existence for more than a year, $25
multiplied by the number of appraisers working
for or contracting with such company in such
State during the previous year, but where such
$25 amount may be adjusted, up to a maximum of
$50, at the discretion of the Appraisal
Subcommittee, if necessary to carry out the
Subcommittee's functions under this title; and
``(ii) in the case of such a company that
has not been in existence for more than a year,
$25 multiplied by an appropriate number to be
determined by the Appraisal Subcommittee, and
where such number will be used for determining
the fee of all such companies that were not in
existence for more than a year, but where such
$25 amount may be adjusted, up to a maximum of
$50, at the discretion of the Appraisal
Subcommittee, if necessary to carry out the
Subcommittee's functions under this title.'';
and
(B) by amending the matter following paragraph (4),
as redesignated, to read as follows:
``Subject to the approval of the Council, the Appraisal Subcommittee
may adjust the dollar amount of registry fees under paragraph (4)(A),
up to a maximum of $80 per annum, as necessary to carry out its
functions under this title. The Appraisal Subcommittee shall consider
at least once every 5 years whether to adjust the dollar amount of the
registry fees to account for inflation. In implementing any change in
registry fees, the Appraisal Subcommittee shall provide flexibility to
the States for multi-year certifications and licenses already in place,
as well as a transition period to implement the changes in registry
fees. In establishing the amount of the annual registry fee for an
appraisal management company, the Appraisal Subcommittee shall have the
discretion to impose a minimum annual registry fee for an appraisal
management company to protect against the under reporting of the number
of appraisers working for or contracted by the appraisal management
company.''.
(2) Incremental revenues.--Incremental revenues collected
pursuant to the increases required by this subsection shall be
placed in a separate account at the United States Treasury,
entitled the ``Appraisal Subcommittee Account''.
(i) Grants and Reports.--Section 1109(b) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3348(b)) is amended--
(1) by striking ``and'' after the semicolon in paragraph
(3);
(2) by striking the period at the end of paragraph (4) and
inserting a semicolon;
(3) by adding at the end the following new paragraphs:
``(5) to make grants to State appraiser certifying and
licensing agencies to support the efforts of such agencies to
comply with this title, including--
``(A) the complaint process, complaint
investigations, and appraiser enforcement activities of
such agencies; and
``(B) the submission of data on State licensed and
certified appraisers and appraisal management companies
to the National appraisal registry, including
information affirming that the appraiser or appraisal
management company meets the required qualification
criteria and formal and informal disciplinary actions;
and
``(6) to report to all State appraiser certifying and
licensing agencies when a license or certification is
surrendered, revoked, or suspended.''.
Obligations authorized under this subsection may not exceed 75 percent
of the fiscal year total of incremental increase in fees collected and
deposited in the ``Appraisal Subcommittee Account'' pursuant to
subsection (h).
(j) Criteria.--Section 1116 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3345) is amended--
(1) in subsection (c), by inserting ``whose criteria for
the licensing of a real estate appraiser currently meet or
exceed the minimum criteria issued by the Appraisal
Qualifications Board of The Appraisal Foundation for the
licensing of real estate appraisers'' before the period at the
end; and
(2) by striking subsection (e) and inserting the following
new subsection:
``(e) Minimum Qualification Requirements.--Any requirements
established for individuals in the position of `Trainee Appraiser' and
`Supervisory Appraiser' shall meet or exceed the minimum qualification
requirements of the Appraiser Qualifications Board of The Appraisal
Foundation. The Appraisal Subcommittee shall have the authority to
enforce these requirements.''.
(k) Monitoring of State Appraiser Certifying and Licensing
Agencies.--Section 1118 of the Financial Institutions Reform, Recovery,
and Enforcement Act of 1989 (12 U.S.C. 3347) is amended--
(1) by amending subsection (a) to read as follows:
``(a) In General.--The Appraisal Subcommittee shall monitor each
State appraiser certifying and licensing agency for the purposes of
determining whether such agency--
``(1) has policies, practices, funding, staffing, and
procedures that are consistent with this title;
``(2) processes complaints and completes investigations in
a reasonable time period;
``(3) appropriately disciplines sanctioned appraisers and
appraisal management companies;
``(4) maintains an effective regulatory program; and
``(5) reports complaints and disciplinary actions on a
timely basis to the national registries on appraisers and
appraisal management companies maintained by the Appraisal
Subcommittee.
The Appraisal Subcommittee shall have the authority to remove a State
licensed or certified appraiser or a registered appraisal management
company from a national registry on an interim basis pending State
agency action on licensing, certification, registration, and
disciplinary proceedings. The Appraisal Subcommittee and all agencies,
instrumentalities, and Federally recognized entities under this title
shall not recognize appraiser certifications and licenses from States
whose appraisal policies, practices, funding, staffing, or procedures
are found to be inconsistent with this title. The Appraisal
Subcommittee shall have the authority to impose sanctions, as described
in this section, against a State agency that fails to have an effective
appraiser regulatory program. In determining whether such a program is
effective, the Appraisal Subcommittee shall include an analyses of the
licensing and certification of appraisers, the registration of
appraisal management companies, the issuance of temporary licenses and
certifications for appraisers, the receiving and tracking of submitted
complaints against appraisers and appraisal management companies, the
investigation of complaints, and enforcement actions against appraisers
and appraisal management companies. The Appraisal Subcommittee shall
have the authority to impose interim actions and suspensions against a
State agency as an alternative to, or in advance of, the derecognition
of a State agency.''.
(2) in subsection (b)(2), by inserting after ``authority''
the following: ``or sufficient funding''.
(l) Reciprocity.--Subsection (b) of section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351(b)) is amended to read as follows:
``(b) Reciprocity.--A State appraiser certifying or licensing
agency shall issue a reciprocal certification or license for an
individual from another State when--
``(1) the appraiser licensing and certification program of
such other State is in compliance with the provisions of this
title; and
``(2) the appraiser holds a valid certification from a
State whose requirements for certification or licensing meet or
exceed the licensure standards established by the State where
an individual seeks appraisal licensure.''.
(m) Consideration of Professional Appraisal Designations.--Section
1122(d) of the Financial Institutions Reform, Recovery, and Enforcement
Act of 1989 (12 U.S.C. 3351(d)) is amended by striking ``shall not
exclude'' and all that follows through the end of the subsection and
inserting the following: ``may include education achieved, experience,
sample appraisals, and references from prior clients. Membership in a
nationally recognized professional appraisal organization may be a
criteria considered, though lack of membership therein shall not be the
sole bar against consideration for an assignment under these
criteria.''.
(n) Appraiser Independence.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351) is amended by adding at the end the following new subsection:
``(g) Appraiser Independence Monitoring.--The Appraisal
Subcommittee shall monitor each State appraiser certifying and
licensing agency for the purpose of determining whether such agency's
policies, practices, and procedures are consistent with the purposes of
maintaining appraiser independence and whether such State has adopted
and maintains effective laws, regulations, and policies aimed at
maintaining appraiser independence.''.
(o) Appraiser Education.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351) is amended by inserting after subsection (g) (as added by
subsection (l) of this section) the following new subsection:
``(h) Approved Education.--The Appraisal Subcommittee shall
encourage the States to accept courses approved by the Appraiser
Qualification Board's Course Approval Program.''.
(p) Appraisal Complaint Hotline.--Section 1122 of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3351), as amended by this section, is further amended by adding at the
end the following new subsection:
``(i) Appraisal Complaint National Hotline.--If, 1 year after the
date of the enactment of this subsection, the Appraisal Subcommittee
determines that no national hotline exists to receive complaints of
non-compliance with appraisal independence standards and Uniform
Standards of Professional Appraisal Practice, including complaints from
appraisers, individuals, or other entities concerning the improper
influencing or attempted improper influencing of appraisers or the
appraisal process, the Appraisal Subcommittee shall establish and
operate such a national hotline, which shall include a toll-free
telephone number and an email address. If the Appraisal Subcommittee
operates such a national hotline, the Appraisal Subcommittee shall
refer complaints for further action to appropriate governmental bodies,
including a State appraiser certifying and licensing agency, a
financial institution regulator, or other appropriate legal
authorities. For complaints referred to State appraiser certifying and
licensing agencies or to Federal regulators, the Appraisal Subcommittee
shall have the authority to follow up such complaint referrals in order
to determine the status of the resolution of the complaint.''.
(q) Automated Valuation Models.--Title XI of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3331 et seq.), as amended by this section, is further amended by adding
at the end the following new section (and amending the table of
contents accordingly):
``SEC. 1125. AUTOMATED VALUATION MODELS USED TO VALUE CERTAIN
MORTGAGES.
``(a) In General.--Automated valuation models shall adhere to
quality control standards designed to--
``(1) ensure a high level of confidence in the estimates
produced by automated valuation models;
``(2) protect against the manipulation of data;
``(3) seek to avoid conflicts of interest; and
``(4) require random sample testing and reviews, where such
testing and reviews are performed by an appraiser who is
licensed or certified in the State where the testing and
reviews take place.
``(b) Adoption of Regulations.--The Appraisal Subcommittee and its
member agencies, in consultation with the Appraisal Standards Board of
the Appraisal Foundation and other interested parties, shall promulgate
regulations to implement the quality control standards required under
this section.
``(c) Enforcement.--Compliance with regulations issued under this
subsection shall be enforced by--
``(1) with respect to a financial institution, or
subsidiary owned and controlled by a financial institution and
regulated by a Federal financial institution regulatory agency,
the Federal financial institution regulatory agency that acts
as the primary Federal supervisor of such financial institution
or subsidiary; and
``(2) with respect to other persons, the Appraisal
Subcommittee.
``(d) Automated Valuation Model Defined.--For purposes of this
section, the term `automated valuation model' means any computerized
model used by mortgage originators and secondary market issuers to
determine the collateral worth of a mortgage secured by a consumer's
principal dwelling.''.
(r) Broker Price Opinions.--Title XI of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.),
as amended by this section, is further amended by adding at the end the
following new section (and amending the table of contents accordingly):
``SEC. 1126. BROKER PRICE OPINIONS.
``(a) General Prohibition.--In conjunction with the purchase of a
consumer's principal dwelling, broker price opinions may not be used as
the primary basis to determine the value of a piece of property for the
purpose of a loan origination of a residential mortgage loan secured by
such piece of property.
``(b) Broker Price Opinion Defined.--For purposes of this section,
the term `broker price opinion' means an estimate prepared by a real
estate broker, agent, or sales person that details the probable selling
price of a particular piece of real estate property and provides a
varying level of detail about the property's condition, market, and
neighborhood, and information on comparable sales, but does not include
an automated valuation model, as defined in section 1125(c).''.
(s) Amendments to Appraisal Subcommittee.--Section 1011 of the
Federal Financial Institutions Examination Council Act of 1978 (12
U.S.C. 3310) is amended--
(1) in the first sentence, by adding before the period the
following: ``and the Federal Housing Finance Agency''; and
(2) by inserting at the end the following: ``At all times
at least one member of the Appraisal Subcommittee shall have
demonstrated knowledge and competence through licensure,
certification, or professional designation within the appraisal
profession.''.
(t) Technical Corrections.--
(1) Section 1119(a)(2) of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3348(a)(2)) is amended by striking ``council,'' and inserting
``Council,''.
(2) Section 1121(6) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(6)) is
amended by striking ``Corporations,'' and inserting
``Corporation,''.
(3) Section 1121(8) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(8)) is
amended by striking ``council'' and inserting ``Council''.
(4) Section 1122 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3351) is
amended--
(A) in subsection (a)(1) by moving the left margin
of subparagraphs (A), (B), and (C) 2 ems to the right;
and
(B) in subsection (c)--
(i) by striking ``Federal Financial
Institutions Examination Council'' and
inserting ``Financial Institutions Examination
Council''; and
(ii) by striking ``the council's
functions'' and inserting ``the Council's
functions''.
SEC. 9504. STUDY REQUIRED ON IMPROVEMENTS IN APPRAISAL PROCESS AND
COMPLIANCE PROGRAMS.
(a) Study.--The Comptroller General shall conduct a comprehensive
study on possible improvements in the appraisal process generally, and
specifically on the consistency in and the effectiveness of, and
possible improvements in, State compliance efforts and programs in
accordance with title XI of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989. In addition, this study shall
examine the existing exemptions to the use of certified appraisers
issued by Federal financial institutions regulatory agencies. The study
shall also review the threshold level established by Federal regulators
for compliance under title XI and whether there is a need to revise
them to reflect the addition of consumer protection to the purposes and
functions of the Appraisal Subcommittee. The study shall additionally
examine the quality of different types of mortgage collateral
valuations produced by broker price opinions, automated valuation
models, licensed appraisals, and certified appraisals, among others,
and the quality of appraisals provided through different distribution
channels, including appraisal management companies, independent
appraisal operations within a mortgage originator, and fee-for-service
appraisals. The study shall also include an analysis and statistical
breakdown of enforcement actions taken during the last 10 years against
different types of appraisers, including certified, licensed,
supervisory, and trainee appraisers. Furthermore, the study shall
examine the benefits and costs, as well as the advantages and
disadvantages, of establishing a national repository to collect data
related to real estate property collateral valuations performed in the
United States.
(b) Report.--Before the end of the 18-month period beginning on the
date of the enactment of this Act, the Comptroller General shall submit
a report on the study under subsection (a) to the Committee on
Financial Services of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate, together with such
recommendations for administrative or legislative action, at the
Federal or State level, as the Comptroller General may determine to be
appropriate.
(c) Additional Study Required.--The Comptroller General shall
conduct an additional study to determine the effects that the changes
to the seller-guide appraisal requirements of Fannie Mae and Freddie
Mac contained in the Home Valuation Code of Conduct have on small
business, like mortgage brokers and independent appraisers, and
consumers, including the effect on the--
(1) quality and costs of appraisals;
(2) length of time for obtaining appraisals;
(3) impact on consumer protection, especially regarding
maintaining appraisal independence, abating appraisal
inflation, and mitigating acts of appraisal fraud;
(4) structure of the appraisal industry, especially
regarding appraisal management companies, fee-for-service
appraisers, and the regulation of appraisal management
companies by the states; and
(5) impact on mortgage brokers and other small business
professionals in the financial services industry.
(d) Additional Report.--Before the end of the 6-month period
beginning on the date of the enactment of this Act, the Comptroller
General shall submit an additional report to the Committee on Financial
Services of the House of Representatives and the Committee on Banking,
Housing, and Urban Affairs of the Senate containing the findings and
conclusions of the Comptroller General with respect to the study
conducted pursuant to subsection (c). Such additional report shall take
into consideration the Small Business Administration's views on how
small businesses are affected by the Home Valuation Code of Conduct.
SEC. 9505. EQUAL CREDIT OPPORTUNITY ACT AMENDMENT.
Subsection (e) of section 701 of the Equal Credit Opportunity Act
(15 U.S.C. 1691) is amended to read as follows:
``(e) Copies Furnished to Applicants.--
``(1) In general.--Each creditor shall furnish to an
applicant a copy of any and all written appraisals and
valuations developed in connection with the applicant's
application for a loan that is secured or would have been
secured by a first lien on a dwelling promptly upon completion,
but in no case later than 3 days prior to the closing of the
loan, whether the creditor grants or denies the applicant's
request for credit or the application is incomplete or
withdrawn.
``(2) Waiver.--The applicant may waive the 3 day
requirement provided for in paragraph (1), except where
otherwise required in law.
``(3) Reimbursement.--The applicant may be required to pay
a reasonable fee to reimburse the creditor for the cost of the
appraisal, except where otherwise required in law.
``(4) Free copy.--Notwithstanding paragraph (3), the
creditor shall provide a copy of each written appraisal or
valuation at no additional cost to the applicant.
``(5) Notification to applicants.--At the time of
application, the creditor shall notify an applicant in writing
of the right to receive a copy of each written appraisal and
valuation under this subsection.
``(6) Regulations.--The Board shall prescribe regulations
to implement this subsection within 1 year of the date of the
enactment of this subsection.
``(7) Valuation defined.--For purposes of this subsection,
the term `valuation' shall include any estimate of the value of
a dwelling developed in connection with a creditor's decision
to provide credit, including those values developed pursuant to
a policy of a government sponsored enterprise or by an
automated valuation model, a broker price opinion, or other
methodology or mechanism.''.
SEC. 9506. REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974 AMENDMENT
RELATING TO CERTAIN APPRAISAL FEES.
Section 4 of the Real Estate Settlement Procedures Act of 1974 is
amended by adding at the end the following new subsection:
``(c) The standard form described in subsection (a) shall include,
in the case of an appraisal coordinated by an appraisal management
company (as such term is defined in section 1121(11) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C.
3350(11))), a clear disclosure of--
``(1) the fee paid directly to the appraiser by such
company; and
``(2) the administration fee charged by such company.''.
Subtitle G--Sense of Congress Regarding the Importance of Government
Sponsored Enterprises Reform
SEC. 9601. SENSE OF CONGRESS REGARDING THE IMPORTANCE OF GOVERNMENT-
SPONSORED ENTERPRISES REFORM TO ENHANCE THE PROTECTION,
LIMITATION, AND REGULATION OF THE TERMS OF RESIDENTIAL
MORTGAGE CREDIT.
(a) Findings.--The Congress finds as follows:
(1) The Government-sponsored enterprises, Federal National
Mortgage Association (Fannie Mae) and the Federal Home Loan
Mortgage Corporation (Freddie Mac), were chartered by Congress
to ensure a reliable and affordable supply of mortgage funding,
but enjoy a dual legal status as privately owned corporations
with Government mandated affordable housing goals.
(2) In 1996, the Department of Housing and Urban
Development required that 42 percent of Fannie Mae's and
Freddie Mac's mortgage financing should go to borrowers with
income levels below the median for a given area.
(3) In 2004, the Department of Housing and Urban
Development revised those goals, increasing them to 56 percent
of their overall mortgage purchases by 2008, and additionally
mandated that 12 percent of all mortgage purchases by Fannie
Mae and Freddie Mac be ``special affordable'' loans made to
borrowers with incomes less than 60 percent of an area's median
income, a target that ultimately increased to 28 percent for
2008.
(4) To help fulfill those mandated affordable housing
goals, in 1995 the Department of Housing and Urban Development
authorized Fannie Mae and Freddie Mac to purchase subprime
securities that included loans made to low-income borrowers.
(5) After this authorization to purchase subprime
securities, subprime and near-prime loans increased from 9
percent of securitized mortgages in 2001 to 40 percent in 2006,
while the market share of conventional mortgages dropped from
78.8 percent in 2003 to 50.1 percent by 2007 with a
corresponding increase in subprime and Alt-A loans from 10.1
percent to 32.7 percent over the same period.
(6) In 2004 alone, Fannie Mae and Freddie Mac purchased
$175,000,000,000 in subprime mortgage securities, which
accounted for 44 percent of the market that year, and from 2005
through 2007, Fannie Mae and Freddie Mac purchased
approximately $1,000,000,000,000 in subprime and Alt-A loans,
while Fannie Mae's acquisitions of mortgages with less than 10
percent down payments almost tripled.
(7) According to data from the Federal Housing Finance
Agency (FHFA) for the fourth quarter of 2008, Fannie Mae and
Freddie Mac own or guarantee 75 percent of all newly originated
mortgages, and Fannie Mae and Freddie Mac currently own 13.3
percent of outstanding mortgage debt in the United States and
have issued mortgage-backed securities for 31.0 percent of the
residential debt market, a combined total of 44.3 percent of
outstanding mortgage debt in the United States.
(8) On September 7, 2008, the FHFA placed Fannie Mae and
Freddie Mac into conservatorship, with the Treasury Department
subsequently agreeing to purchase at least $200,000,000,000 of
preferred stock from each enterprise in exchange for warrants
for the purchase of 79.9 percent of each enterprise's common
stock.
(9) The conservatorship for Fannie Mae and Freddie Mac has
potentially exposed taxpayers to upwards of $5,300,000,000,000
worth of risk.
(10) The hybrid public-private status of Fannie Mae and
Freddie Mac is untenable and must be resolved to assure that
consumers are offered and receive residential mortgage loans on
terms that reasonably reflect their ability to repay the loans
and that are understandable and not unfair, deceptive, or
abusive.
(b) Sense of the Congress.--It is the sense of the Congress that
efforts to enhance by the protection, limitation, and regulation of the
terms of residential mortgage credit and the practices related to such
credit would be incomplete without enactment of meaningful structural
reforms of Fannie Mae and Freddie Mac.
Subtitle H--Reports and Data Collection
SEC. 9701. GAO STUDY REPORT ON GOVERNMENT EFFORTS TO COMBAT MORTGAGE
FORECLOSURE RESCUE SCAMS AND LOAN MODIFICATION FRAUD.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the current inter-agency efforts of the Secretary of
the Treasury, the Secretary of Housing and Urban Development, the
Attorney General, and the Federal Trade Commission to crackdown on
mortgage foreclosure rescue scams and loan modification fraud in order
to advise the Congress to the risks and vulnerabilities of emerging
schemes in the loan modification arena.
(b) Report.--
(1) In general.--The Comptroller General shall submit a
report to the Congress on the study conducted under subsection
(a) containing such recommendations for legislative and
administrative actions as the Comptroller General may determine
to be appropriate in addition to the recommendations required
under paragraph (2).
(2) Specific topics.--The report made under paragraph (1)
shall include--
(A) an evaluation of the effectiveness of the
inter-agency task force current efforts to combat
mortgage foreclosure rescue scams and loan modification
fraud scams;
(B) specific recommendations on agency or
legislative action that are essential to properly
protect homeowners from mortgage foreclosure rescue
scams and loan modification fraud scams; and
(C) the adequacy of financial resources that the
Federal Government is allocating to--
(i) crackdown on loan modification and
foreclosure rescue scams; and
(ii) the education of homeowners about
fraudulent scams relating to loan modification
and foreclosure rescues.
SEC. 9702. REPORTING OF MORTGAGE DATA BY STATE.
(a) In General.--Section 104(a) of the Helping Families Save Their
Homes Act of 2009 (division A of Public Law 111-22) is amended--
(1) in paragraph (2), by striking ``resulting'' and
inserting ``in each State that result'';
(2) in paragraph (3), by inserting ``each State for'' after
``modifications in''; and
(3) in paragraph (4), by inserting ``in each State'' after
``total number of loans''.
(b) Conforming Amendment.--Section 104(b)(1)(A) of such Act is
amended by adding at the end the following sentence: ``Not later than
60 days after the date of the enactment of the Wall Street Reform and
Consumer Protection Act of 2009, the Comptroller of the Currency and
the Director of the Office of Thrift Supervision shall update such
requirements to reflect amendments made to this section by such Act.''.
Subtitle I--Multifamily Mortgage Resolution
SEC. 9801. MULTIFAMILY MORTGAGE RESOLUTION PROGRAM.
(a) Establishment.--The Secretary of Housing and Urban Development
shall develop a program under this subsection to ensure the protection
of current and future tenants and at-risk multifamily properties, where
feasible, based on criteria that may include--
(1) creating sustainable financing of such properties, that
may take into consideration such factors as--
(A) the rental income generated by such properties;
and
(B) the preservation of adequate operating
reserves;
(2) maintaining the level of Federal, State, and city
subsidies in effect as of the date of the enactment of this
Act;
(3) providing funds for rehabilitation; and
(4) facilitating the transfer of such properties, when
appropriate and with the agreement of owners, to responsible
new owners and ensuring affordability of such properties.
(b) Coordination.--The Secretary of Housing and Urban Development
may, in carrying out the program developed under this section,
coordinate with the Secretary of the Treasury, the Federal Deposit
Insurance Corporation, the Board of Governors of the Federal Reserve
System, the Federal Housing Finance Agency, and any other Federal
Government agency that the Secretary considers appropriate.
(c) Definition.--For purposes of this section, the term
``multifamily properties'' means a residential structure that consists
of 5 or more dwelling units.
Subtitle J--Study of Effect of Drywall Presence on Foreclosures
SEC. 9901. STUDY OF EFFECT OF DRYWALL PRESENCE ON FORECLOSURES.
(a) Study.--The Secretary of Housing and Urban Development, in
consultation with the Secretary of the Treasury, shall conduct a study
of the effect on residential mortgage loan foreclosures of--
(1) the presence in residential structures subject to such
mortgage loans of drywall that was imported from China during
the period beginning with 2004 and ending at the end of 2007;
and
(2) the availability of property insurance for residential
structures in which such drywall is present.
(b) Report.--Not later than the expiration of the 120-day period
beginning on the date of the enactment of this Act, the Secretary of
Housing and Urban Development shall submit to the Congress a report on
the study conducted under subsection (a) containing its findings,
conclusions, and recommendations.
Subtitle K--Home Affordable Modification Program
SEC. 9911. HOME AFFORDABLE MODIFICATION PROGRAM GUIDELINES.
(a) Net Present Value Input Data.--The Secretary of the Treasury
(in this section referred to as the ``Secretary'') shall revise the
supplemental directives and other guidelines for the Home Affordable
Modification Program of the Making Home Affordable initiative of the
Secretary of the Treasury, authorized under the Emergency Economic
Stabilization Act of 2008 (Public Law 110-343), to require each
mortgage servicer participating in such program to provide each
borrower under a mortgage whose request for a mortgage modification
under the Program is denied with all borrower-related and mortgage-
related input data used in any net present value (NPV) analyses
performed in connection with the subject mortgage. Such input data
shall be provided to the borrower at the time of such denial.
(b) Web-based Site for NPV Calculator and Application.--
(1) NPV calculator.--In carrying out the Home Affordable
Modification Program, the Secretary shall establish and
maintain a site on the World Wide Web that provides a
calculator for net present value analyses of a mortgage, based
on the Secretary's methodology for calculating such value, that
mortgagors can use to enter information regarding their own
mortgages and that provides a determination after entering such
information regarding a mortgage of whether such mortgage would
be accepted or rejected for modification under the Program,
using such methodology.
(2) Disclosure.--Such Web site shall also prominently
disclose that each mortgage servicer participating in such
Program may use a method for calculating net present value of a
mortgage that is different than the method used by such
calculator.
(3) Application.--The Secretary shall make a reasonable
effort to include on such World Wide Web site a method for
homeowners to apply for a mortgage modification under the Home
Affordable Modification Program.
(c) Public Availability of NPV Methodology, Computer Model, and
Variables.--The Secretary shall make publicly available, including by
posting on a World Wide Web site of the Secretary--
(1) the Secretary's methodology and computer model,
including all formulae used in such computer model, used for
calculating net present value of a mortgage that is used by the
calculator established pursuant to subsection (b); and
(2) all variables used in such net present value analysis.
Subtitle L--Making Home Affordable Program
SEC. 9921. PUBLIC AVAILABILITY OF INFORMATION.
(a) Revisions to Program Guidelines.--The Secretary of the Treasury
(in this section referred to as the ``Secretary'') shall revise the
guidelines for the Home Affordable Modification Program of the Making
Home Affordable initiative of the Secretary of the Treasury, authorized
under the Emergency Economic Stabilization Act of 2008 (Public Law 110-
343), to provide that the data being collected by the Secretary from
each mortgage servicer and lender participating in the Program is made
public in accordance with subsection (b).
(b) Public Availability.--Data shall be made available according to
the following guidelines:
(1) Not more than 14 days after each monthly deadline for
submission of data by mortgage servicers and lenders
participating in the Program, reports shall be made publicly
available by means of a World Wide Web site of the Secretary,
and by submitting a report to the Congress, that shall includes
the following information:
(A) The number of requests for mortgage
modifications under the Program that the servicer or
lender has received.
(B) The number of requests for mortgage
modifications under the Program that the servicer or
lender has processed.
(C) The number of requests for mortgage
modifications under the Program that the servicer or
lender has approved.
(D) The number of requests for mortgage
modifications under the Program that the servicer or
lender has denied.
(2) Not more than 60 days after each monthly deadline for
submission of data by mortgage servicers and lenders
participating in the Program, the Secretary shall make data
tables available to the public at the individual record level.
The Secretary shall issue regulations prescribing--
(A) the procedures for disclosing such data to the
public; and
(B) such deletions as the Secretary may determine
to be appropriate to protect any privacy interest of
any mortgage modification applicant, including the
deletion or alteration of the applicant's name and
identification number.
TITLE VIII--FORECLOSURE AVOIDANCE AND AFFORDABLE HOUSING
SEC. 10001. EMERGENCY MORTGAGE RELIEF.
(a) Use of TARP Funds.--Using the authority available under
sections 101(a) and 115(a) of division A of the Emergency Economic
Stabilization Act of 2008 (12 U.S.C. 5211(a), 5225(a)), the Secretary
of the Treasury shall transfer to the Secretary of Housing and Urban
Development $3,000,000,000, and the Secretary of Housing and Urban
Development shall credit such amount to the Emergency Homeowners'
Relief Fund, which such Secretary shall establish pursuant to section
107 of the Emergency Housing Act of 1975 (12 U.S.C. 2706), as such Act
is amended by this section, for use for emergency mortgage assistance
in accordance with title I of such Act.
(b) Reauthorization of Emergency Mortgage Relief Program.--Title I
of the Emergency Housing Act of 1975 is amended--
(1) in section 103 (12 U.S.C. 2702)--
(A) in paragraph (2)--
(i) by striking ``have indicated'' and all
that follows through ``regulation of the
holder'' and insert ``have certified'';
(ii) by striking ``(such as the volume of
delinquent loans in its portfolio)''; and
(iii) by striking ``, except that such
statement'' and all that follows through
``purposes of this title''; and
(B) in paragraph (4), by inserting ``or medical
conditions'' after ``adverse economic conditions'';
(2) in section 104 (12 U.S.C. 2703)--
(A) in subsection (b), by striking ``, but such
assistance'' and all that follows through the period at
the end and inserting the following: ``. The amount of
assistance provided to a homeowner under this title
shall be an amount that the Secretary determines is
reasonably necessary to supplement such amount as the
homeowner is capable of contributing toward such
mortgage payment, except that the aggregate amount of
such assistance provided for any homeowner shall not
exceed $50,000.'';
(B) in subsection (d), by striking ``interest on a
loan or advance''and all that follows through the end
of the subsection and inserting the following: ``(1)
the rate of interest on any loan or advance of credit
insured under this title shall be fixed for the life of
the loan or advance of credit and shall not exceed the
rate of interest that is generally charged for
mortgages on single-family housing insured by the
Secretary of Housing and Urban Development under title
II of the National Housing Act at the time such loan or
advance of credit is made, and (2) no interest shall be
charged on interest which is deferred on a loan or
advance of credit made under this title. In
establishing rates, terms and conditions for loans or
advances of credit made under this title, the Secretary
shall take into account a homeowner's ability to repay
such loan or advance of credit.''; and
(C) in subsection (e), by inserting after the
period at the end of the first sentence the following:
``Any eligible homeowner who receives a grant or an
advance of credit under this title may repay the loan
in full, without penalty, by lump sum or by installment
payments at any time before the loan becomes due and
payable.'';
(3) in section 105 (12 U.S.C. 2704)--
(A) by striking subsection (b);
(B) in subsection (e)--
(i) by inserting ``and emergency mortgage
relief payments made under section 106'' after
``insured under this section''; and
(ii) by striking ``$1,500,000,000 at any
one time'' and inserting ``$3,000,000,000'';
(C) by redesignating subsections (c), (d), and (e)
as subsections (b), (c), and (d), respectively; and
(D) by adding at the end the following new
subsection:
``(e) The Secretary shall establish underwriting guidelines or
procedures to allocate amounts made available for loans and advances
insured under this section and for emergency relief payments made under
section 106 based on the likelihood that a mortgagor will be able to
resume mortgage payments, pursuant to the requirement under section
103(5).'';
(4) in section 107--
(A) by striking ``(a)''; and
(B) by striking subsection (b);
(5) in section 108 (12 U.S.C. 2707), by adding at the end
the following new subsection:
``(d) Coverage of Existing Programs.--The Secretary shall allow
funds to be administered by a State that has an existing program that
is determined by the Secretary to provide substantially similar
assistance to homeowners. After such determination is made such State
shall not be required to modify such program to comply with the
provisions of this title.'';
(6) in section 109 (12 U.S.C. 2708)--
(A) in the section heading, by striking
``authorization and'';
(B) by striking subsection (a);
(C) by striking ``(b)''; and
(D) by striking ``1977'' and inserting ``2011'';
(7) by striking sections 110, 111, and 113 (12 U.S.C. 2709,
2710, 2712); and
(8) by redesignating section 112 (12 U.S.C. 2711) as
section 110.
SEC. 10002. ADDITIONAL ASSISTANCE FOR NEIGHBORHOOD STABILIZATION
PROGRAM.
Using the authority made available under sections 101(a) and 115(a)
of division A of the Emergency Economic Stabilization Act of 2008 (12
U.S.C. 5211(a), 5225(a)), the Secretary of the Treasury shall transfer
to the Secretary of Housing and Urban Development $1,000,000,000, and
the Secretary of Housing and Urban Development shall use such amounts
for assistance to States and units of general local government for the
redevelopment of abandoned and foreclosed homes, in accordance with the
same provisions applicable under the second undesignated paragraph
under the heading ``Community Planning and Development--Community
Development Fund'' in title XII of division A of the American Recovery
and Reinvestment Act of 2009 (Public Law 111-5; 123 Stat. 217) to
amounts made available under such second undesignated paragraph, except
as follows:
(1) Notwithstanding the matter of such second undesignated
paragraph that precedes the first proviso, amounts made
available by this section shall remain available until
expended.
(2) The 3rd, 4th, 5th, 6th, 7th, and 15th provisos of such
second undesignated paragraph shall not apply to amounts made
available by this section.
(3) Amounts made available by this section shall be
allocated based on a funding formula for such amounts
established by the Secretary in accordance with section 2301(b)
of the Housing and Economic Recovery Act of 2008 (42 U.S.C.
5301 note), except that--
(A) notwithstanding paragraph (2) of such section
2301(b), the formula shall be established not later
than 30 days after the date of the enactment of this
Act;
(B) the Secretary may not establish any minimum
grant amount or size for grants to States;
(C) the Secretary may establish a minimum grant
amount for direct allocations to units of general local
government located within a State, which shall not
exceed $1,000,000; and
(D) each State and local government receiving grant
amounts shall establish procedures to create
preferences for the development of affordable rental
housing for properties assisted with amounts made
available by this section.
(4) Paragraph (1) of section 2301(c) of the Housing and
Economic Recovery Act of 2008 shall not apply to amounts made
available by this section.
(5) Section 2302 of the Housing and Economic Recovery Act
of 2008 shall not apply to amounts made available by this
section.
(6) The fourth proviso from the end of such second
undesignated paragraph shall be applied to amounts made
available by this section by substituting ``2013'' for
``2012''.
(7) Notwithstanding section 2301(a) of the Housing and
Economic Recovery Act of 2008, the term ``State'' means any
State of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern
Mariana Islands, Guam, the Virgin Islands, American Samoa, and
other territory or possession of the United States for purposes
of this section and title III of division B of such Act, as
applied to amounts made available by this section.
(8)(A) None of the amounts made available by this section
shall be distributed to--
(i) any organization which has been convicted for a
violation under Federal law relating to an election for
Federal office; or
(ii) any organization which employs applicable
individuals.
(B) In this paragraph, the term ``applicable individual''
means an individual who--
(i) is--
(I) employed by the organization in a
permanent or temporary capacity;
(II) contracted or retained by the
organization; or
(III) acting on behalf of, or with the
express or apparent authority of, the
organization; and
(ii) has been convicted for a violation under
Federal law relating to an election for Federal office.
TITLE IX--NONADMITTED AND REINSURANCE REFORM ACT
SEC. 10051. SHORT TITLE.
This title may be cited as the ``Nonadmitted and Reinsurance Reform
Act of 2009''.
SEC. 10052. EFFECTIVE DATE.
Except as otherwise specifically provided in this title, this title
shall take effect upon the expiration of the 12-month period beginning
on the date of the enactment of this Act.
Subtitle A--Nonadmitted Insurance
SEC. 10101. REPORTING, PAYMENT, AND ALLOCATION OF PREMIUM TAXES.
(a) Home State's Exclusive Authority.--No State other than the home
State of an insured may require any premium tax payment for nonadmitted
insurance.
(b) Allocation of Nonadmitted Premium Taxes.--
(1) In general.--The States may enter into a compact or
otherwise establish procedures to allocate among the States the
premium taxes paid to an insured's home State described in
subsection (a).
(2) Effective date.--Except as expressly otherwise provided
in such compact or other procedures, any such compact or other
procedures--
(A) if adopted on or before the expiration of the
330-day period that begins on the date of the enactment
of this Act, shall apply to any premium taxes that, on
or after such date of enactment, are required to be
paid to any State that is subject to such compact or
procedures; and
(B) if adopted after the expiration of such 330-day
period, shall apply to any premium taxes that, on or
after January 1 of the first calendar year that begins
after the expiration of such 330-day period, are
required to be paid to any State that is subject to
such compact or procedures.
(3) Report.--Upon the expiration of the 330-day period
referred to in paragraph (2), the NAIC may submit a report to
the Committee on Financial Services and Committee on the
Judiciary of the House of Representatives and the Committee on
Banking, Housing, and Urban Affairs of the Senate identifying
and describing any compact or other procedures for allocation
among the States of premium taxes that have been adopted during
such period by any States.
(4) Nationwide system.--The Congress intends that each
State adopt nationwide uniform requirements, forms, and
procedures, such as an interstate compact, that provides for
the reporting, payment, collection, and allocation of premium
taxes for nonadmitted insurance consistent with this section.
(c) Allocation Based on Tax Allocation Report.--To facilitate the
payment of premium taxes among the States, an insured's home State may
require surplus lines brokers and insureds who have independently
procured insurance to annually file tax allocation reports with the
insured's home State detailing the portion of the nonadmitted insurance
policy premium or premiums attributable to properties, risks or
exposures located in each State. The filing of a nonadmitted insurance
tax allocation report and the payment of tax may be made by a person
authorized by the insured to act as its agent.
SEC. 10102. REGULATION OF NONADMITTED INSURANCE BY INSURED'S HOME
STATE.
(a) Home State Authority.--Except as otherwise provided in this
section, the placement of nonadmitted insurance shall be subject to the
statutory and regulatory requirements solely of the insured's home
State.
(b) Broker Licensing.--No State other than an insured's home State
may require a surplus lines broker to be licensed in order to sell,
solicit, or negotiate nonadmitted insurance with respect to such
insured.
(c) Enforcement Provision.--With respect to section 10101 and
subsections (a) and (b) of this section, any law, regulation,
provision, or action of any State that applies or purports to apply to
nonadmitted insurance sold to, solicited by, or negotiated with an
insured whose home State is another State shall be preempted with
respect to such application.
(d) Workers' Compensation Exception.--This section may not be
construed to preempt any State law, rule, or regulation that restricts
the placement of workers' compensation insurance or excess insurance
for self-funded workers' compensation plans with a nonadmitted insurer.
SEC. 10103. PARTICIPATION IN NATIONAL PRODUCER DATABASE.
After the expiration of the 2-year period beginning on the date of
the enactment of this Act, a State may not collect any fees relating to
licensing of an individual or entity as a surplus lines broker in the
State unless the State has in effect at such time laws or regulations
that provide for participation by the State in the national insurance
producer database of the NAIC, or any other equivalent uniform national
database, for the licensure of surplus lines brokers and the renewal of
such licenses.
SEC. 10104. UNIFORM STANDARDS FOR SURPLUS LINES ELIGIBILITY.
A State may not--
(1) impose eligibility requirements on, or otherwise
establish eligibility criteria for, nonadmitted insurers
domiciled in a United States jurisdiction, except in
conformance with such requirements and criteria in sections
5A(2) and 5C(2)(a) of the Non-Admitted Insurance Model Act,
unless the State has adopted nationwide uniform requirements,
forms, and procedures developed in accordance with section
10101(b) of this title that include alternative nationwide
uniform eligibility requirements; and
(2) prohibit a surplus lines broker from placing
nonadmitted insurance with, or procuring nonadmitted insurance
from, a nonadmitted insurer domiciled outside the United States
that is listed on the Quarterly Listing of Alien Insurers
maintained by the International Insurers Department of the
NAIC.
SEC. 10105. STREAMLINED APPLICATION FOR COMMERCIAL PURCHASERS.
A surplus lines broker seeking to procure or place nonadmitted
insurance in a State for an exempt commercial purchaser shall not be
required to satisfy any State requirement to make a due diligence
search to determine whether the full amount or type of insurance sought
by such exempt commercial purchaser can be obtained from admitted
insurers if--
(1) the broker procuring or placing the surplus lines
insurance has disclosed to the exempt commercial purchaser that
such insurance may or may not be available from the admitted
market that may provide greater protection with more regulatory
oversight; and
(2) the exempt commercial purchaser has subsequently
requested in writing the broker to procure or place such
insurance from a nonadmitted insurer.
SEC. 10106. GAO STUDY OF NONADMITTED INSURANCE MARKET.
(a) In General.--The Comptroller General of the United States shall
conduct a study of the nonadmitted insurance market to determine the
effect of the enactment of this subtitle on the size and market share
of the nonadmitted insurance market for providing coverage typically
provided by the admitted insurance market.
(b) Contents.--The study shall determine and analyze--
(1) the change in the size and market share of the
nonadmitted insurance market and in the number of insurance
companies and insurance holding companies providing such
business in the 18-month period that begins upon the effective
date of this Act;
(2) the extent to which insurance coverage typically
provided by the admitted insurance market has shifted to the
nonadmitted insurance market;
(3) the consequences of any change in the size and market
share of the nonadmitted insurance market, including
differences in the price and availability of coverage available
in both the admitted and nonadmitted insurance markets;
(4) the extent to which insurance companies and insurance
holding companies that provide both admitted and nonadmitted
insurance have experienced shifts in the volume of business
between admitted and nonadmitted insurance; and
(5) the extent to which there has been a change in the
number of individuals who have nonadmitted insurance policies,
the type of coverage provided under such policies, and whether
such coverage is available in the admitted insurance market.
(c) Consultation With NAIC.--In conducting the study under this
section, the Comptroller General shall consult with the NAIC.
(d) Report.--The Comptroller General shall complete the study under
this section and submit a report to the Committee on Financial Services
of the House of Representatives and the Committee on Banking, Housing,
and Urban Affairs of the Senate regarding the findings of the study not
later than 30 months after the effective date of this Act.
SEC. 10107. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) Admitted insurer.--The term ``admitted insurer'' means,
with respect to a State, an insurer licensed to engage in the
business of insurance in such State.
(2) Affiliate.--The term ``affiliate'' means, with respect
to an insured, any entity that controls, is controlled by, or
is under common control with the insured.
(3) Affiliated group.--The term ``affiliated group'' means
any group of entities that are all affiliated.
(4) Control.--An entity has ``control'' over another entity
if--
(A) the entity directly or indirectly or acting
through one or more other persons owns, controls or has
the power to vote 25 percent or more of any class of
voting securities of the other entity; or
(B) the entity controls in any manner the election
of a majority of the directors or trustees of the other
entity.
(5) Exempt commercial purchaser.--The term ``exempt
commercial purchaser'' means any person purchasing commercial
insurance that, at the time of placement, meets the following
requirements:
(A) The person employs or retains a qualified risk
manager to negotiate insurance coverage.
(B) The person has paid aggregate nationwide
commercial property and casualty insurance premiums in
excess of $100,000 in the immediately preceding 12
months.
(C)(i) The person meets at least one of the
following criteria:
(I) The person possesses a net
worth in excess of $20,000,000, as such
amount is adjusted pursuant to clause
(ii).
(II) The person generates annual
revenues in excess of $50,000,000, as
such amount is adjusted pursuant to
clause (ii).
(III) The person employs more than
500 full time or full time equivalent
employees per individual insured or is
a member of an affiliated group
employing more than 1,000 employees in
the aggregate.
(IV) The person is a not-for-profit
organization or public entity
generating annual budgeted expenditures
of at least $30,000,000, as such amount
is adjusted pursuant to clause (ii).
(V) The person is a municipality
with a population in excess of 50,000
persons.
(ii) Effective on the fifth January 1
occurring after the date of the enactment of
this Act and each fifth January 1 occurring
thereafter, the amounts in subclauses (I),
(II), and (IV) of clause (i) shall be adjusted
to reflect the percentage change for such 5-
year period in the Consumer Price Index for All
Urban Consumers published by the Bureau of
Labor Statistics of the Department of Labor.
(6) Home state.--
(A) In general.--Except as provided in subparagraph
(B), the term ``home State'' means, with respect to an
insured--
(i) the State in which an insured maintains
its principal place of business or, in the case
of an individual, the individual's principal
residence; or
(ii) if 100 percent of the insured risk is
located out of the State referred to in
subparagraph (A), the State to which the
greatest percentage of the insured's taxable
premium for that insurance contract is
allocated.
(B) Affiliated groups.--If more than one insured
from an affiliated group are named insureds on a single
nonadmitted insurance contract, the term ``home State''
means the home State, as determined pursuant to
subparagraph (A), of the member of the affiliated group
that has the largest percentage of premium attributed
to it under such insurance contract.
(7) Independently procured insurance.--The term
``independently procured insurance'' means insurance procured
directly by an insured from a nonadmitted insurer.
(8) NAIC.--The term ``NAIC'' means the National Association
of Insurance Commissioners or any successor entity.
(9) Nonadmitted insurance.--The term ``nonadmitted
insurance'' means any property and casualty insurance permitted
to be placed directly or through a surplus lines broker with a
nonadmitted insurer eligible to accept such insurance.
(10) Non-admitted insurance model act.--The term ``Non-
Admitted Insurance Model Act'' means the provisions of the Non-
Admitted Insurance Model Act, as adopted by the NAIC on August
3, 1994, and amended on September 30, 1996, December 6, 1997,
October 2, 1999, and June 8, 2002.
(11) Nonadmitted insurer.--The term ``nonadmitted insurer''
means, with respect to a State, an insurer not licensed to
engage in the business of insurance in such State.
(12) Qualified risk manager.--The term ``qualified risk
manager'' means, with respect to a policyholder of commercial
insurance, a person who meets all of the following
requirements:
(A) The person is an employee of, or third party
consultant retained by, the commercial policyholder.
(B) The person provides skilled services in loss
prevention, loss reduction, or risk and insurance
coverage analysis, and purchase of insurance.
(C) The person--
(i)(I) has a bachelor's degree or higher
from an accredited college or university in
risk management, business administration,
finance, economics, or any other field
determined by a State insurance commissioner or
other State regulatory official or entity to
demonstrate minimum competence in risk
management; and
(II)(aa) has three years of
experience in risk financing, claims
administration, loss prevention, risk
and insurance analysis, or purchasing
commercial lines of insurance; or
(bb) has one of the
following designations:
(AA) a designation
as a Chartered Property
and Casualty
Underwriter (in this
subparagraph referred
to as ``CPCU'') issued
by the American
Institute for CPCU/
Insurance Institute of
America;
(BB) a designation
as an Associate in Risk
Management (ARM) issued
by the American
Institute for CPCU/
Insurance Institute of
America;
(CC) a designation
as Certified Risk
Manager (CRM) issued by
the National Alliance
for Insurance Education
& Research;
(DD) a designation
as a RIMS Fellow (RF)
issued by the Global
Risk Management
Institute; or
(EE) any other
designation,
certification, or
license determined by a
State insurance
commissioner or other
State insurance
regulatory official or
entity to demonstrate
minimum competency in
risk management;
(ii)(I) has at least seven years of
experience in risk financing, claims
administration, loss prevention, risk and
insurance coverage analysis, or purchasing
commercial lines of insurance; and
(II) has any one of the
designations specified in subitems (AA)
through (EE) of clause (i)(II)(bb);
(iii) has at least 10 years of experience
in risk financing, claims administration, loss
prevention, risk and insurance coverage
analysis, or purchasing commercial lines of
insurance; or
(iv) has a graduate degree from an
accredited college or university in risk
management, business administration, finance,
economics, or any other field determined by a
State insurance commissioner or other State
regulatory official or entity to demonstrate
minimum competence in risk management.
(13) Premium tax.--The term ``premium tax'' means, with
respect to surplus lines or independently procured insurance
coverage, any tax, fee, assessment, or other charge imposed by
a government entity directly or indirectly based on any payment
made as consideration for an insurance contract for such
insurance, including premium deposits, assessments,
registration fees, and any other compensation given in
consideration for a contract of insurance.
(14) Surplus lines broker.--The term ``surplus lines
broker'' means an individual, firm, or corporation which is
licensed in a State to sell, solicit, or negotiate insurance on
properties, risks, or exposures located or to be performed in a
State with nonadmitted insurers.
(15) State.--The term ``State'' includes any State of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Northern Mariana Islands, the Virgin
Islands, and American Samoa.
Subtitle B--Reinsurance
SEC. 10201. REGULATION OF CREDIT FOR REINSURANCE AND REINSURANCE
AGREEMENTS.
(a) Credit for Reinsurance.--If the State of domicile of a ceding
insurer is an NAIC-accredited State, or has financial solvency
requirements substantially similar to the requirements necessary for
NAIC accreditation, and recognizes credit for reinsurance for the
insurer's ceded risk, then no other State may deny such credit for
reinsurance.
(b) Additional Preemption of Extraterritorial Application of State
Law.--In addition to the application of subsection (a), all laws,
regulations, provisions, or other actions of a State that is not the
domiciliary State of the ceding insurer, except those with respect to
taxes and assessments on insurance companies or insurance income, are
preempted to the extent that they--
(1) restrict or eliminate the rights of the ceding insurer
or the assuming insurer to resolve disputes pursuant to
contractual arbitration to the extent such contractual
provision is not inconsistent with the provisions of title 9,
United States Code;
(2) require that a certain State's law shall govern the
reinsurance contract, disputes arising from the reinsurance
contract, or requirements of the reinsurance contract;
(3) attempt to enforce a reinsurance contract on terms
different than those set forth in the reinsurance contract, to
the extent that the terms are not inconsistent with this
subtitle; or
(4) otherwise apply the laws of the State to reinsurance
agreements of ceding insurers not domiciled in that State.
SEC. 10202. REGULATION OF REINSURER SOLVENCY.
(a) Domiciliary State Regulation.--If the State of domicile of a
reinsurer is an NAIC-accredited State or has financial solvency
requirements substantially similar to the requirements necessary for
NAIC accreditation, such State shall be solely responsible for
regulating the financial solvency of the reinsurer.
(b) Nondomiciliary States.--
(1) Limitation on financial information requirements.--If
the State of domicile of a reinsurer is an NAIC-accredited
State or has financial solvency requirements substantially
similar to the requirements necessary for NAIC accreditation,
no other State may require the reinsurer to provide any
additional financial information other than the information the
reinsurer is required to file with its domiciliary State.
(2) Receipt of information.--No provision of this section
shall be construed as preventing or prohibiting a State that is
not the State of domicile of a reinsurer from receiving a copy
of any financial statement filed with its domiciliary State.
SEC. 10203. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) Ceding insurer.--The term ``ceding insurer'' means an
insurer that purchases reinsurance.
(2) Domiciliary state.--The terms ``State of domicile'' and
``domiciliary State'' means, with respect to an insurer or
reinsurer, the State in which the insurer or reinsurer is
incorporated or entered through, and licensed.
(3) Reinsurance.--The term ``reinsurance'' means the
assumption by an insurer of all or part of a risk undertaken
originally by another insurer.
(4) Reinsurer.--
(A) In general.--The term ``reinsurer'' means an
insurer to the extent that the insurer--
(i) is principally engaged in the business
of reinsurance;
(ii) does not conduct significant amounts
of direct insurance as a percentage of its net
premiums; and
(iii) is not engaged in an ongoing basis in
the business of soliciting direct insurance.
(B) Determination.--A determination of whether an
insurer is a reinsurer shall be made under the laws of
the State of domicile in accordance with this
paragraph.
(5) State.--The term ``State'' includes any State of the
United States, the District of Columbia, the Commonwealth of
Puerto Rico, Guam, the Northern Mariana Islands, the Virgin
Islands, and American Samoa.
Subtitle C--Rule of Construction
SEC. 10301. RULE OF CONSTRUCTION.
Nothing in this title or amendments to this title shall be
construed to modify, impair, or supersede the application of the
antitrust laws. Any implied or actual conflict between this title and
any amendments to this title and the antitrust laws shall be resolved
in favor of the operation of the antitrust laws.
SEC. 10302. SEVERABILITY.
If any section or subsection of this title, or any application of
such provision to any person or circumstance, is held to be
unconstitutional, the remainder of this title, and the application of
the provision to any other person or circumstance, shall not be
affected.
TITLE X--INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED
SEC. 11001. INTEREST-BEARING TRANSACTION ACCOUNTS AUTHORIZED.
(a) Repeal of Prohibition on Payment of Interest on Demand
Deposits.--
(1) Federal reserve act.--Section 19(i) of the Federal
Reserve Act (12 U.S.C. 371a) is amended to read as follows:
``(i) [Repealed]''.
(2) Home owners' loan act.--The first sentence of section
5(b)(1)(B) of the Home Owners' Loan Act (12 U.S.C.
1464(b)(1)(B)) is amended by striking ``savings association may
not--'' and all that follows through ``(ii) permit any'' and
inserting ``savings association may not permit any''.
(3) Federal deposit insurance act.--Section 18(g) of the
Federal Deposit Insurance Act (12 U.S.C. 1828(g)) is amended to
read as follows:
``(g) [Repealed]''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect at the end of the 1-year period beginning on the date of
the enactment of this Act.
Passed the House of Representatives December 11, 2009.
Attest:
LORRAINE C. MILLER,
Clerk.