[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3217 Placed on Calendar Senate (PCS)]
Calendar No. 349
111th CONGRESS
2d Session
S. 3217
To promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for
other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 15, 2010
Mr. Dodd, from the Committee on Banking, Housing, and Urban Affairs,
reported the following original bill; which was read twice and placed
on the calendar
_______________________________________________________________________
A BILL
To promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for
other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Restoring American
Financial Stability Act of 2010''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Severability.
Sec. 4. Effective date.
TITLE I--FINANCIAL STABILITY
Sec. 101. Short title.
Sec. 102. Definitions.
Subtitle A--Financial Stability Oversight Council
Sec. 111. Financial Stability Oversight Council established.
Sec. 112. Council authority.
Sec. 113. Authority to require supervision and regulation of certain
nonbank financial companies.
Sec. 114. Registration of nonbank financial companies supervised by the
Board of Governors.
Sec. 115. Enhanced supervision and prudential standards for nonbank
financial companies supervised by the Board
of Governors and certain bank holding
companies.
Sec. 116. Reports.
Sec. 117. Treatment of certain companies that cease to be bank holding
companies.
Sec. 118. Council funding.
Sec. 119. Resolution of supervisory jurisdictional disputes among
member agencies.
Sec. 120. Additional standards applicable to activities or practices
for financial stability purposes.
Sec. 121. Mitigation of risks to financial stability.
Subtitle B--Office of Financial Research
Sec. 151. Definitions.
Sec. 152. Office of Financial Research established.
Sec. 153. Purpose and duties of the Office.
Sec. 154. Organizational structure; responsibilities of primary
programmatic units.
Sec. 155. Funding.
Sec. 156. Transition oversight.
Subtitle C--Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
Sec. 161. Reports by and examinations of nonbank financial companies
supervised by the Board of Governors.
Sec. 162. Enforcement.
Sec. 163. Acquisitions.
Sec. 164. Prohibition against management interlocks between certain
financial companies.
Sec. 165. Enhanced supervision and prudential standards for nonbank
financial companies supervised by the Board
of Governors and certain bank holding
companies.
Sec. 166. Early remediation requirements.
Sec. 167. Affiliations.
Sec. 168. Regulations.
Sec. 169. Avoiding duplication.
Sec. 170. Safe harbor.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
Sec. 201. Definitions.
Sec. 202. Orderly Liquidation Authority Panel.
Sec. 203. Systemic risk determination.
Sec. 204. Orderly liquidation.
Sec. 205. Orderly liquidation of covered brokers and dealers.
Sec. 206. Mandatory terms and conditions for all orderly liquidation
actions.
Sec. 207. Directors not liable for acquiescing in appointment of
receiver.
Sec. 208. Dismissal and exclusion of other actions.
Sec. 209. Rulemaking; non-conflicting law.
Sec. 210. Powers and duties of the corporation.
Sec. 211. Miscellaneous provisions.
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS
Sec. 300. Short title.
Sec. 301. Purposes.
Sec. 302. Definition.
Subtitle A--Transfer of Powers and Duties
Sec. 311. Transfer date.
Sec. 312. Powers and duties transferred.
Sec. 313. Abolishment.
Sec. 314. Amendments to the Revised Statutes.
Sec. 315. Federal information policy.
Sec. 316. Savings provisions.
Sec. 317. References in Federal law to Federal banking agencies.
Sec. 318. Funding.
Sec. 319. Contracting and leasing authority.
Subtitle B--Transitional Provisions
Sec. 321. Interim use of funds, personnel, and property.
Sec. 322. Transfer of employees.
Sec. 323. Property transferred.
Sec. 324. Funds transferred.
Sec. 325. Disposition of affairs.
Sec. 326. Continuation of services.
Subtitle C--Federal Deposit Insurance Corporation
Sec. 331. Deposit insurance reforms.
Sec. 332. Management of the Federal Deposit Insurance Corporation.
Subtitle D--Termination of Federal Thrift Charter
Sec. 341. Termination of Federal savings associations.
Sec. 342. Branching.
TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
Sec. 401. Short title.
Sec. 402. Definitions.
Sec. 403. Elimination of private adviser exemption; limited exemption
for foreign private advisers; limited
intrastate exemption.
Sec. 404. Collection of systemic risk data; reports; examinations;
disclosures.
Sec. 405. Disclosure provision eliminated.
Sec. 406. Clarification of rulemaking authority.
Sec. 407. Exemption of venture capital fund advisers.
Sec. 408. Exemption of and record keeping by private equity fund
advisers.
Sec. 409. Family offices.
Sec. 410. State and Federal responsibilities; asset threshold for
Federal registration of investment
advisers.
Sec. 411. Custody of client assets.
Sec. 412. Adjusting the accredited investor standard for inflation.
Sec. 413. GAO study and report on accredited investors.
Sec. 414. GAO study on self-regulatory organization for private funds.
Sec. 415. Commission study and report on short selling.
Sec. 416. Transition period.
TITLE V--INSURANCE
Subtitle A--Office of National Insurance
Sec. 501. Short title.
Sec. 502. Establishment of Office of National Insurance.
Subtitle B--State-based Insurance Reform
Sec. 511. Short title.
Sec. 512. Effective date.
PART I--Nonadmitted Insurance
Sec. 521. Reporting, payment, and allocation of premium taxes.
Sec. 522. Regulation of nonadmitted insurance by insured's home State.
Sec. 523. Participation in national producer database.
Sec. 524. Uniform standards for surplus lines eligibility.
Sec. 525. Streamlined application for commercial purchasers.
Sec. 526. GAO study of nonadmitted insurance market.
Sec. 527. Definitions.
PART II--Reinsurance
Sec. 531. Regulation of credit for reinsurance and reinsurance
agreements.
Sec. 532. Regulation of reinsurer solvency.
Sec. 533. Definitions.
PART III--Rule of Construction
Sec. 541. Rule of construction.
Sec. 542. Severability.
TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
Sec. 601. Short title.
Sec. 602. Definition.
Sec. 603. Moratorium and study on treatment of credit card banks,
industrial loan companies, and certain
other companies under the Bank Holding
Company Act of 1956.
Sec. 604. Reports and examinations of holding companies; regulation of
functionally regulated subsidiaries.
Sec. 605. Assuring consistent oversight of permissible activities of
depository institution subsidiaries of
holding companies.
Sec. 606. Requirements for financial holding companies to remain well
capitalized and well managed.
Sec. 607. Standards for interstate acquisitions.
Sec. 608. Enhancing existing restrictions on bank transactions with
affiliates.
Sec. 609. Eliminating exceptions for transactions with financial
subsidiaries.
Sec. 610. Lending limits applicable to credit exposure on derivative
transactions, repurchase agreements,
reverse repurchase agreements, and
securities lending and borrowing
transactions.
Sec. 611. Application of national bank lending limits to insured State
banks.
Sec. 612. Restriction on conversions of troubled banks.
Sec. 613. De novo branching into States.
Sec. 614. Lending limits to insiders.
Sec. 615. Limitations on purchases of assets from insiders.
Sec. 616. Regulations regarding capital levels of holding companies.
Sec. 617. Elimination of elective investment bank holding company
framework.
Sec. 618. Securities holding companies.
Sec. 619. Restrictions on capital market activity by banks and bank
holding companies.
Sec. 620. Concentration limits on large financial firms.
TITLE VII--IMPROVEMENTS TO REGULATION OF OVER-THE-COUNTER DERIVATIVES
MARKETS
Sec. 701. Short title.
Sec. 702. Findings and purposes.
Subtitle A--Regulation of Swap Markets
Sec. 711. Definitions.
Sec. 712. Jurisdiction.
Sec. 713. Clearing.
Sec. 714. Public reporting of aggregate swap data.
Sec. 715. Swap repositories.
Sec. 716. Reporting and recordkeeping.
Sec. 717. Registration and regulation of swap dealers and major swap
participants.
Sec. 718. Segregation of assets held as collateral in swap
transactions.
Sec. 719. Conflicts of interest.
Sec. 720. Alternative swap execution facilities.
Sec. 721. Derivatives transaction execution facilities and exempt
boards of trade.
Sec. 722. Designated contract markets.
Sec. 723. Margin.
Sec. 724. Position limits.
Sec. 725. Enhanced authority over registered entities.
Sec. 726. Foreign boards of trade.
Sec. 727. Legal certainty for swaps.
Sec. 728. FDICIA amendments.
Sec. 729. Primary enforcement authority.
Sec. 730. Enforcement.
Sec. 731. Retail commodity transactions.
Sec. 732. Large swap trader reporting.
Sec. 733. Other authority.
Sec. 734. Antitrust.
Subtitle B--Regulation of Security-Based Swap Markets
Sec. 751. Definitions under the Securities Exchange Act of 1934.
Sec. 752. Repeal of prohibition on regulation of security-based swaps.
Sec. 753. Amendments to the Securities Exchange Act of 1934.
Sec. 754. Segregation of assets held as collateral in security-based
swap transactions.
Sec. 755. Reporting and recordkeeping.
Sec. 756. State gaming and bucket shop laws.
Sec. 757. Amendments to the Securities Act of 1933; treatment of
security-based swaps.
Sec. 758. Other authority.
Sec. 759. Jurisdiction.
Subtitle C--Other Provisions
Sec. 761. International harmonization.
Sec. 762. Interagency cooperation.
Sec. 763. Study and report on implementation.
Sec. 764. Recommendations for changes to insolvency laws.
Sec. 765. Effective date.
TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
Sec. 801. Short title.
Sec. 802. Findings and purposes.
Sec. 803. Definitions.
Sec. 804. Designation of systemic importance.
Sec. 805. Standards for systemically important financial market
utilities and payment, clearing, or
settlement activities.
Sec. 806. Operations of designated financial market utilities.
Sec. 807. Examination of and enforcement actions against designated
financial market utilities.
Sec. 808. Examination of and enforcement actions against financial
institutions subject to standards for
designated activities.
Sec. 809. Requests for information, reports, or records.
Sec. 810. Rulemaking.
Sec. 811. Other authority.
Sec. 812. Effective date.
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
Subtitle A--Increasing Investor Protection
Sec. 911. Investor Advisory Committee established.
Sec. 912. Clarification of authority of the Commission to engage in
investor testing.
Sec. 913. Study and rulemaking regarding obligations of brokers,
dealers, and investment advisers.
Sec. 914. Office of the Investor Advocate.
Sec. 915. Streamlining of filing procedures for self-regulatory
organizations.
Sec. 916. Study regarding financial literacy among investors.
Sec. 917. Study regarding mutual fund advertising.
Sec. 918. Clarification of Commission authority to require investor
disclosures before purchase of investment
products and services.
Sec. 919. Study on conflicts of interest.
Sec. 919A. Study on improved investor access to information on
investment advisers and broker-dealers.
Sec. 919B. Study on financial planners and the use of financial
designations.
Subtitle B--Increasing Regulatory Enforcement and Remedies
Sec. 921. Authority to issue rules related to mandatory predispute
arbitration.
Sec. 922. Whistleblower protection.
Sec. 923. Conforming amendments for whistleblower protection.
Sec. 924. Implementation and transition provisions for whistleblower
protection.
Sec. 925. Collateral bars.
Sec. 926. Authority of State regulators over Regulation D offerings.
Sec. 927. Equal treatment of self-regulatory organization rules.
Sec. 928. Clarification that Section 205 of the Investment Advisers Act
of 1940 does not apply to State-registered
advisers.
Sec. 929. Unlawful margin lending.
Sec. 929A. Protection for employees of subsidiaries and affiliates of
publicly traded companies.
Sec. 929B. FAIR Fund amendments.
Sec. 929C. Increasing the borrowing limit on Treasury loans.
Subtitle C--Improvements to the Regulation of Credit Rating Agencies
Sec. 931. Findings.
Sec. 932. Enhanced regulation, accountability, and transparency of
nationally recognized statistical rating
organizations.
Sec. 933. State of mind in private actions.
Sec. 934. Referring tips to law enforcement or regulatory authorities.
Sec. 935. Consideration of information from sources other than the
issuer in rating decisions.
Sec. 936. Qualification standards for credit rating analysts.
Sec. 937. Timing of regulations.
Sec. 938. Universal ratings symbols.
Sec. 939. Government Accountability Office study and Federal agency
review of required uses of nationally
recognized statistical rating organization
ratings.
Sec. 939A. Securities and Exchange Commission study on strengthening
credit rating agency independence.
Sec. 939B. Government Accountability Office study on alternative
business models.
Sec. 939C. Government Accountability Office study on the creation of an
independent professional analyst
organization.
Subtitle D--Improvements to the Asset-Backed Securitization Process
Sec. 941. Regulation of credit risk retention.
Sec. 942. Disclosures and reporting for asset-backed securities.
Sec. 943. Representations and warranties in asset-backed offerings.
Sec. 944. Exempted transactions under the Securities Act of 1933.
Sec. 945. Due diligence analysis and disclosure in asset-backed
securities issues.
Subtitle E--Accountability and Executive Compensation
Sec. 951. Shareholder vote on executive compensation disclosures.
Sec. 952. Compensation committee independence.
Sec. 953. Executive compensation disclosures.
Sec. 954. Recovery of erroneously awarded compensation.
Sec. 955. Disclosure regarding employee and director hedging.
Sec. 956. Excessive compensation by holding companies of depository
institutions.
Sec. 957. Voting by brokers.
Subtitle F--Improvements to the Management of the Securities and
Exchange Commission
Sec. 961. Report and certification of internal supervisory controls.
Sec. 962. Triennial report on personnel management.
Sec. 963. Annual financial controls audit.
Sec. 964. Report on oversight of national securities associations.
Sec. 965. Compliance examiners.
Sec. 966. Suggestion program for employees of the Commission.
Subtitle G--Strengthening Corporate Governance
Sec. 971. Election of directors by majority vote in uncontested
elections.
Sec. 972. Proxy access.
Sec. 973. Disclosures regarding chairman and CEO structures.
Subtitle H--Municipal Securities
Sec. 975. Regulation of municipal securities and changes to the board
of the MSRB.
Sec. 976. Government Accountability Office study of increased
disclosure to investors.
Sec. 977. Government Accountability Office study on the municipal
securities markets.
Sec. 978. Study of funding for Government Accounting Standards Board.
Sec. 979. Commission Office of Municipal Securities.
Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters
Sec. 981. Authority to share certain information with foreign
authorities.
Sec. 982. Oversight of brokers and dealers.
Sec. 983. Portfolio margining.
Sec. 984. Loan or borrowing of securities.
Sec. 985. Technical corrections to Federal securities laws.
Sec. 986. Conforming amendments relating to repeal of the Public
Utility Holding Company Act of 1935.
Sec. 987. Amendment to definition of material loss and nonmaterial
losses to the Deposit Insurance Fund for
purposes of Inspector General reviews.
Sec. 988. Amendment to definition of material loss and nonmaterial
losses to the National Credit Union Share
Insurance Fund for purposes of Inspector
General reviews.
Sec. 989. Government Accountability Office study on proprietary
trading.
Sec. 989A. Senior investor protections.
Sec. 989B. Changes in appointment of certain Inspectors General.
Subtitle J--Self-funding of the Securities and Exchange Commission
Sec. 991. Securities and Exchange Commission self-funding.
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
Sec. 1001. Short title.
Sec. 1002. Definitions.
Subtitle A--Bureau of Consumer Financial Protection
Sec. 1011. Establishment of the Bureau.
Sec. 1012. Executive and administrative powers.
Sec. 1013. Administration.
Sec. 1014. Consumer Advisory Board.
Sec. 1015. Coordination.
Sec. 1016. Appearances before and reports to Congress.
Sec. 1017. Funding; penalties and fines.
Sec. 1018. Effective date.
Subtitle B--General Powers of the Bureau
Sec. 1021. Purpose, objectives, and functions.
Sec. 1022. Rulemaking authority.
Sec. 1023. Review of Bureau regulations.
Sec. 1024. Supervision of nondepository covered persons.
Sec. 1025. Supervision of very large banks, savings associations, and
credit unions.
Sec. 1026. Other banks, savings associations, and credit unions.
Sec. 1027. Limitations on authorities of the Bureau; preservation of
authorities.
Sec. 1028. Authority to restrict mandatory pre-dispute arbitration.
Sec. 1029. Effective date.
Subtitle C--Specific Bureau Authorities
Sec. 1031. Prohibiting unfair, deceptive, or abusive acts or practices.
Sec. 1032. Disclosures.
Sec. 1033. Consumer rights to access information.
Sec. 1034. Response to consumer complaints and inquiries.
Sec. 1035. Private education loan ombudsman.
Sec. 1036. Prohibited acts.
Sec. 1037. Effective date.
Subtitle D--Preservation of State Law
Sec. 1041. Relation to State law.
Sec. 1042. Preservation of enforcement powers of States.
Sec. 1043. Preservation of existing contracts.
Sec. 1044. State law preemption standards for national banks and
subsidiaries clarified.
Sec. 1045. Clarification of law applicable to nondepository institution
subsidiaries.
Sec. 1046. State law preemption standards for Federal savings
associations and subsidiaries clarified.
Sec. 1047. Visitorial standards for national banks and savings
associations.
Sec. 1048. Effective date.
Subtitle E--Enforcement Powers
Sec. 1051. Definitions.
Sec. 1052. Investigations and administrative discovery.
Sec. 1053. Hearings and adjudication proceedings.
Sec. 1054. Litigation authority.
Sec. 1055. Relief available.
Sec. 1056. Referrals for criminal proceedings.
Sec. 1057. Employee protection.
Sec. 1058. Effective date.
Subtitle F--Transfer of Functions and Personnel; Transitional
Provisions
Sec. 1061. Transfer of consumer financial protection functions.
Sec. 1062. Designated transfer date.
Sec. 1063. Savings provisions.
Sec. 1064. Transfer of certain personnel.
Sec. 1065. Incidental transfers.
Sec. 1066. Interim authority of the Secretary.
Sec. 1067. Transition oversight.
Subtitle G--Regulatory Improvements
Sec. 1071. Collection of deposit account data.
Sec. 1072. Small business data collection.
Sec. 1073. GAO study on the effectiveness and impact of various
appraisal methods.
Sec. 1074. Prohibition on certain prepayment penalties.
Sec. 1075. Assistance for economically vulnerable individuals and
families.
Sec. 1076. Remittance transfers.
Subtitle H--Conforming Amendments
Sec. 1081. Amendments to the Inspector General Act.
Sec. 1082. Amendments to the Privacy Act of 1974.
Sec. 1083. Amendments to the Alternative Mortgage Transaction Parity
Act of 1982.
Sec. 1084. Amendments to the Electronic Fund Transfer Act.
Sec. 1085. Amendments to the Equal Credit Opportunity Act.
Sec. 1086. Amendments to the Expedited Funds Availability Act.
Sec. 1087. Amendments to the Fair Credit Billing Act.
Sec. 1088. Amendments to the Fair Credit Reporting Act and the Fair and
Accurate Credit Transactions Act.
Sec. 1089. Amendments to the Fair Debt Collection Practices Act.
Sec. 1090. Amendments to the Federal Deposit Insurance Act.
Sec. 1091. Amendments to the Gramm-Leach-Bliley Act.
Sec. 1092. Amendments to the Home Mortgage Disclosure Act.
Sec. 1093. Amendments to the Homeowners Protection Act of 1998.
Sec. 1094. Amendments to the Home Ownership and Equity Protection Act
of 1994.
Sec. 1095. Amendments to the Omnibus Appropriations Act, 2009.
Sec. 1096. Amendments to the Real Estate Settlement Procedures Act.
Sec. 1097. Amendments to the Right to Financial Privacy Act of 1978.
Sec. 1098. Amendments to the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008.
Sec. 1099. Amendments to the Truth in Lending Act.
Sec. 1100. Amendments to the Truth in Savings Act.
Sec. 1101. Amendments to the Telemarketing and Consumer Fraud and Abuse
Prevention Act.
Sec. 1102. Amendments to the Paperwork Reduction Act.
Sec. 1103. Adjustments for inflation in the Truth in Lending Act.
Sec. 1104. Effective date.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
Sec. 1151. Federal Reserve Act amendments on emergency lending
authority.
Sec. 1152. Reviews of special Federal Reserve credit facilities.
Sec. 1153. Public access to information.
Sec. 1154. Liquidity event determination.
Sec. 1155. Emergency financial stabilization.
Sec. 1156. Additional related amendments.
Sec. 1157. Federal Reserve Act amendments on Federal reserve bank
governance.
Sec. 1158. Amendments to the Federal Reserve Act relating to
supervision and regulation policy.
TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
Sec. 1201. Short title.
Sec. 1202. Purpose.
Sec. 1203. Definitions.
Sec. 1204. Expanded access to mainstream financial institutions.
Sec. 1205. Low-cost alternatives to payday loans.
Sec. 1206. Grants to establish loan-loss reserve funds.
Sec. 1207. Procedural provisions.
Sec. 1208. Authorization of appropriations.
Sec. 1209. Regulations.
Sec. 1210. Evaluation and reports to Congress.
SEC. 2. DEFINITIONS.
As used in this Act, the following definitions shall apply, except
as the context otherwise requires or as otherwise specifically provided
in this Act:
(1) Affiliate.--The term ``affiliate'' means any company
that controls, is controlled by, or is under common control
with another company.
(2) Appropriate federal banking agency.--On and after the
transfer date, the term ``appropriate Federal banking agency''
has the same meaning as in section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), as amended by title III.
(3) Board of governors.--The term ``Board of Governors''
means the Board of Governors of the Federal Reserve System.
(4) Bureau.--The term ``Bureau'' means the Bureau of
Consumer Financial Protection established under title X.
(5) Commission.--The term ``Commission'' means the
Securities and Exchange Commission, except in the context of
the Commodity Futures Trading Commission.
(6) Corporation.--The term ``Corporation'' means the
Federal Deposit Insurance Corporation.
(7) Council.--The term ``Council'' means the Financial
Stability Oversight Council established under title I.
(8) Credit union.--The term ``credit union'' means a
Federal credit union, State credit union, or State-chartered
credit union, as those terms are defined in section 101 of the
Federal Credit Union Act (12 U.S.C. 1752).
(9) Federal banking agency.--The term--
(A) ``Federal banking agency'' means, individually,
the Board of Governors, the Office of the Comptroller
of the Currency, and the Corporation; and
(B) ``Federal banking agencies'' means all of the
agencies referred to in subparagraph (A), collectively.
(10) Functionally regulated subsidiary.--The term
``functionally regulated subsidiary'' has the same meaning as
in section 5(c)(5) of the Bank Holding Company Act of 1956 (12
U.S.C. 1844(c)(5)).
(11) Primary financial regulatory agency.--The term
``primary financial regulatory agency'' means--
(A) the appropriate Federal banking agency, with
respect to institutions described in section 3(q) of
the Federal Deposit Insurance Act, except to the extent
that an institution is or the activities of an
institution are otherwise subject to the jurisdiction
of an agency listed in subparagraph (B), (C), (D), or
(E);
(B) the Securities and Exchange Commission, with
respect to--
(i) any broker or dealer that is registered
with the Commission under the Securities
Exchange Act of 1934;
(ii) any investment company that is
registered with the Commission under the
Investment Company Act of 1940;
(iii) any investment adviser that is
registered with the Commission under the
Investment Advisers Act of 1940, with respect
to the investment advisory activities of such
company and activities that are incidental to
such advisory activities; and
(iv) any clearing agency registered with
the Commission under the Securities Exchange
Act of 1934;
(C) the Commodity Futures Trading Commission, with
respect to any futures commission merchant, any
commodity trading adviser, and any commodity pool
operator registered with the Commodity Futures Trading
Commission under the Commodity Exchange Act, with
respect to the commodities activities of such entity
and activities that are incidental to such commodities
activities;
(D) the State insurance authority of the State in
which an insurance company is domiciled, with respect
to the insurance activities and activities that are
incidental to such insurance activities of an insurance
company that is subject to supervision by the State
insurance authority under State insurance law; and
(E) the Federal Housing Finance Agency, with
respect to Federal Home Loan Banks or the Federal Home
Loan Bank System, and with respect to the Federal
National Mortgage Association or the Federal Home Loan
Mortgage Corporation.
(12) Prudential standards.--The term ``prudential
standards'' means enhanced supervision and regulatory standards
developed by the Board of Governors under section 115 or 165.
(13) Secretary.--The term ``Secretary'' means the Secretary
of the Treasury.
(14) Securities terms.--The--
(A) terms ``broker'', ``dealer'', ``issuer'',
``nationally recognized statistical ratings
organization'', ``security'', and ``securities laws''
have the same meanings as in section 3 of the
Securities Exchange Act of 1934 (15 U.S.C. 78c);
(B) term ``investment adviser'' has the same
meaning as in section 202 of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-2); and
(C) term ``investment company'' has the same
meaning as in section 3 of the Investment Company Act
of 1940 (15 U.S.C. 80a-3).
(15) 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.
(16) Transfer date.--The term ``transfer date'' means the
date established under section 311.
(17) Other incorporated definitions.--
(A) Federal deposit insurance act.--The terms
``affiliate'', ``bank'', ``bank holding company'',
``control'' (when used with respect to a depository
institution), ``deposit'', ``depository institution'',
``Federal depository institution'', ``Federal savings
association'', ``foreign bank'', ``including'',
``insured branch'', ``insured depository institution'',
``national member bank'', ``national nonmember bank'',
``savings association'', ``State bank'', ``State
depository institution'', ``State member bank'',
``State nonmember bank'', ``State savings
association'', and ``subsidiary'' have the same
meanings as in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813).
(B) Holding companies.--The term--
(i) ``bank holding company'' has the same
meaning as in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841);
(ii) ``financial holding company'' has the
same meaning as in section 2(p) of the Bank
Holding Company Act of 1956 (12 U.S.C.
1841(p)); and
(iii) ``savings and loan holding company''
has the same meaning as in section 10 of the
Home Owners' Loan Act (12 U.S.C. 1467a(a)).
SEC. 3. SEVERABILITY.
If any provision of this Act, an amendment made by this Act, or the
application of such provision or amendment to any person or
circumstance is held to be unconstitutional, the remainder of this Act,
the amendments made by this Act, and the application of the provisions
of such to any person or circumstance shall not be affected thereby.
SEC. 4. EFFECTIVE DATE.
Except as otherwise specifically provided in this Act or the
amendments made by this Act, this Act and such amendments shall take
effect 1 day after the date of enactment of this Act.
TITLE I--FINANCIAL STABILITY
SEC. 101. SHORT TITLE.
This title may be cited as the ``Financial Stability Act of 2010''.
SEC. 102. DEFINITIONS.
(a) In General.--For purposes of this title, unless the context
otherwise requires, the following definitions shall apply:
(1) Bank holding company.--The term ``bank holding
company'' has the same meaning as in section 2 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841). A foreign bank or
company that is treated as a bank holding company for purposes
of the Bank Holding Company Act of 1956, pursuant to section
8(a) of the International Banking Act of 1978 (12 U.S.C.
3106(a)), shall be treated as a bank holding company for
purposes of this title.
(2) Chairperson.--The term ``Chairperson'' means the
Chairperson of the Council.
(3) Member agency.--The term ``member agency'' means an
agency represented by a voting member of the Council.
(4) Nonbank financial company definitions.--
(A) Foreign nonbank financial company.--The term
``foreign nonbank financial company'' means a company
(other than a company that is, or is treated in the
United States as, a bank holding company or a
subsidiary thereof) that is--
(i) incorporated or organized in a country
other than the United States; and
(ii) substantially engaged in, including
through a branch in the United States,
activities in the United States that are
financial in nature (as defined in section 4(k)
of the Bank Holding Company Act of 1956).
(B) U.S. nonbank financial company.--The term
``U.S. nonbank financial company'' means a company
(other than a bank holding company or a subsidiary
thereof, or a Farm Credit System institution chartered
and subject to the provisions of the Farm Credit Act of
1971 (12 U.S.C. 2001 et. seq.)) that is--
(i) incorporated or organized under the
laws of the United States or any State; and
(ii) substantially engaged in activities in
the United States that are financial in nature
(as defined in section 4(k) of the Bank Holding
Company Act of 1956).
(C) Nonbank financial company.--The term ``nonbank
financial company'' means a U.S. nonbank financial
company and a foreign nonbank financial company.
(D) Nonbank financial company supervised by the
board of governors.--The term ``nonbank financial
company supervised by the Board of Governors'' means a
nonbank financial company that the Council has
determined under section 113 shall be supervised by the
Board of Governors.
(5) Office of financial research.--The term ``Office of
Financial Research'' means the office established under section
152.
(6) Significant institutions.--The terms ``significant
nonbank financial company'' and ``significant bank holding
company'' have the meanings given those terms by rule of the
Board of Governors.
(b) Definitional Criteria.--The Board of Governors shall establish,
by regulation, the criteria to determine whether a company is
substantially engaged in activities in the United States that are
financial in nature (as defined in section 4(k) of the Bank Holding
Company Act of 1956) for purposes of the definitions of the terms
``U.S. nonbank financial company'' and ``foreign nonbank financial
company'' under subsection (a)(4).
(c) Foreign Nonbank Financial Companies.--For purposes of the
authority of the Board of Governors under this title with respect to
foreign nonbank financial companies, references in this title to
``company'' or ``subsidiary'' include only the United States activities
and subsidiaries of such foreign company.
Subtitle A--Financial Stability Oversight Council
SEC. 111. FINANCIAL STABILITY OVERSIGHT COUNCIL ESTABLISHED.
(a) Establishment.--Effective on the date of enactment of this Act,
there is established the Financial Stability Oversight Council.
(b) Membership.--The Council shall consist of the following
members:
(1) Voting members.--The voting members, who shall each
have 1 vote on the Council shall be--
(A) the Secretary of the Treasury, who shall serve
as Chairperson of the Council;
(B) the Chairman of the Board of Governors;
(C) the Comptroller of the Currency;
(D) the Director of the Bureau;
(E) the Chairman of the Commission;
(F) the Chairperson of the Corporation;
(G) the Chairperson of the Commodity Futures
Trading Commission;
(H) the Director of the Federal Housing Finance
Agency; and
(I) an independent member appointed by the
President, by and with the advice and consent of the
Senate, having insurance expertise.
(2) Nonvoting members.--The Director of the Office of
Financial Research--
(A) shall serve in an advisory capacity as a
nonvoting member of the Council; and
(B) may not be excluded from any of the
proceedings, meetings, discussions, or deliberations of
the Council.
(c) Terms; Vacancy.--
(1) Terms.--The independent member of the Council shall
serve for a term of 6 years.
(2) Vacancy.--Any vacancy on the Council shall be filled in
the manner in which the original appointment was made.
(3) Acting officials may serve.--In the event of a vacancy
in the office of the head of a member agency or department, and
pending the appointment of a successor, or during the absence
or disability of the head of a member agency or department, the
acting head of the member agency or department shall serve as a
member of the Council in the place of that agency or department
head.
(d) Technical and Professional Advisory Committees.--The Council
may appoint such special advisory, technical, or professional
committees as may be useful in carrying out the functions of the
Council, including an advisory committee consisting of State
regulators, and the members of such committees may be members of the
Council, or other persons, or both.
(e) Meetings.--
(1) Timing.--The Council shall meet at the call of the
Chairperson or a majority of the members then serving, but not
less frequently than quarterly.
(2) Rules for conducting business.--The Council shall adopt
such rules as may be necessary for the conduct of the business
of the Council. Such rules shall be rules of agency
organization, procedure, or practice for purposes of section
553 of title 5, United States Code.
(f) Voting.--Unless otherwise specified, the Council shall make all
decisions that it is authorized or required to make by a majority vote
of the members then serving.
(g) Nonapplicability of FACA.--The Federal Advisory Committee Act
(5 U.S.C. App.) shall not apply to the Council, or to any special
advisory, technical, or professional committee appointed by the
Council, except that, if an advisory, technical, or professional
committee has one or more members who are not employees of or
affiliated with the United States Government, the Council shall publish
a list of the names of the members of such committee.
(h) Assistance From Federal Agencies.--Any department or agency of
the United States may provide to the Council and any special advisory,
technical, or professional committee appointed by the Council, such
services, funds, facilities, staff, and other support services as the
Council may determine advisable.
(i) Compensation of Members.--
(1) Federal employee members.--All members of the Council
who are officers or employees of the United States shall serve
without compensation in addition to that received for their
services as officers or employees of the United States.
(2) Compensation for non-federal member.--Section 5314 of
title 5, United States Code, is amended by adding at the end
the following:
``Independent Member of the Financial Stability Oversight
Council (1).''.
(j) Detail of Government Employees.--Any employee of the Federal
Government may be detailed to the Council without reimbursement, and
such detail shall be without interruption or loss of civil service
status or privilege. An employee of the Federal Government detailed to
the Council shall report to and be subject to oversight by the Council
during the assignment to the Council, and shall be compensated by the
department or agency from which the employee was detailed.
SEC. 112. COUNCIL AUTHORITY.
(a) Purposes and Duties of the Council.--
(1) In general.--The purposes of the Council are--
(A) to identify risks to the financial stability of
the United States that could arise from the material
financial distress or failure of large, interconnected
bank holding companies or nonbank financial companies;
(B) to promote market discipline, by eliminating
expectations on the part of shareholders, creditors,
and counterparties of such companies that the
Government will shield them from losses in the event of
failure; and
(C) to respond to emerging threats to the stability
of the United States financial markets.
(2) Duties.--The Council shall, in accordance with this
title--
(A) collect information from member agencies and
other Federal and State financial regulatory agencies
and, if necessary to assess risks to the United States
financial system, direct the Office of Financial
Research to collect information from bank holding
companies and nonbank financial companies;
(B) provide direction to, and request data and
analyses from, the Office of Financial Research to
support the work of the Council;
(C) monitor the financial services marketplace in
order to identify potential threats to the financial
stability of the United States;
(D) facilitate information sharing and coordination
among the member agencies and other Federal and State
agencies regarding domestic financial services policy
development, rulemaking, examinations, reporting
requirements, and enforcement actions;
(E) recommend to the member agencies general
supervisory priorities and principles reflecting the
outcome of discussions among the member agencies;
(F) identify gaps in regulation that could pose
risks to the financial stability of the United States;
(G) require supervision by the Board of Governors
for nonbank financial companies that may pose risks to
the financial stability of the United States in the
event of their material financial distress or failure,
pursuant to section 113;
(H) make recommendations to the Board of Governors
concerning the establishment of heightened prudential
standards for risk-based capital, leverage, liquidity,
contingent capital, resolution plans and credit
exposure reports, concentration limits, enhanced public
disclosures, and overall risk management for nonbank
financial companies and large, interconnected bank
holding companies supervised by the Board of Governors;
(I) identify systemically important financial
market utilities and payment, clearing, and settlement
activities (as that term is defined in title VIII), and
require such utilities and activities to be subject to
standards established by the Board of Governors;
(J) make recommendations to primary financial
regulatory agencies to apply new or heightened
standards and safeguards for financial activities or
practices that could create or increase risks of
significant liquidity, credit, or other problems
spreading among bank holding companies, nonbank
financial companies, and United States financial
markets;
(K) make determinations regarding exemptions in
title VII, where necessary;
(L) provide a forum for--
(i) discussion and analysis of emerging
market developments and financial regulatory
issues; and
(ii) resolution of jurisdictional disputes
among the members of the Council; and
(M) annually report to and testify before Congress
on--
(i) the activities of the Council;
(ii) significant financial market
developments and potential emerging threats to
the financial stability of the United States;
(iii) all determinations made under section
113 or title VIII, and the basis for such
determinations; and
(iv) recommendations--
(I) to enhance the integrity,
efficiency, competitiveness, and
stability of United States financial
markets;
(II) to promote market discipline;
and
(III) to maintain investor
confidence.
(b) Authority To Obtain Information.--
(1) In general.--The Council may receive, and may request
the submission of, any data or information from the Office of
Financial Research and member agencies, as necessary--
(A) to monitor the financial services marketplace
to identify potential risks to the financial stability
of the United States; or
(B) to otherwise carry out any of the provisions of
this title.
(2) Submissions by the office and member agencies.--
Notwithstanding any other provision of law, the Office of
Financial Research and any member agency are authorized to
submit information to the Council.
(3) Financial data collection.--
(A) In general.--The Council, acting through the
Office of Financial Research, may require the
submission of periodic and other reports from any
nonbank financial company or bank holding company for
the purpose of assessing the extent to which a
financial activity or financial market in which the
nonbank financial company or bank holding company
participates, or the nonbank financial company or bank
holding company itself, poses a threat to the financial
stability of the United States.
(B) Mitigation of report burden.--Before requiring
the submission of reports from any nonbank financial
company or bank holding company that is regulated by a
member agency or any primary financial regulatory
agency, the Council, acting through the Office of
Financial Research, shall coordinate with such agencies
and shall, whenever possible, rely on information
available from the Office of Financial Research or such
agencies.
(4) Back-up examination by the board of governors.--If the
Council is unable to determine whether the financial activities
of a nonbank financial company pose a threat to the financial
stability of the United States, based on information or reports
obtained under paragraph (3), discussions with management, and
publicly available information, the Council may request the
Board of Governors, and the Board of Governors is authorized,
to conduct an examination of the nonbank financial company for
the sole purpose of determining whether the nonbank financial
company should be supervised by the Board of Governors for
purposes of this title.
(5) Confidentiality.--
(A) In general.--The Council, the Office of
Financial Research, and the other member agencies shall
maintain the confidentiality of any data, information,
and reports submitted under this subsection and
subtitle B.
(B) Retention of privilege.--The submission of any
nonpublicly available data or information under this
subsection and subtitle B shall not constitute a waiver
of, or otherwise affect, any privilege arising under
Federal or State law (including the rules of any
Federal or State court) to which the data or
information is otherwise subject.
(C) Freedom of information act.--Section 552 of
title 5, United States Code, including the exceptions
thereunder, shall apply to any data or information
submitted under this subsection and subtitle B.
SEC. 113. AUTHORITY TO REQUIRE SUPERVISION AND REGULATION OF CERTAIN
NONBANK FINANCIAL COMPANIES.
(a) U.S. Nonbank Financial Companies Supervised by the Board of
Governors.--
(1) Determination.--The Council, on a nondelegable basis
and by a vote of not fewer than \2/3\ of the members then
serving, including an affirmative vote by the Chairperson, may
determine that a U.S. nonbank financial company shall be
supervised by the Board of Governors and shall be subject to
prudential standards, in accordance with this title, if the
Council determines that material financial distress at the U.S.
nonbank financial company would pose a threat to the financial
stability of the United States.
(2) Considerations.--Each determination under paragraph (1)
shall be based on a consideration by the Council of--
(A) the degree of leverage of the company;
(B) the amount and nature of the financial assets
of the company;
(C) the amount and types of the liabilities of the
company, including the degree of reliance on short-term
funding;
(D) the extent and types of the off-balance-sheet
exposures of the company;
(E) the extent and types of the transactions and
relationships of the company with other significant
nonbank financial companies and significant bank
holding companies;
(F) the importance of the company as a source of
credit for households, businesses, and State and local
governments and as a source of liquidity for the United
States financial system;
(G) the recommendation, if any, of a member of the
Council;
(H) the operation of, or ownership interest in, any
clearing, settlement, or payment business of the
company;
(I) the extent to which--
(i) assets are managed rather than owned by
the company; and
(ii) ownership of assets under management
is diffuse; and
(J) any other factors that the Council deems
appropriate.
(b) Foreign Nonbank Financial Companies Supervised by the Board of
Governors.--
(1) Determination.--The Council, on a nondelegable basis
and by a vote of not fewer than \2/3\ of the members then
serving, including an affirmative vote by the Chairperson, may
determine that a foreign nonbank financial company that has
substantial assets or operations in the United States shall be
supervised by the Board of Governors and shall be subject to
prudential standards in accordance with this title, if the
Council determines that material financial distress at the
foreign nonbank financial company would pose a threat to the
financial stability of the United States.
(2) Considerations.--Each determination under paragraph (1)
shall be based on a consideration by the Council of--
(A) the degree of leverage of the company;
(B) the amount and nature of the United States
financial assets of the company;
(C) the amount and types of the liabilities of the
company used to fund activities and operations in the
United States, including the degree of reliance on
short-term funding;
(D) the extent of the United States-related off-
balance-sheet exposure of the company;
(E) the extent and type of the transactions and
relationships of the company with other significant
nonbank financial companies and bank holding companies;
(F) the importance of the company as a source of
credit for United States households, businesses, and
State and local governments, and as a source of
liquidity for the United States financial system;
(G) the recommendation, if any, of a member of the
Council;
(H) the extent to which--
(i) assets are managed rather than owned by
the company; and
(ii) ownership of assets under management
is diffuse; and
(I) any other factors that the Council deems
appropriate.
(c) Reevaluation and Rescission.--The Council shall--
(1) not less frequently than annually, reevaluate each
determination made under subsections (a) and (b) with respect
to each nonbank financial company supervised by the Board of
Governors; and
(2) rescind any such determination, if the Council, by a
vote of not fewer than \2/3\ of the members then serving,
including an affirmative vote by the Chairperson, determines
that the nonbank financial company no longer meets the
standards under subsection (a) or (b), as applicable.
(d) Notice and Opportunity for Hearing and Final Determination.--
(1) In general.--The Council shall provide to a nonbank
financial company written notice of a proposed determination of
the Council, including an explanation of the basis of the
proposed determination of the Council, that such nonbank
financial company shall be supervised by the Board of Governors
and shall be subject to prudential standards in accordance with
this title.
(2) Hearing.--Not later than 30 days after the date of
receipt of any notice of a proposed determination under
paragraph (1), the nonbank financial company may request, in
writing, an opportunity for a written or oral hearing before
the Council to contest the proposed determination. Upon receipt
of a timely request, the Council shall fix a time (not later
than 30 days after the date of receipt of the request) and
place at which such company may appear, personally or through
counsel, to submit written materials (or, at the sole
discretion of the Council, oral testimony and oral argument).
(3) Final determination.--Not later than 60 days after the
date of a hearing under paragraph (2), the Council shall notify
the nonbank financial company of the final determination of the
Council, which shall contain a statement of the basis for the
decision of the Council.
(4) No hearing requested.--If a nonbank financial company
does not make a timely request for a hearing, the Council shall
notify the nonbank financial company, in writing, of the final
determination of the Council under subsection (a) or (b), as
applicable, not later than 10 days after the date by which the
company may request a hearing under paragraph (2).
(e) Emergency Exception.--
(1) In general.--The Council may waive or modify the
requirements of subsection (d) with respect to a nonbank
financial company, if the Council determines, by a vote of not
fewer than \2/3\ of the members then serving, including an
affirmative vote by the Chairperson, that such waiver or
modification is necessary or appropriate to prevent or mitigate
threats posed by the nonbank financial company to the financial
stability of the United States.
(2) Notice.--The Council shall provide notice of a waiver
or modification under this paragraph to the nonbank financial
company concerned as soon as practicable, but not later than 24
hours after the waiver or modification is granted.
(3) Opportunity for hearing.--The Council shall allow a
nonbank financial company to request, in writing, an
opportunity for a written or oral hearing before the Council to
contest a waiver or modification under this paragraph, not
later than 10 days after the date of receipt of notice of the
waiver or modification by the company. Upon receipt of a timely
request, the Council shall fix a time (not later than 15 days
after the date of receipt of the request) and place at which
the nonbank financial company may appear, personally or through
counsel, to submit written materials (or, at the sole
discretion of the Council, oral testimony and oral argument).
(4) Notice of final determination.--Not later than 30 days
after the date of any hearing under paragraph (3), the Council
shall notify the subject nonbank financial company of the final
determination of the Council under this paragraph, which shall
contain a statement of the basis for the decision of the
Council.
(f) Consultation.--The Council shall consult with the primary
financial regulatory agency, if any, for each nonbank financial company
or subsidiary of a nonbank financial company that is being considered
for supervision by the Board of Governors under this section before the
Council makes any final determination with respect to such nonbank
financial company under subsection (a), (b), or (c).
(g) Judicial Review.--If the Council makes a final determination
under this section with respect to a nonbank financial company, such
nonbank financial company may, not later than 30 days after the date of
receipt of the notice of final determination under subsection (d)(3) or
(e)(4), bring an action in the United States district court for the
judicial district in which the home office of such nonbank financial
company is located, or in the United States District Court for the
District of Columbia, for an order requiring that the final
determination be rescinded, and the court shall, upon review, dismiss
such action or direct the final determination to be rescinded. Review
of such an action shall be limited to whether the final determination
made under this section was arbitrary and capricious.
SEC. 114. REGISTRATION OF NONBANK FINANCIAL COMPANIES SUPERVISED BY THE
BOARD OF GOVERNORS.
Not later than 180 days after the date of a final Council
determination under section 113 that a nonbank financial company is to
be supervised by the Board of Governors, such company shall register
with the Board of Governors, on forms prescribed by the Board of
Governors, which shall include such information as the Board of
Governors, in consultation with the Council, may deem necessary or
appropriate to carry out this title.
SEC. 115. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK
FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF GOVERNORS
AND CERTAIN BANK HOLDING COMPANIES.
(a) In General.--
(1) Purpose.--In order to prevent or mitigate risks to the
financial stability of the United States that could arise from
the material financial distress or failure of large,
interconnected financial institutions, the Council may make
recommendations to the Board of Governors concerning the
establishment and refinement of prudential standards and
reporting and disclosure requirements applicable to nonbank
financial companies supervised by the Board of Governors and
large, interconnected bank holding companies, that--
(A) are more stringent than those applicable to
other nonbank financial companies and bank holding
companies that do not present similar risks to the
financial stability of the United States; and
(B) increase in stringency, based on the
considerations identified in subsection (b)(3).
(2) Limitation on bank holding companies.--Any standards
recommended under subsections (b) through (f) shall not apply
to any bank holding company with total consolidated assets of
less than $50,000,000,000. The Council may recommend an asset
threshold greater than $50,000,000,000 for the applicability of
any particular standard under those subsections.
(b) Development of Prudential Standards.--
(1) In general.--The recommendations of the Council under
subsection (a) may include--
(A) risk-based capital requirements;
(B) leverage limits;
(C) liquidity requirements;
(D) resolution plan and credit exposure report
requirements;
(E) concentration limits;
(F) a contingent capital requirement;
(G) enhanced public disclosures; and
(H) overall risk management requirements.
(2) Prudential standards for foreign financial companies.--
In making recommendations concerning the standards set forth in
paragraph (1) that would apply to foreign nonbank financial
companies supervised by the Board of Governors or foreign-based
bank holding companies, the Council shall give due regard to
the principle of national treatment and competitive equity.
(3) Considerations.--In making recommendations concerning
prudential standards under paragraph (1), the Council shall--
(A) take into account differences among nonbank
financial companies supervised by the Board of
Governors and bank holding companies described in
subsection (a), based on--
(i) the factors described in subsections
(a) and (b) of section 113;
(ii) whether the company owns an insured
depository institution;
(iii) nonfinancial activities and
affiliations of the company; and
(iv) any other factors that the Council
determines appropriate; and
(B) to the extent possible, ensure that small
changes in the factors listed in subsections (a) and
(b) of section 113 would not result in sharp,
discontinuous changes in the prudential standards
established under paragraph (1).
(c) Contingent Capital.--
(1) Study required.--The Council shall conduct a study of
the feasibility, benefits, costs, and structure of a contingent
capital requirement for nonbank financial companies supervised
by the Board of Governors and bank holding companies described
in subsection (a), which study shall include--
(A) an evaluation of the degree to which such
requirement would enhance the safety and soundness of
companies subject to the requirement, promote the
financial stability of the United States, and reduce
risks to United States taxpayers;
(B) an evaluation of the characteristics and
amounts of convertible debt that should be required;
(C) an analysis of potential prudential standards
that should be used to determine whether the contingent
capital of a company would be converted to equity in
times of financial stress;
(D) an evaluation of the costs to companies, the
effects on the structure and operation of credit and
other financial markets, and other economic effects of
requiring contingent capital;
(E) an evaluation of the effects of such
requirement on the international competitiveness of
companies subject to the requirement and the prospects
for international coordination in establishing such
requirement; and
(F) recommendations for implementing regulations.
(2) Report.--The Council shall submit a report to Congress
regarding the study required by paragraph (1) not later than 2
years after the date of enactment of this Act.
(3) Recommendations.--
(A) In general.--Subsequent to submitting a report
to Congress under paragraph (2), the Council may make
recommendations to the Board of Governors to require
any nonbank financial company supervised by the Board
of Governors and any bank holding company described in
subsection (a) to maintain a minimum amount of long-
term hybrid debt that is convertible to equity in times
of financial stress.
(B) Factors to consider.--In making recommendations
under this subsection, the Council shall consider--
(i) an appropriate transition period for
implementation of a conversion under this
subsection;
(ii) the factors described in subsection
(b)(3);
(iii) capital requirements applicable to a
nonbank financial company supervised by the
Board of Governors or a bank holding company
described in subsection (a), and subsidiaries
thereof;
(iv) results of the study required by
paragraph (1); and
(v) any other factor that the Council deems
appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Council may make recommendations
to the Board of Governors concerning the requirement that each
nonbank financial company supervised by the Board of Governors
and each bank holding company described in subsection (a)
report periodically to the Council, the Board of Governors, and
the Corporation, the plan of such company for rapid and orderly
resolution in the event of material financial distress or
failure.
(2) Credit exposure report.--The Council may make
recommendations to the Board of Governors concerning the
advisability of requiring each nonbank financial company
supervised by the Board of Governors and bank holding company
described in subsection (a) to report periodically to the
Council, the Board of Governors, and the Corporation on--
(A) the nature and extent to which the company has
credit exposure to other significant nonbank financial
companies and significant bank holding companies; and
(B) the nature and extent to which other such
significant nonbank financial companies and significant
bank holding companies have credit exposure to that
company.
(e) Concentration Limits.--In order to limit the risks that the
failure of any individual company could pose to nonbank financial
companies supervised by the Board of Governors or bank holding
companies described in subsection (a), the Council may make
recommendations to the Board of Governors to prescribe standards to
limit such risks, as set forth in section 165.
(f) Enhanced Public Disclosures.--The Council may make
recommendations to the Board of Governors to require periodic public
disclosures by bank holding companies described in subsection (a) and
by nonbank financial companies supervised by the Board of Governors, in
order to support market evaluation of the risk profile, capital
adequacy, and risk management capabilities thereof.
SEC. 116. REPORTS.
(a) In General.--Subject to subsection (b), the Council, acting
through the Office of Financial Research, may require a bank holding
company with total consolidated assets of $50,000,000,000 or greater or
a nonbank financial company supervised by the Board of Governors, and
any subsidiary thereof, to submit certified reports to keep the Council
informed as to--
(1) the financial condition of the company;
(2) systems for monitoring and controlling financial,
operating, and other risks;
(3) transactions with any subsidiary that is a depository
institution; and
(4) the extent to which the activities and operations of
the company and any subsidiary thereof, could, under adverse
circumstances, have the potential to disrupt financial markets
or affect the overall financial stability of the United States.
(b) Use of Existing Reports.--
(1) In general.--For purposes of compliance with subsection
(a), the Council, acting through the Office of Financial
Research, shall, to the fullest extent possible, use--
(A) reports that a bank holding company, nonbank
financial company supervised by the Board of Governors,
or any functionally regulated subsidiary of such
company has been required to provide to other Federal
or State regulatory agencies;
(B) information that is otherwise required to be
reported publicly; and
(C) externally audited financial statements.
(2) Availability.--Each bank holding company described in
subsection (a) and nonbank financial company supervised by the
Board of Governors, and any subsidiary thereof, shall provide
to the Council, at the request of the Council, copies of all
reports referred to in paragraph (1).
(3) Confidentiality.--The Council shall maintain the
confidentiality of the reports obtained under subsection (a)
and paragraph (1)(A) of this subsection.
SEC. 117. TREATMENT OF CERTAIN COMPANIES THAT CEASE TO BE BANK HOLDING
COMPANIES.
(a) Applicability.--This section shall apply to any entity or a
successor entity that--
(1) was a bank holding company having total consolidated
assets equal to or greater than $50,000,000,000 as of January
1, 2010; and
(2) received financial assistance under or participated in
the Capital Purchase Program established under the Troubled
Asset Relief Program authorized by the Emergency Economic
Stabilization Act of 2008.
(b) Treatment.--If an entity described in subsection (a) ceases to
be a bank holding company at any time after January 1, 2010, then such
entity shall be treated as a nonbank financial company supervised by
the Board of Governors, as if the Council had made a determination
under section 113 with respect to that entity.
(c) Appeal.--
(1) Request for hearing.--An entity may request, in
writing, an opportunity for a written or oral hearing before
the Council to appeal its treatment as a nonbank financial
company supervised by the Board of Governors in accordance with
this section. Upon receipt of the request, the Council shall
fix a time (not later than 30 days after the date of receipt of
the request) and place at which such entity may appear,
personally or through counsel, to submit written materials (or,
at the sole discretion of the Council, oral testimony and oral
argument).
(2) Decision.--
(A) Proposed decision.--Not later than 60 days
after the date of a hearing under paragraph (1), the
Council shall submit a report to, and may testify
before, the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial
Services of the House of Representatives on the
proposed decision of the Council regarding an appeal
under paragraph (1), which report shall include a
statement of the basis for the proposed decision of the
Council.
(B) Notice of final decision.--The Council shall
notify the subject entity of the final decision of the
Council regarding an appeal under paragraph (1), which
notice shall contain a statement of the basis for the
final decision of the Council, not later than 60 days
after the later of--
(i) the date of the submission of the
report under subparagraph (A); or
(ii) if the Committee on Banking, Housing,
and Urban Affairs of the Senate or the
Committee on Financial Services of the House of
Representatives holds one or more hearings
regarding such report, the date of the last
such hearing.
(C) Considerations.--In making a decision regarding
an appeal under paragraph (1), the Council shall
consider whether the company meets the standards under
section 113(a) or 113(b), as applicable, and the
definition of the term ``nonbank financial company''
under section 102. The decision of the Council shall be
final, subject to the review under paragraph (3).
(3) Review.--If the Council denies an appeal under this
subsection, the Council shall, not less frequently than
annually, review and reevaluate the decision.
SEC. 118. COUNCIL FUNDING.
Any expenses of the Council shall be treated as expenses of, and
paid by, the Office of Financial Research.
SEC. 119. RESOLUTION OF SUPERVISORY JURISDICTIONAL DISPUTES AMONG
MEMBER AGENCIES.
(a) Request for Dispute Resolution.--The Council shall resolve a
dispute among 2 or more member agencies, if--
(1) a member agency has a dispute with another member
agency about the respective jurisdiction over a particular bank
holding company, nonbank financial company, or financial
activity or product (excluding matters for which another
dispute mechanism specifically has been provided under Federal
law);
(2) the Council determines that the disputing agencies
cannot, after a demonstrated good faith effort, resolve the
dispute without the intervention of the Council; and
(3) any of the member agencies involved in the dispute--
(A) provides all other disputants prior notice of
the intent to request dispute resolution by the
Council; and
(B) requests in writing, not earlier than 14 days
after providing the notice described in subparagraph
(A), that the Council resolve the dispute.
(b) Council Decision.--The Council shall resolve each dispute
described in subsection (a)--
(1) within a reasonable time after receiving the dispute
resolution request;
(2) after consideration of relevant information provided by
each agency party to the dispute; and
(3) by agreeing with 1 of the disputants regarding the
entirety of the matter, or by determining a compromise
position.
(c) Form and Binding Effect.--A Council decision under this section
shall--
(1) be in writing;
(2) include an explanation of the reasons therefor; and
(3) be binding on all Federal agencies that are parties to
the dispute.
SEC. 120. ADDITIONAL STANDARDS APPLICABLE TO ACTIVITIES OR PRACTICES
FOR FINANCIAL STABILITY PURPOSES.
(a) In General.--The Council may issue recommendations to the
primary financial regulatory agencies to apply new or heightened
standards and safeguards, including standards enumerated in section
115, for a financial activity or practice conducted by bank holding
companies or nonbank financial companies under their respective
jurisdictions, if the Council determines that the conduct of such
activity or practice could create or increase the risk of significant
liquidity, credit, or other problems spreading among bank holding
companies and nonbank financial companies or the financial markets of
the United States.
(b) Procedure for Recommendations to Regulators.--
(1) Notice and opportunity for comment.--The Council shall
consult with the primary financial regulatory agencies and
provide notice to the public and opportunity for comment for
any proposed recommendation that the primary financial
regulatory agencies apply new or heightened standards and
safeguards for a financial activity or practice.
(2) Criteria.--The new or heightened standards and
safeguards for a financial activity or practice recommended
under paragraph (1)--
(A) shall take costs to long-term economic growth
into account; and
(B) may include prescribing the conduct of the
activity or practice in specific ways (such as by
limiting its scope, or applying particular capital or
risk management requirements to the conduct of the
activity) or prohibiting the activity or practice.
(c) Implementation of Recommended Standards.--
(1) Role of primary financial regulatory agency.--
(A) In general.--Each primary financial regulatory
agency may impose, require reports regarding, examine
for compliance with, and enforce standards in
accordance with this section with respect to those
entities for which it is the primary financial
regulatory agency.
(B) Rule of construction.--The authority under this
paragraph is in addition to, and does not limit, any
other authority of a primary financial regulatory
agency. Compliance by an entity with actions taken by a
primary financial regulatory agency under this section
shall be enforceable in accordance with the statutes
governing the respective jurisdiction of the primary
financial regulatory agency over the entity, as if the
agency action were taken under those statutes.
(2) Imposition of standards.--The primary financial
regulatory agency shall impose the standards recommended by the
Council in accordance with subsection (a), or similar standards
that the Council deems acceptable, or shall explain in writing
to the Council, not later than 90 days after the date on which
the Council issues the recommendation, why the agency has
determined not to follow the recommendation of the Council.
(d) Report to Congress.--The Council shall report to Congress on--
(1) any recommendations issued by the Council under this
section;
(2) the implementation of, or failure to implement such
recommendation on the part of a primary financial regulatory
agency; and
(3) in any case in which no primary financial regulatory
agency exists for the nonbank financial company conducting
financial activities or practices referred to in subsection
(a), recommendations for legislation that would prevent such
activities or practices from threatening the stability of the
financial system of the United States.
(e) Effect of Rescission of Identification.--
(1) Notice.--The Council may recommend to the relevant
primary financial regulatory agency that a financial activity
or practice no longer requires any standards or safeguards
implemented under this section.
(2) Determination of primary financial regulatory agency to
continue.--
(A) In general.--Upon receipt of a recommendation
under paragraph (1), a primary financial regulatory
agency that has imposed standards under this section
shall determine whether standards that it has imposed
under this section should remain in effect.
(B) Appeal process.--Each primary financial
regulatory agency that has imposed standards under this
section shall promulgate regulations to establish a
procedure under which entities under its jurisdiction
may appeal a determination by such agency under this
paragraph that standards imposed under this section
should remain in effect.
SEC. 121. MITIGATION OF RISKS TO FINANCIAL STABILITY.
(a) Mitigatory Actions.--If the Board of Governors determines that
a bank holding company with total consolidated assets of
$50,000,000,000 or more, or a nonbank financial company supervised by
the Board of Governors, poses a grave threat to the financial stability
of the United States, the Board of Governors, upon an affirmative vote
of not fewer than \2/3\ of the Council members then serving, shall
require the subject company--
(1) to terminate one or more activities;
(2) to impose conditions on the manner in which the company
conducts one or more activities; or
(3) if the Board of Governors determines that such action
is inadequate to mitigate a threat to the financial stability
of the United States in its recommendation, to sell or
otherwise transfer assets or off-balance-sheet items to
unaffiliated entities.
(b) Notice and Hearing.--
(1) In general.--The Board of Governors, in consultation
with the Council, shall provide to a company described in
subsection (a) written notice that such company is being
considered for mitigatory action pursuant to this section,
including an explanation of the basis for, and description of,
the proposed mitigatory action.
(2) Hearing.--Not later than 30 days after the date of
receipt of notice under paragraph (1), the company may request,
in writing, an opportunity for a written or oral hearing before
the Board of Governors to contest the proposed mitigatory
action. Upon receipt of a timely request, the Board of
Governors shall fix a time (not later than 30 days after the
date of receipt of the request) and place at which such company
may appear, personally or through counsel, to submit written
materials (or, at the discretion of the Board of Governors, in
consultation with the Council, oral testimony and oral
argument).
(3) Decision.--Not later than 60 days after the date of a
hearing under paragraph (2), or not later than 60 days after
the provision of a notice under paragraph (1) if no hearing was
held, the Board of Governors shall notify the company of the
final decision of the Board of Governors, including the results
of the vote of the Council, as described in subsection (a).
(c) Factors for Consideration.--The Board of Governors and the
Council shall take into consideration the factors set forth in
subsection (a) or (b) of section 113, as applicable, in a determination
described in subsection (a) and in a decision described in subsection
(b).
(d) Application to Foreign Financial Companies.--The Board of
Governors may prescribe regulations regarding the application of this
section to foreign nonbank financial companies supervised by the Board
of Governors and foreign-based bank holding companies, giving due
regard to the principle of national treatment and competitive equity.
Subtitle B--Office of Financial Research
SEC. 151. DEFINITIONS.
For purposes of this subtitle--
(1) the terms ``Office'' and ``Director'' mean the Office
of Financial Research established under this subtitle and the
Director thereof, respectively;
(2) the term ``financial company'' has the same meaning as
in title II, and includes an insured depository institution and
an insurance company;
(3) the term ``Data Center'' means the data center
established under section 154;
(4) the term ``Research and Analysis Center'' means the
research and analysis center established under section 154;
(5) the term ``financial transaction data'' means the
structure and legal description of a financial contract, with
sufficient detail to describe the rights and obligations
between counterparties and make possible an independent
valuation;
(6) the term ``position data''--
(A) means data on financial assets or liabilities
held on the balance sheet of a financial company, where
positions are created or changed by the execution of a
financial transaction; and
(B) includes information that identifies
counterparties, the valuation by the financial company
of the position, and information that makes possible an
independent valuation of the position;
(7) the term ``financial contract'' means a legally binding
agreement between 2 or more counterparties, describing rights
and obligations relating to the future delivery of items of
intrinsic or extrinsic value among the counterparties; and
(8) the term ``financial instrument'' means a financial
contract in which the terms and conditions are publicly
available, and the roles of one or more of the counterparties
are assignable without the consent of any of the other
counterparties (including common stock of a publicly traded
company, government bonds, or exchange traded futures and
options contracts).
SEC. 152. OFFICE OF FINANCIAL RESEARCH ESTABLISHED.
(a) Establishment.--There is established within the Department of
the Treasury the Office of Financial Research.
(b) Director.--
(1) In general.--The Office shall be headed by a Director,
who shall be appointed by the President, by and with the advice
and consent of the Senate.
(2) Term of service.--The Director shall serve for a term
of 6 years, except that, in the event that a successor is not
nominated and confirmed by the end of the term of service of a
Director, the Director may continue to serve until such time as
the next Director is appointed and confirmed.
(3) Executive level.--The Director shall be compensated at
level III of the Executive Schedule.
(4) Prohibition on dual service.--The individual serving in
the position of Director may not, during such service, also
serve as the head of any financial regulatory agency.
(5) Responsibilities, duties, and authority.--The Director
shall have sole discretion in the manner in which the Director
fulfills the responsibilities and duties and exercises the
authorities described in this subtitle.
(c) Budget.--The Director, in consultation with the Chairperson,
shall establish the annual budget of the Office.
(d) Office Personnel.--
(1) In general.--The Director, in consultation with the
Chairperson, may fix the number of, and appoint and direct, all
employees of the Office.
(2) Compensation.--The Director, in consultation with the
Chairperson, shall fix, adjust, and administer the pay for all
employees of the Office, without regard to chapter 51 or
subchapter III of chapter 53 of title 5, United States Code,
relating to classification of positions and General Schedule
pay rates.
(3) Comparability.--Section 1206(a) of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (12
U.S.C. 1833b(a)) is amended--
(A) by striking ``Finance Board,'' and inserting
``Finance Board, the Office of Financial Research, and
the Bureau of Consumer Financial Protection''; and
(B) by striking ``and the Office of Thrift
Supervision,''.
(e) Assistance From Federal Agencies.--Any department or agency of
the United States may provide to the Office and any special advisory,
technical, or professional committees appointed by the Office, such
services, funds, facilities, staff, and other support services as the
Office may determine advisable. Any Federal Government employee may be
detailed to the Office without reimbursement, and such detail shall be
without interruption or loss of civil service status or privilege.
(f) Procurement of Temporary and Intermittent Services.--The
Director may procure temporary and intermittent services under section
3109(b) of title 5, United States Code, at rates for individuals which
do not exceed the daily equivalent of the annual rate of basic pay
prescribed for level V of the Executive Schedule under section 5316 of
such title.
(g) Contracting and Leasing Authority.--Notwithstanding the Federal
Property and Administrative Services Act of 1949 (41 U.S.C. 251 et
seq.) or any other provision of law, the Director may--
(1) enter into and perform contracts, execute instruments,
and acquire, in any lawful manner, such goods and services, or
personal or real property (or property interest), as the
Director deems necessary to carry out the duties and
responsibilities of the Office; and
(2) hold, maintain, sell, lease, or otherwise dispose of
the property (or property interest) acquired under paragraph
(1).
(h) Non-compete.--The Director and any staff of the Office who has
had access to the transaction or position data maintained by the Data
Center or other business confidential information about financial
entities required to report to the Office, may not, for a period of 1
year after last having access to such transaction or position data or
business confidential information, be employed by or provide advice or
consulting services to a financial company, regardless of whether that
entity is required to report to the Office. For staff whose access to
business confidential information was limited, the Director may
provide, on a case-by-case basis, for a shorter period of post-
employment prohibition, provided that the shorter period does not
compromise business confidential information.
(i) Technical and Professional Advisory Committees.--The Office, in
consultation with the Chairperson, may appoint such special advisory,
technical, or professional committees as may be useful in carrying out
the functions of the Office, and the members of such committees may be
staff of the Office, or other persons, or both.
(j) Fellowship Program.--The Office, in consultation with the
Chairperson, may establish and maintain an academic and professional
fellowship program, under which qualified academics and professionals
shall be invited to spend not longer than 2 years at the Office, to
perform research and to provide advanced training for Office personnel.
(k) Executive Schedule Compensation.--Section 5314 of title 5,
United States Code, is amended by adding at the end the following new
item:
``Director of the Office of Financial Research.''.
SEC. 153. PURPOSE AND DUTIES OF THE OFFICE.
(a) Purpose and Duties.--The purpose of the Office is to support
the Council in fulfilling the purposes and duties of the Council, as
set forth in subtitle A, and to support member agencies, by--
(1) collecting data on behalf of the Council, and providing
such data to the Council and member agencies;
(2) standardizing the types and formats of data reported
and collected;
(3) performing applied research and essential long-term
research;
(4) developing tools for risk measurement and monitoring;
(5) performing other related services;
(6) making the results of the activities of the Office
available to financial regulatory agencies; and
(7) assisting such member agencies in determining the types
and formats of data authorized by this Act to be collected by
such member agencies.
(b) Administrative Authority.--The Office may--
(1) share data and information, including software
developed by the Office, with the Council and member agencies,
which shared data, information, and software--
(A) shall be maintained with at least the same
level of security as is used by the Office; and
(B) may not be shared with any individual or entity
without the permission of the Council;
(2) sponsor and conduct research projects; and
(3) assist, on a reimbursable basis, with financial
analyses undertaken at the request of other Federal agencies
that are not member agencies.
(c) Rulemaking Authority.--
(1) Scope.--The Office, in consultation with the
Chairperson, shall issue rules, regulations, and orders only to
the extent necessary to carry out the purposes and duties
described in paragraphs (1), (2), and (7) of subsection (a).
(2) Standardization.--Member agencies, in consultation with
the Office, shall implement regulations promulgated by the
Office under paragraph (1) to standardize the types and formats
of data reported and collected on behalf of the Council, as
described in subsection (a)(2). If a member agency fails to
implement such regulations prior to the expiration of the 3-
year period following the date of publication of final
regulations, the Office, in consultation with the Chairperson,
may implement such regulations with respect to the financial
entities under the jurisdiction of the member agency.
(d) Testimony.--
(1) In general.--The Director of the Office shall report to
and testify before the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services
of the House of Representatives annually on the activities of
the Office, including the work of the Data Center and the
Research and Analysis Center, and the assessment of the Office
of significant financial market developments and potential
emerging threats to the financial stability of the United
States.
(2) No prior review.--No officer or agency of the United
States shall have any authority to require the Director to
submit the testimony required under paragraph (1) or other
Congressional testimony to any officer or agency of the United
States for approval, comment, or review prior to the submission
of such testimony. Any such testimony to Congress shall include
a statement that the views expressed therein are those of the
Director and do not necessarily represent the views of the
President.
(e) Additional Reports.--The Director may provide additional
reports to Congress concerning the financial stability of the United
States. The Director shall notify the Council of any such additional
reports provided to Congress.
(f) Subpoena.--
(1) In general.--The Director may require, by subpoena, the
production of the data requested under subsection (a)(1) and
section 154(b)(1), but only upon a written finding by the
Director that--
(A) such data is required to carry out the
functions described under this subtitle; and
(B) the Office has coordinated with such agency, as
required under section 154(b)(1)(B)(ii).
(2) Format.--Subpoenas under paragraph (1) shall bear the
signature of the Director, and shall be served by any person or
class of persons designated by the Director for that purpose.
(3) Enforcement.--In the case of contumacy or failure to
obey a subpoena, the subpoena shall be enforceable by order of
any appropriate district court of the United States. Any
failure to obey the order of the court may be punished by the
court as a contempt of court.
SEC. 154. ORGANIZATIONAL STRUCTURE; RESPONSIBILITIES OF PRIMARY
PROGRAMMATIC UNITS.
(a) In General.--There are established within the Office, to carry
out the programmatic responsibilities of the Office--
(1) the Data Center; and
(2) the Research and Analysis Center.
(b) Data Center.--
(1) General duties.--
(A) Data collection.--The Data Center, on behalf of
the Council, shall collect, validate, and maintain all
data necessary to carry out the duties of the Data
Center, as described in this subtitle. The data
assembled shall be obtained from member agencies,
commercial data providers, publicly available data
sources, and financial entities under subparagraph (B).
(B) Authority.--
(i) In general.--The Office may, as
determined by the Council or by the Director in
consultation with the Council, require the
submission of periodic and other reports from
any financial company for the purpose of
assessing the extent to which a financial
activity or financial market in which the
financial company participates, or the
financial company itself, poses a threat to the
financial stability of the United States.
(ii) Mitigation of report burden.--Before
requiring the submission of a report from any
financial company that is regulated by a member
agency or any primary financial regulatory
agency, the Office shall coordinate with such
agencies and shall, whenever possible, rely on
information available from such agencies.
(C) Rulemaking.--The Office shall promulgate
regulations pursuant to subsections (a)(1), (a)(2),
(a)(7), and (c)(1) of section 153 regarding the type
and scope of the data to be collected by the Data
Center under this paragraph.
(2) Responsibilities.--
(A) Publication.--The Data Center shall prepare and
publish, in a manner that is easily accessible to the
public--
(i) a financial company reference database;
(ii) a financial instrument reference
database; and
(iii) formats and standards for Office
data, including standards for reporting
financial transaction and position data to the
Office.
(B) Confidentiality.--The Data Center shall not
publish any confidential data under subparagraph (A).
(3) Information security.--The Director shall ensure that
data collected and maintained by the Data Center are kept
secure and protected against unauthorized disclosure.
(4) Catalog of financial entities and instruments.--The
Data Center shall maintain a catalog of the financial entities
and instruments reported to the Office.
(5) Availability to the council and member agencies.--The
Data Center shall make data collected and maintained by the
Data Center available to the Council and member agencies, as
necessary to support their regulatory responsibilities.
(6) Other authority.--The Office shall, after consultation
with the member agencies, provide certain data to financial
industry participants and to the general public to increase
market transparency and facilitate research on the financial
system, to the extent that intellectual property rights are not
violated, business confidential information is properly
protected, and the sharing of such information poses no
significant threats to the financial system of the United
States.
(c) Research and Analysis Center.--
(1) General duties.--The Research and Analysis Center, on
behalf of the Council, shall develop and maintain independent
analytical capabilities and computing resources--
(A) to develop and maintain metrics and reporting
systems for risks to the financial stability of the
United States;
(B) to monitor, investigate, and report on changes
in system-wide risk levels and patterns to the Council
and Congress;
(C) to conduct, coordinate, and sponsor research to
support and improve regulation of financial entities
and markets;
(D) to evaluate and report on stress tests or other
stability-related evaluations of financial entities
overseen by the member agencies;
(E) to maintain expertise in such areas as may be
necessary to support specific requests for advice and
assistance from financial regulators;
(F) to investigate disruptions and failures in the
financial markets, report findings, and make
recommendations to the Council based on those findings;
(G) to conduct studies and provide advice on the
impact of policies related to systemic risk; and
(H) to promote best practices for financial risk
management.
(d) Reporting Responsibilities.--
(1) Required reports.--Not later than 2 years after the
date of enactment of this Act, and not later than 120 days
after the end of each fiscal year thereafter, the Office shall
prepare and submit a report to Congress.
(2) Content.--Each report required by this subsection shall
assess the state of the United States financial system,
including--
(A) an analysis of any threats to the financial
stability of the United States;
(B) the status of the efforts of the Office in
meeting the mission of the Office; and
(C) key findings from the research and analysis of
the financial system by the Office.
SEC. 155. FUNDING.
(a) Financial Research Fund.--
(1) Fund established.--There is established in the Treasury
of the United States a separate fund to be known as the
``Financial Research Fund''.
(2) Fund receipts.--All amounts provided to the Office
under subsection (c), and all assessments that the Office
receives under subsection (d) shall be deposited into the
Financial Research Fund.
(3) Investments authorized.--
(A) Amounts in fund may be invested.--The Director
may request the Secretary to invest the portion of the
Financial Research Fund that is not, in the judgment of
the Director, required to meet the needs of the Office.
(B) Eligible investments.--Investments shall be
made by the Secretary in obligations of the United
States or obligations that are guaranteed as to
principal and interest by the United States, with
maturities suitable to the needs of the Financial
Research Fund, as determined by the Director.
(4) Interest and proceeds credited.--The interest on, and
the proceeds from the sale or redemption of, any obligations
held in the Financial Research Fund shall be credited to and
form a part of the Financial Research Fund.
(b) Use of Funds.--
(1) In general.--Funds obtained by, transferred to, or
credited to the Financial Research Fund shall be immediately
available to the Office, and shall remain available until
expended, to pay the expenses of the Office in carrying out the
duties and responsibilities of the Office.
(2) Fees, assessments, and other funds not government
funds.--Funds obtained by, transferred to, or credited to the
Financial Research Fund shall not be construed to be Government
funds or appropriated monies.
(3) Amounts not subject to apportionment.--Notwithstanding
any other provision of law, amounts in the Financial Research
Fund shall not be subject to apportionment for purposes of
chapter 15 of title 31, United States Code, or under any other
authority, or for any other purpose.
(c) Interim Funding.--During the 2-year period following the date
of enactment of this Act, the Board of Governors shall provide to the
Office an amount sufficient to cover the expenses of the Office.
(d) Permanent Self-funding.--
(1) In general.--Beginning 2 years after the date of
enactment of this Act, the Secretary shall establish, by
regulation, and with the approval of the Council, an assessment
schedule, including the assessment base and rates, applicable
to bank holding companies with total consolidated assets of
$50,000,000,000 or greater and nonbank financial companies
supervised by the Board of Governors, that takes into account
differences among such companies, based on the considerations
for establishing the prudential standards under section 115, to
collect assessments equal to the estimated total expenses of
the Office.
(2) Shortfall.--To the extent that the assessments under
paragraph (1) do not fully cover the total expenses of the
Office, the Board of Governors shall provide to the Office an
amount sufficient to cover the difference.
SEC. 156. TRANSITION OVERSIGHT.
(a) Purpose.--The purpose of this section is to ensure that the
Office--
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and
benefits programs.
(b) Reporting Requirement.--
(1) In general.--The Office shall submit an annual report
to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives that includes the plans described in paragraph
(2).
(2) Plans.--The plans described in this paragraph are as
follows:
(A) Training and workforce development plan.--The
Office shall submit a training and workforce
development plan that includes, to the extent
practicable--
(i) identification of skill and technical
expertise needs and actions taken to meet those
requirements;
(ii) steps taken to foster innovation and
creativity;
(iii) leadership development and succession
planning; and
(iv) effective use of technology by
employees.
(B) Workplace flexibility plan.--The Office shall
submit a workforce flexibility plan that includes, to
the extent practicable--
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and childcare
assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities; or
(x) any combination of the items described
in clauses (i) through (ix).
(C) Recruitment and retention plan.--The Office
shall submit a recruitment and retention plan that
includes, to the extent practicable, provisions
relating to--
(i) the steps necessary to target highly
qualified applicant pools with diverse
backgrounds;
(ii) streamlined employment application
processes;
(iii) the provision of timely notification
of the status of employment applications to
applicants; and
(iv) the collection of information to
measure indicators of hiring effectiveness.
(c) Expiration.--The reporting requirement under subsection (b)
shall terminate 5 years after the date of enactment of this Act.
(d) Rule of Construction.--Nothing in this section may be construed
to affect--
(1) a collective bargaining agreement, as that term is
defined in section 7103(a)(8) of title 5, United States Code,
that is in effect on the date of enactment of this Act; or
(2) the rights of employees under chapter 71 of title 5,
United States Code.
Subtitle C--Additional Board of Governors Authority for Certain Nonbank
Financial Companies and Bank Holding Companies
SEC. 161. REPORTS BY AND EXAMINATIONS OF NONBANK FINANCIAL COMPANIES BY
THE BOARD OF GOVERNORS.
(a) Reports.--
(1) In general.--The Board of Governors may require each
nonbank financial company supervised by the Board of Governors,
and any subsidiary thereof, to submit reports under oath, to
keep the Board of Governors informed as to--
(A) the financial condition of the company or
subsidiary, systems of the company or subsidiary for
monitoring and controlling financial, operating, and
other risks, and the extent to which the activities and
operations of the company or subsidiary pose a threat
to the financial stability of the United States; and
(B) compliance by the company or subsidiary with
the requirements of this subtitle.
(2) Use of existing reports and information.--In carrying
out subsection (a), the Board of Governors shall, to the
fullest extent possible, use--
(A) reports and supervisory information that a
nonbank financial company or subsidiary thereof has
been required to provide to other Federal or State
regulatory agencies;
(B) information otherwise obtainable from Federal
or State regulatory agencies;
(C) information that is otherwise required to be
reported publicly; and
(D) externally audited financial statements of such
company or subsidiary.
(3) Availability.--Upon the request of the Board of
Governors, a nonbank financial company supervised by the Board
of Governors, or a subsidiary thereof, shall promptly provide
to the Board of Governors any information described in
paragraph (2).
(b) Examinations.--
(1) In general.--Subject to paragraph (2), the Board of
Governors may examine any nonbank financial company supervised
by the Board of Governors and any subsidiary of such company,
to determine--
(A) the nature of the operations and financial
condition of the company and such subsidiary;
(B) the financial, operational, and other risks
within the company that may pose a threat to the safety
and soundness of such company or to the financial
stability of the United States;
(C) the systems for monitoring and controlling such
risks; and
(D) compliance by the company with the requirements
of this subtitle.
(2) Use of examination reports and information.--For
purposes of this subsection, the Board of Governors shall, to
the fullest extent possible, rely on reports of examination of
any depository institution subsidiary or functionally regulated
subsidiary made by the primary financial regulatory agency for
that subsidiary, and on information described in subsection
(a)(2).
(c) Coordination With Primary Financial Regulatory Agency.--The
Board of Governors shall--
(1) provide to the primary financial regulatory agency for
any company or subsidiary, reasonable notice before requiring a
report, requesting information, or commencing an examination of
such subsidiary under this section; and
(2) avoid duplication of examination activities, reporting
requirements, and requests for information, to the extent
possible.
SEC. 162. ENFORCEMENT.
(a) In General.--Except as provided in subsection (b), a nonbank
financial company supervised by the Board of Governors and any
subsidiaries of such company (other than any depository institution
subsidiary) shall be subject to the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act (12
U.S.C. 1818), in the same manner and to the same extent as if the
company were a bank holding company, as provided in section 8(b)(3) of
the Federal Deposit Insurance Act (12 U.S.C. 1818(b)(3)).
(b) Enforcement Authority for Functionally Regulated
Subsidiaries.--
(1) Referral.--If the Board of Governors determines that a
condition, practice, or activity of a depository institution
subsidiary or functionally regulated subsidiary of a nonbank
financial company supervised by the Board of Governors does not
comply with the regulations or orders prescribed by the Board
of Governors under this Act, or otherwise poses a threat to the
financial stability of the United States, the Board of
Governors may recommend, in writing, to the primary financial
regulatory agency for the subsidiary that such agency initiate
a supervisory action or enforcement proceeding. The
recommendation shall be accompanied by a written explanation of
the concerns giving rise to the recommendation.
(2) Back-up authority of the board of governors.--If,
during the 60-day period beginning on the date on which the
primary financial regulatory agency receives a recommendation
under paragraph (1), the primary financial regulatory agency
does not take supervisory or enforcement action against a
subsidiary that is acceptable to the Board of Governors, the
Board of Governors (upon a vote of its members) may take the
recommended supervisory or enforcement action, as if the
subsidiary were a bank holding company subject to supervision
by the Board of Governors.
SEC. 163. ACQUISITIONS.
(a) Acquisitions of Banks; Treatment as a Bank Holding Company.--
For purposes of section 3 of the Bank Holding Company Act of 1956 (12
U.S.C. 1842), a nonbank financial company supervised by the Board of
Governors shall be deemed to be, and shall be treated as, a bank
holding company.
(b) Acquisition of Nonbank Companies.--
(1) Prior notice for large acquisitions.--Notwithstanding
section 4(k)(6)(B) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(k)(6)(B)), a bank holding company with total
consolidated assets equal to or greater than $50,000,000,000 or
a nonbank financial company supervised by the Board of
Governors shall not acquire direct or indirect ownership or
control of any voting shares of any company (other than an
insured depository institution) that is engaged in activities
described in section 4(k) of the Bank Holding Company Act of
1956 having total consolidated assets of $10,000,000,000 or
more, without providing written notice to the Board of
Governors in advance of the transaction.
(2) Exemptions.--The prior notice requirement in paragraph
(1) shall not apply with regard to the acquisition of shares
that would qualify for the exemptions in section 4(c) or
section 4(k)(4)(E) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(c) and (k)(4)(E)).
(3) Notice procedures.--The notice procedures set forth in
section 4(j)(1) of the Bank Holding Company Act of 1956 (12
U.S.C. 1843(j)(1)), without regard to section 4(j)(3) of that
Act, shall apply to an acquisition of any company (other than
an insured depository institution) by a bank holding company
with total consolidated assets equal to or greater than
$50,000,000,000 or a nonbank financial company supervised by
the Board of Governors, as described in paragraph (1),
including any such company engaged in activities described in
section 4(k) of that Act.
(4) Standards for review.--In addition to the standards
provided in section 4(j)(2) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(j)(2)), the Board of Governors shall
consider the extent to which the proposed acquisition would
result in greater or more concentrated risks to global or
United States financial stability or the United States economy.
SEC. 164. PROHIBITION AGAINST MANAGEMENT INTERLOCKS BETWEEN CERTAIN
FINANCIAL COMPANIES.
A nonbank financial company supervised by the Board of Governors
shall be treated as a bank holding company for purposes of the
Depository Institutions Management Interlocks Act (12 U.S.C. 3201 et
seq.), except that the Board of Governors shall not exercise the
authority provided in section 7 of that Act (12 U.S.C. 3207) to permit
service by a management official of a nonbank financial company
supervised by the Board of Governors as a management official of any
bank holding company with total consolidated assets equal to or greater
than $50,000,000,000, or other nonaffiliated nonbank financial company
supervised by the Board of Governors (other than to provide a temporary
exemption for interlocks resulting from a merger, acquisition, or
consolidation).
SEC. 165. ENHANCED SUPERVISION AND PRUDENTIAL STANDARDS FOR NONBANK
FINANCIAL COMPANIES SUPERVISED BY THE BOARD OF GOVERNORS
AND CERTAIN BANK HOLDING COMPANIES.
(a) In General.--
(1) Purpose.--In order to prevent or mitigate risks to the
financial stability of the United States that could arise from
the material financial distress or failure of large,
interconnected financial institutions, the Board of Governors
shall, on its own or pursuant to recommendations by the Council
under section 115, establish prudential standards and reporting
and disclosure requirements applicable to nonbank financial
companies supervised by the Board of Governors and large,
interconnected bank holding companies that--
(A) are more stringent than the standards and
requirements applicable to nonbank financial companies
and bank holding companies that do not present similar
risks to the financial stability of the United States;
and
(B) increase in stringency, based on the
considerations identified in subsection (b)(3).
(2) Limitation on bank holding companies.--Any standards
established under subsections (b) through (f) shall not apply
to any bank holding company with total consolidated assets of
less than $50,000,000,000, but the Board of Governors may
establish an asset threshold greater than $50,000,000,000 for
the applicability of any particular standard under subsections
(b) through (f).
(b) Development of Prudential Standards.--
(1) In general.--
(A) Required standards.--The Board of Governors
shall, by regulation or order, establish prudential
standards for nonbank financial companies supervised by
the Board of Governors and bank holding companies
described in subsection (a), that shall include--
(i) risk-based capital requirements;
(ii) leverage limits;
(iii) liquidity requirements;
(iv) resolution plan and credit exposure
report requirements; and
(v) concentration limits.
(B) Additional standards authorized.--The Board of
Governors may, by regulation or order, establish
prudential standards for nonbank financial companies
supervised by the Board of Governors and bank holding
companies described in subsection (a), that include--
(i) a contingent capital requirement;
(ii) enhanced public disclosures; and
(iii) overall risk management requirements.
(2) Prudential standards for foreign financial companies.--
In applying the standards set forth in paragraph (1) to foreign
nonbank financial companies supervised by the Board of
Governors and to foreign-based bank holding companies, the
Board of Governors shall give due regard to the principle of
national treatment and competitive equity.
(3) Considerations.--In prescribing prudential standards
under paragraph (1), the Board of Governors shall--
(A) take into account differences among nonbank
financial companies supervised by the Board of
Governors and bank holding companies described in
subsection (a), based on--
(i) the factors described in subsections
(a) and (b) of section 113;
(ii) whether the company owns an insured
depository institution;
(iii) nonfinancial activities and
affiliations of the company; and
(iv) any other factors that the Board of
Governors determines appropriate;
(B) to the extent possible, ensure that small
changes in the factors listed in subsections (a) and
(b) of section 113 would not result in sharp,
discontinuous changes in the prudential standards
established under paragraph (1) of this subsection; and
(C) take into account any recommendations of the
Council under section 115.
(4) Report.--The Board of Governors shall submit an annual
report to Congress regarding the implementation of the
prudential standards required pursuant to paragraph (1),
including the use of such standards to mitigate risks to the
financial stability of the United States.
(c) Contingent Capital.--
(1) In general.--Subsequent to submission by the Council of
a report to Congress under section 115(c), the Board of
Governors may promulgate regulations that require each nonbank
financial company supervised by the Board of Governors and bank
holding companies described in subsection (a) to maintain a
minimum amount of long-term hybrid debt that is convertible to
equity in times of financial stress.
(2) Factors to consider.--In establishing regulations under
this subsection, the Board of Governors shall consider--
(A) the results of the study undertaken by the
Council, and any recommendations of the Council, under
section 115(c);
(B) an appropriate transition period for
implementation of a conversion under this subsection;
(C) the factors described in subsection (b)(3)(A);
(D) capital requirements applicable to the nonbank
financial company supervised by the Board of Governors
or a bank holding company described in subsection (a),
and subsidiaries thereof; and
(E) any other factor that the Board of Governors
deems appropriate.
(d) Resolution Plan and Credit Exposure Reports.--
(1) Resolution plan.--The Board of Governors shall require
each nonbank financial company supervised by the Board of
Governors and bank holding companies described in subsection
(a) to report periodically to the Board of Governors, the
Council, and the Corporation the plan of such company for rapid
and orderly resolution in the event of material financial
distress or failure.
(2) Credit exposure report.--The Board of Governors shall
require each nonbank financial company supervised by the Board
of Governors and bank holding companies described in subsection
(a) to report periodically to the Board of Governors, the
Council, and the Corporation on--
(A) the nature and extent to which the company has
credit exposure to other significant nonbank financial
companies and significant bank holding companies; and
(B) the nature and extent to which other
significant nonbank financial companies and significant
bank holding companies have credit exposure to that
company.
(3) Review.--The Board of Governors and the Corporation
shall review the information provided in accordance with this
section by each nonbank financial company supervised by the
Board of Governors and bank holding company described in
subsection (a).
(4) Notice of deficiencies.--If the Board of Governors and
the Corporation jointly determine, based on their review under
paragraph (3), that the resolution plan of a nonbank financial
company supervised by the Board of Governors or a bank holding
company described in subsection (a) is not credible or would
not facilitate an orderly resolution of the company under title
11, United States Code--
(A) the Board of Governors and the Corporation
shall notify the company, as applicable, of the
deficiencies in the resolution plan; and
(B) the company shall resubmit the resolution plan
within a time frame determined by the Board of
Governors and the Corporation, with revisions
demonstrating that the plan is credible and would
result in an orderly resolution under title 11, United
States Code, including any proposed changes in business
operations and corporate structure to facilitate
implementation of the plan.
(5) Failure to resubmit credible plan.--
(A) In general.--If a nonbank financial company
supervised by the Board of Governors or a bank holding
company described in subsection (a) fails to timely
resubmit the resolution plan as required under
paragraph (4), with such revisions as are required
under subparagraph (B), the Board of Governors and the
Corporation may jointly impose more stringent capital,
leverage, or liquidity requirements, or restrictions on
the growth, activities, or operations of the company,
or any subsidiary thereof, until such time as the
company resubmits a plan that remedies the
deficiencies.
(B) Divestiture.--The Board of Governors and the
Corporation, in consultation with the Council, may
direct a nonbank financial company supervised by the
Board of Governors or a bank holding company described
in subsection (a), by order, to divest certain assets
or operations identified by the Board of Governors and
the Corporation, to facilitate an orderly resolution of
such company under title 11, United States Code, in the
event of the failure of such company, in any case in
which--
(i) the Board of Governors and the
Corporation have jointly imposed more stringent
requirements on the company pursuant to
subparagraph (A); and
(ii) the company has failed, within the 2-
year period beginning on the date of the
imposition of such requirements under
subparagraph (A), to resubmit the resolution
plan with such revisions as were required under
paragraph (4)(B).
(6) Rules.--Not later than 18 months after the date of
enactment of this Act, the Board of Governors and the
Corporation shall jointly issue final rules implementing this
subsection.
(e) Concentration Limits.--
(1) Standards.--In order to limit the risks that the
failure of any individual company could pose to a nonbank
financial company supervised by the Board of Governors or a
bank holding company described in subsection (a), the Board of
Governors, by regulation, shall prescribe standards that limit
such risks.
(2) Limitation on credit exposure.--The regulations
prescribed by the Board of Governors under paragraph (1) shall
prohibit each nonbank financial company supervised by the Board
of Governors and bank holding company described in subsection
(a) from having credit exposure to any unaffiliated company
that exceeds 25 percent of the capital stock and surplus (or
such lower amount as the Board of Governors may determine by
regulation to be necessary to mitigate risks to the financial
stability of the United States) of the company.
(3) Credit exposure.--For purposes of paragraph (2),
``credit exposure'' to a company means--
(A) all extensions of credit to the company,
including loans, deposits, and lines of credit;
(B) all repurchase agreements and reverse
repurchase agreements with the company;
(C) all securities borrowing and lending
transactions with the company, to the extent that such
transactions create credit exposure for the nonbank
financial company supervised by the Board of Governors
or a bank holding company described in subsection (a);
(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
nonbank financial company supervised by the Board of
Governors or a bank holding company described in
subsection (a) and the company; and
(G) any other similar transactions that the Board
of Governors, by regulation, determines to be a credit
exposure for purposes of this section.
(4) Attribution rule.--For purposes of this subsection, any
transaction by a nonbank financial company supervised by the
Board of Governors or a bank holding company described in
subsection (a) with any person is a transaction with a company,
to the extent that the proceeds of the transaction are used for
the benefit of, or transferred to, that company.
(5) Rulemaking.--The Board of Governors may issue such
regulations and orders, including definitions consistent with
this section, as may be necessary to administer and carry out
this subsection.
(6) Exemptions.--The Board of Governors may, by regulation
or order, exempt transactions, in whole or in part, from the
definition of ``credit exposure'' for purposes of this
subsection, if the Board of Governors finds that the exemption
is in the public interest and is consistent with the purpose of
this subsection.
(7) Transition period.--
(A) In general.--This subsection and any
regulations and orders of the Board of Governors under
this subsection shall not be effective until 3 years
after the date of enactment of this Act.
(B) Extension authorized.--The Board of Governors
may extend the period specified in subparagraph (A) for
not longer than an additional 2 years.
(f) Enhanced Public Disclosures.--The Board of Governors may
prescribe, by regulation, periodic public disclosures by nonbank
financial companies supervised by the Board of Governors and bank
holding companies described in subsection (a) in order to support
market evaluation of the risk profile, capital adequacy, and risk
management capabilities thereof.
(g) Risk Committee.--
(1) Nonbank financial companies supervised by the board of
governors.--The Board of Governors shall require each nonbank
financial company supervised by the Board of Governors that is
a publicly traded company to establish a risk committee, as set
forth in paragraph (3), not later than 1 year after the date of
receipt of a notice of final determination under section
113(d)(3) with respect to such nonbank financial company
supervised by the Board of Governors.
(2) Certain bank holding companies.--
(A) Mandatory regulations.--The Board of Governors
shall issue regulations requiring each bank holding
company that is a publicly traded company and that has
total consolidated assets of not less than
$10,000,000,000 to establish a risk committee, as set
forth in paragraph (3).
(B) Permissive regulations.--The Board of Governors
may require each bank holding company that is a
publicly traded company and that has total consolidated
assets of less than $10,000,000,000 to establish a risk
committee, as set forth in paragraph (3), as determined
necessary or appropriate by the Board of Governors to
promote sound risk management practices.
(3) Risk committee.--A risk committee required by this
subsection shall--
(A) be responsible for the oversight of the
enterprise-wide risk management practices of the
nonbank financial company supervised by the Board of
Governors or bank holding company described in
subsection (a), as applicable;
(B) include such number of independent directors as
the Board of Governors may determine appropriate, based
on the nature of operations, size of assets, and other
appropriate criteria related to the nonbank financial
company supervised by the Board of Governors or a bank
holding company described in subsection (a), as
applicable; and
(C) include at least 1 risk management expert
having experience in identifying, assessing, and
managing risk exposures of large, complex firms.
(4) Rulemaking.--The Board of Governors shall issue final
rules to carry out this subsection, not later than 1 year after
the transfer date, to take effect not later than 15 months
after the transfer date.
(h) Stress Tests.--The Board of Governors shall conduct analyses in
which nonbank financial companies supervised by the Board of Governors
and bank holding companies described in subsection (a) are subject to
evaluation of whether the companies have the capital, on a total
consolidated basis, necessary to absorb losses as a result of adverse
economic conditions. The Board of Governors may develop and apply such
other analytic techniques as are necessary to identify, measure, and
monitor risks to the financial stability of the United States.
SEC. 166. EARLY REMEDIATION REQUIREMENTS.
(a) In General.--The Board of Governors, in consultation with the
Council and the Corporation, shall prescribe regulations establishing
requirements to provide for the early remediation of financial distress
of a nonbank financial company supervised by the Board of Governors or
a bank holding company described in section 165(a), except that nothing
in this subsection authorizes the provision of financial assistance
from the Federal Government.
(b) Purpose of the Early Remediation Requirements.--The purpose of
the early remediation requirements under subsection (a) shall be to
establish a series of specific remedial actions to be taken by a
nonbank financial company supervised by the Board of Governors or a
bank holding company described in section 165(a) that is experiencing
increasing financial distress, in order to minimize the probability
that the company will become insolvent and the potential harm of such
insolvency to the financial stability of the United States.
(c) Remediation Requirements.--The regulations prescribed by the
Board of Governors under subsection (a) shall--
(1) define measures of the financial condition of the
company, including regulatory capital, liquidity measures, and
other forward-looking indicators; and
(2) establish requirements that increase in stringency as
the financial condition of the company declines, including--
(A) requirements in the initial stages of financial
decline, including limits on capital distributions,
acquisitions, and asset growth; and
(B) requirements at later stages of financial
decline, including a capital restoration plan and
capital-raising requirements, limits on transactions
with affiliates, management changes, and asset sales.
SEC. 167. AFFILIATIONS.
(a) Affiliations.--Nothing in this subtitle shall be construed to
require a nonbank financial company supervised by the Board of
Governors, or a company that controls a nonbank financial company
supervised by the Board of Governors, to conform the activities thereof
to the requirements of section 4 of the Bank Holding Company Act of
1956 (12 U.S.C. 1843).
(b) Requirement.--
(1) In general.--If a nonbank financial company supervised
by the Board of Governors conducts activities other than those
that are determined to be financial in nature or incidental
thereto under section 4(k) of the Bank Holding Company Act of
1956, the Board of Governors may require such company to
establish and conduct such activities that are determined to be
financial in nature or incidental thereto in an intermediate
holding company established pursuant to regulation of the Board
of Governors, not later than 90 days after the date on which
the nonbank financial company supervised by the Board of
Governors was notified of the determination under section
113(a).
(2) Internal financial activities.--For purposes of this
subsection, activities that are determined to be financial in
nature or incidental thereto under section 4(k) of the Bank
Holding Company Act of 1956, as described in paragraph (1),
shall not include internal financial activities conducted for a
nonbank financial company supervised by the Board of Governors
or any affiliate, including internal treasury, investment, and
employee benefit functions. With respect to any internal
financial activity of such company during the year prior to the
date of enactment of this Act, such company may continue to
engage in such activity as long as at least \2/3\ of the assets
or \2/3\ of the revenues generated from the activity are from
or attributable to such company, subject to review by the Board
of Governors, to determine whether engaging in such activity
presents undue risk to such company or to the financial
stability of the United States.
(c) Regulations.--The Board of Governors--
(1) shall promulgate regulations to establish the criteria
for determining whether to require a nonbank financial company
supervised by the Board of Governors to establish an
intermediate holding company under subsection (a); and
(2) may promulgate regulations to establish any
restrictions or limitations on transactions between an
intermediate holding company or a nonbank financial company
supervised by the Board of Governors and its affiliates, as
necessary to prevent unsafe and unsound practices in connection
with transactions between such company, or any subsidiary
thereof, and its parent company or affiliates that are not
subsidiaries of such company, except that such regulations
shall not restrict or limit any transaction in connection with
the bona fide acquisition or lease by an unaffiliated person of
assets, goods, or services.
SEC. 168. REGULATIONS.
Except as otherwise specified in this subtitle, not later than 18
months after the transfer date, the Board of Governors shall issue
final regulations to implement this subtitle and the amendments made by
this subtitle.
SEC. 169. AVOIDING DUPLICATION.
The Board of Governors shall take any action that the Board of
Governors deems appropriate to avoid imposing requirements under this
subtitle that are duplicative of requirements applicable to bank
holding companies and nonbank financial companies under other
provisions of law.
SEC. 170. SAFE HARBOR.
(a) Regulations.--The Board of Governors shall promulgate
regulations on behalf of, and in consultation with, the Council setting
forth the criteria for exempting certain types or classes of U.S.
nonbank financial companies or foreign nonbank financial companies from
supervision by the Board of Governors.
(b) Considerations.--In developing the criteria under subsection
(a), the Board of Governors shall take into account the factors for
consideration described in subsections (a) and (b) of section 113 in
determining whether a U.S. nonbank financial company or foreign nonbank
financial company shall be supervised by the Board of Governors.
(c) Rule of Construction.--Nothing in this section shall be
construed to require supervision by the Board of Governors of a U.S.
nonbank financial company or foreign nonbank financial company, if such
company does not meet the criteria for exemption established under
subsection (a).
(d) Update.--The Board of Governors shall, in consultation with the
Council, review the regulations promulgated under subsection (a), not
less frequently than every 5 years, and based upon the review, the
Board of Governors may revise such regulations on behalf of, and in
consultation with, the Council to update as necessary the criteria set
forth in such regulations.
(e) Transition Period.--No revisions under subsection (d) shall
take effect before the end of the 2-year period after the date of
publication of such revisions in final form.
(f) Report.--The Chairperson of the Board of Governors and the
Chairperson of the Council shall submit a joint report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives not later than 30
days after the date of the issuance in final form of the regulations
under subsection (a), or any subsequent revision to such regulations
under subsection (d), as applicable. Such report shall include, at a
minimum, the rationale for exemption and empirical evidence to support
the criteria for exemption.
TITLE II--ORDERLY LIQUIDATION AUTHORITY
SEC. 201. DEFINITIONS.
In this title, the following definitions shall apply:
(1) Administrative expenses of the receiver.--The term
``administrative expenses of the receiver'' includes--
(A) the actual, necessary costs and expenses
incurred by the Corporation as receiver for a covered
financial company in liquidating a covered financial
company; and
(B) any obligations that the Corporation as
receiver for a covered financial company determines are
necessary and appropriate to facilitate the smooth and
orderly liquidation of the covered financial company.
(2) Bankruptcy code.--The term ``Bankruptcy Code'' means
title 11, United States Code.
(3) Bridge financial company.--The term ``bridge financial
company'' means a new financial company organized by the
Corporation in accordance with section 210(h) for the purpose
of resolving a covered financial company.
(4) Claim.--The term ``claim'' means any right of payment,
whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured.
(5) Company.--The term ``company'' has the same meaning as
in section 2(b) of the Bank Holding Company Act of 1956 (12
U.S.C. 1841(b)), except that such term includes any company
described in paragraph (11), the majority of the securities of
which are owned by the United States or any State.
(6) Covered broker or dealer.--The term ``covered broker or
dealer'' means a covered financial company that is a broker or
dealer that--
(A) is registered with the Commission under section
15(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78o(b)); and
(B) is a member of SIPC.
(7) Covered financial company.--The term ``covered
financial company''--
(A) means a financial company for which a
determination has been made under section 203(b); and
(B) does not include an insured depository
institution.
(8) Covered subsidiary.--The term ``covered subsidiary''
means a subsidiary of a covered financial company, other than--
(A) an insured depository institution;
(B) an insurance company; or
(C) a covered broker or dealer.
(9) Definitions relating to covered brokers and dealers.--
The terms ``customer'', ``customer name securities'',
``customer property'', and ``net equity'' in the context of a
covered broker or dealer, have the same meanings as in section
16 of the Securities Investor Protection Act of 1970 (15 U.S.C.
78lll).
(10) Financial company.--The term ``financial company''
means any company that--
(A) is incorporated or organized under any
provision of Federal law or the laws of any State;
(B) is--
(i) a bank holding company, as defined in
section 2(a) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(a)), and including any
company described in paragraph (5);
(ii) a nonbank financial company supervised
by the Board of Governors;
(iii) any company that is predominantly
engaged in activities that the Board of
Governors has determined are financial in
nature or incidental thereto for purposes of
section 4(k) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(k)) other than a company
described in clause (i) or (ii); or
(iv) any subsidiary of any company
described in any of clauses (i) through (iii)
(other than a subsidiary that is an insured
depository institution or an insurance
company); and
(C) is not a Farm Credit System institution
chartered under and subject to the provisions of the
Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et
seq.).
(11) Fund.--The term ``Fund'' means the Orderly Liquidation
Fund established under section 210(n).
(12) Insurance company.--The term ``insurance company''
means any entity that is--
(A) engaged in the business of insurance;
(B) subject to regulation by a State insurance
regulator; and
(C) covered by a State law that is designed to
specifically deal with the rehabilitation, liquidation,
or insolvency of an insurance company.
(13) Nonbank financial company.--The term ``nonbank
financial company'' has the same meaning as in section
102(a)(4)(C).
(14) Nonbank financial company supervised by the board of
governors.--The term ``nonbank financial company supervised by
the Board of Governors'' has the same meaning as in section
102(a)(3)(D).
(15) Panel.--The term ``Panel'' means the Orderly
Liquidation Authority Panel established under section 202.
(16) SIPC.--The term ``SIPC'' means the Securities Investor
Protection Corporation.
SEC. 202. ORDERLY LIQUIDATION AUTHORITY PANEL.
(a) Orderly Liquidation Authority Panel.--
(1) Establishment.--There is established in the United
States Bankruptcy Court for the District of Delaware, an
Orderly Liquidation Authority Panel. The Chief Judge of the
United States Bankruptcy Court for the District of Delaware
shall appoint judges to the Panel, consistent with paragraph
(2). In making such appointments, the Chief Judge shall
consider the expertise in financial matters of each judge.
(2) Composition.--The Panel shall be composed of 3 judges
from the United States Bankruptcy Court for the District of
Delaware.
(3) Jurisdiction.--The Panel shall have original and
exclusive jurisdiction of proceedings to consider petitions by
the Secretary under subsection (b)(1).
(b) Commencement of Orderly Liquidation.--
(1) Petition to panel.--
(A) Orderly liquidation authority panel.--
(i) Petition to panel.--Subsequent to a
determination by the Secretary under section
203 that a financial company meets the criteria
in section 203(b), the Secretary, upon notice
to the Corporation and the covered financial
company, shall petition the Panel for an order
authorizing the Secretary to appoint the
Corporation as receiver.
(ii) Form and content of order.--The
Secretary shall present all relevant findings
and the recommendation made pursuant to section
203(a) to the Panel. The petition shall be
filed under seal.
(iii) Determination.--On a strictly
confidential basis, and without any prior
public disclosure, the Panel, after notice to
the covered financial company and a hearing in
which the covered financial company may oppose
the petition, shall determine, within 24 hours
of receipt of the petition filed by the
Secretary, whether the determination of the
Secretary that the covered financial company is
in default or in danger of default is supported
by substantial evidence.
(iv) Issuance of order.--If the Panel
determines that the determination of the
Secretary that the covered financial company is
in default or in danger of default--
(I) is supported by substantial
evidence, the Panel shall issue an
order immediately authorizing the
Secretary to appoint the Corporation as
receiver of the covered financial
company; or
(II) is not supported by
substantial evidence, the Panel shall
immediately provide to the Secretary a
written statement of each reason
supporting its determination, and
afford the Secretary an immediate
opportunity to amend and refile the
petition under clause (i).
(B) Effect of determination.--The determination of
the Panel under subparagraph (A) shall be final, and
shall be subject to appeal only in accordance with
paragraph (2). The decision shall not be subject to any
stay or injunction pending appeal. Upon conclusion of
its proceedings under subparagraph (A), the Panel shall
provide immediately for the record a written statement
of each reason supporting the decision of the Panel,
and shall provide copies thereof to the Secretary and
the covered financial company.
(C) Criminal penalties.--A person who recklessly
discloses a determination of the Secretary under
section 203(b) or a petition of the Secretary under
subparagraph (A), or the pendency of court proceedings
as provided for under subparagraph (A), shall be fined
not more than $250,000, or imprisoned for not more than
5 years, or both.
(2) Appeal of decisions of the panel.--
(A) Appeal to court of appeals.--
(i) In general.--Subject to clause (ii),
the United States Court of Appeals for the
Third Circuit shall have jurisdiction of an
appeal of a final decision of the Panel filed
by the Secretary or a covered financial
company, through its board of directors,
notwithstanding section 210(a)(1)(A)(i), not
later than 30 days after the date on which the
decision of the Panel is rendered or deemed
rendered under this subsection.
(ii) Condition of jurisdiction.--The Court
of Appeals shall have jurisdiction of an appeal
by a covered financial company only if the
covered financial company did not acquiesce or
consent to the appointment of a receiver by the
Secretary under paragraph (1)(A).
(iii) Expedition.--The Court of Appeals
shall consider any appeal under this
subparagraph on an expedited basis.
(iv) Scope of review.--For an appeal taken
under this subparagraph, review shall be
limited to whether the determination of the
Secretary that a covered financial company is
in default or in danger of default is supported
by substantial evidence.
(B) Appeal to the supreme court.--
(i) In general.--A petition for a writ of
certiorari to review a decision of the Court of
Appeals under subparagraph (A) may be filed by
the Secretary or the covered financial company,
through its board of directors, notwithstanding
section 210(a)(1)(A)(i), with the Supreme Court
of the United States, not later than 30 days
after the date of the final decision of the
Court of Appeals, and the Supreme Court shall
have discretionary jurisdiction to review such
decision.
(ii) Written statement.--In the event of a
petition under clause (i), the Court of Appeals
shall immediately provide for the record a
written statement of each reason for its
decision.
(iii) Expedition.--The Supreme Court shall
consider any petition under this subparagraph
on an expedited basis.
(iv) Scope of review.--Review by the
Supreme Court under this subparagraph shall be
limited to whether the determination of the
Secretary that the covered financial company is
in default or in danger of default is supported
by substantial evidence.
(c) Establishment and Transmittal of Rules and Procedures.--
(1) In general.--Not later than 6 months after the date of
enactment of this Act, the Panel shall establish such rules and
procedures as may be necessary to ensure the orderly conduct of
proceedings, including rules and procedures to ensure that the
24-hour deadline is met and that the Secretary shall have an
ongoing opportunity to amend and refile petitions under
subsection (b)(1). The rules and procedures shall include
provisions for the appointment of judges to the Panel, such
that the composition of the Panel is established in advance of
the filing of a petition under subsection (b).
(2) Publication of rules.--The rules and procedures
established under paragraph (1), and any modifications of such
rules and procedures, shall be recorded and shall be
transmitted to--
(A) each judge of the Panel;
(B) the Chief Judge of the United States Bankruptcy
Court for the District of Delaware;
(C) the Committee on the Judiciary of the Senate;
(D) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(E) the Committee on the Judiciary of the House of
Representatives; and
(F) the Committee on Financial Services of the
House of Representatives.
(d) Provisions Applicable to Financial Companies.--
(1) Bankruptcy code.--Except as provided in this
subsection, the provisions of the Bankruptcy Code and rules
issued thereunder, and not the provisions of this title, shall
apply to financial companies that are not covered financial
companies for which the Corporation has been appointed as
receiver.
(2) This title.--The provisions of this title shall
exclusively apply to and govern all matters relating to covered
financial companies for which the Corporation is appointed as
receiver, and no provisions of the Bankruptcy Code or the rules
issued thereunder shall apply in such cases.
(e) Study of Bankruptcy and Orderly Liquidation Process for
Financial Companies.--
(1) Study.--
(A) In general.--The Administrative Office of the
United States Courts and the Comptroller General of the
United States shall each monitor the activities of the
Panel, and each such Office shall conduct separate
studies regarding the bankruptcy and orderly
liquidation process for financial companies under the
Bankruptcy Code.
(B) Issues to be studied.--In conducting the study
under subparagraph (A), the Administrative Office of
the United States Courts and the Comptroller General of
the United States each shall evaluate--
(i) the effectiveness of chapter 7 or
chapter 11 of the Bankruptcy Code in
facilitating the orderly liquidation or
reorganization of financial companies;
(ii) ways to maximize the efficiency and
effectiveness of the Panel; and
(iii) ways to make the orderly liquidation
process under the Bankruptcy Code for financial
companies more effective.
(2) Reports.--Not later than 1 year after the date of
enactment of this Act, in each successive year until the third
year, and every fifth year after that date of enactment, the
Administrative Office of the United States Courts and the
Comptroller General of the United States shall submit to the
Committee on Banking, Housing, and Urban Affairs and the
Committee on the Judiciary of the Senate and the Committee on
Financial Services and the Committee on the Judiciary of the
House of Representatives separate reports summarizing the
results of the studies conducted under paragraph (1).
(f) Study of International Coordination Relating to Bankruptcy
Process for Financial Companies.--
(1) Study.--
(A) In general.--The Comptroller General of the
United States shall conduct a study regarding
international coordination relating to the orderly
liquidation of financial companies under the Bankruptcy
Code.
(B) Issues to be studied.--In conducting the study
under subparagraph (A), the Comptroller General of the
United States shall evaluate, with respect to the
bankruptcy process for financial companies--
(i) the extent to which international
coordination currently exists;
(ii) current mechanisms and structures for
facilitating international cooperation;
(iii) barriers to effective international
coordination; and
(iv) ways to increase and make more
effective international coordination.
(2) Report.--Not later than 1 year after the date of
enactment of this Act, the Comptroller General of the United
States shall submit to the Committee on Banking, Housing, and
Urban Affairs and the Committee on the Judiciary of the Senate
and the Committee on Financial Services and the Committee on
the Judiciary of the House of Representatives and the Secretary
a report summarizing the results of the study conducted under
paragraph (1).
SEC. 203. SYSTEMIC RISK DETERMINATION.
(a) Written Recommendation and Determination.--
(1) Vote required.--
(A) In general.--On their own initiative, or at the
request of the Secretary, the Corporation and the Board
of Governors shall consider whether to make a written
recommendation described in paragraph (2) with respect
to whether the Secretary should appoint the Corporation
as receiver for a financial company. Such
recommendation shall be made upon a vote of not fewer
than \2/3\ of the members of the Board of Governors
then serving and \2/3\ of the members of the board of
directors of the Corporation then serving.
(B) Cases involving covered brokers or dealers.--In
the case of a covered broker or dealer, or in which the
largest United States subsidiary (as measured by total
assets as of the end of the previous calendar quarter)
of a financial company is a covered broker or dealer,
the Commission and the Board of Governors, at the
request of the Secretary, or on their own initiative,
shall consider whether to make the written
recommendation described in paragraph (2) with respect
to the financial company. Subject to the requirements
in paragraph (2), such recommendation shall be made
upon a vote of not fewer than \2/3\ of the members of
the Board of Governors then serving and the members of
the Commission then serving, and in consultation with
the Corporation.
(2) Recommendation required.--Any written recommendation
pursuant to paragraph (1) shall contain--
(A) an evaluation of whether the financial company
is in default or in danger of default;
(B) a description of the effect that the default of
the financial company would have on financial stability
in the United States;
(C) a recommendation regarding the nature and the
extent of actions to be taken under this title
regarding the financial company;
(D) an evaluation of the likelihood of a private
sector alternative to prevent the default of the
financial company;
(E) an evaluation of why a case under the
Bankruptcy Code is not appropriate for the financial
company; and
(F) an evaluation of the effects on creditors,
counterparties, and shareholders of the financial
company and other market participants.
(b) Determination by the Secretary.--Notwithstanding any other
provision of Federal or State law, the Secretary shall take action in
accordance with section 202(b)(1)(A), if, upon the written
recommendation under subsection (a), the Secretary (in consultation
with the President) determines that--
(1) the financial company is in default or in danger of
default;
(2) the failure of the financial company and its resolution
under otherwise applicable Federal or State law would have
serious adverse effects on financial stability in the United
States;
(3) no viable private sector alternative is available to
prevent the default of the financial company;
(4) any effect on the claims or interests of creditors,
counterparties, and shareholders of the financial company and
other market participants as a result of actions to be taken
under this title is appropriate, given the impact that any
action taken under this title would have on financial stability
in the United States;
(5) any action under section 204 would avoid or mitigate
such adverse effects, taking into consideration the
effectiveness of the action in mitigating potential adverse
effects on the financial system, the cost to the general fund
of the Treasury, and the potential to increase excessive risk
taking on the part of creditors, counterparties, and
shareholders in the financial company; and
(6) a Federal regulatory agency has ordered the financial
company to convert all of its convertible debt instruments that
are subject to the regulatory order.
(c) Documentation and Review.--
(1) In general.--The Secretary shall--
(A) document any determination under subsection
(b);
(B) retain the documentation for review under
paragraph (2); and
(C) notify the covered financial company and the
Corporation of such determination.
(2) Report to congress.--Not later than 24 hours after the
date of appointment of the Corporation as receiver for a
covered financial company, the Secretary shall provide written
notice of the recommendations and determinations reached in
accordance with subsections (a) and (b) to the Majority Leader
and the Minority Leader of the Senate and the Speaker and the
Minority Leader of the House of Representatives, the Committee
on Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of
Representatives, which shall consist of a summary of the basis
for the determination, including, to the extent available at
the time of the determination--
(A) the size and financial condition of the covered
financial company;
(B) the sources of capital and credit support that
were available to the covered financial company;
(C) the operations of the covered financial company
that could have had a significant impact on financial
stability, markets, or both;
(D) identification of the banks and financial
companies which may be able to provide the services
offered by the covered financial company;
(E) any potential international ramifications of
resolution of the covered financial company under other
applicable insolvency law;
(F) an estimate of the potential effect of the
resolution of the covered financial company under other
applicable insolvency law on the financial stability of
the United States;
(G) the potential effect of the appointment of a
receiver by the Secretary on consumers;
(H) the potential effect of the appointment of a
receiver by the Secretary on the financial system,
financial markets, and banks and other financial
companies; and
(I) whether resolution of the covered financial
company under other applicable insolvency law would
cause banks or other financial companies to experience
severe liquidity distress.
(3) Reports to congress and the public.--
(A) In general.--Not later than 60 days after the
date of appointment of the Corporation as receiver for
a covered financial company, the Corporation, as
receiver, shall--
(i) prepare reports setting forth
information on the assets and liabilities of
the covered financial company as of the date of
the appointment;
(ii) file such reports with the Committee
on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services
of the House of Representatives; and
(iii) publish such reports on an online
website maintained by the Corporation.
(B) Amendments.--The Corporation shall, on a timely
basis, not less frequently than quarterly, amend or
revise and resubmit the reports prepared under this
paragraph, as necessary.
(4) Default or in danger of default.--For purposes of this
title, a financial company shall be considered to be in default
or in danger of default if, as determined in accordance with
subsection (b)--
(A) a case has been, or likely will promptly be,
commenced with respect to the financial company under
the Bankruptcy Code;
(B) the financial company has incurred, or is
likely to incur, losses that will deplete all or
substantially all of its capital, and there is no
reasonable prospect for the company to avoid such
depletion;
(C) the assets of the financial company are, or are
likely to be, less than its obligations to creditors
and others; or
(D) the financial company is, or is likely to be,
unable to pay its obligations (other than those subject
to a bona fide dispute) in the normal course of
business.
(5) GAO review.--The Comptroller General of the United
States shall review and report to Congress on any determination
under subsection (b), that results in the appointment of the
Corporation as receiver, including--
(A) the basis for the determination;
(B) the purpose for which any action was taken
pursuant thereto;
(C) the likely effect of the determination and such
action on the incentives and conduct of financial
companies and their creditors, counterparties, and
shareholders; and
(D) the likely disruptive effect of the
determination and such action on the reasonable
expectations of creditors, counterparties, and
shareholders, taking into account the impact any action
under this title would have on financial stability in
the United States, including whether the rights of such
parties will be disrupted.
(d) Corporation Policies and Procedures.--As soon as is practicable
after the date of enactment of this Act, the Corporation shall
establish policies and procedures that are acceptable to the Secretary
governing the use of funds available to the Corporation to carry out
this title, including the terms and conditions for the provision and
use of funds under sections 204(d), 210(h)(2)(G)(iv), and 210(h)(9).
(e) Treatment of Insurance Companies and Insurance Company
Subsidiaries.--
(1) In general.--Notwithstanding subsection (b), if an
insurance company is a covered financial company or a
subsidiary or affiliate of a covered financial company, the
liquidation or rehabilitation of such insurance company, and
any subsidiary or affiliate of such company that is not
excepted under paragraph (2), shall be conducted as provided
under such State law.
(2) Exception for subsidiaries and affiliates.--The
requirement of paragraph (1) shall not apply with respect to
any subsidiary or affiliate of an insurance company that is not
itself an insurance company.
(3) Backup authority.--Notwithstanding paragraph (1), with
respect to a covered financial company described in paragraph
(1), if, after the end of the 60-day period beginning on the
date on which a determination is made under section 202(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 orderly liquidation
under the laws and requirements of the State, the Corporation
shall have the authority to stand in the place of the
appropriate regulatory agency and file the appropriate judicial
action in the appropriate State court to place such company
into orderly liquidation under the laws and requirements of the
State.
SEC. 204. ORDERLY LIQUIDATION.
(a) Purpose of Orderly Liquidation Authority.--It is the purpose of
this title to provide the necessary authority to liquidate failing
financial companies that pose a significant risk to the financial
stability of the United States in a manner that mitigates such risk and
minimizes moral hazard. The authority provided in this title shall be
exercised in the manner that best fulfills such purpose, with the
strong presumption that--
(1) creditors and shareholders will bear the losses of the
financial company;
(2) management responsible for the condition of the
financial company will not be retained; and
(3) the Corporation and other appropriate agencies will
take all steps necessary and appropriate to assure that all
parties, including management and third parties, having
responsibility for the condition of the financial company bear
losses consistent with their responsibility, including actions
for damages, restitution, and recoupment of compensation and
other gains not compatible with such responsibility.
(b) Corporation as Receiver.--Upon the appointment of the
Corporation under section 202, the Corporation shall act as the
receiver for the covered financial company, with all of the rights and
obligations set forth in this title.
(c) Consultation.--The Corporation, as receiver--
(1) shall consult with the primary financial regulatory
agency or agencies of the covered financial company and its
covered subsidiaries for purposes of ensuring an orderly
liquidation of the covered financial company;
(2) may consult with, or under subsection (a)(1)(B)(v) or
(a)(1)(L) of section 210, acquire the services of, any outside
experts, as appropriate to inform and aid the Corporation in
the orderly liquidation process;
(3) shall consult with the primary financial regulatory
agency or agencies of any subsidiaries of the covered financial
company that are not covered subsidiaries, and coordinate with
such regulators regarding the treatment of such solvent
subsidiaries and the separate resolution of any such insolvent
subsidiaries under other governmental authority, as
appropriate; and
(4) shall consult with the Commission and the Securities
Investor Protection Corporation in the case of any covered
financial company for which the Corporation has been appointed
as receiver that is a broker or dealer registered with the
Commission under section 15(b) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o(b)) and is a member of the Securities
Investor Protection Corporation, for the purpose of determining
whether to transfer to a bridge financial company organized by
the Corporation as receiver, without consent of any customer,
customer accounts of the covered financial company.
(d) Funding for Orderly Liquidation.--Upon its appointment as
receiver for a covered financial company, and thereafter as the
Corporation may, in its discretion, determine to be necessary or
appropriate, the Corporation may make available to the receivership,
subject to the conditions set forth in section 206 and subject to the
plan described in section 210(n)(13), funds for the orderly liquidation
of the covered financial company.
SEC. 205. ORDERLY LIQUIDATION OF COVERED BROKERS AND DEALERS.
(a) Appointment of SIPC as Trustee for Protection of Customer
Securities and Property.--Upon the appointment of the Corporation as
receiver for any covered broker or dealer, the Corporation shall
appoint, without any need for court approval, the Securities Investor
Protection Corporation to act as trustee for liquidation under the
Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) of
the covered broker or dealer.
(b) Powers and Duties of SIPC.--
(1) In general.--Except as provided in this section, upon
its appointment as trustee for the liquidation of a covered
broker or dealer, SIPC shall have all of the powers and duties
provided by the Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.), including, without limitation, all
rights of action against third parties, but shall have no
powers or duties with respect to assets and liabilities
transferred by the Corporation from the covered broker or
dealer to any bridge financial company established in
accordance with this title.
(2) Limitation of powers.--The exercise by SIPC of powers
and functions as trustee under subsection (a) shall not impair
or impede the exercise of the powers and duties of the
Corporation with regard to--
(A) any action, except as otherwise provided in
this title--
(i) to make funds available under section
204(d);
(ii) to organize, establish, operate, or
terminate any bridge financial company;
(iii) to transfer assets and liabilities;
(iv) to enforce or repudiate contracts; or
(v) to take any other action relating to
such bridge financial company under section
210; or
(B) determining claims under subsection (d).
(3) Qualified financial contracts.--Notwithstanding any
provision of the Securities Investor Protection Act of 1970 to
the contrary (including section 5(b)(2)(C) of that Act (15
U.S.C. 78eee(b)(2)(C))), the rights and obligations of any
party to a qualified financial contract (as that term is
defined in section 210(c)(8)) to which a covered broker or
dealer described in subsection (a) is a party shall be governed
exclusively by section 210, including the limitations and
restrictions contained in section 210(c)(10)(B).
(c) Limitation on Court Action.--Except as otherwise provided in
this title, no court may take any action, including any action pursuant
to the Securities Investor Protection Act of 1970 or the Bankruptcy
Code, to restrain or affect the exercise of powers or functions of the
Corporation as receiver for a covered broker or dealer and any claims
against the Corporation as such receiver shall be determined in
accordance with subsection (e) and such claims shall be limited to
money damages.
(d) Actions by Corporation as Receiver.--
(1) In general.--Notwithstanding any other provision of
this title, no action taken by the Corporation, as receiver
with respect to a covered broker or dealer, shall--
(A) adversely affect the rights of a customer to
customer property or customer name securities;
(B) diminish the amount or timely payment of net
equity claims of customers; or
(C) otherwise impair the recoveries provided to a
customer under the Securities Investor Protection Act
of 1970 (15 U.S.C. 78aaa et seq.).
(2) Net proceeds.--The net proceeds from any transfer,
sale, or disposition of assets by the Corporation as receiver
for the covered broker or dealer shall be for the benefit of
the estate of the covered broker or dealer, as provided in this
title.
(e) Claims Against the Corporation as Receiver.--Any claim against
the Corporation as receiver for a covered broker or dealer for assets
transferred to a bridge financial company established with respect to
such covered broker or dealer--
(1) shall be determined in accordance with section
210(a)(2); and
(2) may be reviewed by the appropriate district or
territorial court of the United States in accordance with
section 210(a)(5).
(f) Satisfaction of Customer Claims.--
(1) Obligations to customers.--Notwithstanding any other
provision of this title, all obligations of a covered broker or
dealer or of any bridge financial company established with
respect to such covered broker or dealer to a customer relating
to, or net equity claims based upon, customer property shall be
promptly discharged by the delivery of securities or the making
of payments to or for the account of such customer, in a manner
and in an amount at least as beneficial to the customer as
would have been the case had the covered broker or dealer been
subject to a proceeding under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.) without the
appointment of the Corporation as receiver, and with a filing
date as of the date on which the Corporation is appointed as
receiver.
(2) Satisfaction of claims by sipc.--SIPC, as trustee for a
covered broker or dealer, shall satisfy customer claims in the
manner and amount provided under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.), as if the
appointment of the Corporation as receiver had not occurred,
and with a filing date as of the date on which the Corporation
is appointed as receiver. The Corporation shall satisfy
customer claims, to the extent that a customer would have
received more securities or cash with respect to the allocation
of customer property had the covered financial company been
subject to a proceeding under the Securities Investor
Protection Act (15 U.S.C. 78aaa et seq.) without the
appointment of the Corporation as receiver, and with a filing
date as of the date on which the Corporation is appointed as
receiver.
(g) Priorities.--
(1) Customer property.--As trustee for a covered broker or
dealer, SIPC shall allocate customer property and deliver
customer name securities in accordance with section 8(c) of the
Securities Investor Protection Act of 1970 (15 U.S.C. 78fff-
2(c)).
(2) Other claims.--All claims other than those described in
paragraph (1) (including any unpaid claim by a customer for the
allowed net equity claim of such customer from customer
property) shall be paid in accordance with the priorities in
section 210(b).
(h) Rulemaking.--The Commission and the Corporation, after
consultation with SIPC, shall jointly issue rules to implement this
section.
SEC. 206. MANDATORY TERMS AND CONDITIONS FOR ALL ORDERLY LIQUIDATION
ACTIONS.
In taking action under this title, the Corporation shall--
(1) determine that such action is necessary for purposes of
the financial stability of the United States, and not for the
purpose of preserving the covered financial company;
(2) ensure that the shareholders of a covered financial
company do not receive payment until after all other claims and
the Fund are fully paid;
(3) ensure that unsecured creditors bear losses in
accordance with the priority of claim provisions in section
210;
(4) ensure that management responsible for the failed
condition of the covered financial company is removed (if such
management has not already been removed at the time at which
the Corporation is appointed receiver); and
(5) not take an equity interest in or become a shareholder
of any covered financial company or any covered subsidiary.
SEC. 207. DIRECTORS NOT LIABLE FOR ACQUIESCING IN APPOINTMENT OF
RECEIVER.
The members of the board of directors (or body performing similar
functions) of a covered financial company shall not be liable to the
shareholders or creditors thereof for acquiescing in or consenting in
good faith to the appointment of the Corporation as receiver for the
covered financial company under section 203.
SEC. 208. DISMISSAL AND EXCLUSION OF OTHER ACTIONS.
(a) In General.--Effective as of the date of the appointment of the
Corporation as receiver for the covered financial company under section
202 or the appointment of SIPC as trustee for a covered broker or
dealer under section 205, as applicable, any case or proceeding
commenced with respect to the covered financial company under the
Bankruptcy Code or the Securities Investor Protection Act of 1970 shall
be dismissed, upon notice to the Bankruptcy Court (with respect to a
case commenced under the Bankruptcy Code), and upon notice to SIPC
(with respect to a covered broker or dealer) and no such case or
proceeding may be commenced with respect to a covered financial company
at any time while the orderly liquidation is pending.
(b) Revesting of Assets.--Effective as of the date of appointment
of the Corporation as receiver, the assets of a covered financial
company shall, to the extent they have vested in any entity other than
the covered financial company as a result of any case or proceeding
commenced with respect to the covered financial company under the
Bankruptcy Code, the Securities Investor Protection Act of 1970, or any
similar provision of State liquidation or insolvency law applicable to
the covered financial company, revest in the covered financial company.
(c) Limitation.--Notwithstanding subsections (a) and (b), any order
entered or other relief granted by a bankruptcy court prior to the date
of appointment of the Corporation as receiver shall continue with the
same validity as if an orderly liquidation had not been commenced.
SEC. 209. RULEMAKING; NON-CONFLICTING LAW.
The Corporation shall, in consultation with the Council, prescribe
such rules or regulations as the Corporation considers necessary or
appropriate to implement this title, including rules and regulations
with respect to the rights, interests, and priorities of creditors,
counterparties, security entitlement holders, or other persons with
respect to any covered financial company or any assets or other
property of or held by such covered financial company. To the extent
possible, the Corporation shall seek to harmonize applicable rules and
regulations promulgated under this section with the insolvency laws
that would otherwise apply to a covered financial company.
SEC. 210. POWERS AND DUTIES OF THE CORPORATION.
(a) Powers and Authorities.--
(1) General powers.--
(A) Successor to covered financial company.--The
Corporation shall, upon appointment as receiver for a
covered financial company under this title, succeed
to--
(i) all rights, titles, powers, and
privileges of the covered financial company and
its assets, and of any stockholder, member,
officer, or director of such company; and
(ii) title to the books, records, and
assets of any previous receiver or other legal
custodian of such covered financial company.
(B) Operation of the covered financial company
during the period of orderly liquidation.--The
Corporation, as receiver for a covered financial
company, may--
(i) take over the assets of and operate the
covered financial company with all of the
powers of the members or shareholders, the
directors, and the officers of the covered
financial company, and conduct all business of
the covered financial company;
(ii) collect all obligations and money owed
to the covered financial company;
(iii) perform all functions of the covered
financial company, in the name of the covered
financial company;
(iv) manage the assets and property of the
covered financial company, consistent with
maximization of the value of the assets in the
context of the orderly liquidation; and
(v) provide by contract for assistance in
fulfilling any function, activity, action, or
duty of the Corporation as receiver.
(C) Functions of covered financial company
officers, directors, and shareholders.--
(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 title.
(ii) Presumption.--There shall be a strong
presumption that the Corporation, as receiver
for a covered financial company, will remove
management responsible for the failed condition
of the covered financial company.
(D) Additional powers as receiver.--The Corporation
shall, as receiver for a covered financial company, and
subject to all legally enforceable and perfected
security interests and all legally enforceable security
entitlements in respect of assets held by the covered
financial company, liquidate, and wind-up the affairs
of a covered financial company, including taking steps
to realize upon the assets of the covered financial
company, in such manner as the Corporation deems
appropriate, including through the sale of assets, the
transfer of assets to a bridge financial company
established under subsection (h), or the exercise of
any other rights or privileges granted to the receiver
under this section.
(E) Additional powers with respect to failing
subsidiaries of a covered financial company.--
(i) In general.--In any case in which a
receiver is appointed for a covered financial
company under section 202, the Corporation may
appoint itself as receiver of any subsidiary
(other than an insured depository institution,
any covered broker or dealer, or an insurance
company) of the covered financial company that
is organized under Federal law or the laws of
any State, if the Corporation and the Secretary
jointly determine that--
(I) the subsidiary is in default or
in danger of default;
(II) such action would avoid or
mitigate serious adverse effects on the
financial stability or economic
conditions of the United States; and
(III) such action would facilitate
the orderly liquidation of the covered
financial company.
(ii) Treatment as covered financial
company.--If the Corporation is appointed as
receiver of a subsidiary of a covered financial
company under clause (i), the subsidiary shall
thereafter be considered a covered financial
company under this title, and the Corporation
shall thereafter have all the powers and rights
with respect to that subsidiary as it has with
respect to a covered financial company under
this title.
(F) Organization of bridge companies.--The
Corporation, as receiver for a covered financial
company, may organize a bridge financial company under
subsection (h).
(G) Merger; transfer of assets and liabilities.--
(i) In general.--Subject to clauses (ii)
and (iii), the Corporation, as receiver for a
covered financial company, may--
(I) merge the covered financial
company with another company; or
(II) transfer any asset or
liability of the covered financial
company (including any assets and
liabilities held by the covered
financial company for security
entitlement holders, any customer
property, or any assets and liabilities
associated with any trust or custody
business) without obtaining any
approval, assignment, or consent with
respect to such transfer.
(ii) Federal agency approval; antitrust
review.--With respect to a transaction
described in clause (i)(I) that requires
approval by a Federal agency--
(I) the transaction may not be
consummated before the 5th calendar day
after the date of approval by the
Federal agency responsible for such
approval;
(II) if, in connection with any
such approval, a report on competitive
factors is required, the Federal agency
responsible for such approval shall
promptly notify the Attorney General of
the United States of the proposed
transaction, and the Attorney General
shall provide the required report not
later than 10 days after the date of
the request; and
(III) if notification under section
7A of the Clayton Act is required with
respect to such transaction, then the
required waiting period shall end on
the 15th day after the date on which
the Attorney General and the Federal
Trade Commission receive such
notification, unless the waiting period
is terminated earlier under subsection
(b)(2) of such section 7A, or is
extended pursuant to subsection (e)(2)
of such section 7A.
(iii) Setoff.--Subject to the other
provisions of this title, any transferee of
assets from a receiver, including a bridge
financial company, shall be subject to such
claims or rights as would prevail over the
rights of such transferee in such assets under
applicable noninsolvency law.
(H) Payment of valid obligations.--The Corporation,
as receiver for a covered financial company, shall, to
the extent that funds are available, pay all valid
obligations of the covered financial company that are
due and payable at the time of the appointment of the
Corporation as receiver, in accordance with the
prescriptions and limitations of this title.
(I) Applicable noninsolvency law.--Except as may
otherwise be provided in this title, the applicable
noninsolvency law shall be determined by the
noninsolvency choice of law rules otherwise applicable
to the claims, rights, titles, persons, or entities at
issue.
(J) Subpoena authority.--
(i) In general.--The Corporation, as
receiver for a covered financial company, may,
for purposes of carrying out any power,
authority, or duty with respect to the covered
financial company (including determining any
claim against the covered financial company and
determining and realizing upon any asset of any
person in the course of collecting money due
the covered financial company), exercise any
power established under section 8(n) of the
Federal Deposit Insurance Act, as if the
Corporation were the appropriate Federal
banking agency for the covered financial
company, and the covered financial company were
an insured depository institution.
(ii) Rule of construction.--This
subparagraph may not be construed as limiting
any rights that the Corporation, in any
capacity, might otherwise have to exercise any
powers described in clause (i) or under any
other provision of law.
(K) Incidental powers.--The Corporation, as
receiver for a covered financial company, may exercise
all powers and authorities specifically granted to
receivers under this title, and such incidental powers
as shall be necessary to carry out such powers under
this title.
(L) Utilization of private sector.--In carrying out
its responsibilities in the management and disposition
of assets from the covered financial company, the
Corporation, as receiver for a covered financial
company, may utilize the services of private persons,
including real estate and loan portfolio asset
management, property management, auction marketing,
legal, and brokerage services, if such services are
available in the private sector, and the Corporation
determines that utilization of such services is
practicable, efficient, and cost effective.
(M) Shareholders and creditors of covered financial
company.--Notwithstanding any other provision of law,
the Corporation, as receiver for a covered financial
company, shall succeed by operation of law to the
rights, titles, powers, and privileges described in
subparagraph (A), and shall terminate all rights and
claims that the stockholders and creditors of the
covered financial company may have against the assets
of the covered financial company or the Corporation
arising out of their status as stockholders or
creditors, except for their right to payment,
resolution, or other satisfaction of their claims, as
permitted under this section. The Corporation shall
ensure that shareholders and unsecured creditors bear
losses, consistent with the priority of claims
provisions under this section.
(N) Coordination with foreign financial
authorities.--The Corporation, as receiver for a
covered financial company, shall coordinate, to the
maximum extent possible, with the appropriate foreign
financial authorities regarding the orderly liquidation
of any covered financial company that has assets or
operations in a country other than the United States.
(O) Restriction on transfers to bridge financial
company.--
(i) Section of accounts for transfer.--If
the Corporation establishes one or more bridge
financial companies with respect to a covered
broker or dealer, the Corporation shall
transfer to a bridge financial company, all
customer accounts of the covered financial
company, unless the Corporation, after
consulting with the Commission and SIPC,
determines that--
(I) the customer accounts are
likely to be promptly transferred to
another covered broker or dealer; or
(II) the transfer of the accounts
to a bridge financial company would
materially interfere with the ability
of the Corporation to avoid or mitigate
serious adverse effects on financial
stability or economic conditions in the
United States.
(ii) Transfer of property.--SIPC, as
trustee for the liquidation of the covered
broker or dealer, and the Commission, shall
provide any and all reasonable assistance
necessary to complete such transfers by the
Corporation.
(iii) Customer consent and court approval
not required.--Neither customer consent nor
court approval shall be required to transfer
any customer accounts and associated customer
property to a bridge financial company in
accordance with this section.
(iv) Notification of sipc and sharing of
information.--The Corporation shall identify to
SIPC the customer accounts and associated
customer property transferred to the bridge
financial company. The Corporation and SIPC
shall cooperate in the sharing of any
information necessary for each entity to
discharge its obligations under this title and
under the Securities Investor Protection Act of
1970 (15 U.S.C. 78aaa et seq.) including by
providing access to the books and records of
the covered financial company and any bridge
financial company established in accordance
with this title.
(2) Determination of claims.--
(A) In general.--The Corporation, as receiver for a
covered financial company, shall report on claims, as
set forth in section 203(c)(3). Subject to paragraph
(4) of this subsection, the Corporation, as receiver
for a covered financial company, shall determine claims
in accordance with the requirements of this subsection
and regulations prescribed under section 209.
(B) Notice requirements.--The Corporation, as
receiver for a covered financial company, in any case
involving the liquidation or winding up of the affairs
of a covered financial company, shall--
(i) promptly publish a notice to the
creditors of the covered financial company to
present their claims, together with proof, to
the receiver by a date specified in the notice,
which shall be not earlier than 90 days after
the date of publication of such notice; and
(ii) republish such notice 1 month and 2
months, respectively, after the date of
publication under clause (i).
(C) Mailing required.--The Corporation as receiver
shall mail a notice similar to the notice published
under clause (i) or (ii) of subparagraph (B), at the
time of such publication, to any creditor shown on the
books and records of the covered financial company--
(i) at the last address of the creditor
appearing in such books;
(ii) in any claim filed by the claimant; or
(iii) upon discovery of the name and
address of a claimant not appearing on the
books and records of the covered financial
company, not later than 30 days after the date
of the discovery of such name and address.
(3) Procedures for resolution of claims.--
(A) Decision period.--
(i) In general.--Prior to the 180th day
after the date on which a claim against a
covered financial company is filed with the
Corporation as receiver, or such later date as
may be agreed as provided in clause (ii), the
Corporation shall notify the claimant whether
it accepts or objects to the claim, in
accordance with subparagraphs (B), (C), and
(D).
(ii) Extension of time.--By written
agreement executed not later than 180 days
after the date on which a claim against a
covered financial company is filed with the
Corporation, the period described in clause (i)
may be extended by written agreement between
the claimant and the Corporation. Failure to
notify the claimant of any disallowance within
the time period set forth in clause (i), as it
may be extended by agreement under this clause,
shall be deemed to be a disallowance of such
claim, and the claimant may file or continue an
action in court, as provided in paragraph (4).
(iii) Mailing of notice sufficient.--The
requirements of clause (i) shall be deemed to
be satisfied if the notice of any decision with
respect to any claim is mailed to the last
address of the claimant which appears--
(I) on the books, records, or both
of the covered financial company;
(II) in the claim filed by the
claimant; or
(III) in documents submitted in
proof of the claim.
(iv) Contents of notice of disallowance.--
If the Corporation as receiver objects to any
claim filed under clause (i), the notice to the
claimant shall contain--
(I) a statement of each reason for
the disallowance; and
(II) the procedures required to
file or continue an action in court, as
provided in paragraph (4).
(B) Allowance of proven claim.--The receiver shall
allow any claim received by the receiver on or before
the date specified in the notice under paragraph
(2)(B)(i), which is proved to the satisfaction of the
receiver.
(C) Disallowance of claims filed after end of
filing period.--
(i) In general.--Except as provided in
clause (ii), claims filed after the date
specified in the notice published under
paragraph (2)(B)(i) shall be disallowed, and
such disallowance shall be final.
(ii) Certain exceptions.--Clause (i) shall
not apply with respect to any claim filed by a
claimant after the date specified in the notice
published under paragraph (2)(B)(i), and such
claim may be considered by the receiver under
subparagraph (B), if--
(I) the claimant did not receive
notice of the appointment of the
receiver in time to file such claim
before such date; and
(II) such claim is filed in time to
permit payment of such claim.
(D) Authority to disallow claims.--
(i) In general.--The Corporation may object
to any portion of any claim by a creditor or
claim of a security, preference, setoff, or
priority which is not proved to the
satisfaction of the Corporation.
(ii) Payments to undersecured creditors.--
In the case of a claim against a covered
financial company that is secured by any
property or other asset of such covered
financial company, the receiver--
(I) may treat the portion of such
claim which exceeds an amount equal to
the fair market value of such property
or other asset as an unsecured claim;
and
(II) may not make any payment with
respect to such unsecured portion of
the claim, other than in connection
with the disposition of all claims of
unsecured creditors of the covered
financial company.
(iii) Exceptions.--No provision of this
paragraph shall apply with respect to--
(I) any extension of credit from
any Federal reserve bank, or the
Corporation, to any covered financial
company; or
(II) subject to clause (ii), any
legally enforceable and perfected
security interest in the assets of the
covered financial company securing any
such extension of credit.
(E) Legal effect of filing.--
(i) Statute of limitations tolled.--For
purposes of any applicable statute of
limitations, the filing of a claim with the
receiver shall constitute a commencement of an
action.
(ii) No prejudice to other actions.--
Subject to paragraph (8), the filing of a claim
with the receiver shall not prejudice any right
of the claimant to continue any action which
was filed before the date of appointment of the
receiver for the covered financial company.
(4) Judicial determination of claims.--
(A) In general.--Subject to subparagraph (B), a
claimant may file suit on a claim (or continue an
action commenced before the date of appointment of the
Corporation as receiver) in the district or territorial
court of the United States for the district within
which the principal place of business of the covered
financial company is located (and such court shall have
jurisdiction to hear such claim).
(B) Timing.--A claim under subparagraph (A) may be
filed before the end of the 60-day period beginning on
the earlier of--
(i) the end of the period described in
paragraph (3)(A)(i) (or, if extended by
agreement of the Corporation and the claimant,
the period described in paragraph (3)(A)(ii))
with respect to any claim against a covered
financial company for which the Corporation is
receiver; or
(ii) the date of any notice of disallowance
of such claim pursuant to paragraph (3)(A)(i).
(C) Statute of limitations.--If any claimant fails
to file suit on such claim (or to continue an action on
such claim commenced before the date of appointment of
the Corporation as receiver) prior to the end of the
60-day period described in subparagraph (B), the claim
shall be deemed to be disallowed (other than any
portion of such claim which was allowed by the
receiver) as of the end of such period, such
disallowance shall be final, and the claimant shall
have no further rights or remedies with respect to such
claim.
(5) Expedited determination of claims.--
(A) Procedure required.--The Corporation shall
establish a procedure for expedited relief outside of
the claims process established under paragraph (3), for
any claimant that alleges--
(i) the existence of a legally valid and
enforceable or perfected security interest in
property of a covered financial company, or is
an entitlement holder that has obtained control
of any legally valid and enforceable security
entitlement in respect of any asset held by the
covered financial company for which the
Corporation has been appointed receiver; and
(ii) that irreparable injury will occur if
the claims procedure established under
paragraph (3) is followed.
(B) Determination period.--Prior to the end of the
90-day period beginning on the date on which a claim is
filed in accordance with the procedures established
pursuant to subparagraph (A), the Corporation shall--
(i) determine--
(I) whether to allow or disallow
such claim, or any portion thereof; or
(II) whether such claim should be
determined pursuant to the procedures
established pursuant to paragraph (3);
(ii) notify the claimant of the
determination; and
(iii) if the claim is disallowed, provide a
statement of each reason for the disallowance
and the procedure for obtaining a judicial
determination.
(C) Period for filing or renewing suit.--Any
claimant who files a request for expedited relief shall
be permitted to file suit (or continue a suit filed
before the date of appointment of the Corporation as
receiver seeking a determination of the rights of the
claimant with respect to such security interest (or
such security entitlement) after the earlier of--
(i) the end of the 90-day period beginning
on the date of the filing of a request for
expedited relief; or
(ii) the date on which the Corporation
denies the claim or a portion thereof.
(D) Statute of limitations.--If an action described
in subparagraph (C) is not filed, or the motion to
renew a previously filed suit is not made, before the
end of the 30-day period beginning on the date on which
such action or motion may be filed in accordance with
subparagraph (C), the claim shall be deemed to be
disallowed as of the end of such period (other than any
portion of such claim which was allowed by the
receiver), such disallowance shall be final, and the
claimant shall have no further rights or remedies with
respect to such claim.
(E) Legal effect of filing.--
(i) Statute of limitations tolled.--For
purposes of any applicable statute of
limitations, the filing of a claim with the
receiver shall constitute a commencement of an
action.
(ii) No prejudice to other actions.--
Subject to paragraph (8), the filing of a claim
with the receiver shall not prejudice any right
of the claimant to continue any action which
was filed before the appointment of the
Corporation as receiver for the covered
financial company.
(6) Agreements against interest of the receiver.--No
agreement that tends to diminish or defeat the interest of the
Corporation as receiver in any asset acquired by the receiver
under this section shall be valid against the receiver, unless
such agreement--
(A) is in writing;
(B) was executed by an authorized officer or
representative of the covered financial company, or
confirmed in the ordinary course of business by the
covered financial company; and
(C) has been, since the time of its execution, an
official record of the company or the party claiming
under the agreement provides documentation, acceptable
to the receiver, of such agreement and its authorized
execution or confirmation by the covered financial
company.
(7) Payment of claims.--
(A) In general.--Subject to subparagraph (B), the
Corporation as receiver may, in its discretion and to
the extent that funds are available, pay creditor
claims, in such manner and amounts as are authorized
under this section, which are--
(i) allowed by the receiver;
(ii) approved by the receiver pursuant to a
final determination pursuant to paragraph (3)
or (5), as applicable; or
(iii) determined by the final judgment of a
court of competent jurisdiction.
(B) Limitation.--A creditor shall, in no event,
receive less than the amount that the creditor is
entitled to receive under paragraphs (2) and (3) of
subsection (d), as applicable.
(C) Payment of dividends on claims.--The
Corporation as receiver may, in its sole discretion,
and to the extent otherwise permitted by this section,
pay dividends on proven claims at any time, and no
liability shall attach to the Corporation as receiver,
by reason of any such payment or for failure to pay
dividends to a claimant whose claim is not proved at
the time of any such payment.
(D) Rulemaking by the corporation.--The Corporation
may prescribe such rules, including definitions of
terms, as the Corporation deems appropriate to
establish an interest rate for or to make payments of
post-insolvency interest to creditors holding proven
claims against the receivership estate of a covered
financial company, except that no such interest shall
be paid until the Corporation as receiver has satisfied
the principal amount of all creditor claims.
(8) Suspension of legal actions.--
(A) In general.--After the appointment of the
Corporation as receiver for a covered financial
company, the Corporation may request a stay in any
judicial action or proceeding in which such covered
financial company is or becomes a party, for a period
of not to exceed 90 days.
(B) Grant of stay by all courts required.--Upon
receipt of a request by the Corporation pursuant to
subparagraph (A), the court shall grant such stay as to
all parties.
(9) Additional rights and duties.--
(A) Prior final adjudication.--The Corporation
shall abide by any final, non-appealable judgment of
any court of competent jurisdiction that was rendered
before the appointment of the Corporation as receiver.
(B) Rights and remedies of receiver.--In the event
of any appealable judgment, the Corporation as receiver
shall--
(i) have all the rights and remedies
available to the covered financial company
(before the date of appointment of the
Corporation as receiver under section 202) and
the Corporation, including removal to Federal
court and all appellate rights; and
(ii) not be required to post any bond in
order to pursue such remedies.
(C) No attachment or execution.--No attachment or
execution may be issued by any court upon assets in the
possession of the Corporation as receiver for a covered
financial company.
(D) Limitation on judicial review.--Except as
otherwise provided in this title, no court shall have
jurisdiction over--
(i) any claim or action for payment from,
or any action seeking a determination of rights
with respect to, the assets of any covered
financial company for which the Corporation has
been appointed receiver, including any assets
which the Corporation may acquire from itself
as such receiver; or
(ii) any claim relating to any act or
omission of such covered financial company or
the Corporation as receiver.
(E) Disposition of assets.--In exercising any
right, power, privilege, or authority as receiver in
connection with any covered financial company for which
the Corporation is acting as receiver under this
section, the Corporation shall, to the greatest extent
practicable, conduct its operations in a manner that--
(i) maximizes the net present value return
from the sale or disposition of such assets;
(ii) minimizes the amount of any loss
realized in the resolution of cases;
(iii) mitigates the potential for serious
adverse effects to the financial system;
(iv) ensures timely and adequate
competition and fair and consistent treatment
of offerors; and
(v) prohibits discrimination on the basis
of race, sex, or ethnic group in the
solicitation and consideration of offers.
(10) Statute of limitations for actions brought by
receiver.--
(A) In general.--Notwithstanding any provision of
any contract, the applicable statute of limitations
with regard to any action brought by the Corporation as
receiver for a covered financial company shall be--
(i) in the case of any contract claim, the
longer of--
(I) the 6-year period beginning on
the date on which the claim accrues; or
(II) the period applicable under
State law; and
(ii) in the case of any tort claim, the
longer of--
(I) the 3-year period beginning on
the date on which the claim accrues; or
(II) the period applicable under
State law.
(B) Date on which a claim accrues.--For purposes of
subparagraph (A), the date on which the statute of
limitations begins to run on any claim described in
subparagraph (A) shall be the later of--
(i) the date of the appointment of the
Corporation as receiver under this title; or
(ii) the date on which the cause of action
accrues.
(C) Revival of expired state causes of action.--
(i) In general.--In the case of any tort
claim described in clause (ii) for which the
applicable statute of limitations under State
law has expired not more than 5 years before
the date of appointment of the Corporation as
receiver for a covered financial company, the
Corporation may bring an action as receiver on
such claim without regard to the expiration of
the statute of limitations.
(ii) Claims described.--A tort claim
referred to in clause (i) is a claim arising
from fraud, intentional misconduct resulting in
unjust enrichment, or intentional misconduct
resulting in substantial loss to the covered
financial company.
(11) Avoidable transfers.--
(A) Fraudulent transfers.--The Corporation, as
receiver for any covered financial company, may avoid a
transfer of any interest of the covered financial
company in property, or any obligation incurred by the
covered financial company, that was made or incurred at
or within 2 years before the time of commencement, if--
(i) the covered financial company
voluntarily or involuntarily--
(I) made such transfer or incurred
such obligation with actual intent to
hinder, delay, or defraud any entity to
which the covered financial company was
or became, on or after the date on
which such transfer was made or such
obligation was incurred, indebted; or
(II) received less than a
reasonably equivalent value in exchange
for such transferor obligation; and
(ii) the covered financial company
voluntarily or involuntarily--
(I) was insolvent on the date that
such transfer was made or such
obligation was incurred, or became
insolvent as a result of such transfer
or obligation;
(II) was engaged in business or a
transaction, or was about to engage in
business or a transaction, for which
any property remaining with the covered
financial company was an unreasonably
small capital;
(III) intended to incur, or
believed that the covered financial
company would incur, debts that would
be beyond the ability of the covered
financial company to pay as such debts
matured; or
(IV) made such transfer to or for
the benefit of an insider, or incurred
such obligation to or for the benefit
of an insider, under an employment
contract and not in the ordinary course
of business.
(B) Preferential transfers.--The Corporation as
receiver for any covered financial company may avoid a
transfer of an interest of the covered financial
company in property--
(i) to or for the benefit of a creditor;
(ii) for or on account of an antecedent
debt that was owed by the covered financial
company before the transfer was made;
(iii) that was made while the covered
financial company was insolvent;
(iv) that was made--
(I) 90 days or less before the date
on which the Corporation was appointed
receiver; or
(II) more than 90 days, but less
than 1 year before the date on which
the Corporation was appointed receiver,
if such creditor at the time of the
transfer was an insider; and
(v) that enables the creditor to receive
more than the creditor would receive if--
(I) the covered financial company
had been liquidated under chapter 7 of
the Bankruptcy Code;
(II) the transfer had not been
made; and
(III) the creditor received payment
of such debt to the extent provided by
the provisions of chapter 7 of the
Bankruptcy Code.
(C) Post-receivership transactions.--The
Corporation as receiver for any covered financial
company may avoid a transfer of property of the
receivership that occurred after the Corporation was
appointed receiver that was not authorized under this
title by the Corporation as receiver.
(D) Right of recovery.--To the extent that a
transfer is avoided under subparagraph (A), (B), or
(C), the Corporation may recover, for the benefit of
the covered financial company, the property transferred
or, if a court so orders, the value of such property
(at the time of such transfer) from--
(i) the initial transferee of such transfer
or the person for whose benefit such transfer
was made; or
(ii) any immediate or mediate transferee of
any such initial transferee.
(E) Rights of transferee or obligee.--The
Corporation may not recover under subparagraph (D)(ii)
from--
(i) any transferee that takes for value,
including in satisfaction of or to secure a
present or antecedent debt, in good faith, and
without knowledge of the voidability of the
transfer avoided; or
(ii) any immediate or mediate good faith
transferee of such transferee.
(F) Defenses.--Subject to the other provisions of
this title--
(i) a transferee or obligee from which the
Corporation seeks to recover a transfer or to
avoid an obligation under subparagraph (A),
(B), (C), or (D) shall have the same defenses
available to a transferee or obligee from which
a trustee seeks to recover a transfer or avoid
an obligation under; and
(ii) the authority of the Corporation to
recover a transfer or avoid an obligation shall
be subject to subsections (b) and (c) of
section 546, section 547(c), and section 548(c)
of the Bankruptcy Code.
(G) Rights under this section.--The rights of the
Corporation as receiver under this section shall be
superior to any rights of a trustee or any other party
(other than a Federal agency) under the Bankruptcy
Code.
(H) Rules of construction; definitions.--For
purposes of--
(i) subparagraphs (A) and (B)--
(I) the term ``insider'' has the
same meaning as in section 101(31) of
the Bankruptcy Code;
(II) a transfer is made when such
transfer is so perfected that a bona
fide purchaser from the covered
financial company against whom
applicable law permits such transfer to
be perfected cannot acquire an interest
in the property transferred that is
superior to the interest in such
property of the transferee, but if such
transfer is not so perfected before the
date on which the Corporation is
appointed as receiver for the covered
financial company, such transfer is
made immediately before the date of
such appointment; and
(III) the term ``value'' means
property, or satisfaction or securing
of a present or antecedent debt of the
covered financial company, but does not
include an unperformed promise to
furnish support to the covered
financial company; and
(ii) subparagraph (B)--
(I) the covered financial company
is presumed to have been insolvent on
and during the 90-day period
immediately preceding the date of
appointment of the Corporation as
receiver; and
(II) the term ``insolvent'' has the
same meaning as in section 101(32) of
the Bankruptcy Code.
(12) Setoff.--
(A) Generally.--Except as otherwise provided in
this title, any right of a creditor to offset a mutual
debt owed by the creditor to any covered financial
company that arose before the Corporation was appointed
as receiver for the covered financial company against a
claim of such creditor may be asserted if enforceable
under applicable noninsolvency law, except to the
extent that--
(i) the claim of the creditor against the
covered financial company is disallowed;
(ii) the claim was transferred, by an
entity other than the covered financial
company, to the creditor--
(I) after the Corporation was
appointed as receiver of the covered
financial company; or
(II)(aa) after the 90-day period
preceding the date on which the
Corporation was appointed as receiver
for the covered financial company; and
(bb) while the covered financial
company was insolvent (except for a
setoff in connection with a qualified
financial contract); or
(iii) the debt owed to the covered
financial company was incurred by the covered
financial company--
(I) after the 90-day period
preceding the date on which the
Corporation was appointed as receiver
for the covered financial company;
(II) while the covered financial
company was insolvent; and
(III) for the purpose of obtaining
a right of setoff against the covered
financial company (except for a setoff
in connection with a qualified
financial contract).
(B) Insufficiency.--
(i) In general.--Except with respect to a
setoff in connection with a qualified financial
contract, if a creditor offsets a mutual debt
owed to the covered financial company against a
claim of the covered financial company on or
within the 90-day period preceding the date on
which the Corporation is appointed as receiver
for the covered financial company, the
Corporation may recover from the creditor the
amount so offset, to the extent that any
insufficiency on the date of such setoff is
less than the insufficiency on the later of--
(I) the date that is 90 days before
the date on which the Corporation is
appointed as receiver for the covered
financial company; or
(II) the first day on which there
is an insufficiency during the 90-day
period preceding the date on which the
Corporation is appointed as receiver
for the covered financial company.
(ii) Definition of insufficiency.--In this
subparagraph, the term ``insufficiency'' means
the amount, if any, by which a claim against
the covered financial company exceeds a mutual
debt owed to the covered financial company by
the holder of such claim.
(C) Insolvency.--The term ``insolvent'' has the
same meaning as in section 101(32) of the Bankruptcy
Code.
(D) Presumption of insolvency.--For purposes of
this paragraph, the covered financial company is
presumed to have been insolvent on and during the 90-
day period preceding the date of appointment of the
Corporation as receiver.
(E) Limitation.--Nothing in this paragraph (12)
shall be the basis for any right of setoff where no
such right exists under applicable noninsolvency law.
(F) Priority claim.--Except as otherwise provided
in this title, the Corporation as receiver for the
covered financial company may sell or transfer any
assets free and clear of the setoff rights of any
party, except that such party shall be entitled to a
claim, subordinate to the claims payable under
subparagraphs (A), (B), and (C) of subsection (b)(1),
but senior to all other unsecured liabilities defined
in subsection (b)(1)(D), in an amount equal to the
value of such setoff rights.
(13) Attachment of assets and other injunctive relief.--
Subject to paragraph (14), any court of competent jurisdiction
may, at the request of the Corporation as receiver for a
covered financial company, issue an order in accordance with
Rule 65 of the Federal Rules of Civil Procedure, including an
order placing the assets of any person designated by the
Corporation under the control of the court and appointing a
trustee to hold such assets.
(14) Standards.--
(A) Showing.--Rule 65 of the Federal Rules of Civil
Procedure shall apply with respect to any proceeding
under paragraph (13), without regard to the requirement
that the applicant show that the injury, loss, or
damage is irreparable and immediate.
(B) State proceeding.--If, in the case of any
proceeding in a State court, the court determines that
rules of civil procedure available under the laws of
the State provide substantially similar protections of
the right of the parties to due process as provided
under Rule 65 (as modified with respect to such
proceeding by subparagraph (A)), the relief sought by
the Corporation pursuant to paragraph (14) may be
requested under the laws of such State.
(15) Treatment of claims arising from breach of contracts
executed by the corporation as receiver.--Notwithstanding any
other provision of this title, any final and non-appealable
judgment for monetary damages entered against the Corporation
as receiver for a covered financial company for the breach of
an agreement executed or approved by the Corporation after the
date of its appointment shall be paid as an administrative
expense of the receiver. Nothing in this paragraph shall be
construed to limit the power of a receiver to exercise any
rights under contract or law, including to terminate, breach,
cancel, or otherwise discontinue such agreement.
(16) Accounting and recordkeeping requirements.--
(A) In general.--The Corporation as receiver for a
covered financial company shall, consistent with the
accounting and reporting practices and procedures
established by the Corporation, maintain a full
accounting of each receivership or other disposition of
any covered financial company.
(B) Annual accounting or report.--With respect to
each receivership to which the Corporation is
appointed, the Corporation shall make an annual
accounting or report, as appropriate, available to the
Secretary and the Comptroller General of the United
States.
(C) Availability of reports.--Any report prepared
pursuant to subparagraph (B) and section 203(c)(3)
shall be made available to the public by the
Corporation.
(D) Recordkeeping requirement.--
(i) In general.--The Corporation shall
prescribe such regulations and establish such
retention schedules as are necessary to
maintain the documents and records of the
Corporation generated in exercising the
authorities of this title and the records of a
covered financial company for which the
Corporation is appointed receiver, with due
regard for--
(I) the avoidance of duplicative
record retention; and
(II) the expected evidentiary needs
of the Corporation as receiver for a
covered financial company and the
public regarding the records of covered
financial companies.
(ii) Retention of records.--Unless
otherwise required by applicable Federal law or
court order, the Corporation may not, at any
time, destroy any records that are subject to
clause (i).
(iii) Records defined.--As used in this
subparagraph, the terms ``records'' and
``records of a covered financial company'' mean
any document, book, paper, map, photograph,
microfiche, microfilm, computer or
electronically-created record generated or
maintained by the covered financial company in
the course of and necessary to its transaction
of business.
(b) Priority of Expenses and Unsecured Claims.--
(1) In general.--Unsecured claims against a covered
financial company, or the Corporation as receiver for such
covered financial company under this section, that are proven
to the satisfaction of the receiver shall have priority in the
following order:
(A) Administrative expenses of the receiver.
(B) Any amounts owed to the United States, unless
the United States agrees or consents otherwise.
(C) Any other general or senior liability of the
covered financial company (which is not a liability
described under subparagraph (D) or (E)).
(D) Any obligation subordinated to general
creditors (which is not an obligation described under
subparagraph (E)).
(E) Any obligation to shareholders, members,
general partners, limited partners, or other persons,
with interests in the equity of the covered financial
company arising as a result of their status as
shareholders, members, general partners, limited
partners, or other persons with interests in the equity
of the covered financial company.
(2) Post-receivership financing priority.--In the event
that the Corporation, as receiver for a covered financial
company, is unable to obtain unsecured credit for the covered
financial company from commercial sources, the Corporation as
receiver may obtain credit or incur debt on the part of the
covered financial company, which shall have priority over any
or all administrative expenses of the receiver under paragraph
(1)(A).
(3) Claims of the united states.--Unsecured claims of the
United States shall, at a minimum, have a higher priority than
liabilities of the covered financial company that count as
regulatory capital.
(4) Creditors similarly situated.--All claimants of a
covered financial company that are similarly situated under
paragraph (1) shall be treated in a similar manner, except that
the Corporation as receiver may take any action (including
making payments, subject to subsection (o)(1)(E)(ii)) that does
not comply with this subsection, if--
(A) the Corporation determines that such action is
necessary--
(i) to maximize the value of the assets of
the covered financial company;
(ii) to maximize the present value return
from the sale or other disposition of the
assets of the covered financial company; or
(iii) to minimize the amount of any loss
realized upon the sale or other disposition of
the assets of the covered financial company;
and
(B) all claimants that are similarly situated under
paragraph (1) receive not less than the amount provided
in paragraphs (2) and (3) of subsection (d).
(5) Secured claims unaffected.--This section shall not
affect secured claims or security entitlements in respect of
assets or property held by the covered financial company,
except to the extent that the security is insufficient to
satisfy the claim, and then only with regard to the difference
between the claim and the amount realized from the security.
(6) Priority of expenses and unsecured claims in the
orderly liquidation of sipc member.--Where the Corporation is
appointed as receiver for a covered broker or dealer, unsecured
claims against such covered broker or dealer, or the
Corporation as receiver for such covered broker or dealer under
this section, that are proven to the satisfaction of the
receiver under section 205(e), shall have the priority
prescribed in paragraph (1), except that--
(A) SIPC shall be entitled to recover
administrative expenses incurred in performing its
responsibilities under section 205 on an equal basis
with the Corporation, in accordance with paragraph
(1)(A);
(B) the Corporation shall be entitled to recover
any amounts paid to customers or to SIPC pursuant to
section 205(f), in accordance with paragraph (1)(B);
(C) SIPC shall be entitled to recover any amounts
paid out of the SIPC Fund to meet its obligations under
section 205 and under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.), which
claim shall be subordinate to the claims payable under
subparagraphs (A) and (B) of paragraph (1), but senior
to all other claims; and
(D) the Corporation may, after paying any proven
claims to customers under section 205 and the
Securities Investor Protection Act of 1970 (15 U.S.C.
78aaa et seq.), and as provided above, pay dividends on
other proven claims, in its discretion, and to the
extent that funds are available, in accordance with the
priorities set forth in paragraph (1).
(c) Provisions Relating to Contracts Entered Into Before
Appointment of Receiver.--
(1) Authority to repudiate contracts.--In addition to any
other rights that a receiver may have, the Corporation as
receiver for any covered financial company may disaffirm or
repudiate any contract or lease--
(A) to which the covered financial company is a
party;
(B) the performance of which the Corporation as
receiver, in the discretion of the Corporation,
determines to be burdensome; and
(C) the disaffirmance or repudiation of which the
Corporation as receiver determines, in the discretion
of the Corporation, will promote the orderly
administration of the affairs of the covered financial
company.
(2) Timing of repudiation.--The Corporation, as receiver
for any covered financial company, shall determine whether or
not to exercise the rights of repudiation under this section
within a reasonable period of time.
(3) Claims for damages for repudiation.--
(A) In general.--Except as provided in paragraphs
(4), (5), and (6) and in subparagraphs (C), (D), and
(E) of this paragraph, the liability of the Corporation
as receiver for a covered financial company for the
disaffirmance or repudiation of any contract pursuant
to paragraph (1) shall be--
(i) limited to actual direct compensatory
damages; and
(ii) determined as of--
(I) the date of the appointment of
the Corporation as receiver; or
(II) in the case of any contract or
agreement referred to in paragraph (8),
the date of the disaffirmance or
repudiation of such contract or
agreement.
(B) No liability for other damages.--For purposes
of subparagraph (A), the term ``actual direct
compensatory damages'' does not include--
(i) punitive or exemplary damages;
(ii) damages for lost profits or
opportunity; or
(iii) damages for pain and suffering.
(C) Measure of damages for repudiation of qualified
financial contracts.--In the case of any qualified
financial contract or agreement to which paragraph (8)
applies, compensatory damages shall be--
(i) deemed to include normal and reasonable
costs of cover or other reasonable measures of
damages utilized in the industries for such
contract and agreement claims; and
(ii) paid in accordance with this paragraph
and subsection (d), except as otherwise
specifically provided in this subsection.
(D) Measure of damages for repudiation or
disaffirmance of debt obligation.--In the case of any
debt for borrowed money or evidenced by a security,
actual direct compensatory damages shall be no less
than the amount lent plus accrued interest plus any
accreted original issue discount as of the date the
Corporation was appointed receiver of the covered
financial company and, to the extent that an allowed
secured claim is secured by property the value of which
is greater than the amount of such claim and any
accrued interest through the date of repudiation or
disaffirmance, such accrued interest pursuant to
paragraph (1).
(E) Measure of damages for repudiation or
disaffirmance of contingent obligation.--In the case of
any contingent obligation of a covered financial
company consisting of any obligation under a guarantee,
letter of credit, loan commitment, or similar credit
obligation, the Corporation may, by rule or regulation,
prescribe that actual direct compensatory damages shall
be no less than the estimated value of the claim as of
the date the Corporation was appointed receiver of the
covered financial company, as such value is measured
based on the likelihood that such contingent claim
would become fixed and the probable magnitude thereof.
(4) Leases under which the covered financial company is the
lessee.--
(A) In general.--If the Corporation as receiver
disaffirms or repudiates a lease under which the
covered financial company is the lessee, the receiver
shall not be liable for any damages (other than damages
determined pursuant to subparagraph (B)) for the
disaffirmance or repudiation of such lease.
(B) Payments of rent.--Notwithstanding subparagraph
(A), the lessor under a lease to which subparagraph (A)
would otherwise apply shall--
(i) be entitled to the contractual rent
accruing before the later of the date on
which--
(I) the notice of disaffirmance or
repudiation is mailed; or
(II) the disaffirmance or
repudiation becomes effective, unless
the lessor is in default or breach of
the terms of the lease;
(ii) have no claim for damages under any
acceleration clause or other penalty provision
in the lease; and
(iii) have a claim for any unpaid rent,
subject to all appropriate offsets and
defenses, due as of the date of the appointment
which shall be paid in accordance with this
paragraph and subsection (d).
(5) Leases under which the covered financial company is the
lessor.--
(A) In general.--If the Corporation as receiver for
a covered financial company repudiates an unexpired
written lease of real property of the covered financial
company under which the covered financial company is
the lessor and the lessee is not, as of the date of
such repudiation, in default, the lessee under such
lease may either--
(i) treat the lease as terminated by such
repudiation; or
(ii) remain in possession of the leasehold
interest for the balance of the term of the
lease, unless the lessee defaults under the
terms of the lease after the date of such
repudiation.
(B) Provisions applicable to lessee remaining in
possession.--If any lessee under a lease described in
subparagraph (A) remains in possession of a leasehold
interest pursuant to clause (ii) of subparagraph (A)--
(i) the lessee--
(I) shall continue to pay the
contractual rent pursuant to the terms
of the lease after the date of the
repudiation of such lease; and
(II) may offset against any rent
payment which accrues after the date of
the repudiation of the lease, any
damages which accrue after such date
due to the nonperformance of any
obligation of the covered financial
company under the lease after such
date; and
(ii) the Corporation as receiver shall not
be liable to the lessee for any damages arising
after such date as a result of the repudiation,
other than the amount of any offset allowed
under clause (i)(II).
(6) Contracts for the sale of real property.--
(A) In general.--If the receiver repudiates any
contract (which meets the requirements of subsection
(a)(6)) for the sale of real property, and the
purchaser of such real property under such contract is
in possession and is not, as of the date of such
repudiation, in default, such purchaser may either--
(i) treat the contract as terminated by
such repudiation; or
(ii) remain in possession of such real
property.
(B) Provisions applicable to purchaser remaining in
possession.--If any purchaser of real property under
any contract described in subparagraph (A) remains in
possession of such property pursuant to clause (ii) of
subparagraph (A)--
(i) the purchaser--
(I) shall continue to make all
payments due under the contract after
the date of the repudiation of the
contract; and
(II) may offset against any such
payments any damages which accrue after
such date due to the nonperformance
(after such date) of any obligation of
the covered financial company under the
contract; and
(ii) the Corporation as receiver shall--
(I) not be liable to the purchaser
for any damages arising after such date
as a result of the repudiation, other
than the amount of any offset allowed
under clause (i)(II);
(II) deliver title to the purchaser
in accordance with the provisions of
the contract; and
(III) have no obligation under the
contract other than the performance
required under subclause (II).
(C) Assignment and sale allowed.--
(i) In general.--No provision of this
paragraph shall be construed as limiting the
right of the Corporation as receiver to assign
the contract described in subparagraph (A) and
sell the property, subject to the contract and
the provisions of this paragraph.
(ii) No liability after assignment and
sale.--If an assignment and sale described in
clause (i) is consummated, the Corporation as
receiver shall have no further liability under
the contract described in subparagraph (A) or
with respect to the real property which was the
subject of such contract.
(7) Provisions applicable to service contracts.--
(A) Services performed before appointment.--In the
case of any contract for services between any person
and any covered financial company for which the
Corporation has been appointed receiver, any claim of
such person for services performed before the date of
appointment shall be--
(i) a claim to be paid in accordance with
subsections (a), (b), and (d); and
(ii) deemed to have arisen as of the date
on which the receiver was appointed.
(B) Services performed after appointment and prior
to repudiation.--If, in the case of any contract for
services described in subparagraph (A), the Corporation
as receiver accepts performance by the other person
before making any determination to exercise the right
of repudiation of such contract under this section--
(i) the other party shall be paid under the
terms of the contract for the services
performed; and
(ii) the amount of such payment shall be
treated as an administrative expense of the
receivership.
(C) Acceptance of performance no bar to subsequent
repudiation.--The acceptance by the Corporation as
receiver for services referred to in subparagraph (B)
in connection with a contract described in subparagraph
(B) shall not affect the right of the Corporation as
receiver to repudiate such contract under this section
at any time after such performance.
(8) Certain qualified financial contracts.--
(A) Rights of parties to contracts.--Subject to
subsection (a)(8) and paragraphs (9) and (10) of this
subsection, and notwithstanding any other provision of
this section, any other provision of Federal law, or
the law of any State, no person shall be stayed or
prohibited from exercising--
(i) any right that such person has to cause
the termination, liquidation, or acceleration
of any qualified financial contract with a
covered financial company which arises upon the
date of appointment of the Corporation as
receiver for such covered financial company at
any time after such appointment;
(ii) any right under any security agreement
or arrangement or other credit enhancement
related to one or more qualified financial
contracts described in clause (i); or
(iii) any right to offset or net out any
termination value, payment amount, or other
transfer obligation arising under or in
connection with 1 or more contracts or
agreements described in clause (i), including
any master agreement for such contracts or
agreements.
(B) Applicability of other provisions.--Subsection
(a)(8) shall apply in the case of any judicial action
or proceeding brought against the Corporation as
receiver referred to in subparagraph (A), or the
subject covered financial company, by any party to a
contract or agreement described in subparagraph (A)(i)
with such covered financial company.
(C) Certain transfers not avoidable.--
(i) In general.--Notwithstanding subsection
(a)(11), (a)(12), or (c)(12), section 5242 of
the Revised Statutes of the United States, or
any other provision of Federal or State law
relating to the avoidance of preferential or
fraudulent transfers, the Corporation, whether
acting as the Corporation or as receiver for a
covered financial company, may not avoid any
transfer of money or other property in
connection with any qualified financial
contract with a covered financial company.
(ii) Exception for certain transfers.--
Clause (i) shall not apply to any transfer of
money or other property in connection with any
qualified financial contract with a covered
financial company if the transferee had actual
intent to hinder, delay, or defraud such
company, the creditors of such company, or the
Corporation as receiver appointed for such
company.
(D) Certain contracts and agreements defined.--For
purposes of this subsection, the following definitions
shall apply:
(i) Qualified financial contract.--The term
``qualified financial contract'' means any
securities contract, commodity contract,
forward contract, repurchase agreement, swap
agreement, and any similar agreement that the
Corporation determines by regulation,
resolution, or order to be a qualified
financial contract for purposes of this
paragraph.
(ii) Securities contract.--The term
``securities contract''--
(I) means a contract for the
purchase, sale, or loan of a security,
a certificate of deposit, a mortgage
loan, any interest in a mortgage loan,
a group or index of securities,
certificates of deposit, or mortgage
loans or interests therein (including
any interest therein or based on the
value thereof), or any option on any of
the foregoing, including any option to
purchase or sell any such security,
certificate of deposit, mortgage loan,
interest, group or index, or option,
and including any repurchase or reverse
repurchase transaction on any such
security, certificate of deposit,
mortgage loan, interest, group or
index, or option (whether or not such
repurchase or reverse repurchase
transaction is a ``repurchase
agreement'', as defined in clause (v));
(II) does not include any purchase,
sale, or repurchase obligation under a
participation in a commercial mortgage
loan unless the Corporation determines
by regulation, resolution, or order to
include any such agreement within the
meaning of such term;
(III) means any option entered into
on a national securities exchange
relating to foreign currencies;
(IV) means the guarantee (including
by novation) by or to any securities
clearing agency of any settlement of
cash, securities, certificates of
deposit, mortgage loans or interests
therein, group or index of securities,
certificates of deposit or mortgage
loans or interests therein (including
any interest therein or based on the
value thereof) or an option on any of
the foregoing, including any option to
purchase or sell any such security,
certificate of deposit, mortgage loan,
interest, group or index, or option
(whether or not such settlement is in
connection with any agreement or
transaction referred to in subclauses
(I) through (XII) (other than subclause
(II)));
(V) means any margin loan;
(VI) means any extension of credit
for the clearance or settlement of
securities transactions;
(VII) means any loan transaction
coupled with a securities collar
transaction, any prepaid securities
forward transaction, or any total
return swap transaction coupled with a
securities sale transaction;
(VIII) means any other agreement or
transaction that is similar to any
agreement or transaction referred to in
this clause;
(IX) means any combination of the
agreements or transactions referred to
in this clause;
(X) means any option to enter into
any agreement or transaction referred
to in this clause;
(XI) means a master agreement that
provides for an agreement or
transaction referred to in any of
subclauses (I) through (X), other than
subclause (II), together with all
supplements to any such master
agreement, without regard to whether
the master agreement provides for an
agreement or transaction that is not a
securities contract under this clause,
except that the master agreement shall
be considered to be a securities
contract under this clause only with
respect to each agreement or
transaction under the master agreement
that is referred to in any of
subclauses (I) through (X), other than
subclause (II); and
(XII) means any security agreement
or arrangement or other credit
enhancement related to any agreement or
transaction referred to in this clause,
including any guarantee or
reimbursement obligation in connection
with any agreement or transaction
referred to in this clause.
(iii) Commodity contract.--The term
``commodity contract'' means--
(I) with respect to a futures
commission merchant, a contract for the
purchase or sale of a commodity for
future delivery on, or subject to the
rules of, a contract market or board of
trade;
(II) with respect to a foreign
futures commission merchant, a foreign
future;
(III) with respect to a leverage
transaction merchant, a leverage
transaction;
(IV) with respect to a clearing
organization, a contract for the
purchase or sale of a commodity for
future delivery on, or subject to the
rules of, a contract market or board of
trade that is cleared by such clearing
organization, or commodity option
traded on, or subject to the rules of,
a contract market or board of trade
that is cleared by such clearing
organization;
(V) with respect to a commodity
options dealer, a commodity option;
(VI) any other agreement or
transaction that is similar to any
agreement or transaction referred to in
this clause;
(VII) any combination of the
agreements or transactions referred to
in this clause;
(VIII) any option to enter into any
agreement or transaction referred to in
this clause;
(IX) a master agreement that
provides for an agreement or
transaction referred to in any of
subclauses (I) through (VIII), together
with all supplements to any such master
agreement, without regard to whether
the master agreement provides for an
agreement or transaction that is not a
commodity contract under this clause,
except that the master agreement shall
be considered to be a commodity
contract under this clause only with
respect to each agreement or
transaction under the master agreement
that is referred to in any of
subclauses (I) through (VIII); or
(X) any security agreement or
arrangement or other credit enhancement
related to any agreement or transaction
referred to in this clause, including
any guarantee or reimbursement
obligation in connection with any
agreement or transaction referred to in
this clause.
(iv) Forward contract.--The term ``forward
contract'' means--
(I) a contract (other than a
commodity contract) for the purchase,
sale, or transfer of a commodity or any
similar good, article, service, right,
or interest which is presently or in
the future becomes the subject of
dealing in the forward contract trade,
or product or byproduct thereof, with a
maturity date that is more than 10 days
after the date on which the contract is
entered into, including a repurchase or
reverse repurchase transaction (whether
or not such repurchase or reverse
repurchase transaction is a
``repurchase agreement'', as defined in
clause (v)), consignment, lease, swap,
hedge transaction, deposit, loan,
option, allocated transaction,
unallocated transaction, or any other
similar agreement;
(II) any combination of agreements
or transactions referred to in
subclauses (I) and (III);
(III) any option to enter into any
agreement or transaction referred to in
subclause (I) or (II);
(IV) a master agreement that
provides for an agreement or
transaction referred to in subclause
(I), (II), or (III), together with all
supplements to any such master
agreement, without regard to whether
the master agreement provides for an
agreement or transaction that is not a
forward contract under this clause,
except that the master agreement shall
be considered to be a forward contract
under this clause only with respect to
each agreement or transaction under the
master agreement that is referred to in
subclause (I), (II), or (III); or
(V) any security agreement or
arrangement or other credit enhancement
related to any agreement or transaction
referred to in subclause (I), (II),
(III), or (IV), including any guarantee
or reimbursement obligation in
connection with any agreement or
transaction referred to in any such
subclause.
(v) Repurchase agreement.--The term
``repurchase agreement'' (which definition also
applies to a reverse repurchase agreement)--
(I) means an agreement, including
related terms, which provides for the
transfer of one or more certificates of
deposit, mortgage related securities
(as such term is defined in section 3
of the Securities Exchange Act of
1934), mortgage loans, interests in
mortgage-related securities or mortgage
loans, eligible bankers' acceptances,
qualified foreign government securities
(which, for purposes of this clause,
means a security that is a direct
obligation of, or that is fully
guaranteed by, the central government
of a member of the Organization for
Economic Cooperation and Development,
as determined by regulation or order
adopted by the Board of Governors), or
securities that are direct obligations
of, or that are fully guaranteed by,
the United States or any agency of the
United States against the transfer of
funds by the transferee of such
certificates of deposit, eligible
bankers' acceptances, securities,
mortgage loans, or interests with a
simultaneous agreement by such
transferee to transfer to the
transferor thereof certificates of
deposit, eligible bankers' acceptances,
securities, mortgage loans, or
interests as described above, at a date
certain not later than 1 year after
such transfers or on demand, against
the transfer of funds, or any other
similar agreement;
(II) does not include any
repurchase obligation under a
participation in a commercial mortgage
loan, unless the Corporation
determines, by regulation, resolution,
or order to include any such
participation within the meaning of
such term;
(III) means any combination of
agreements or transactions referred to
in subclauses (I) and (IV);
(IV) means any option to enter into
any agreement or transaction referred
to in subclause (I) or (III);
(V) means a master agreement that
provides for an agreement or
transaction referred to in subclause
(I), (III), or (IV), together with all
supplements to any such master
agreement, without regard to whether
the master agreement provides for an
agreement or transaction that is not a
repurchase agreement under this clause,
except that the master agreement shall
be considered to be a repurchase
agreement under this subclause only
with respect to each agreement or
transaction under the master agreement
that is referred to in subclause (I),
(III), or (IV); and
(VI) means any security agreement
or arrangement or other credit
enhancement related to any agreement or
transaction referred to in subclause
(I), (III), (IV), or (V), including any
guarantee or reimbursement obligation
in connection with any agreement or
transaction referred to in any such
subclause.
(vi) Swap agreement.--The term ``swap
agreement'' means--
(I) any agreement, including the
terms and conditions incorporated by
reference in any such agreement, which
is an interest rate swap, option,
future, or forward agreement, including
a rate floor, rate cap, rate collar,
cross-currency rate swap, and basis
swap; a spot, same day-tomorrow,
tomorrow-next, forward, or other
foreign exchange, precious metals, or
other commodity agreement; a currency
swap, option, future, or forward
agreement; an equity index or equity
swap, option, future, or forward
agreement; a debt index or debt swap,
option, future, or forward agreement; a
total return, credit spread or credit
swap, option, future, or forward
agreement; a commodity index or
commodity swap, option, future, or
forward agreement; weather swap,
option, future, or forward agreement;
an emissions swap, option, future, or
forward agreement; or an inflation
swap, option, future, or forward
agreement;
(II) any agreement or transaction
that is similar to any other agreement
or transaction referred to in this
clause and that is of a type that has
been, is presently, or in the future
becomes, the subject of recurrent
dealings in the swap or other
derivatives markets (including terms
and conditions incorporated by
reference in such agreement) and that
is a forward, swap, future, option, or
spot transaction on one or more rates,
currencies, commodities, equity
securities or other equity instruments,
debt securities or other debt
instruments, quantitative measures
associated with an occurrence, extent
of an occurrence, or contingency
associated with a financial,
commercial, or economic consequence, or
economic or financial indices or
measures of economic or financial risk
or value;
(III) any combination of agreements
or transactions referred to in this
clause;
(IV) any option to enter into any
agreement or transaction referred to in
this clause;
(V) a master agreement that
provides for an agreement or
transaction referred to in subclause
(I), (II), (III), or (IV), together
with all supplements to any such master
agreement, without regard to whether
the master agreement contains an
agreement or transaction that is not a
swap agreement under this clause,
except that the master agreement shall
be considered to be a swap agreement
under this clause only with respect to
each agreement or transaction under the
master agreement that is referred to in
subclause (I), (II), (III), or (IV);
and
(VI) any security agreement or
arrangement or other credit enhancement
related to any agreement or transaction
referred to in any of clauses (I)
through (V), including any guarantee or
reimbursement obligation in connection
with any agreement or transaction
referred to in any such clause.
(vii) Definitions relating to default.--
When used in this paragraph and paragraph
(10)--
(I) the term ``default'' means,
with respect to a covered financial
company, any adjudication or other
official decision by any court of
competent jurisdiction, or other public
authority pursuant to which the
Corporation has been appointed
receiver; and
(II) the term ``in danger of
default'' means a covered financial
company with respect to which the
Corporation or appropriate State
authority has determined that--
(aa) in the opinion of the
Corporation or such authority--
(AA) the covered
financial company is
not likely to be able
to pay its obligations
in the normal course of
business; and
(BB) there is no
reasonable prospect
that the covered
financial company will
be able to pay such
obligations without
Federal assistance; or
(bb) in the opinion of the
Corporation or such authority--
(AA) the covered
financial company has
incurred or is likely
to incur losses that
will deplete all or
substantially all of
its capital; and
(BB) there is no
reasonable prospect
that the capital will
be replenished without
Federal assistance.
(viii) Treatment of master agreement as one
agreement.--Any master agreement for any
contract or agreement described in any of
clauses (i) through (vi) (or any master
agreement for such master agreement or
agreements), together with all supplements to
such master agreement, shall be treated as a
single agreement and a single qualified
financial contact. If a master agreement
contains provisions relating to agreements or
transactions that are not themselves qualified
financial contracts, the master agreement shall
be deemed to be a qualified financial contract
only with respect to those transactions that
are themselves qualified financial contracts.
(ix) Transfer.--The term ``transfer'' means
every mode, direct or indirect, absolute or
conditional, voluntary or involuntary, of
disposing of or parting with property or with
an interest in property, including retention of
title as a security interest and foreclosure of
the equity of redemption of the covered
financial company.
(x) Person.--The term ``person'' includes
any governmental entity in addition to any
entity included in the definition of such term
in section 1, title 1, United States Code.
(E) Clarification.--No provision of law shall be
construed as limiting the right or power of the
Corporation, or authorizing any court or agency to
limit or delay, in any manner, the right or power of
the Corporation to transfer any qualified financial
contract in accordance with paragraphs (9) and (10) of
this subsection or to disaffirm or repudiate any such
contract in accordance with subsection (c)(1).
(F) Walkaway clauses not effective.--
(i) In general.--Notwithstanding the
provisions of subparagraph (A) of this
paragraph and sections 403 and 404 of the
Federal Deposit Insurance Corporation
Improvement Act of 1991, no walkaway clause
shall be enforceable in a qualified financial
contract of a covered financial company in
default.
(ii) Limited suspension of certain
obligations.--In the case of a qualified
financial contract referred to in clause (i),
any payment or delivery obligations otherwise
due from a party pursuant to the qualified
financial contract shall be suspended from the
time at which the Corporation is appointed as
receiver until the earlier of--
(I) the time at which such party
receives notice that such contract has
been transferred pursuant to paragraph
(10)(A); or
(II) 5:00 p.m. (eastern time) on
the 5th business day following the date
of the appointment of the Corporation
as receiver.
(iii) Walkaway clause defined.--For
purposes of this subparagraph, the term
``walkaway clause'' means any provision in a
qualified financial contract that suspends,
conditions, or extinguishes a payment
obligation of a party, in whole or in part, or
does not create a payment obligation of a party
that would otherwise exist, solely because of
the status of such party as a nondefaulting
party in connection with the insolvency of a
covered financial company that is a party to
the contract or the appointment of or the
exercise of rights or powers by the Corporation
as receiver for such covered financial company,
and not as a result of the exercise by a party
of any right to offset, setoff, or net
obligations that exist under the contract, any
other contract between those parties, or
applicable law.
(iv) Certain obligations to clearing
organizations.--In the event that the
Corporation has been appointed as receiver for
a covered financial company which is a party to
any qualified financial contract cleared by or
subject to the rules of a clearing organization
(as defined in subsection (c)(9)(D)), the
receiver shall use its best efforts to meet all
margin, collateral, and settlement obligations
of the covered financial company that arise
under qualified financial contracts (other than
any margin, collateral, or settlement
obligation that is not enforceable against the
receiver under paragraph (8)(F)(i) or paragraph
(10)(B)), as required by the rules of the
clearing organization when due, and such
obligations shall not be suspended pursuant to
paragraph (8)(F)(ii). Notwithstanding paragraph
(8)(F)(ii) or (10)(B), if the receiver fails to
satisfy any such margin, collateral, or
settlement obligations under the rules of the
clearing organization, the clearing
organization shall have the immediate right to
exercise, and shall not be stayed from
exercising, all of its rights and remedies
under its rules and applicable law with respect
to any qualified financial contract of the
covered financial company, including, without
limitation, the right to liquidate all
positions and collateral of such covered
financial company under the company's qualified
financial contracts, and suspend or cease to
act for such covered financial company, all in
accordance with the rules of the clearing
organization.
(G) Recordkeeping.--
(i) Joint rulemaking.--The Federal primary
financial regulatory agencies shall jointly
prescribe regulations requiring that financial
companies maintain such records with respect to
qualified financial contracts (including market
valuations) that the Federal primary financial
regulatory agencies determine to be necessary
or appropriate in order to assist the
Corporation as receiver for a covered financial
company in being able to exercise its rights
and fulfill its obligations under this
paragraph or paragraph (9) or (10).
(ii) Timeframe.--The Federal primary
financial regulatory agencies shall prescribe
joint final or interim final regulations not
later than 24 months after the date of
enactment of this Act.
(iii) Back-up rulemaking authority.--If the
Federal primary financial regulatory agencies
do not prescribe joint final or interim final
regulations within the time frame in clause
(ii), the Chairperson of the Council shall
prescribe, in consultation with the
Corporation, the regulations required by clause
(i).
(iv) Categorization and tiering.--The joint
regulations prescribed under clause (i) shall,
as appropriate, differentiate among financial
companies by taking into consideration their
size, risk, complexity, leverage, frequency and
dollar amount of qualified financial contracts,
interconnectedness to the financial system, and
any other factors deemed appropriate.
(9) Transfer of qualified financial contracts.--
(A) In general.--In making any transfer of assets
or liabilities of a covered financial company in
default, which includes any qualified financial
contract, the Corporation as receiver for such covered
financial company shall either--
(i) transfer to one financial institution,
other than a financial institution for which a
conservator, receiver, trustee in bankruptcy,
or other legal custodian has been appointed or
which is otherwise the subject of a bankruptcy
or insolvency proceeding--
(I) all qualified financial
contracts between any person or any
affiliate of such person and the
covered financial company in default;
(II) all claims of such person or
any affiliate of such person against
such covered financial company under
any such contract (other than any claim
which, under the terms of any such
contract, is subordinated to the claims
of general unsecured creditors of such
company);
(III) all claims of such covered
financial company against such person
or any affiliate of such person under
any such contract; and
(IV) all property securing or any
other credit enhancement for any
contract described in subclause (I) or
any claim described in subclause (II)
or (III) under any such contract; or
(ii) transfer none of the qualified
financial contracts, claims, property or other
credit enhancement referred to in clause (i)
(with respect to such person and any affiliate
of such person).
(B) Transfer to foreign bank, financial
institution, or branch or agency thereof.--In
transferring any qualified financial contracts and
related claims and property under subparagraph (A)(i),
the Corporation as receiver for the covered financial
company shall not make such transfer to a foreign bank,
financial institution organized under the laws of a
foreign country, or a branch or agency of a foreign
bank or financial institution unless, under the law
applicable to such bank, financial institution, branch
or agency, to the qualified financial contracts, and to
any netting contract, any security agreement or
arrangement or other credit enhancement related to one
or more qualified financial contracts, the contractual
rights of the parties to such qualified financial
contracts, netting contracts, security agreements or
arrangements, or other credit enhancements are
enforceable substantially to the same extent as
permitted under this section.
(C) Transfer of contracts subject to the rules of a
clearing organization.--In the event that the
Corporation as receiver for a financial institution
transfers any qualified financial contract and related
claims, property, or credit enhancement pursuant to
subparagraph (A)(i) and such contract is cleared by or
subject to the rules of a clearing organization, the
clearing organization shall not be required to accept
the transferee as a member by virtue of the transfer.
(D) Definitions.--For purposes of this paragraph--
(i) the term ``financial institution''
means a broker or dealer, a depository
institution, a futures commission merchant, a
bridge financial company, or any other
institution determined by the Corporation, by
regulation, to be a financial institution; and
(ii) the term ``clearing organization'' has
the same meaning as in section 402 of the
Federal Deposit Insurance Corporation
Improvement Act of 1991.
(10) Notification of transfer.--
(A) In general.--
(i) Notice.--The Corporation shall provide
notice in accordance with clause (ii), if--
(I) the Corporation as receiver for
a covered financial company in default
or in danger of default transfers any
assets or liabilities of the covered
financial company; and
(II) the transfer includes any
qualified financial contract.
(ii) Timing.--The Corporation as receiver
for a covered financial company shall notify
any person who is a party to any contract
described in clause (i) of such transfer not
later than 5:00 p.m. (eastern time) on the 5th
business day following the date of the
appointment of the Corporation as receiver.
(B) Certain rights not enforceable.--
(i) Receivership.--A person who is a party
to a qualified financial contract with a
covered financial company may not exercise any
right that such person has to terminate,
liquidate, or net such contract under paragraph
(8)(A) solely by reason of or incidental to the
appointment under this section of the
Corporation as receiver for the covered
financial company (or the insolvency or
financial condition of the covered financial
company for which the Corporation has been
appointed as receiver)--
(I) until 5:00 p.m. (eastern time)
on the 5th business day following the
date of the appointment; or
(II) after the person has received
notice that the contract has been
transferred pursuant to paragraph
(9)(A).
(ii) Notice.--For purposes of this
paragraph, the Corporation as receiver for a
covered financial company shall be deemed to
have notified a person who is a party to a
qualified financial contract with such covered
financial company, if the Corporation has taken
steps reasonably calculated to provide notice
to such person by the time specified in
subparagraph (A).
(C) Treatment of bridge financial company.--For
purposes of paragraph (9), a bridge financial company
shall not be considered to be a covered financial
company for which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has been
appointed, or which is otherwise the subject of a
bankruptcy or insolvency proceeding.
(D) Business day defined.--For purposes of this
paragraph, the term ``business day'' means any day
other than any Saturday, Sunday, or any day on which
either the New York Stock Exchange or the Federal
Reserve Bank of New York is closed.
(11) Disaffirmance or repudiation of qualified financial
contracts.--In exercising the rights of disaffirmance or
repudiation of the Corporation as receiver with respect to any
qualified financial contract to which a covered financial
company is a party, the Corporation shall either--
(A) disaffirm or repudiate all qualified financial
contracts between--
(i) any person or any affiliate of such
person; and
(ii) the covered financial company in
default; or
(B) disaffirm or repudiate none of the qualified
financial contracts referred to in subparagraph (A)
(with respect to such person or any affiliate of such
person).
(12) Certain security and customer interests not
avoidable.--No provision of this subsection shall be construed
as permitting the avoidance of any--
(A) legally enforceable or perfected security
interest in any of the assets of any covered financial
company, except in accordance with subsection (a)(11);
or
(B) legally enforceable interest in customer
property, security entitlements in respect of assets or
property held by the covered financial company for any
security entitlement holder.
(13) Authority to enforce contracts.--
(A) In general.--The Corporation, as receiver for a
covered financial company, may enforce any contract,
other than a liability insurance contract of a director
or officer, a financial institution bond entered into
by the covered financial company, notwithstanding any
provision of the contract providing for termination,
default, acceleration, or exercise of rights upon, or
solely by reason of, insolvency, the appointment of or
the exercise of rights or powers by the Corporation as
receiver, the filing of the petition pursuant to
section 202(c)(1), or the issuance of the
recommendations or determination, or any actions or
events occurring in connection therewith or as a result
thereof, pursuant to section 203.
(B) Certain rights not affected.--No provision of
this paragraph may be construed as impairing or
affecting any right of the Corporation as receiver to
enforce or recover under a liability insurance contract
of a director or officer or financial institution bond
under other applicable law.
(C) Consent requirement and ipso facto clauses.--
(i) In general.--Except as otherwise
provided by this section, no person may
exercise any right or power to terminate,
accelerate, or declare a default under any
contract to which the covered financial company
is a party (and no provision in any such
contract providing for such default,
termination, or acceleration shall be
enforceable), or to obtain possession of or
exercise control over any property of the
covered financial company or affect any
contractual rights of the covered financial
company, without the consent of the Corporation
as receiver for the covered financial company
during the 90 day period beginning from the
appointment of the Corporation as receiver.
(ii) Exceptions.--No provision of this
subparagraph shall apply to a director or
officer liability insurance contract or a
financial institution bond, to the rights of
parties to certain qualified financial
contracts pursuant to paragraph (8), or to the
rights of parties to netting contracts pursuant
to subtitle A of title IV of the Federal
Deposit Insurance Corporation Improvement Act
of 1991 (12 U.S.C. 4401 et seq.), or shall be
construed as permitting the Corporation as
receiver to fail to comply with otherwise
enforceable provisions of such contract.
(D) Contracts to extend credit.--Notwithstanding
any other provision in this title, if the Corporation
as receiver enforces any contract to extend credit to
the covered financial company or bridge financial
company, any valid and enforceable obligation to repay
such debt shall be paid by the Corporation as receiver,
as an administrative expense of the receivership.
(14) Exception for federal reserve banks and corporation
security interest.--No provision of this subsection shall apply
with respect to--
(A) any extension of credit from any Federal
reserve bank or the Corporation to any covered
financial company; or
(B) any security interest in the assets of the
covered financial company securing any such extension
of credit.
(15) Savings clause.--The meanings of terms used in this
subsection are applicable for purposes of this subsection only,
and shall not be construed or applied so as to challenge or
affect the characterization, definition, or treatment of any
similar terms under any other statute, regulation, or rule,
including the Gramm-Leach-Bliley Act, the Legal Certainty for
Bank Products Act of 2000, the securities laws (as that term is
defined in section 3(a)(47) of the Securities Exchange Act of
1934), and the Commodity Exchange Act.
(16) Enforcement of contracts guaranteed by the covered
financial company.--
(A) In general.--The Corporation, as receiver for a
covered financial company or as receiver for a
subsidiary of a covered financial company (including an
insured depository institution) shall have the power to
enforce contracts of subsidiaries or affiliates of the
covered financial company, the obligations under which
are guaranteed or otherwise supported by or linked to
the covered financial company, notwithstanding any
contractual right to cause the termination,
liquidation, or acceleration of such contracts based
solely on the insolvency, financial condition, or
receivership of the covered financial company, if--
(i) such guaranty or other support and all
related assets and liabilities are transferred
to and assumed by a bridge financial company or
a third party (other than a third party for
which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has been
appointed, or which is otherwise the subject of
a bankruptcy or insolvency proceeding) within
the same period of time as the Corporation is
entitled to transfer the qualified financial
contracts of such covered financial company; or
(ii) the Corporation, as receiver,
otherwise provides adequate protection with
respect to such obligations.
(B) Rule of construction.--For purposes of this
paragraph, a bridge financial company shall not be
considered to be a third party for which a conservator,
receiver, trustee in bankruptcy, or other legal
custodian has been appointed, or which is otherwise the
subject of a bankruptcy or insolvency proceeding.
(d) Valuation of Claims in Default.--
(1) In general.--Notwithstanding any other provision of
Federal law or the law of any State, and regardless of the
method utilized by the Corporation for a covered financial
company, including transactions authorized under subsection
(h), this subsection shall govern the rights of the creditors
of any such covered financial company.
(2) Maximum liability.--The maximum liability of the
Corporation, acting as receiver for a covered financial company
or in any other capacity, to any person having a claim against
the Corporation as receiver or the covered financial company
for which the Corporation is appointed shall equal the amount
that such claimant would have received if--
(A) the Corporation had not been appointed receiver
with respect to the covered financial company; and
(B) the covered financial company had been
liquidated under chapter 7 of the Bankruptcy Code, or
any similar provision of State insolvency law
applicable to the covered financial company.
(3) Special provision for orderly liquidation by sipc.--The
maximum liability of the Corporation, acting as receiver or in
its corporate capacity for any covered broker or dealer to any
customer of such covered broker or dealer, with respect to
customer property of such customer, shall be--
(A) equal to the amount that such customer would
have received with respect to such customer property in
a case initiated by SIPC under the Securities Investor
Protection Act of 1970 (15 U.S.C. 78aaa et seq.); and
(B) determined as of the close of business on the
date on which the Corporation is appointed as receiver.
(4) Additional payments authorized.--
(A) In general.--Subject to subsection
(o)(1)(E)(ii), the Corporation, with the approval of
the Secretary, may make additional payments or credit
additional amounts to or with respect to or for the
account of any claimant or category of claimants of the
covered financial company, if the Corporation
determines that such payments or credits are necessary
or appropriate to minimize losses to the Corporation as
receiver from the orderly liquidation of the covered
financial company under this section.
(B) Limitation.--Notwithstanding any other
provision of Federal or State law, or the constitution
of any State, the Corporation shall not be obligated,
as a result of having made any payment under
subparagraph (A) or credited any amount described in
subparagraph (A) to or with respect to or for the
account of any claimant or category of claimants, to
make payments to any other claimant or category of
claimants.
(C) Manner of payment.--The Corporation may make
payments or credit amounts under subparagraph (A)
directly to the claimants or may make such payments or
credit such amounts to a company other than a covered
financial company or a bridge financial company
established with respect thereto in order to induce
such other company to accept liability for such claims.
(e) Limitation on Court Action.--Except as provided in this title,
no court may take any action to restrain or affect the exercise of
powers or functions of the receiver hereunder, and any remedy against
the Corporation or receiver shall be limited to money damages
determined in accordance with this title.
(f) Liability of Directors and Officers.--
(1) In general.--A director or officer of a covered
financial company may be held personally liable for monetary
damages in any civil action described in paragraph (2) by, on
behalf of, or at the request or direction of the Corporation,
which action is prosecuted wholly or partially for the benefit
of the Corporation--
(A) acting as receiver for such covered financial
company;
(B) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed by the Corporation as receiver; or
(C) acting based upon a suit, claim, or cause of
action purchased from, assigned by, or otherwise
conveyed in whole or in part by a covered financial
company or its affiliate in connection with assistance
provided under this title.
(2) Actions covered.--Paragraph (1) shall apply with
respect to actions for gross negligence, including any similar
conduct or conduct that demonstrates a greater disregard of a
duty of care (than gross negligence) including intentional
tortious conduct, as such terms are defined and determined
under applicable State law.
(3) Savings clause.--Nothing in this subsection shall
impair or affect any right of the Corporation under other
applicable law.
(g) Damages.--In any proceeding related to any claim against a
director, officer, employee, agent, attorney, accountant, or appraiser
of a covered financial company, or any other party employed by or
providing services to a covered financial company, recoverable damages
determined to result from the improvident or otherwise improper use or
investment of any assets of the covered financial company shall include
principal losses and appropriate interest.
(h) Bridge Financial Companies.--
(1) Organization.--
(A) Purpose.--The Corporation, as receiver for one
or more covered financial companies or in anticipation
of being appointed receiver for one or more covered
financial companies, may organize one or more bridge
financial companies in accordance with this subsection.
(B) Authorities.--Upon the creation of a bridge
financial company under subparagraph (A) with respect
to a covered financial company, such bridge financial
company may--
(i) assume such liabilities (including
liabilities associated with any trust or
custody business, but excluding any liabilities
that count as regulatory capital) of such
covered financial company as the Corporation
may, in its discretion, determine to be
appropriate;
(ii) purchase such assets (including assets
associated with any trust or custody business)
of such covered financial company as the
Corporation may, in its discretion, determine
to be appropriate; and
(iii) perform any other temporary function
which the Corporation may, in its discretion,
prescribe in accordance with this section.
(2) Charter and establishment.--
(A) Establishment.--Except as provided in
subparagraph (H), where the covered financial company
is a covered broker or dealer, the Corporation, as
receiver for a covered financial company, may grant a
Federal charter to and approve articles of association
for one or more bridge financial company or companies,
with respect to such covered financial company which
shall, by operation of law and immediately upon
issuance of its charter and approval of its articles of
association, be established and operate in accordance
with, and subject to, such charter, articles, and this
section.
(B) Management.--Upon its establishment, a bridge
financial company shall be under the management of a
board of directors appointed by the Corporation.
(C) Articles of association.--The articles of
association and organization certificate of a bridge
financial company shall have such terms as the
Corporation may provide, and shall be executed by such
representatives as the Corporation may designate.
(D) Terms of charter; rights and privileges.--
Subject to and in accordance with the provisions of
this subsection, the Corporation shall--
(i) establish the terms of the charter of a
bridge financial company and the rights,
powers, authorities, and privileges of a bridge
financial company granted by the charter or as
an incident thereto; and
(ii) provide for, and establish the terms
and conditions governing, the management
(including the bylaws and the number of
directors of the board of directors) and
operations of the bridge financial company.
(E) Transfer of rights and privileges of covered
financial company.--
(i) In general.--Notwithstanding any other
provision of Federal or State law, the
Corporation may provide for a bridge financial
company to succeed to and assume any rights,
powers, authorities, or privileges of the
covered financial company with respect to which
the bridge financial company was established
and, upon such determination by the
Corporation, the bridge financial company shall
immediately and by operation of law succeed to
and assume such rights, powers, authorities,
and privileges.
(ii) Effective without approval.--Any
succession to or assumption by a bridge
financial company of rights, powers,
authorities, or privileges of a covered
financial company under clause (i) or otherwise
shall be effective without any further approval
under Federal or State law, assignment, or
consent with respect thereto.
(F) Corporate governance and election and
designation of body of law.--To the extent permitted by
the Corporation and consistent with this section and
any rules, regulations, or directives issued by the
Corporation under this section, a bridge financial
company may elect to follow the corporate governance
practices and procedures that are applicable to a
corporation incorporated under the general corporation
law of the State of Delaware, or the State of
incorporation or organization of the covered financial
company with respect to which the bridge financial
company was established, as such law may be amended
from time to time.
(G) Capital.--
(i) Capital not required.--Notwithstanding
any other provision of Federal or State law, a
bridge financial company may, if permitted by
the Corporation, operate without any capital or
surplus, or with such capital or surplus as the
Corporation may in its discretion determine to
be appropriate.
(ii) No contribution by the corporation
required.--The Corporation is not required to
pay capital into a bridge financial company or
to issue any capital stock on behalf of a
bridge financial company established under this
subsection.
(iii) Authority.--If the Corporation
determines that such action is advisable, the
Corporation may cause capital stock or other
securities of a bridge financial company
established with respect to a covered financial
company to be issued and offered for sale in
such amounts and on such terms and conditions
as the Corporation may, in its discretion,
determine.
(iv) Operating funds in lieu of capital and
implementation plan.--Upon the organization of
a bridge financial company, and thereafter as
the Corporation may, in its discretion,
determine to be necessary or advisable, the
Corporation may make available to the bridge
financial company, subject to the plan
described in subsection (n)(13), funds for the
operation of the bridge financial company in
lieu of capital.
(H) Bridge brokers or dealers.--
(i) In general.--The Corporation, as
receiver for a covered broker or dealer, may
approve articles of association for one or more
bridge financial companies with respect to such
covered broker or dealer, which bridge
financial company or companies shall, by
operation of law and immediately upon approval
of its articles of association--
(I) be established and deemed
registered with the Commission under
the Securities Exchange Act of 1934 and
a member of SIPC;
(II) operate in accordance with
such articles and this section; and
(III) succeed to any and all
registrations and memberships of the
covered financial company with or in
any self-regulatory organizations.
(ii) Other requirements.--Except as
provided in clause (i), and notwithstanding any
other provision of this section, the bridge
financial company shall be subject to the
Federal securities laws and all requirements
with respect to being a member of a self-
regulatory organization, unless exempted from
any such requirements by the Commission, as is
necessary or appropriate in the public interest
or for the protection of investors.
(iii) Treatment of customers.--Except as
otherwise provided by this title, any customer
of the covered broker or dealer whose account
is transferred to a bridge financial company
shall have all the rights, privileges, and
protections under section 205(f) and under the
Securities Investor Protection Act of 1970 (15
U.S.C. 78aaa et seq.), that such customer would
have had if the account were not transferred
from the covered financial company under this
subparagraph.
(iv) Operation of bridge brokers or
dealers.--Notwithstanding any other provision
of this title, the Corporation shall not
operate any bridge financial company created by
the Corporation under this title with respect
to a covered broker or dealer in such a manner
as to adversely affect the ability of customers
to promptly access their customer property in
accordance with applicable law.
(3) Interests in and assets and obligations of covered
financial company.--Notwithstanding paragraph (1) or (2) or any
other provision of law--
(A) a bridge financial company shall assume,
acquire, or succeed to the assets or liabilities of a
covered financial company (including the assets or
liabilities associated with any trust or custody
business) only to the extent that such assets or
liabilities are transferred by the Corporation to the
bridge financial company in accordance with, and
subject to the restrictions set forth in, paragraph
(1)(B); and
(B) a bridge financial company shall not assume,
acquire, or succeed to any obligation that a covered
financial company for which the Corporation has been
appointed receiver may have to any shareholder, member,
general partner, limited partner, or other person with
an interest in the equity of the covered financial
company that arises as a result of the status of that
person having an equity claim in the covered financial
company.
(4) Bridge financial company treated as being in default
for certain purposes.--A bridge financial company shall be
treated as a covered financial company in default at such times
and for such purposes as the Corporation may, in its
discretion, determine.
(5) Transfer of assets and liabilities.--
(A) Authority of corporation.--The Corporation, as
receiver for a covered financial company, may transfer
any assets and liabilities of a covered financial
company (including any assets or liabilities associated
with any trust or custody business) to one or more
bridge financial companies, in accordance with and
subject to the restrictions of paragraph (1).
(B) Subsequent transfers.--At any time after the
establishment of a bridge financial company with
respect to a covered financial company, the
Corporation, as receiver, may transfer any assets and
liabilities of such covered financial company as the
Corporation may, in its discretion, determine to be
appropriate in accordance with and subject to the
restrictions of paragraph (1).
(C) Treatment of trust or custody business.--For
purposes of this paragraph, the trust or custody
business, including fiduciary appointments, held by any
covered financial company is included among its assets
and liabilities.
(D) Effective without approval.--The transfer of
any assets or liabilities, including those associated
with any trust or custody business of a covered
financial company, to a bridge financial company shall
be effective without any further approval under Federal
or State law, assignment, or consent with respect
thereto.
(E) Equitable treatment of similarly situated
creditors.--The Corporation shall treat all creditors
of a covered financial company that are similarly
situated under subsection (b)(1), in a similar manner
in exercising the authority of the Corporation under
this subsection to transfer any assets or liabilities
of the covered financial company to one or more bridge
financial companies established with respect to such
covered financial company, except that the Corporation
may take any action (including making payments, subject
to subsection (o)(1)(E)(ii)) that does not comply with
this subparagraph, if--
(i) the Corporation determines that such
action is necessary--
(I) to maximize the value of the
assets of the covered financial
company;
(II) to maximize the present value
return from the sale or other
disposition of the assets of the
covered financial company; or
(III) to minimize the amount of any
loss realized upon the sale or other
disposition of the assets of the
covered financial company; and
(ii) all creditors that are similarly
situated under subsection (b)(1) receive not
less than the amount provided under paragraphs
(2) and (3) of subsection (d).
(F) Limitation on transfer of liabilities.--
Notwithstanding any other provision of law, the
aggregate amount of liabilities of a covered financial
company that are transferred to, or assumed by, a
bridge financial company from a covered financial
company may not exceed the aggregate amount of the
assets of the covered financial company that are
transferred to, or purchased by, the bridge financial
company from the covered financial company.
(6) Stay of judicial action.--Any judicial action to which
a bridge financial company becomes a party by virtue of its
acquisition of any assets or assumption of any liabilities of a
covered financial company shall be stayed from further
proceedings for a period of not longer than 45 days (or such
longer period as may be agreed to upon the consent of all
parties) at the request of the bridge financial company.
(7) Agreements against interest of the bridge financial
company.--No agreement that tends to diminish or defeat the
interest of the bridge financial company in any asset of a
covered financial company acquired by the bridge financial
company shall be valid against the bridge financial company,
unless such agreement--
(A) is in writing;
(B) was executed by an authorized officer or
representative of the covered financial company or
confirmed in the ordinary course of business by the
covered financial company; and
(C) has been on the official record of the company,
since the time of its execution, or with which, the
party claiming under the agreement provides
documentation of such agreement and its authorized
execution or confirmation by the covered financial
company that is acceptable to the receiver.
(8) No federal status.--
(A) Agency status.--A bridge financial company is
not an agency, establishment, or instrumentality of the
United States.
(B) Employee status.--Representatives for purposes
of paragraph (1)(B), directors, officers, employees, or
agents of a bridge financial company are not, solely by
virtue of service in any such capacity, officers or
employees of the United States. Any employee of the
Corporation or of any Federal instrumentality who
serves at the request of the Corporation as a
representative for purposes of paragraph (1)(B),
director, officer, employee, or agent of a bridge
financial company shall not--
(i) solely by virtue of service in any such
capacity lose any existing status as an officer
or employee of the United States for purposes
of title 5, United States Code, or any other
provision of law; or
(ii) receive any salary or benefits for
service in any such capacity with respect to a
bridge financial company in addition to such
salary or benefits as are obtained through
employment with the Corporation or such Federal
instrumentality.
(9) Funding authorized.--The Corporation may, subject to
the plan described in subsection (n)(13), provide funding to
facilitate any transaction described in subparagraph (A), (B),
(C), or (D) of paragraph (13) with respect to any bridge
financial company, or facilitate the acquisition by a bridge
financial company of any assets, or the assumption of any
liabilities, of a covered financial company for which the
Corporation has been appointed receiver.
(10) Exempt tax status.--Notwithstanding any other
provision of Federal or State law, a bridge financial company,
its franchise, property, and income shall be exempt from all
taxation now or hereafter imposed by the United States, by any
territory, dependency, or possession thereof, or by any State,
county, municipality, or local taxing authority.
(11) Federal agency approval; antitrust review.--If a
transaction involving the merger or sale of a bridge financial
company requires approval by a Federal agency, the transaction
may not be consummated before the 5th calendar day after the
date of approval by the Federal agency responsible for such
approval with respect thereto. If, in connection with any such
approval a report on competitive factors from the Attorney
General is required, the Federal agency responsible for such
approval shall promptly notify the Attorney General of the
proposed transaction and the Attorney General shall provide the
required report within 10 days of the request. If a
notification is required under section 7A of the Clayton Act
with respect to such transaction, the required waiting period
shall end on the 15th day after the date on which the Attorney
General and the Federal Trade Commission receive such
notification, unless the waiting period is terminated earlier
under section 7A(b)(2) of the Clayton Act, or extended under
section 7A(e)(2) of that Act.
(12) Duration of bridge financial company.--Subject to
paragraphs (13) and (14), the status of a bridge financial
company as such shall terminate at the end of the 2-year period
following the date on which it was granted a charter. The
Corporation may, in its discretion, extend the status of the
bridge financial company as such for no more than 3 additional
1-year periods.
(13) Termination of bridge financial company status.--The
status of any bridge financial company as such shall terminate
upon the earliest of--
(A) the date of the merger or consolidation of the
bridge financial company with a company that is not a
bridge financial company;
(B) at the election of the Corporation, the sale of
a majority of the capital stock of the bridge financial
company to a company other than the Corporation and
other than another bridge financial company;
(C) the sale of 80 percent, or more, of the capital
stock of the bridge financial company to a person other
than the Corporation and other than another bridge
financial company;
(D) at the election of the Corporation, either the
assumption of all or substantially all of the
liabilities of the bridge financial company by a
company that is not a bridge financial company, or the
acquisition of all or substantially all of the assets
of the bridge financial company by a company that is
not a bridge financial company, or other entity as
permitted under applicable law; and
(E) the expiration of the period provided in
paragraph (12), or the earlier dissolution of the
bridge financial company, as provided in paragraph
(15).
(14) Effect of termination events.--
(A) Merger or consolidation.--A merger or
consolidation, described in paragraph (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 (13)(B), the
Corporation may amend the charter of the bridge
financial company to reflect the termination of the
status of the bridge financial company as such,
whereupon the company shall have all of the rights,
powers, and privileges under its constituent documents
and applicable Federal or State law. In connection
therewith, the Corporation may take such steps as may
be necessary or convenient to reincorporate the bridge
financial company under the laws of a State and,
notwithstanding any provisions of Federal or State law,
such State-chartered corporation shall be deemed to
succeed by operation of law to such rights, titles,
powers, and interests of the bridge financial company
as the Corporation may provide, with the same effect as
if the bridge financial company had merged with the
State-chartered corporation under provisions of the
corporate laws of such State.
(C) Sale of stock.--Following the sale of 80
percent or more of the capital stock of a bridge
financial company, as provided in paragraph (13)(C),
the company shall have all of the rights, powers, and
privileges under its constituent documents and
applicable Federal or State law. In connection
therewith, the Corporation may take such steps as may
be necessary or convenient to reincorporate the bridge
financial company under the laws of a State and,
notwithstanding any provisions of Federal or State law,
the State-chartered corporation shall be deemed to
succeed by operation of law to such rights, titles,
powers and interests of the bridge financial company as
the Corporation may provide, with the same effect as if
the bridge financial company had merged with the State-
chartered corporation under provisions of the corporate
laws of such State.
(D) Assumption of liabilities and sale of assets.--
Following the assumption of all or substantially all of
the liabilities of the bridge financial company, or the
sale of all or substantially all of the assets of the
bridge financial company, as provided in paragraph
(13)(D), at the election of the Corporation, the bridge
financial company may retain its status as such for the
period provided in paragraph (12) or may be dissolved
at the election of the Corporation.
(E) Amendments to charter.--Following the
consummation of a transaction described in subparagraph
(A), (B), (C), or (D) of paragraph (13), the charter of
the resulting company shall be amended to reflect the
termination of bridge financial company status, if
appropriate.
(15) Dissolution of bridge financial company.--
(A) In general.--Notwithstanding any other
provision of Federal or State law, if the status of a
bridge financial company as such has not previously
been terminated by the occurrence of an event specified
in subparagraph (A), (B), (C), or (D) of paragraph
(13)--
(i) the Corporation may, in its discretion,
dissolve the bridge financial company in
accordance with this paragraph at any time; and
(ii) the Corporation shall promptly
commence dissolution proceedings in accordance
with this paragraph upon the expiration of the
2-year period following the date on which the
bridge financial company was chartered, or any
extension thereof, as provided in paragraph
(12).
(B) Procedures.--The Corporation shall remain the
receiver for a bridge financial company for the purpose
of dissolving the bridge financial company. The
Corporation as receiver for a bridge financial company
shall wind up the affairs of the bridge financial
company in conformity with the provisions of law
relating to the liquidation of covered financial
companies under this title. With respect to any such
bridge financial company, the Corporation as receiver
shall have all the rights, powers, and privileges and
shall perform the duties related to the exercise of
such rights, powers, or privileges granted by law to
the Corporation as receiver for a covered financial
company under this title and, notwithstanding any other
provision of law, in the exercise of such rights,
powers, and privileges, the Corporation shall not be
subject to the direction or supervision of any State
agency or other Federal agency.
(16) Authority to obtain credit.--
(A) In general.--A bridge financial company may
obtain unsecured credit and issue unsecured debt.
(B) Inability to obtain credit.--If a bridge
financial company is unable to obtain unsecured credit
or issue unsecured debt, the Corporation may authorize
the obtaining of credit or the issuance of debt by the
bridge financial company--
(i) with priority over any or all of the
obligations of the bridge financial company;
(ii) secured by a lien on property of the
bridge financial company that is not otherwise
subject to a lien; or
(iii) secured by a junior lien on property
of the bridge financial company that is subject
to a lien.
(C) Limitations.--
(i) In general.--The Corporation, after
notice and a hearing, may authorize the
obtaining of credit or the issuance of debt by
a bridge financial company that is secured by a
senior or equal lien on property of the bridge
financial company that is subject to a lien,
only if--
(I) the bridge financial company is
unable to otherwise obtain such credit
or issue such debt; and
(II) there is adequate protection
of the interest of the holder of the
lien on the property with respect to
which such senior or equal lien is
proposed to be granted.
(ii) Hearing.--The hearing required
pursuant to this subparagraph shall be before a
court of the United States, which shall have
jurisdiction to conduct such hearing.
(D) Burden of proof.--In any hearing under this
paragraph, the Corporation has the burden of proof on
the issue of adequate protection.
(E) Qualified financial contracts.--No credit or
debt obtained or issued by a bridge financial company
may contain terms that impair the rights of a
counterparty to a qualified financial contract upon a
default by the bridge financial company, other than the
priority of such counterparty's unsecured claim (after
the exercise of rights) relative to the priority of the
bridge financial company's obligations in respect of
such credit or debt, unless such counterparty consents
in writing to any such impairment.
(17) Effect on debts and liens.--The reversal or
modification on appeal of an authorization under this
subsection to obtain credit or issue debt, or of a grant under
this section of a priority or a lien, does not affect the
validity of any debt so issued, or any priority or lien so
granted, to an entity that extended such credit in good faith,
whether or not such entity knew of the pendency of the appeal,
unless such authorization and the issuance of such debt, or the
granting of such priority or lien, were stayed pending appeal.
(i) Sharing Records.--If the Corporation has been appointed as
receiver for a covered financial company, other Federal regulators
shall make all records relating to the covered financial company
available to the Corporation, which may be used by the Corporation in
any manner that the Corporation determines to be appropriate.
(j) Expedited Procedures for Certain Claims.--
(1) Time for filing notice of appeal.--The notice of appeal
of any order, whether interlocutory or final, entered in any
case brought by the Corporation against a director, officer,
employee, agent, attorney, accountant, or appraiser of the
covered financial company, or any other person employed by or
providing services to a covered financial company, shall be
filed not later than 30 days after the date of entry of the
order. The hearing of the appeal shall be held not later than
120 days after the date of the notice of appeal. The appeal
shall be decided not later than 180 days after the date of the
notice of appeal.
(2) Scheduling.--The court shall expedite the consideration
of any case brought by the Corporation against a director,
officer, employee, agent, attorney, accountant, or appraiser of
a covered financial company or any other person employed by or
providing services to a covered financial company. As far as
practicable, the court shall give such case priority on its
docket.
(3) Judicial discretion.--The court may modify the schedule
and limitations stated in paragraphs (1) and (2) in a
particular case, based on a specific finding that the ends of
justice that would be served by making such a modification
would outweigh the best interest of the public in having the
case resolved expeditiously.
(k) Foreign Investigations.--The Corporation, as receiver for any
covered financial company, and for purposes of carrying out any power,
authority, or duty with respect to a covered financial company--
(1) may request the assistance of any foreign financial
authority and provide assistance to any foreign financial
authority in accordance with section 8(v) of the Federal
Deposit Insurance Act, as if the covered financial company were
an insured depository institution, the Corporation were the
appropriate Federal banking agency for the company, and any
foreign financial authority were the foreign banking authority;
and
(2) may maintain an office to coordinate foreign
investigations or investigations on behalf of foreign financial
authorities.
(l) Prohibition on Entering Secrecy Agreements and Protective
Orders.--The Corporation may not enter into any agreement or approve
any protective order which prohibits the Corporation from disclosing
the terms of any settlement of an administrative or other action for
damages or restitution brought by the Corporation in its capacity as
receiver for a covered financial company.
(m) Liquidation of Certain Covered Financial Companies or Bridge
Financial Companies.--
(1) In general.--Except as specifically provided in this
section, and notwithstanding any other provision of law, the
Corporation, in connection with the liquidation of any covered
financial company or bridge financial company with respect to
which the Corporation has been appointed as receiver, shall--
(A) in the case of any covered financial company or
bridge financial company that is or has a subsidiary
that is a stockbroker, but is not a member of the
Securities Investor Protection Corporation, apply the
provisions of subchapter III of chapter 7 of the
Bankruptcy Code, in respect of the distribution to any
customer of all customer name securities and customer
property, as if such covered financial company or
bridge financial company were a debtor for purposes of
such subchapter; or
(B) in the case of any covered financial company or
bridge financial company that is a commodity broker,
apply the provisions of subchapter IV of chapter 7 the
Bankruptcy Code, in respect of the distribution to any
customer of all customer property, as if such covered
financial company or bridge financial company were a
debtor for purposes of such subchapter.
(2) Definitions.--For purposes of this subsection--
(A) the terms ``customer'', ``customer name
securities'', and ``customer property'' have the same
meanings as in section 741 of title 11, United States
Code; and
(B) the terms ``commodity broker'' and
``stockbroker'' have the same meanings as in section
101 of the Bankruptcy Code.
(n) Orderly Liquidation Fund.--
(1) Establishment.--There is established in the Treasury of
the United States a separate fund to be known as the ``Orderly
Liquidation Fund'', which shall be available to the Corporation
to carry out the authorities contained in this title, for the
cost of actions authorized by this title, including the orderly
liquidation of covered financial companies, payment of
administrative expenses, the payment of principal and interest
by the Corporation on obligations issued under paragraph (9),
and the exercise of the authorities of the Corporation under
this title.
(2) Proceeds.--Amounts received by the Corporation,
including assessments received under subsection (o), proceeds
of obligations issued under paragraph (9), interest and other
earnings from investments, and repayments to the Corporation by
covered financial companies, shall be deposited into the Fund.
(3) Management.--The Corporation shall manage the Fund in
accordance with this subsection and the policies and procedures
established under section 203(d).
(4) Investments.--The Corporation shall invest amounts in
the Fund in accordance with paragraph (8).
(5) Target size of the fund.--The target size of the Fund
(in this section referred to as ``target size'') shall be
$50,000,000,000, adjusted for inflation on a periodic basis by
the Corporation.
(6) Initial capitalization period.--The Corporation shall
impose risk-based assessments as provided under subsection (o),
during the period beginning one year after the date of
enactment of this Act and ending on the date on which the Fund
reaches the target size (in this section referred to as the
``initial capitalization period''), provided that the initial
capitalization period shall be not shorter than 5 years, and
not longer than 10 years, after the date of enactment of this
Act. The Corporation, with the approval of the Secretary, may
extend the initial capitalization period for a longer period,
as determined necessary by the Corporation, if the Corporation
is appointed receiver for a covered financial company under
this title and the Fund incurs a loss before the expiration of
such period.
(7) Maintaining the fund.--Upon the expiration of the
initial capitalization period, the Corporation shall suspend
assessments, except as set forth in subsection (o)(1).
(8) Investments.--At the request of the Corporation, the
Secretary may invest such portion of amounts held in the Fund
that are not, in the judgment of the Corporation, required to
meet the current needs of the Corporation, in obligations of
the United States having suitable maturities, as determined by
the Corporation. The interest on and the proceeds from the sale
or redemption of such obligations shall be credited to the
Fund.
(9) Authority to issue obligations.--
(A) Corporation authorized to issue obligations.--
Upon appointment by the Secretary of the Corporation as
receiver for a covered financial company, the
Corporation is authorized to issue obligations to the
Secretary.
(B) Secretary authorized to purchase obligations.--
The Secretary may, under such terms and conditions as
the Secretary may require, purchase or agree to
purchase any obligations issued under subparagraph (A),
and for such purpose, the Secretary is authorized to
use as a public debt transaction the proceeds of the
sale of any securities issued under chapter 31 of title
31, United States Code, and the purposes for which
securities may be issued under chapter 31 of title 31,
United States Code, are extended to include such
purchases.
(C) Interest rate.--Each purchase of obligations by
the Secretary under this paragraph shall be upon such
terms and conditions as to yield a return at a rate
determined by the Secretary, taking into consideration
the current average yield on outstanding marketable
obligations of the United States of comparable
maturity.
(D) Secretary authorized to sell obligations.--The
Secretary may sell, upon such terms and conditions as
the Secretary shall determine, any of the obligations
acquired under this paragraph.
(E) Public debt transactions.--All purchases and
sales by the Secretary of such obligations under this
paragraph shall be treated as public debt transactions
of the United States, and the proceeds from the sale of
any obligations acquired by the Secretary under this
paragraph shall be deposited into the Treasury of the
United States as miscellaneous receipts.
(10) Maximum obligation limitation.--The Corporation may
not, in connection with the orderly liquidation of a covered
financial company, issue or incur any obligation, if, after
issuing or incurring the obligation, the aggregate amount of
such obligations outstanding under this subsection would exceed
the sum of--
(A) the amount of cash or the cash equivalents held
by the Fund; and
(B) the amount that is equal to 90 percent of the
fair value of assets from each covered financial
company that are available to repay the Corporation.
(11) Rulemaking.--The Corporation and the Secretary shall
jointly, in consultation with the Council, prescribe
regulations governing the calculation of the maximum obligation
limitation defined in this paragraph.
(12) Reliance on private sector funding.--The Corporation
may exercise its authority under paragraph (9) only after the
cash and cash equivalents held by the Fund have been drawn down
to facilitate the orderly liquidation of a covered financial
company.
(13) Rule of construction.--
(A) In general.--Nothing in this section shall be
construed to affect the authority of the Corporation
under subsection (a) or (b) of section 14 or section
15(c)(5) of the Federal Deposit Insurance Act (12
U.S.C. 1824, 1825(c)(5)), the management of the Deposit
Insurance Fund by the Corporation, or the resolution of
insured depository institutions, provided that--
(i) none of the authorities contained in
this title shall be used to assist the Deposit
Insurance Fund with any of the other
responsibilities of the Corporation under
applicable law other than this title; and
(ii) the authorities of the Corporation
relating to the Deposit Insurance Fund, or any
other responsibilities of the Corporation,
shall not be used to assist a covered financial
company pursuant to this title.
(B) Valuation.--For purposes of determining the
amount of obligations under this subsection--
(i) the Corporation shall include as an
obligation any contingent liability of the
Corporation pursuant to this title; and
(ii) the Corporation shall value any
contingent liability at its expected cost to
the Corporation.
(14) Orderly liquidation plan.--Amounts in the Fund shall
be available to the Corporation with regard to a covered
financial company for which the Corporation is appointed
receiver after the Corporation has developed an orderly
liquidation plan that is acceptable to the Secretary with
regard to such covered financial company, including the
provision and use of funds under section 204(d) and subsection
(h)(2)(G)(iv) and (h)(9) of this section. The Corporation may,
at any time, amend any orderly liquidation plan approved by the
Secretary with the concurrence of the Secretary.
(o) Assessments.--
(1) Risk-based assessments.--
(A) Assessments to capitalize the fund.--
(i) In general.--Except as provided under
subparagraph (C)(ii), the Corporation shall
impose risk-based assessments on eligible
financial companies to capitalize the Fund
during the initial capitalization period,
taking into account the considerations set
forth in paragraph (4).
(ii) Suspension of assessments.--The
Corporation shall suspend the imposition of
assessments under clause (i) following a
determination by the Corporation that the Fund
has reached the target size described in
subsection (n).
(B) Eligible financial companies defined.--For
purposes of this subsection, the term ``eligible
financial company'' means any bank holding company with
total consolidated assets equal to or greater than
$50,000,000,000 and any nonbank financial company
supervised by the Board of Governors.
(C) Additional assessments.--The Corporation shall
charge one or more risk-based assessments in accordance
with the provisions of subparagraph (E), if--
(i) the Fund falls below the target size
after the initial capitalization period, in
order to restore the Fund to the target size
over a period of time determined by the
Corporation;
(ii) the Corporation is appointed receiver
for a covered financial company and the Fund
incurs a loss during the initial capitalization
period with respect to that covered financial
company; or
(iii) such assessments are necessary to pay
in full the obligations issued by the
Corporation to the Secretary within 60 months
of the date of issuance of such obligations.
(D) Extensions authorized.--The Corporation may,
with the approval of the Secretary, extend the time
period under subparagraph (C)(iii), if the Corporation
determines that an extension is necessary to avoid a
serious adverse effect on the financial system of the
United States.
(E) Application of additional assessments.--To meet
the requirements of subparagraph (C), the Corporation
shall, taking into account the considerations set forth
in paragraph (4), impose assessments--
(i) on--
(I) eligible financial companies;
and
(II) financial companies with total
consolidated assets over
$50,000,000,000 that are not eligible
financial companies; and
(ii) at a substantially higher rate than
otherwise would be assessed on any financial
company that received payments or credit
pursuant to subsection (b)(4), (d)(4), or
(h)(5)(E).
(F) New eligible financial companies.--The
Corporation shall impose an assessment, in an amount
determined by the Corporation in consultation with the
Secretary and taking into account the considerations
set forth in paragraph (4), on any company that becomes
an eligible financial company after the initial
capitalization period.
(2) Graduated assessment rate.--The Corporation shall
impose assessments on a graduated basis, with financial
companies having greater assets being assessed at a higher
rate.
(3) Notification and payment.--The Corporation shall notify
each financial company of that company's assessment under this
subsection. Any financial company subject to assessment under
this subsection shall pay such assessment in accordance with
the regulations prescribed pursuant to paragraph (6).
(4) Risk-based assessment considerations.--In imposing
assessments under this subsection, the Corporation shall--
(A) take into account economic conditions generally
affecting financial companies, so as to allow
assessments to be lower during less favorable economic
conditions;
(B) take into account any assessments imposed on--
(i) an insured depository institution
subsidiary of a financial company pursuant to
section 7 or section 13(c)(4)(G) of the Federal
Deposit Insurance Act (12 U.S.C. 1817,
1823(c)(4)(G));
(ii) a financial company or subsidiary of
such company that is a member of SIPC pursuant
to section 4 of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78ddd); and
(iii) a financial company or subsidiary of
such company that is an insurance company
pursuant to applicable State law to cover (or
reimburse payments made to cover) the costs of
rehabilitation, liquidation, or other State
insolvency proceeding with respect to one or
more insurance companies;
(C) take into account the financial condition of
the financial company, including the extent and type of
off-balance-sheet exposures of the financial company;
(D) take into account the risks presented by the
financial company to the financial stability of the
United States economy;
(E) take into account the extent to which the
financial company or group of financial companies has
benefitted, or likely would benefit, from the orderly
liquidation of a covered financial company and the use
of the Fund under this title;
(F) distinguish among different classes of assets
or different types of financial companies (including
distinguishing among different types of financial
companies, based on their levels of capital and
leverage) in order to establish comparable assessment
bases among financial companies subject to this
subsection;
(G) establish the parameters for the graduated
assessment requirement in paragraph (2); and
(H) take into account such other factors as the
Corporation deems appropriate.
(5) Collection of information.--The Corporation may impose
on covered financial companies such collection of information
requirements as the Corporation deems necessary to carry out
this subsection after the appointment of the Corporation as
receiver under this title.
(6) Rulemaking.--
(A) In general.--The Corporation shall, in
consultation with the Secretary and the Council,
prescribe regulations to carry out this subsection.
(B) Equitable treatment.--The regulations
prescribed under subparagraph (A) shall take into
account the differences in risks posed to the financial
stability of the United States by financial companies,
the differences in the liability structures of
financial companies, and the different bases for other
assessments that such financial companies may be
required to pay, to ensure that assessed financial
companies are treated equitably and that assessments
under this subsection reflect such differences.
(p) Unenforceability of Certain Agreements.--
(1) In general.--No provision described in paragraph (2)
shall be enforceable against or impose any liability on any
person, as such enforcement or liability shall be contrary to
public policy.
(2) Prohibited provisions.--A provision described in this
paragraph is any term contained in any existing or future
standstill, confidentiality, or other agreement that, directly
or indirectly--
(A) affects, restricts, or limits the ability of
any person to offer to acquire or acquire;
(B) prohibits any person from offering to acquire
or acquiring; or
(C) prohibits any person from using any previously
disclosed information in connection with any such offer
to acquire or acquisition of,
all or part of any covered financial company, including any
liabilities, assets, or interest therein, in connection with
any transaction in which the Corporation exercises its
authority under this title.
(q) Other Exemptions.--
(1) In general.--When acting as a receiver under this
title--
(A) the Corporation, including its franchise, its
capital, reserves and surplus, and its income, shall be
exempt from all taxation imposed by any State, county,
municipality, or local taxing authority, except that
any real property of the Corporation shall be subject
to State, territorial, county, municipal, or local
taxation to the same extent according to its value as
other real property is taxed, except that,
notwithstanding the failure of any person to challenge
an assessment under State law of the value of such
property, such value, and the tax thereon, shall be
determined as of the period for which such tax is
imposed;
(B) no property of the Corporation shall be subject
to levy, attachment, garnishment, foreclosure, or sale
without the consent of the Corporation, nor shall any
involuntary lien attach to the property of the
Corporation; and
(C) the Corporation shall not be liable for any
amounts in the nature of penalties or fines, including
those arising from the failure of any person to pay any
real property, personal property, probate, or recording
tax or any recording or filing fees when due; and
(D) the Corporation shall be exempt from all
prosecution by the United States or any State, county,
municipality, or local authority for any criminal
offense arising under Federal, State, county,
municipal, or local law, which was allegedly committed
by the covered financial company, or persons acting on
behalf of the covered financial company, prior to the
appointment of the Corporation as receiver.
(2) Limitation.--Paragraph (1) shall not apply with respect
to any tax imposed (or other amount arising) under the Internal
Revenue Code of 1986.
(r) Certain Sales of Assets Prohibited.--
(1) Persons who engaged in improper conduct with, or caused
losses to, covered financial companies.--The Corporation shall
prescribe regulations which, at a minimum, shall prohibit the
sale of assets of a covered financial company by the
Corporation to--
(A) any person who--
(i) has defaulted, or was a member of a
partnership or an officer or director of a
corporation that has defaulted, on 1 or more
obligations, the aggregate amount of which
exceeds $1,000,000, to such covered financial
company;
(ii) has been found to have engaged in
fraudulent activity in connection with any
obligation referred to in clause (i); and
(iii) proposes to purchase any such asset
in whole or in part through the use of the
proceeds of a loan or advance of credit from
the Corporation or from any covered financial
company;
(B) any person who participated, as an officer or
director of such covered financial company or of any
affiliate of such company, in a material way in any
transaction that resulted in a substantial loss to such
covered financial company; or
(C) any person who has demonstrated a pattern or
practice of defalcation regarding obligations to such
covered financial company.
(2) Convicted debtors.--Except as provided in paragraph
(3), a person may not purchase any asset of such institution
from the receiver, if that person--
(A) has been convicted of an offense under section
215, 656, 657, 1005, 1006, 1007, 1008, 1014, 1032,
1341, 1343, or 1344 of title 18, United States Code, or
of conspiring to commit such an offense, affecting any
covered financial company; and
(B) is in default on any loan or other extension of
credit from such covered financial company which, if
not paid, will cause substantial loss to the Fund or
the Corporation.
(3) Settlement of claims.--Paragraphs (1) and (2) shall not
apply to the sale or transfer by the Corporation of any asset
of any covered financial company to any person, if the sale or
transfer of the asset resolves or settles, or is part of the
resolution or settlement, of 1 or more claims that have been,
or could have been, asserted by the Corporation against the
person.
(4) Definition of default.--For purposes of this
subsection, the term ``default'' means a failure to comply with
the terms of a loan or other obligation to such an extent that
the property securing the obligation is foreclosed upon.
SEC. 211. MISCELLANEOUS PROVISIONS.
(a) Clarification of Prohibition Regarding Concealment of Assets
From Receiver or Liquidating Agent.--Section 1032(1) of title 18,
United States Code, is amended by inserting ``the Federal Deposit
Insurance Corporation acting as receiver for a covered financial
company, in accordance with title II of the Restoring American
Financial Stability Act of 2010,'' before ``or the National Credit''.
(b) Conforming Amendment.--Section 1032 of title 18, United States
Code, is amended in the section heading, by striking ``of financial
institution''.
(c) Federal Deposit Insurance Corporation Improvement Act of
1991.--Section 403(a) of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4403(a)) is amended by inserting
``section 210(c) of the Restoring American Financial Stability Act of
2010, 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,''.
TITLE III--TRANSFER OF POWERS TO THE COMPTROLLER OF THE CURRENCY, THE
CORPORATION, AND THE BOARD OF GOVERNORS
SEC. 300. SHORT TITLE.
This title may be cited as the ``Enhancing Financial Institution
Safety and Soundness Act of 2010''.
SEC. 301. PURPOSES.
The purposes of this title are--
(1) to provide for the safe and sound operation of the
banking system of the United States;
(2) to preserve and protect the dual system of Federal and
State-chartered depository institutions;
(3) to ensure the fair and appropriate supervision of each
depository institution, regardless of the size or type of
charter of the depository institution; and
(4) to streamline and rationalize the supervision of
depository institutions and the holding companies of depository
institutions.
SEC. 302. DEFINITION.
In this title, the term ``transferred employee'' means, as the
context requires, an employee transferred to the Office of the
Comptroller of the Currency or the Corporation under section 322.
Subtitle A--Transfer of Powers and Duties
SEC. 311. TRANSFER DATE.
(a) Transfer Date.--Except as provided in subsection (b), the term
``transfer date'' means the date that is 1 year after the date of
enactment of this Act.
(b) Extension Permitted.--
(1) Notice required.--The Secretary, in consultation with
the Comptroller of the Currency, the Director of the Office of
Thrift Supervision, the Chairman of the Board of Governors, and
the Chairperson of the Corporation, may extend the period under
subsection (a) and designate a transfer date that is not later
than 18 months after the date of enactment of this Act, if the
Secretary transmits to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives--
(A) a written determination that commencement of
the orderly process to implement this title is not
feasible by the date that is 1 year after the date of
enactment of this Act;
(B) an explanation of why an extension is necessary
to commence the process of orderly implementation of
this title;
(C) the transfer date designated under this
subsection; and
(D) a description of the steps that will be taken
to initiate the process of an orderly and timely
implementation of this title within the extended time
period.
(2) Publication of notice.--Not later than 270 days after
the date of enactment of this Act, the Secretary shall publish
in the Federal Register notice of any transfer date designated
under paragraph (1).
SEC. 312. POWERS AND DUTIES TRANSFERRED.
(a) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
(b) Functions of the Office of Thrift Supervision.--
(1) Savings and loan holding company functions
transferred.--
(A) Board of governors.--There are transferred to
the Board of Governors all functions of the Office of
Thrift Supervision and the Director of the Office of
Thrift Supervision (including the authority to issue
orders) relating to--
(i) the supervision of--
(I) any savings and loan holding
company--
(aa) having $50,000,000,000
or more in total consolidated
assets; or
(bb) that is a foreign
bank; and
(II) any subsidiary (other than a
depository institution) of a savings
and loan holding company described in
subclause (I); and
(ii) all rulemaking authority of the Office
of Thrift Supervision and the Director of the
Office of Thrift Supervision relating to
savings and loan holding companies.
(B) Comptroller of the currency.--Except as
provided in subparagraph (A), there are transferred to
the Office of the Comptroller of the Currency all
functions of the Office of Thrift Supervision and the
Director of the Office of Thrift Supervision (including
the authority to issue orders) relating to the
supervision of--
(i) any savings and loan holding company
(other than a foreign bank)--
(I) having less than
$50,000,000,000 in total consolidated
assets; and
(II) having--
(aa) a subsidiary that is
an insured depository
institution, if all such
insured depository institutions
are Federal depository
institutions; or
(bb) a subsidiary that is a
Federal depository institution
and a subsidiary that is a
State depository institution,
if the total consolidated
assets of all subsidiaries that
are Federal depository
institutions exceed the total
consolidated assets of all
subsidiaries that are State
depository institutions; and
(ii) any subsidiary (other than a
depository institution) of a savings and loan
holding company described in clause (i).
(C) Corporation.--Except as provided in
subparagraph (A), there are transferred to the
Corporation all functions of the Office of Thrift
Supervision and the Director of the Office of Thrift
Supervision (including the authority to issue orders)
relating to the supervision of--
(i) any savings and loan holding company
(other than a foreign bank)--
(I) having less than
$50,000,000,000 in total consolidated
assets; and
(II) having--
(aa) a subsidiary that is
an insured depository
institution, if all such
insured depository institutions
are State depository
institutions; or
(bb) a subsidiary that is a
Federal depository institution
and a subsidiary that is a
State depository institution,
if the total consolidated
assets of all subsidiaries that
are State depository
institutions exceed the total
consolidated assets of all
subsidiaries that are Federal
depository institutions; and
(ii) any subsidiary (other than a
depository institution) of a savings and loan
holding company described in clause (i).
(2) All other functions transferred.--
(A) Board of governors.--All rulemaking authority
of the Office of Thrift Supervision and the Director of
the Office of Thrift Supervision under section 11 of
the Home Owners' Loan Act (12 U.S.C. 1468) relating to
transactions with affiliates and extensions of credit
to executive officers, directors, and principal
shareholders is transferred to the Board of Governors.
(B) Comptroller of the currency.--Except as
provided in subparagraph (A), there are transferred to
the Comptroller of the Currency all functions of the
Office of Thrift Supervision and the Director of the
Office of Thrift Supervision relating to Federal
savings associations.
(C) Corporation.--Except as provided in paragraph
(1), all functions of the Office of Thrift Supervision
and the Director of the Office of Thrift Supervision
relating to State savings associations are transferred
to the Corporation.
(D) Comptroller of the currency and the
corporation.--All rulemaking authority of the Office of
Thrift Supervision and the Director of the Office of
Thrift Supervision relating to savings associations is
transferred to, and shall be exercised jointly by, the
Comptroller of the Currency and the Corporation.
(c) Certain Functions of the Board of Governors.--
(1) Bank holding company functions transferred.--
(A) Comptroller of the currency.--Except as
provided in subparagraph (C), there are transferred to
the Office of the Comptroller of the Currency all
functions of the Board of Governors (including any
Federal reserve bank) relating to the supervision of--
(i) any bank holding company (other than a
foreign bank)--
(I) having less than
$50,000,000,000 in total consolidated
assets; and
(II) having--
(aa) a subsidiary that is
an insured depository
institution, if all such
insured depository institutions
are Federal depository
institutions; or
(bb) a subsidiary that is a
Federal depository institution
and a subsidiary that is a
State depository institution,
if the total consolidated
assets of all subsidiaries that
are Federal depository
institutions exceed the total
consolidated assets of all
subsidiaries that are State
depository institutions; and
(ii) any subsidiary (other than a
depository institution) of a bank holding
company that is described in clause (i).
(B) Corporation.--Except as provided in
subparagraph (C), there are transferred to the
Corporation all functions of the Board of Governors
(including any Federal reserve bank) relating to the
supervision of--
(i) any bank holding company (other than a
foreign bank)--
(I) having less than
$50,000,000,000 in total consolidated
assets; and
(II) having--
(aa) a subsidiary that is
an insured depository
institution, if all such
insured depository institutions
are State depository
institutions; or
(bb) a subsidiary that is a
Federal depository institution
and a subsidiary that is a
State depository institution,
if the total consolidated
assets of all subsidiaries that
are State depository
institutions exceed the total
consolidated assets of all
subsidiaries that are Federal
depository institutions; and
(ii) any subsidiary (other than a
depository institution) of a bank holding
company that is described in clause (i).
(C) Rulemaking authority.--No rulemaking authority
of the Board of Governors is transferred to the Office
of the Comptroller of the Currency or the Corporation
under this paragraph.
(2) Other functions transferred.--There are transferred to
the Corporation all functions (other than rulemaking authority
under the Federal Reserve Act) of the Board of Governors (and
any Federal reserve bank) relating to the supervision of
insured State member banks.
(d) Conforming Amendments.--
(1) Federal deposit insurance act.--Section 3(q) of the
Federal Deposit Insurance Act (12 U.S.C. 1813(q)) is amended by
striking paragraphs (1) through (4) and inserting the
following:
``(1) the Office of the Comptroller of the Currency, in the
case of--
``(A) any national banking association;
``(B) any Federal branch or agency of a foreign
bank;
``(C) any bank holding company (other than a
foreign bank)--
``(i) having less than $50,000,000,000 in
total consolidated assets; and
``(ii) having--
``(I) a subsidiary that is an
insured depository institution, if all
such insured depository institutions
are Federal depository institutions; or
``(II) a subsidiary that is a
Federal depository institution and a
subsidiary that is a State depository
institution, if the total consolidated
assets of all subsidiaries that are
Federal depository institutions exceed
the total consolidated assets of all
subsidiaries that are State depository
institutions;
``(D) any subsidiary (other than a depository
institution) of a bank holding company that is
described in subparagraph (C);
``(E) any Federal savings association;
``(F) any savings and loan holding company (other
than a foreign bank)--
``(i) having less than $50,000,000,000 in
total consolidated assets; and
``(ii) having--
``(I) a subsidiary that is an
insured depository institution, if all
such insured depository institutions
are Federal depository institutions; or
``(II) a subsidiary that is a
Federal depository institution and a
subsidiary that is a State depository
institution, if the total consolidated
assets of all subsidiaries that are
Federal depository institutions exceed
the total consolidated assets of all
subsidiaries that are State depository
institutions; and
``(G) any subsidiary (other than a depository
institution) of a savings and loan holding company that
is described in subparagraph (F);
``(2) the Federal Deposit Insurance Corporation, in the
case of--
``(A) any insured State bank;
``(B) any foreign bank having an insured branch;
``(C) any State savings association;
``(D) any bank holding company (other than a
foreign bank)--
``(i) having less than $50,000,000,000 in
total consolidated assets; and
``(ii) having--
``(I) a subsidiary that is an
insured depository institution, if all
such insured depository institutions
are State depository institutions; or
``(II) a subsidiary that is a
Federal depository institution and a
subsidiary that is a State depository
institution, if the total consolidated
assets of all subsidiaries that are
State depository institutions exceed
the total consolidated assets of all
subsidiaries that are Federal
depository institutions;
``(E) any subsidiary (other than a depository
institution) of a bank holding company that is
described in subparagraph (D);
``(F) any savings and loan holding company (other
than a foreign bank)--
``(i) having less than $50,000,000,000 in
total consolidated assets; and
``(ii) having--
``(I) a subsidiary that is an
insured depository institution, if all
such insured depository institutions
are State depository institutions; or
``(II) a subsidiary that is a
Federal depository institution and a
subsidiary that is a State depository
institution, if the total consolidated
assets of all subsidiaries that are
State depository institutions exceed
the total consolidated assets of all
subsidiaries that are Federal
depository institutions; and
``(G) any subsidiary (other than a depository
institution) of a savings and loan holding company that
is described in subparagraph (F);
``(3) the Board of Governors of the Federal Reserve System,
in the case of--
``(A) any noninsured State member bank;
``(B) any branch or agency of a foreign bank with
respect to any provision of the Federal Reserve Act
which is made applicable under the International
Banking Act of 1978;
``(C) any foreign bank which does not operate an
insured branch;
``(D) any agency or commercial lending company
other than a Federal agency;
``(E) supervisory or regulatory proceedings arising
from the authority given to the Board of Governors
under section 7(c)(1) of the International Banking Act
of 1978, including such proceedings under the Financial
Institutions Supervisory Act of 1966;
``(F) any bank holding company having total
consolidated assets of $50,000,000,000 or more, any
bank holding company that is a foreign bank, and any
subsidiary (other than a depository institution) of
such a bank holding company; and
``(G) any savings and loan holding company having
total consolidated assets of $50,000,000,000 or more,
any savings and loan holding company that is a foreign
bank, and any subsidiary (other than a depository
institution) of such a savings and loan holding
company.''.
(2) Certain references in the bank holding company act of
1956.--
(A) Comptroller of the currency.--On or after the
transfer date, in the case of a bank holding company
described in section 3(q)(1)(C) of the Federal Deposit
Insurance Act, as amended by this Act, any reference in
the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.) to the Board of Governors shall be deemed to be a
reference to the Office of the Comptroller of the
Currency.
(B) Corporation.--On or after the transfer date, in
the case of a bank holding company described in section
3(q)(2)(D) of the Federal Deposit Insurance Act, as
amended by this Act, any reference in the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.) to the
Board of Governors shall be deemed to be a reference to
the Corporation.
(C) Rule of construction.--Notwithstanding
subparagraph (A) or (B), the Board of Governors shall
retain all rulemaking authority under the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.).
(3) Consultation in holding company rulemaking.--
(A) Bank holding companies.--Section 5 of the Bank
Holding Company Act of 1956 (12 U.S.C. 1844) is amended
by adding at the end the following:
``(h) Consultation in Rulemaking.--Before proposing or adopting
regulations under this Act that apply to bank holding companies having
less than $50,000,000,000 in total consolidated assets, the Board of
Governors shall consult with the Comptroller of the Currency and the
Federal Deposit Insurance Corporation as to the terms of such
regulations.''.
(B) Savings and loan holding companies.--
(i) Home owners' loan act.--Section 10 of
the Home Owners' Loan Act (12 U.S.C. 1467a) is
amended by adding at the end the following:
``(u) Consultation in Rulemaking.--Before proposing or adopting
regulations under this section that apply to savings and loan holding
companies having less than $50,000,000,000 in total consolidated
assets, the Board of Governors shall consult with the Comptroller of
the Currency and the Federal Deposit Insurance Corporation as to the
terms of such regulations.''.
(ii) Federal deposit insurance act.--
Section 19 of the Federal Deposit Insurance Act
(12 U.S.C. 1829) is amended--
(I) in subsection (d)(2), by
inserting ``, in consultation with the
Corporation and the Comptroller of the
Currency,'' after ``System''; and
(II) in subsection (e)(2), by
striking ``Director of the Office of
Thrift Supervision'' and inserting
``Board of Governors of the Federal
Reserve System, in consultation with
the Corporation and the Comptroller of
the Currency,''.
(4) Federal deposit insurance act.--
(A) Application.--Section 8(b)(3) of the Federal
Deposit Insurance Act (12 U.S.C. 1818(b)(3)) is amended
to read as follows:
``(3) Application to Bank Holding Companies, Savings and Loan
Holding Companies, and Edge and Agreement Corporations.--
``(A) Application.--This subsection, subsections (c)
through (s) and subsection (u) of this section, and section 50
shall apply to--
``(i) any bank holding company, and any subsidiary
(other than a bank) of a bank holding company, as those
terms are defined in section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841), as if such
company or subsidiary was an insured depository
institution for which the appropriate Federal banking
agency for the bank holding company was the appropriate
Federal banking agency;
``(ii) any savings and loan holding company, and
any subsidiary (other than a depository institution) of
a savings and loan holding company, as those terms are
defined in section 10 of the Home Owners' Loan Act (12
U.S.C. 1467a), as if such company or subsidiary was an
insured depository institution for which the
appropriate Federal banking agency for the savings and
loan holding company was the appropriate Federal
banking agency; and
``(iii) any organization organized and operated
under section 25A of the Federal Reserve Act (12 U.S.C.
611 et seq.) or operating under section 25 of the
Federal Reserve Act (12 U.S.C. 601 et seq.) and any
noninsured State member bank, as if such organization
was a bank holding company for which the Board of
Governors of the Federal Reserve System was the
appropriate Federal banking agency.
``(B) Rule of construction.--Nothing in this paragraph may
be construed to alter or affect the authority of an appropriate
Federal banking agency to initiate enforcement proceedings,
issue directives, or take other remedial action under any other
provision of law.''.
(B) Conforming amendment.--Section 8(b)(9) of the
Federal Deposit Insurance Act (12 U.S.C. 1818(b)(9)) is
amended to read as follows:
``(9) [Reserved].''.
(e) Determination of Total Consolidated Assets.--
(1) Regulations.--
(A) In general.--Not later than 180 days after the
date of enactment of this Act, the Office of the
Comptroller of the Currency, the Corporation, and the
Board of Governors, in order to avoid disruptive
transfers of regulatory responsibility, shall issue
joint regulations that specify--
(i) the source of data for determining the
total consolidated assets of a depository
institution, bank holding company, or savings
and loan holding company for purposes of this
Act, and the amendments made by this Act,
including the amendments to section 3(q) of the
Federal Deposit Insurance Act (12 U.S.C.
1813(q)); and
(ii) the interval and frequency at which
the total consolidated assets of a depository
institution, bank holding company, or savings
and loan holding company will be determined.
(B) Content.--The regulations issued under
subparagraph (A)--
(i) shall use information contained in the
reports described in paragraph (2), other
regulatory reports, audited financial
statements, or other comparable sources;
(ii) shall establish the frequency with
which the total consolidated assets of
depository institutions, bank holding
companies, and savings and loan companies are
determined, at an interval that--
(I) avoids undue disruption in
regulatory oversight;
(II) facilitates nondisruptive
transfers of regulatory responsibility;
and
(III) is not shorter than 2 years;
and
(iii) may provide for more frequent
determinations of the total consolidated assets
of a depository institution, bank holding
company, or savings and loan holding company,
to take into account a transaction outside the
ordinary course of business, including a
merger, acquisition, or other circumstance, as
determined jointly by the Office of the
Comptroller of the Currency, the Corporation,
and the Board of Governors, by rule.
(2) Interim provisions.--Until the date on which final
regulations issued under paragraph (1) are effective, for
purposes this Act, and the amendments made by this Act,
including the amendments to section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)), the total consolidated
assets of--
(A) a depository institution shall be determined by
reference to the total consolidated assets reported in
the most recent Consolidated Report of Income and
Condition or Thrift Financial Report (or any successor
thereto) filed by the depository institution with the
Corporation or the Office of Thrift Supervision before
the transfer date;
(B) a bank holding company shall be determined by
reference to the total consolidated assets reported in
the most recent Consolidated Financial Statements for
Bank Holding Companies (commonly referred to as the
``FR Y-9C'', or any successor thereto) filed by the
bank holding company with the Board of Governors before
the transfer date; and
(C) a savings and loan holding company shall be
determined by reference to the total consolidated
assets reported in the applicable schedule of the most
recent Thrift Financial Report (or any successor
thereto) filed by the savings and loan holding company
with the Office of Thrift Supervision before the
transfer date.
(f) Consumer Protection.--Nothing in this section may be construed
to limit or otherwise affect the transfer of powers under title X.
SEC. 313. ABOLISHMENT.
Effective 90 days after the transfer date, the Office of Thrift
Supervision and the position of Director of the Office of Thrift
Supervision are abolished.
SEC. 314. AMENDMENTS TO THE REVISED STATUTES.
(a) Amendment to Section 324.--Section 324 of the Revised Statutes
of the United States (12 U.S.C. 1) is amended to read as follows:
``SEC. 324. COMPTROLLER OF THE CURRENCY.
``(a) Office of the Comptroller of the Currency Established.--There
is established in the Department of the Treasury a bureau to be known
as the `Office of the Comptroller of the Currency' which is charged
with assuring the safety and soundness of, and compliance with laws and
regulations, fair access to financial services, and fair treatment of
customers by, the institutions and other persons subject to its
jurisdiction.
``(b) Comptroller of the Currency.--
``(1) In general.--The chief officer of the Office of the
Comptroller of the Currency shall be known as the Comptroller
of the Currency. The Comptroller of the Currency shall perform
the duties of the Comptroller of the Currency under the general
direction of the Secretary of the Treasury. The Secretary of
the Treasury may not delay or prevent the issuance of any rule
or the promulgation of any regulation by the Comptroller of the
Currency, and may not intervene in any matter or proceeding
before the Comptroller of the Currency (including agency
enforcement actions), unless otherwise specifically provided by
law.
``(2) Additional authority.--The Comptroller of the
Currency shall have the same authority with respect to
functions transferred to the Comptroller of the Currency under
the Enhancing Financial Institution Safety and Soundness Act of
2010 (including matters that were within the jurisdiction of
the Director of the Office of Thrift Supervision or the Office
of Thrift Supervision on the day before the transfer date under
that Act) as was vested in the Director of the Office of Thrift
Supervision on the transfer date under that Act.''.
(b) Amendment to Section 329.--Section 329 of the Revised Statutes
of the United States (12 U.S.C. 11) is amended by inserting before the
period at the end the following: ``or any Federal savings
association''.
(c) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
SEC. 315. FEDERAL INFORMATION POLICY.
Section 3502(5) of title 44, United States Code, is amended by
inserting ``Office of the Comptroller of the Currency,'' after ``the
Securities and Exchange Commission,''.
SEC. 316. SAVINGS PROVISIONS.
(a) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not
affected.--Sections 312(b) and 313 shall not affect the
validity of any right, duty, or obligation of the United
States, the Director of the Office of Thrift Supervision, the
Office of Thrift Supervision, or any other person, that existed
on the day before the transfer date.
(2) Continuation of suits.--This title shall not abate any
action or proceeding commenced by or against the Director of
the Office of Thrift Supervision or the Office of Thrift
Supervision before the transfer date, except that, for any
action or proceeding arising out of a function of the Director
of the Office of Thrift Supervision or the Office of Thrift
Supervision that is transferred to the Comptroller of the
Currency, the Office of the Comptroller of the Currency, the
Chairperson of the Corporation, the Corporation, the Chairman
of the Board of Governors, or the Board of Governors by this
subtitle, the Comptroller of the Currency, the Office of the
Comptroller of the Currency, the Chairperson of the
Corporation, the Corporation, the Chairman of the Board of
Governors, or the Board of Governors shall be substituted for
the Director of the Office of Thrift Supervision or the Office
of Thrift Supervision, as appropriate, as a party to the action
or proceeding as of the transfer date.
(b) Board of Governors.--
(1) Existing rights, duties, and obligations not
affected.--Section 312(c) shall not affect the validity of any
right, duty, or obligation of the United States, the Board of
Governors, any Federal reserve bank, or any other person, that
existed on the day before the transfer date.
(2) Continuation of suits.--This title shall not abate any
action or proceeding commenced by or against the Board of
Governors or a Federal reserve bank before the transfer date,
except that, for any action or proceeding arising out of a
function of the Board of Governors or a Federal reserve bank
transferred to the Comptroller of the Currency, the Office of
the Comptroller of the Currency, the Chairperson of the
Corporation, or the Corporation by this subtitle, the
Comptroller of the Currency, the Office of the Comptroller of
the Currency, the Chairperson of the Corporation, or the
Corporation shall be substituted for the Board of Governors or
the Federal reserve bank, as appropriate, as a party to the
action or proceeding, as of the transfer date.
(c) Continuation of Existing Orders, Resolutions, Determinations,
Agreements, Regulations, and Other Materials.--
(1) Office of thrift supervision.--All orders, resolutions,
determinations, agreements, 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 of the Office of Thrift Supervision
that are transferred by this subtitle and that are in effect on
the day before the transfer date, shall continue in effect
according to the terms of those materials, and shall be
enforceable by or against the Office of the Comptroller of the
Currency, the Corporation, or the Board of Governors, as
appropriate, until modified, terminated, set aside, or
superseded in accordance with applicable law by the Office of
the Comptroller of the Currency, the Corporation, or the Board
of Governors, as appropriate, by any court of competent
jurisdiction, or by operation of law.
(2) Board of governors.--All orders, resolutions,
determinations, agreements, regulations, interpretative rules,
other interpretations, guidelines, procedures, and other
advisory materials, that have been issued, made, prescribed, or
allowed to become effective by the Board of Governors, or by a
court of competent jurisdiction, in the performance of
functions of the Board of Governors that are transferred by
this subtitle and that are in effect on the day before the
transfer date, shall continue in effect according to the terms
of those materials, and shall be enforceable by or against the
Office of the Comptroller of the Currency or the Corporation,
as appropriate, until modified, terminated, set aside, or
superseded in accordance with applicable law by the Office of
the Comptroller of the Currency or the Corporation, as
appropriate, by any court of competent jurisdiction, or by
operation of law.
(d) Identification of Regulations Continued.--
(1) By the office of the comptroller of the currency.--Not
later than the transfer date, the Office of the Comptroller of
the Currency shall--
(A) in consultation with the Corporation, identify
the regulations continued under subsection (c) 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) in consultation with the Office of the
Comptroller of the Currency, identify the regulations
continued under subsection (c) that will be enforced by
the Corporation; and
(B) publish a list of such regulations in the
Federal Register.
(3) By the board of governors.--Not later than the transfer
date, the Board of Governors shall--
(A) in consultation with the Office of the
Comptroller of the Currency and the Corporation,
identify the regulations continued under subsection (c)
that will be enforced by the Board of Governors; 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 or the Board of Governors, which
that agency, in performing functions transferred by this
subtitle, 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, the Corporation, or the Board of
Governors, as appropriate, according to its terms.
(2) Regulations not yet effective.--Any interim or final
regulation of the Office of Thrift Supervision or the Board of
Governors, which that agency, in performing functions
transferred by this subtitle, 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, the Corporation, or the Board of
Governors, as appropriate, according to its terms.
SEC. 317. REFERENCES IN FEDERAL LAW TO FEDERAL BANKING AGENCIES.
(a) Director of the Office of Thrift Supervision and the Office of
Thrift Supervision.--Except as provided in section 312(d)(2), on and
after the transfer date, any reference in Federal law to the Director
of the Office of Thrift Supervision or the Office of Thrift
Supervision, in connection with any function of the Director of the
Office of Thrift Supervision or the Office of Thrift Supervision
transferred under section 312(b) or any other provision of this
subtitle, shall be deemed to be a reference to the Comptroller of the
Currency, the Office of the Comptroller of the Currency, the
Chairperson of the Corporation, the Corporation, the Chairman of the
Board of Governors, or the Board of Governors, as appropriate.
(b) Board of Governors.--Except as provided in section 312(d)(2),
on and after the transfer date, any reference in Federal law to the
Board of Governors or any Federal reserve bank, in connection with any
function of the Board of Governors or any Federal reserve bank
transferred under section 312(c) or any other provision of this
subtitle, shall be deemed to be a reference to the Comptroller of the
Currency, the Office of the Comptroller of the Currency, the
Chairperson of the Corporation, or the Corporation, as appropriate.
SEC. 318. FUNDING.
(a) Funding of Office of the Comptroller of the Currency.--
(1) Authority to collect assessments, fees, and other
charges, and to receive transferred funds.--Chapter 4 of title
LXII of the Revised Statutes is amended by inserting after
section 5240 (12 U.S.C. 481, 482) the following:
``Sec. 5240A. The Comptroller of the Currency may collect an
assessment, fee, or other charge from any entity described in section
3(q)(1) of the Federal Deposit Insurance Act (12 U.S.C. 1813(q)(1)), as
the Comptroller determines is necessary or appropriate to carry out the
responsibilities of the Office of the Comptroller of the Currency. The
Comptroller of the Currency also may collect an assessment, fee, or
other charge from any entity, the activities of which are supervised by
the Comptroller of the Currency under section 6 of the Bank Holding
Company Act of 1956, as the Comptroller determines is necessary or
appropriate to carry out the responsibilities of the Office of the
Comptroller of the Currency in connection with such activities. In
establishing the amount of an assessment, fee, or charge collected from
an entity under this section, the Comptroller of the Currency may take
into account the funds transferred to the Office of the Comptroller of
the Currency under this section, the nature and scope of the activities
of the entity, the amount and type of assets that the entity holds, the
financial and managerial condition of the entity, and any other factor,
as the Comptroller of the Currency determines is appropriate. Funds
derived from any assessment, fee, or charge collected or payment made
pursuant to this section may be deposited by the Comptroller of the
Currency in accordance with the provisions of section 5234. Such funds
shall not be construed to be Government funds or appropriated monies,
and shall not be subject to apportionment for purposes of chapter 15 of
title 31, United States Code, or any other provision of law. The
authority of the Comptroller of the Currency under this section shall
be in addition to the authority under section 5240.
``The Comptroller of the Currency shall have sole authority to
determine the manner in which the obligations of the Office of the
Comptroller of the Currency shall be incurred and its disbursements and
expenses allowed and paid, in accordance with this section.''.
(2) Promoting parity in supervision fees.--
(A) Proposal required.--
(i) In general.--The Comptroller of the
Currency shall submit to the Board of Directors
of the Corporation a proposal to promote parity
in the examination fees paid by State and
Federal depository institutions having total
consolidated assets of less than
$50,000,000,000.
(ii) Contents.--The proposal submitted
under clause (i) shall recommend a transfer
from the Corporation to the Office of the
Comptroller of the Currency of a percentage of
the amount that the Office of the Comptroller
of the Currency estimates is necessary or
appropriate to carry out the responsibilities
of the Office of the Comptroller of the
Currency associated with the supervision of
Federal depository institutions having total
consolidated assets of less than
$50,000,000,000.
(iii) Data collection.--The Corporation
shall assist the Office of the Comptroller of
the Currency in collecting data relative to the
supervision of State depository institutions to
develop the proposal submitted under clause
(i).
(B) Vote.--Not later than 60 days after the date of
receipt of the proposal under subparagraph (A), the
Board of Directors of the Corporation shall--
(i) vote on the proposal; and
(ii) promptly implement a plan to
periodically transfer to the Office of the
Comptroller of the Currency a percentage of the
amount that the Office of the Comptroller of
the Currency estimates is necessary or
appropriate to carry out the responsibilities
of the Office of the Comptroller of the
Currency associated with the supervision of
Federal depository institutions having total
consolidated assets of less than
$50,000,000,000, as approved by the Board of
Directors of the Corporation.
(C) Report to congress.--Not later than 30 days
after date of the vote of the Board of Directors of the
Corporation under subparagraph (B), the Corporation
shall submit to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a
report describing--
(i) the proposal made to the Board of
Directors of the Corporation by the Comptroller
of the Currency; and
(ii) the decision resulting from the vote
of the Board of Directors of the Corporation.
(D) Failure to approve plan.--If, on the date that
is 2 years after the date of enactment of this Act, the
Board of Directors of the Corporation has failed to
approve a plan under subparagraph (B), the Council
shall approve a plan using the dispute resolution
procedures under section 119.
(b) Funding of Board of Governors.--Section 11 of the Federal
Reserve Act (12 U.S.C. 248) is amended by adding at the end the
following:
``(s) Assessments, Fees, and Other Charges for Certain Companies.--
``(1) In general.--The Board shall collect a total amount
of assessments, fees, or other charges from the companies
described in paragraph (2) that is equal to the total expenses
the Board estimates are necessary or appropriate to carry out
the responsibilities of the Board with respect to such
companies.
``(2) Companies.--The companies described in this paragraph
are--
``(A) all bank holding companies having total
consolidated assets of $50,000,000,000 or more;
``(B) all savings and loan holding companies having
total consolidated assets of $50,000,000,000 or more;
and
``(C) all nonbank financial companies supervised by
the Board under section 113 of the Restoring American
Financial Stability Act of 2010.''.
(c) Corporation Examination Fees.--Section 10(e) of the Federal
Deposit Insurance Act (12 U.S.C. 1820(e)) is amended by striking
paragraph (1) and inserting the following:
``(1) Regular and special examinations of depository
institutions.--The cost of conducting any regular examination
or special examination of any depository institution under
subsection (b)(2), (b)(3), or (d) or of any entity described in
section 3(q)(2) may be assessed by the Corporation against the
institution or entity to meet the expenses of the Corporation
in carrying out such examinations, or as the Corporation
determines is necessary or appropriate to carry out the
responsibilities of the Corporation. The Corporation may also
collect an assessment, fee, or other charge from any entity,
the activities of which are supervised by the Corporation under
section 6 of the Bank Holding Company Act of 1956, as the
Corporation determines is necessary or appropriate to carry out
the responsibilities of the Corporation in connection with such
activities.''.
(d) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
SEC. 319. CONTRACTING AND LEASING AUTHORITY.
Notwithstanding the Federal Property and Administrative Services
Act of 1949 (41 U.S.C. 251 et seq.) or any other provision of law, the
Office of 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
personal or real property (or property interest) as the
Comptroller deems necessary to carry out the duties and
responsibilities of the Office of the Comptroller of the
Currency; and
(2) hold, maintain, sell, lease, or otherwise dispose of
the property (or property interest) acquired under paragraph
(1).
Subtitle B--Transitional Provisions
SEC. 321. INTERIM USE OF FUNDS, PERSONNEL, AND PROPERTY.
(a) Office of Thrift Supervision.--
(1) In general.--Before the transfer date, the Office of
the Comptroller of the Currency, the Corporation, and the Board
of Governors shall--
(A) consult and cooperate with the Office of Thrift
Supervision to facilitate the orderly transfer of
functions to the Office of the Comptroller of the
Currency, the Corporation, and the Board of Governors
in accordance with this title;
(B) determine jointly, from time to time--
(i) the amount of funds necessary to pay
any expenses associated with the transfer of
functions (including expenses for personnel,
property, and administrative services) during
the period beginning on the date of enactment
of this Act and ending on the transfer date;
(ii) which personnel are appropriate to
facilitate the orderly transfer of functions by
this title; and
(iii) what property and administrative
services are necessary to support the Office of
the Comptroller of the Currency, the
Corporation, and the Board of Governors during
the period beginning on the date of enactment
of this Act and ending on the transfer date;
and
(C) take such actions as may be necessary to
provide for the orderly implementation of this title.
(2) Agency consultation.--When requested jointly by the
Office of the Comptroller of the Currency, the Corporation, and
the Board of Governors to do so before the transfer date, the
Office of Thrift Supervision shall--
(A) pay to the Office of the Comptroller of the
Currency, the Corporation, or the Board of Governors,
as applicable, from funds obtained by the Office of
Thrift Supervision through assessments, fees, or other
charges that the Office of Thrift Supervision is
authorized by law to impose, such amounts as the Office
of the Comptroller of the Currency, the Corporation,
and the Board of Governors jointly determine to be
necessary under paragraph (1);
(B) detail to the Office of the Comptroller of the
Currency, the Corporation, or the Board of Governors,
as applicable, such personnel as the Office of the
Comptroller of the Currency, the Corporation, and the
Board of Governors jointly determine to be appropriate
under paragraph (1); and
(C) make available to the Office of the Comptroller
of the Currency, the Corporation, or the Board of
Governors, as applicable, such property and provide to
the Office of the Comptroller of the Currency, the
Corporation, or the Board of Governors, as applicable,
such administrative services as the Office of the
Comptroller of the Currency, the Corporation, and the
Board of Governors jointly determine to be necessary
under paragraph (1).
(3) Notice required.--The Office of the Comptroller of the
Currency, the Corporation, and the Board of Governors shall
jointly give the Office of Thrift Supervision reasonable prior
notice of any request that the Office of the Comptroller of the
Currency, the Corporation, and the Board of Governors jointly
intend to make under paragraph (2).
(b) Board of Governors.--
(1) In general.--Before the transfer date, the Office of
the Comptroller of the Currency and the Corporation shall--
(A) consult and cooperate with the Board of
Governors to facilitate the orderly transfer of
functions to the Office of the Comptroller of the
Currency and the Corporation in accordance with this
title;
(B) determine jointly, from time to time--
(i) the amount of funds necessary to pay
any expenses associated with the transfer of
functions (including expenses for personnel,
property, and administrative services) during
the period beginning on the date of enactment
of this Act and ending on the transfer date;
(ii) which personnel are appropriate to
facilitate the orderly transfer of functions by
this title; and
(iii) what property and administrative
services are necessary to support the Office of
the Comptroller of the Currency and the
Corporation during the period beginning on the
date of enactment of this Act and ending on the
transfer date; and
(C) take such actions as may be necessary to
provide for the orderly implementation of this title.
(2) Agency consultation.--When requested jointly by the
Office of the Comptroller of the Currency and the Corporation
to do so before the transfer date, the Board of Governors
shall--
(A) pay to the Office of the Comptroller of the
Currency or the Corporation, as applicable, from funds
obtained by the Board of Governors through assessments,
fees, or other charges that the Board of Governors is
authorized by law to impose, such amounts as the Office
of the Comptroller of the Currency and the Corporation
jointly determine to be necessary under paragraph (1);
(B) detail to the Office of the Comptroller of the
Currency or the Corporation, as applicable, such
personnel as the Office of the Comptroller of the
Currency and the Corporation jointly determine to be
appropriate under paragraph (1); and
(C) make available to the Office of the Comptroller
of the Currency or the Corporation, as applicable, such
property and provide to the Office of the Comptroller
of the Currency or the Corporation, as applicable, such
administrative services as the Office of the
Comptroller of the Currency and the Corporation jointly
determine to be necessary under paragraph (1).
(3) Notice required.--The Office of the Comptroller of the
Currency and the Corporation shall jointly give the Board of
Governors reasonable prior notice of any request that the
Office of the Comptroller of the Currency and the Corporation
jointly intend to make under paragraph (2).
SEC. 322. TRANSFER OF EMPLOYEES.
(a) In General.--
(1) Office of thrift supervision employees.--
(A) In general.--All employees of the Office of
Thrift Supervision shall be transferred to the Office
of the Comptroller of the Currency or the Corporation
for employment in accordance with this section.
(B) Allocating employees for transfer to receiving
agencies.--The Director of the Office of Thrift
Supervision, the Comptroller of the Currency, and the
Chairperson of the Corporation shall--
(i) jointly determine the number of
employees of the Office of Thrift Supervision
necessary to perform or support the functions
that are transferred to the Office of the
Comptroller of the Currency or the Corporation
by this title; and
(ii) consistent with the determination
under clause (i), jointly identify employees of
the Office of Thrift Supervision for transfer
to the Office of the Comptroller of the
Currency or the Corporation.
(2) Board of governors.--The Comptroller of the Currency,
the Chairperson of the Corporation, and the Chairman of the
Board of Governors shall--
(A) jointly determine the number of employees of
the Board of Governors (including employees of the
Federal reserve banks who, on the day before the
transfer date, are performing functions on behalf of
the Board of Governors) necessary to perform or support
the functions that are transferred to the Office of the
Comptroller of the Currency or the Corporation under
this title; and
(B) consistent with the determination under
subparagraph (A), jointly identify employees of the
Board of Governors (including employees of the Federal
reserve banks who, on the day before the transfer date,
are performing functions on behalf of the Board of
Governors) for transfer to the Office of the
Comptroller of the Currency or the Corporation.
(3) Employees transferred; service periods credited.--For
purposes of this section, periods of service with a Federal
home loan bank, a joint office of Federal home loan banks, or a
Federal reserve bank shall be credited as periods of service
with a Federal agency.
(4) Appointment authority for excepted service
transferred.--
(A) In general.--Except as provided in subparagraph
(B), any appointment authority of the Office of Thrift
Supervision or the Board of Governors under Federal law
that relates to the functions transferred under section
312, including the regulations of the Office of
Personnel Management, for filling the positions of
employees in the excepted service shall be transferred
to the Comptroller of the Currency or the Chairperson
of the Corporation, as appropriate.
(B) Declining transfers allowed.--The Office of the
Comptroller of the Currency or the Chairperson of the
Corporation may decline to accept a transfer of
authority under subparagraph (A) (and the employees
appointed under that authority) to the extent that such
authority relates to positions excepted from the
competitive service because of their confidential,
policy-making, policy-determining, or policy-advocating
character.
(5) Additional appointment authority.--Notwithstanding any
other provision of law, the Office of the Comptroller of the
Currency and the Corporation may appoint transferred employees
to positions in the Office of the Comptroller of the Currency
or the Corporation, respectively. For purposes of this
paragraph, an employee transferred from any Federal reserve
bank shall be treated as an employee of the Board of Governors.
(b) Timing of Transfers and Position Assignments.--Each employee to
be transferred under subsection (a)(1) shall--
(1) be transferred not later than 90 days after the
transfer date; and
(2) receive notice of the position assignment of the
employee not later than 120 days after the effective date of
the transfer of the employee.
(c) Transfer of Functions.--
(1) In general.--Notwithstanding any other provision of
law, the transfer of employees under this subtitle shall be
deemed a transfer of functions for the purpose of section 3503
of title 5, United States Code.
(2) Priority.--If any provision of this subtitle conflicts
with any protection provided to a transferred employee under
section 3503 of title 5, United States Code, the provisions of
this subtitle shall control.
(d) Employee Status and Eligibility.--The transfer of functions and
employees under this subtitle, and the abolishment of the Office of
Thrift Supervision under section 313, shall not affect the status of
the transferred employees as employees of an agency of the United
States under any provision of law.
(e) Equal Status and Tenure Positions.--
(1) Status and tenure.--
(A) Office of thrift supervision.--Each transferred
employee from the Office of Thrift Supervision shall be
placed in a position at the Office of the Comptroller
of the Currency or the Corporation with the same status
and tenure as the transferred employee held on the day
before the date on which the employee was transferred.
(B) Board of governors.--Each transferred employee
from the Board of Governors or from a Federal reserve
bank shall be placed in a position with the same status
and tenure as employees of the Office of the
Comptroller of the Currency or the Corporation who
perform similar functions and have similar periods of
service.
(2) Functions.--To the extent practicable, each transferred
employee shall be placed in a position at the Office of the
Comptroller of the Currency or the Corporation, as applicable,
responsible for the same functions and duties as the
transferred employee had on the day before the date on which
the employee was transferred, in accordance with the expertise
and preferences of the transferred employee.
(f) No Additional Certification Requirements.--An examiner who is a
transferred employee shall not be subject to any additional
certification requirements before being placed in a comparable position
at the Office of the Comptroller of the Currency or the Corporation, if
the examiner carries out examinations of the same type of institutions
as an employee of the Office of the Comptroller of the Currency or the
Corporation as the employee was responsible for carrying out before the
date on which the employee was transferred.
(g) Personnel Actions Limited.--
(1) 2-year protection.--Except as provided in paragraph
(2), during the 2-year period beginning on the transfer date,
an employee holding a permanent position on the day before the
date on which the employee was transferred shall not be
involuntarily separated or involuntarily reassigned outside the
locality pay area (as defined by the Office of Personnel
Management) of the employee.
(2) Exceptions.--The Comptroller of the Currency and the
Chairperson of the Corporation, as applicable, may--
(A) separate a transferred employee for cause,
including 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) 2-year protection.--Except as provided in paragraph
(2), during the 2-year period beginning on the date on which
the employee was transferred under this subtitle, a transferred
employee shall be paid at a rate that is not less than the
basic rate of pay, including any geographic differential, that
the transferred employee received during the pay period
immediately preceding the date on which the employee was
transferred.
(2) Exceptions.--The Comptroller of the Currency, the
Chairperson of the Corporation, or the Chairman of the Board of
Governors may reduce the rate of basic pay of a transferred
employee--
(A) for cause, including for unacceptable
performance; or
(B) with the consent of the transferred employee.
(3) Protection only while employed.--This subsection shall
apply to a transferred employee only during the period that the
transferred employee remains employed by Office of the
Comptroller of the Currency or the Corporation.
(4) Pay increases permitted.--Nothing in this subsection
shall limit the authority of the Comptroller of the Currency or
the Chairperson of the Corporation to increase the pay of a
transferred employee.
(i) Benefits.--
(1) Retirement benefits for transferred employees.--
(A) In general.--
(i) Continuation of existing retirement
plan.--Each transferred employee shall remain
enrolled in the retirement plan of the
transferred employee, for as long as the
transferred employee is employed by the Office
of the Comptroller of the Currency or the
Corporation.
(ii) Employer's contribution.--The
Comptroller of the Currency or the Chairperson
of the Corporation, as appropriate, shall pay
any employer contributions to the existing
retirement plan of each transferred employee,
as required under each such existing retirement
plan.
(B) 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 transfer of the employee to the Office of
the Comptroller of the Currency or the
Corporation may, during the period beginning 6
months after the transfer date and ending 1
year after the 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 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
employees transferred to the Office of the
Comptroller of the Currency or the Corporation
under this title 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 Office of the Comptroller of the Currency
or the Corporation, as appropriate, shall
deposit into the account established under
clause (i) the employer contributions that the
Office of the Comptroller of the Currency or
the Corporation, respectively, makes on behalf
of transferred employees who do not make an
election under subparagraph (B).
(iv) Account administration.--The Office of
the Comptroller of the Currency or the
Corporation, as appropriate, shall administer
the account established under clause (i) as a
participation employer in the Federal Reserve
System retirement plan.
(D) Definition.--In this paragraph, the term
``existing retirement plan'' means, with respect to a
transferred employee, the retirement plan (including
the Financial Institutions Retirement Fund), and any
associated thrift savings plan, of the agency from
which the employee was transferred in which the
employee was enrolled on the day before the date on
which the employee was transferred.
(2) Benefits other than retirement benefits.--
(A) During first year.--
(i) Existing plans continue.--During the 1-
year period following the transfer date, each
transferred employee may retain membership in
any employee benefit program (other than a
retirement benefit program) of the agency from
which the employee was transferred under this
title, including any dental, vision, long term
care, or life insurance program to which the
employee belonged on the day before the
transfer date.
(ii) Employer's contribution.--The Office
of the Comptroller of the Currency or the
Corporation, as appropriate, shall pay any
employer cost required to extend coverage in
the benefit program to the transferred employee
as required under that program or negotiated
agreements.
(B) Dental, vision, or life insurance after first
year.--If, after the 1-year period beginning on the
transfer date, the Office of the Comptroller of the
Currency or the Corporation determines that the Office
of the Comptroller of the Currency or the Corporation,
as the case may be, will not continue to participate in
any dental, vision, or life insurance program of an
agency from which an employee was transferred, a
transferred employee who is a member of the program
may, before the decision takes effect and without
regard to any regularly scheduled open season, elect to
enroll in--
(i) the enhanced dental benefits program
established under chapter 89A of title 5,
United States Code;
(ii) the enhanced vision benefits
established under chapter 89B of title 5,
United States Code; and
(iii) the Federal Employees' Group Life
Insurance Program established under chapter 87
of title 5, United States Code, without regard
to any requirement of insurability.
(C) Long term care insurance after 1st year.--If,
after the 1-year period beginning on the transfer date,
the Office of the Comptroller of the Currency or the
Corporation determines that the Office of the
Comptroller of the Currency or the Corporation, as
appropriate, will not continue to participate in any
long term care insurance program of an agency from
which an employee transferred, a transferred employee
who is a member of such a program may, before the
decision takes effect, elect to apply for coverage
under the Federal Long Term Care Insurance Program
established under chapter 90 of title 5, United States
Code, under the underwriting requirements applicable to
a new active workforce member, as described in part 875
of title 5, Code of Federal Regulations (or any
successor thereto).
(D) Contribution of transferred employee.--
(i) In general.--Subject to clause (ii), a
transferred employee who is enrolled in a plan
under the Federal Employees Health Benefits
Program shall pay any employee contribution
required under the plan.
(ii) Cost differential.--The Office of the
Comptroller of the Currency or the Corporation,
as applicable, shall pay any difference in cost
between the employee contribution required
under the plan provided to transferred
employees by the agency from which the employee
transferred on the date of enactment of this
Act and the plan provided by the Office of the
Comptroller of the Currency or the Corporation,
as the case may be, under this section.
(iii) Funds transfer.--The Office of the
Comptroller of the Currency or the Corporation,
as the case may be, shall transfer to the
Employees Health Benefits Fund established
under section 8909 of title 5, United States
Code, an amount determined by the Director of
the Office of Personnel Management, after
consultation with the Comptroller of the
Currency or the Chairperson of the Corporation,
as the case may be, and the Office of
Management and Budget, to be necessary to
reimburse the Fund for the cost to the Fund of
providing any benefits under this subparagraph
that are not otherwise paid for by a
transferred employee under clause (i).
(E) Special provisions to ensure continuation of
life insurance benefits.--
(i) In general.--An annuitant, as defined
in section 8901 of title 5, United States Code,
who is enrolled in a life insurance plan
administered by an agency from which employees
are transferred under this title on the day
before the transfer date shall be eligible for
coverage by a life insurance plan under
sections 8706(b), 8714a, 8714b, or 8714c of
title 5, United States Code, or by a life
insurance plan established by the Office of the
Comptroller of the Currency or the Corporation,
as applicable, without regard to any regularly
scheduled open season or any requirement of
insurability.
(ii) Contribution of transferred
employee.--
(I) In general.--Subject to
subclause (II), a transferred employee
enrolled in a life insurance plan under
this subparagraph shall pay any
employee contribution required by the
plan.
(II) Cost differential.--The Office
of the Comptroller of the Currency or
the Corporation, as the case may be,
shall pay any difference in cost
between the benefits provided by the
agency from which the employee
transferred on the date of enactment of
this Act and the benefits provided
under this section.
(III) Funds transfer.--The Office
of the Comptroller of the Currency or
the Corporation, as the case may be,
shall transfer to the Federal
Employees' Group Life Insurance Fund
established under section 8714 of title
5, United States Code, an amount
determined by the Director of the
Office of Personnel Management, after
consultation with the Comptroller of
the Currency or the Chairperson of the
Corporation, as the case may be, and
the Office of Management and Budget, to
be necessary to reimburse the Federal
Employees' Group Life Insurance Fund
for the cost to the Federal Employees'
Group Life Insurance Fund of providing
benefits under this subparagraph not
otherwise paid for by a transferred
employee under subclause (I).
(IV) Credit for time enrolled in
other plans.--For any transferred
employee, enrollment in a life
insurance plan administered by the
agency from which the employee
transferred, immediately before
enrollment in a life insurance plan
under chapter 87 of title 5, United
States Code, shall be considered as
enrollment in a life insurance plan
under that chapter for purposes of
section 8706(b)(1)(A) of title 5,
United States Code.
(j) Incorporation Into Agency Pay System.--Not later than 2 years
after the transfer date, the Comptroller of the Currency and the
Chairperson of the Corporation shall place each transferred employee
into the established pay system and structure of the appropriate
employing agency.
(k) Equitable Treatment.--In administering the provisions of this
section, the Comptroller of the Currency and the Chairperson of the
Corporation--
(1) may not take any action that would unfairly
disadvantage a transferred employee relative to any other
employee of the Office of the Comptroller of the Currency or
the Corporation on the basis of prior employment by the Office
of Thrift Supervision, the Board of Governors, or a Federal
reserve bank; and
(2) may take such action as is appropriate in an individual
case to ensure that a transferred employee receives equitable
treatment, with respect to the status, tenure, pay, benefits
(other than benefits under programs administered by the Office
of Personnel Management), and accrued leave or vacation time
for prior periods of service with any Federal agency of the
transferred employee.
(l) Reorganization.--
(1) In general.--If the Comptroller of the Currency or the
Chairperson of the Corporation determines, during the 2-year
period beginning 1 year after the transfer date, that a
reorganization of the staff of the Office of the Comptroller of
the Currency or the Corporation, respectively, is required, the
reorganization shall be deemed a ``major reorganization'' for
purposes of affording affected employees retirement under
section 8336(d)(2) or 8414(b)(1)(B) of title 5, United States
Code.
(2) Service credit.--For purposes of this subsection,
periods of service with a Federal home loan bank, a joint
office of Federal home loan banks or a Federal reserve bank
shall be credited as periods of service with a Federal agency.
SEC. 323. PROPERTY TRANSFERRED.
(a) Property Defined.--For purposes of this section, the term
``property'' includes all real property (including leaseholds) and all
personal property, including computers, furniture, fixtures, equipment,
books, accounts, records, reports, files, memoranda, paper, reports of
examination, work papers, and correspondence related to such reports,
and any other information or materials.
(b) Property of the Office of Thrift Supervision.--Not later than
90 days after the transfer date, all property of the Office of Thrift
Supervision that the Comptroller of the Currency and the Chairperson of
the Corporation jointly determine is used, on the day before the
transfer date, to perform or support the functions of the Office of
Thrift Supervision transferred to the Office of the Comptroller of the
Currency or the Corporation under this title, shall be transferred to
the Office of the Comptroller of the Currency or the Corporation in a
manner consistent with the transfer of employees under this subtitle.
(c) Property of the Board of Governors.--
(1) In general.--Not later than 90 days after the transfer
date, all property of the Board of Governors that the Office of
the Comptroller of the Currency, the Corporation, and the Board
of Governors jointly determine is used, on the day before the
transfer date, to perform or support the functions of the Board
of Governor transferred to the Office of the Comptroller of the
Currency or the Corporation under this title, shall be
transferred to the Office of the Comptroller of the Currency or
the Corporation in a manner consistent with the transfer of
employees under this subtitle.
(2) Property of federal reserve banks.--Any property of any
Federal reserve bank that, on the day before the transfer date,
is used to perform or support the functions of the Board of
Governors transferred to the Office of the Comptroller of the
Currency or the Corporation by this title shall be treated as
property of the Board of Governors for purposes of paragraph
(1).
(d) Contracts Related to Property Transferred.--Each contract,
agreement, lease, license, permit, and similar arrangement relating to
property transferred to the Office of the Comptroller of the Currency
or the Corporation by this section shall be transferred to the Office
of the Comptroller of the Currency or the Corporation, as appropriate,
together with the property to which it relates.
(e) Preservation of Property.--Property identified for transfer
under this section shall not be altered, destroyed, or deleted before
transfer under this section.
SEC. 324. FUNDS TRANSFERRED.
The funds that, on the day before the transfer date, the Director
of the Office of Thrift Supervision (in consultation with the
Comptroller of the Currency, the Chairperson of the Corporation, and
the Chairman of the Board of Governors) determines are not necessary to
dispose of the affairs of the Office of Thrift Supervision under
section 325 and are available to the Office of Thrift Supervision to
pay the expenses of the Office of Thrift Supervision--
(1) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(1)(B), shall be
transferred to the Office of the Comptroller of the Currency on
the transfer date;
(2) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(1)(C), shall be
transferred to the Corporation on the transfer date; and
(3) relating to the functions of the Office of Thrift
Supervision transferred under section 312(b)(1)(A), shall be
transferred to the Board of Governors on the transfer date.
SEC. 325. DISPOSITION OF AFFAIRS.
(a) Authority of Director.--During the 90-day period beginning on
the transfer date, the Director of the Office of Thrift Supervision--
(1) shall, solely for the purpose of winding up the affairs
of the Office of Thrift Supervision relating to any function
transferred to the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors under this title--
(A) manage the employees of the Office of Thrift
Supervision who have not yet been transferred and
provide for the payment of the compensation and
benefits of the employees that accrue before the date
on which the employees are transferred under this
title; and
(B) manage any property of the Office of Thrift
Supervision, until the date on which the property is
transferred under section 323; and
(2) may take any other action necessary to wind up the
affairs of the Office of Thrift Supervision.
(b) Status of Director.--
(1) In general.--Notwithstanding the transfer of functions
under this subtitle, during the 90-day period beginning on the
transfer date, the Director of the Office of Thrift Supervision
shall retain and may exercise any authority vested in the
Director of the Office of Thrift Supervision on the day before
the transfer date, only to the extent necessary--
(A) to wind up the Office of Thrift Supervision;
and
(B) to carry out the transfer under this subtitle
during such 90-day period.
(2) Other provisions.--For purposes of paragraph (1), the
Director of the Office of Thrift Supervision shall, during the
90-day period beginning on the transfer date, continue to be--
(A) treated as an officer of the United States; and
(B) entitled to receive compensation at the same
annual rate of basic pay that the Director of the
Office of Thrift Supervision received on the day before
the transfer date.
(c) Authority of Chairman of the Board of Governors.--During the
90-day period beginning on the transfer date, the Chairman of the Board
of Governors shall--
(1) manage the employees of the Board of Governors who have
not yet been transferred under this title and provide for the
payment of the compensation and benefits of the employees that
accrue before the date on which the employees are transferred
under this title; and
(2) manage any property of the Board of Governors that is
transferred under this title, until the date on which the
property is transferred under section 323.
SEC. 326. CONTINUATION OF SERVICES.
Any agency, department, or other instrumentality of the United
States, and any successor to any such agency, department, or
instrumentality, that was, before the transfer date, providing support
services to the Office of Thrift Supervision or the Board of Governors
in connection with functions transferred to the Office of the
Comptroller of the Currency, the Corporation or the Board of Governors
under this title, shall--
(1) continue to provide such services, subject to
reimbursement by the Office of the Comptroller of the Currency,
the Corporation, or the Board of Governors, until the transfer
of functions under this title is complete; and
(2) consult with the Comptroller of the Currency, the
Chairperson of the Corporation, or the Chairman of the Board of
Governors, as appropriate, to coordinate and facilitate a
prompt and orderly transition.
Subtitle C--Federal Deposit Insurance Corporation
SEC. 331. DEPOSIT INSURANCE REFORMS.
(a) Size Distinctions.--Section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) is amended--
(1) by striking subparagraph (D); and
(2) by redesignating subparagraph (C) as subparagraph (D).
(b) Assessment Base.--
(1) In general.--Except as provided in paragraph (2), the
Corporation shall amend the regulations issued by the
Corporation under section 7(b)(2) of the Federal Deposit
Insurance Act (12 U.S.C. 1817(b)(2)) to define the term
``assessment base'' with respect to an insured depository
institution for purposes of that section 7(b)(2), as an amount
equal to--
(A) the average total consolidated assets of the
insured depository institution during the assessment
period; minus
(B) the sum of--
(i) the average tangible equity of the
insured depository institution during the
assessment period; and
(ii) the average long-term unsecured debt
of the insured depository institution during
the assessment period.
(2) Determination.--If, not later than 1 year after the
date of enactment of this Act, the Corporation submits to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives, in writing, a finding that an amendment to the
rules of the Corporation regarding the definition of the term
``assessment base'', as provided in paragraph (1), would reduce
the effectiveness of the risk-based assessment system of the
Corporation or increase the risk of loss to the Deposit
Insurance Fund, the Corporation may--
(A) continue in effect the definition of the term
``assessment base'', as in effect on the day before the
date of enactment of this Act; or
(B) establish, by rule, a definition of the term
``assessment base'' that the Corporation deems
appropriate.
SEC. 332. MANAGEMENT OF THE FEDERAL DEPOSIT INSURANCE CORPORATION.
(a) In General.--Section 2 of the Federal Deposit Insurance Act (12
U.S.C. 1812) is amended--
(1) in subsection (a)(1)(B), by striking ``Director of the
Office of Thrift Supervision'' and inserting ``Director of the
Consumer Financial Protection Bureau'';
(2) by amending subsection (d)(2) to read as follows:
``(2) Acting officials may serve.--In the event of a
vacancy in the Office of the Comptroller of the Currency 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''.
(b) Effective Date.--This section, and the amendments made by this
section, shall take effect on the transfer date.
Subtitle D--Termination of Federal Thrift Charter
SEC. 341. TERMINATION OF FEDERAL SAVINGS ASSOCIATIONS.
(a) In General.--Beginning on the date of enactment of this Act,
the Director of the Office of Thrift Supervision, or the Comptroller of
the Currency, may not issue a charter for a Federal savings association
under section 5 of the Home Owners' Loan Act (12 U.S.C. 1464).
(b) Conforming Amendment.--Section 5(a) of the Home Owner's Loan
Act (12 U.S.C. 1464(a)) is amended to read as follows:
``(a) In General.--In order to provide thrift institutions for the
deposit of funds and for the extension of credit for homes and other
goods and services, the Comptroller of the Currency is authorized,
under such regulations as the Comptroller of the Currency may
prescribe, to provide for the examination, operation, and regulation of
associations to be known as `Federal savings associations' (including
Federal savings banks), giving primary consideration to the best
practices of thrift institutions in the United States. The lending and
investment powers conferred by this section are intended to encourage
such institutions to provide credit for housing safely and soundly.''.
(c) Prospective Repeal.--Effective on the date on which the
Comptroller of the Currency determines that no Federal savings
associations exist, section 5 of the Home Owner's Loan Act (12 U.S.C.
1464) is repealed.
SEC. 342. BRANCHING.
Notwithstanding the Federal Deposit Insurance Act (12 U.S.C. 1811
et seq.), the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et
seq.), or any other provision of Federal or State law, a savings
association that becomes a bank may continue to operate any branch or
agency that the savings association operated immediately before the
savings association became a bank.
TITLE IV--REGULATION OF ADVISERS TO HEDGE FUNDS AND OTHERS
SEC. 401. SHORT TITLE.
This title may be cited as the ``Private Fund Investment Advisers
Registration Act of 2010''.
SEC. 402. DEFINITIONS.
(a) Investment Advisers Act of 1940 Definitions.--Section 202(a) of
the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)) is amended by
adding at the end the following:
``(29) The term `private fund' means an issuer that would
be an investment company, as defined in section 3 of the
Investment Company Act of 1940 (15 U.S.C. 80a-3), but for
section 3(c)(1) or 3(c)(7) of that Act.
``(30) The term `foreign private adviser' means any
investment adviser who--
``(A) has no place of business in the United
States;
``(B) has, in total, fewer than 15 clients who are
domiciled in or residents of the United States;
``(C) has aggregate assets under management
attributable to clients in the United States and
investors in the United States in private funds advised
by the investment adviser of less than $25,000,000, or
such higher amount as the Commission may, by rule, deem
appropriate in accordance with the purposes of this
title; and
``(D) neither--
``(i) holds itself out generally to the
public in the United States as an investment
adviser; nor
``(ii) acts as--
``(I) an investment adviser to any
investment company registered under the
Investment Company Act of 1940; or
``(II) a company that has elected
to be a business development company
pursuant to section 54 of the
Investment Company Act of 1940 (15
U.S.C. 80a-53), and has not withdrawn
its election.''.
(b) Other Definitions.--As used in this title, the terms
``investment adviser'' and ``private fund'' have the same meanings as
in section 202 of the Investment Advisers Act of 1940, as amended by
this title.
SEC. 403. ELIMINATION OF PRIVATE ADVISER EXEMPTION; LIMITED EXEMPTION
FOR FOREIGN PRIVATE ADVISERS; LIMITED INTRASTATE
EXEMPTION.
Section 203(b) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-3(b)) is amended--
(1) in paragraph (1), by inserting ``, other than an
investment adviser who acts as an investment adviser to any
private fund,'' before ``all of whose'';
(2) by striking paragraph (3) and inserting the following:
``(3) any investment adviser that is a foreign private
adviser;''; and
(3) in paragraph (5), by striking ``or'' at the end;
(4) in paragraph (6), by striking the period at the end and
inserting ``; or''; and
(5) by adding at the end the following:
``(7) any investment adviser, other than any entity that
has elected to be regulated or is regulated as a business
development company pursuant to section 54 of the Investment
Company Act of 1940 (15 U.S.C. 80a-54), who solely advises--
``(A) small business investment companies that are
licensees under the Small Business Investment Act of
1958;
``(B) entities that have received from the Small
Business Administration notice to proceed to qualify
for a license as a small business investment company
under the Small Business Investment Act of 1958, which
notice or license has not been revoked; or
``(C) applicants that are affiliated with 1 or more
licensed small business investment companies described
in subparagraph (A) and that have applied for another
license under the Small Business Investment Act of
1958, which application remains pending.''.
SEC. 404. COLLECTION OF SYSTEMIC RISK DATA; REPORTS; EXAMINATIONS;
DISCLOSURES.
Section 204 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
4) is amended--
(1) by redesignating subsections (b) and (c) as subsections
(c) and (d), respectively; and
(2) by inserting after subsection (a) the following:
``(b) Records and Reports of Private Funds.--
``(1) In general.--The Commission may require any
investment adviser registered under this title--
``(A) to maintain such records of, and file with
the Commission such reports regarding, private funds
advised by the investment adviser, as necessary and
appropriate in the public interest and for the
protection of investors, or for the assessment of
systemic risk by the Financial Stability Oversight
Council (in this subsection referred to as the
`Council'); and
``(B) to provide or make available to the Council
those reports or records or the information contained
therein.
``(2) Treatment of records.--The records and reports of any
private fund to which an investment adviser registered under
this title provides investment advice shall be deemed to be the
records and reports of the investment adviser.
``(3) Required information.--The records and reports
required to be maintained by a private fund and subject to
inspection by the Commission under this subsection shall
include, for each private fund advised by the investment
adviser, a description of--
``(A) the amount of assets under management and use
of leverage;
``(B) counterparty credit risk exposure;
``(C) trading and investment positions;
``(D) valuation policies and practices of the fund;
``(E) types of assets held;
``(F) side arrangements or side letters, whereby
certain investors in a fund obtain more favorable
rights or entitlements than other investors;
``(G) trading practices; and
``(H) such other information as the Commission, in
consultation with the Council, determines is necessary
and appropriate in the public interest and for the
protection of investors or for the assessment of
systemic risk, which may include the establishment of
different reporting requirements for different classes
of fund advisers, based on the type or size of private
fund being advised.
``(4) Maintenance of records.--An investment adviser
registered under this title shall maintain such records of
private funds advised by the investment adviser for such period
or periods as the Commission, by rule, may prescribe as
necessary and appropriate in the public interest and for the
protection of investors, or for the assessment of systemic
risk.
``(5) Filing of records.--The Commission shall issue rules
requiring each investment adviser to a private fund to file
reports containing such information as the Commission deems
necessary and appropriate in the public interest and for the
protection of investors or for the assessment of systemic risk.
``(6) Examination of records.--
``(A) Periodic and special examinations.--The
Commission--
``(i) shall conduct periodic inspections of
all records of private funds maintained by an
investment adviser registered under this title
in accordance with a schedule established by
the Commission; and
``(ii) may conduct at any time and from
time to time such additional, special, and
other examinations as the Commission may
prescribe as necessary and appropriate in the
public interest and for the protection of
investors, or for the assessment of systemic
risk.
``(B) Availability of records.--An investment
adviser registered under this title shall make
available to the Commission any copies or extracts from
such records as may be prepared without undue effort,
expense, or delay, as the Commission or its
representatives may reasonably request.
``(7) Information sharing.--
``(A) In general.--The Commission shall make
available to the Council copies of all reports,
documents, records, and information filed with or
provided to the Commission by an investment adviser
under this subsection as the Council may consider
necessary for the purpose of assessing the systemic
risk posed by a private fund.
``(B) Confidentiality.--The Council shall maintain
the confidentiality of information received under this
paragraph in all such reports, documents, records, and
information, in a manner consistent with the level of
confidentiality established by the Commission pursuant
to paragraph (8). The Council shall be exempt from
section 552 of title 5, United States Code, with
respect to any information in any report, document,
record, or information made available, to the Council
under this subsection.''.
``(8) Commission confidentiality of reports.--
Notwithstanding any other provision of law, the Commission may
not be compelled to disclose any report or information
contained therein required to be filed with the Commission
under this subsection, except that nothing in this subsection
authorizes the Commission--
``(A) to withhold information from Congress, upon
an agreement of confidentiality; or
``(B) prevent the Commission from complying with--
``(i) a request for information from any
other Federal department or agency or any self-
regulatory organization requesting the report
or information for purposes within the scope of
its jurisdiction; or
``(ii) an order of a court of the United
States in an action brought by the United
States or the Commission.
``(9) Other recipients confidentiality.--Any department,
agency, or self-regulatory organization that receives reports
or information from the Commission under this subsection shall
maintain the confidentiality of such reports, documents,
records, and information in a manner consistent with the level
of confidentiality established for the Commission under
paragraph (8).
``(10) Public information exception.--
``(A) In general.--The Commission, the Council, and
any other department, agency, or self-regulatory
organization that receives information, reports,
documents, records, or information from the Commission
under this subsection, shall be exempt from the
provisions of section 552 of title 5, United States
Code, with respect to any such report, document,
record, or information. Any proprietary information of
an investment adviser ascertained by the Commission
from any report required to be filed with the
Commission pursuant to this subsection shall be subject
to the same limitations on public disclosure as any
facts ascertained during an examination, as provided by
section 210(b) of this title.
``(B) Proprietary information.--For purposes of
this paragraph, proprietary information includes--
``(i) sensitive, non-public information
regarding the investment or trading strategies
of the investment adviser;
``(ii) analytical or research
methodologies;
``(iii) trading data;
``(iv) computer hardware or software
containing intellectual property; and
``(v) any additional information that the
Commission determines to be proprietary.
``(11) Annual report to congress.--The Commission shall
report annually to Congress on how the Commission has used the
data collected pursuant to this subsection to monitor the
markets for the protection of investors and the integrity of
the markets.''.
SEC. 405. DISCLOSURE PROVISION ELIMINATED.
Section 210(c) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-10(c)) is amended by inserting before the period at the end the
following: ``or for purposes of assessment of potential systemic
risk''.
SEC. 406. CLARIFICATION OF RULEMAKING AUTHORITY.
Section 211 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
11) is amended--
(1) in subsection (a), by inserting before the period at
the end of the first sentence the following: ``, including
rules and regulations defining technical, trade, and other
terms used in this title, except that the Commission may not
define the term `client' for purposes of paragraphs (1) and (2)
of section 206 to include an investor in a private fund managed
by an investment adviser, if such private fund has entered into
an advisory contract with such adviser''; and
(2) by adding at the end the following:
``(e) Disclosure Rules on Private Funds.--The Commission and the
Commodity Futures Trading Commission shall, after consultation with the
Council but not later than 12 months after the date of enactment of the
Private Fund Investment Advisers Registration Act of 2010, jointly
promulgate rules to establish the form and content of the reports
required to be filed with the Commission under subsection 204(b) and
with the Commodity Futures Trading Commission by investment advisers
that are registered both under this title and the Commodity Exchange
Act (7 U.S.C. 1a et seq.).''.
SEC. 407. EXEMPTION OF VENTURE CAPITAL FUND ADVISERS.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) is amended by adding at the end the following:
``(l) Exemption of Venture Capital Fund Advisers.--No investment
adviser shall be subject to the registration requirements of this title
with respect to the provision of investment advice relating to a
venture capital fund. Not later than 6 months after the date of
enactment of this subsection, the Commission shall issue final rules to
define the term `venture capital fund' for purposes of this
subsection.''.
SEC. 408. EXEMPTION OF AND RECORD KEEPING BY PRIVATE EQUITY FUND
ADVISERS.
Section 203 of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
3) is amended by adding at the end the following:
``(m) Exemption of and Reporting by Private Equity Fund Advisers.--
``(1) In general.--Except as provided in this subsection,
no investment adviser shall be subject to the registration or
reporting requirements of this title with respect to the
provision of investment advice relating to a private equity
fund or funds.
``(2) Maintenance of records and access by commission.--Not
later than 6 months after the date of enactment of this
subsection, the Commission shall issue final rules--
``(A) to require investment advisers described in
paragraph (1) to maintain such records and provide to
the Commission such annual or other reports as the
Commission taking into account fund size, governance,
investment strategy, risk, and other factors, as the
Commission determines necessary and appropriate in the
public interest and for the protection of investors;
and
``(B) to define the term `private equity fund' for
purposes of this subsection.''.
SEC. 409. FAMILY OFFICES.
(a) In General.--Section 202(a)(11) of the Investment Advisers Act
of 1940 (15 U.S.C. 80b-2(a)(11)) is amended by striking ``or (G)'' and
inserting the following: ``; (G) any family office, as defined by rule,
regulation, or order of the Commission, in accordance with the purposes
of this title; or (H)''.
(b) Rulemaking.--The rules, regulations, or orders issued by the
Commission pursuant to section 202(a)(11)(G) of the Investment Advisers
Act of 1940, as added by this section, regarding the definition of the
term ``family office'' shall provide for an exemption that--
(1) is consistent with the previous exemptive policy of the
Commission, as reflected in exemptive orders for family offices
in effect on the date of enactment of this Act; and
(2) recognizes the range of organizational, management, and
employment structures and arrangements employed by family
offices.
SEC. 410. STATE AND FEDERAL RESPONSIBILITIES; ASSET THRESHOLD FOR
FEDERAL REGISTRATION OF INVESTMENT ADVISERS.
Section 203A(a)(1) of the Investment Advisers Act of 1940 (15
U.S.C. 80b-3a(a)(1)) is amended --
(1) in subparagraph (A)--
(A) by striking ``$25,000,000'' and inserting
``$100,000,000''; and
(B) by striking ``or'' at the end;
(2) in subparagraph (B), by striking the period at the end
and inserting ``; or''; and
(3) by adding at the end the following:
``(C) is an adviser to a company that has elected
to be a business development company pursuant to
section 54 of the Investment Company Act of 1940, and
has not withdrawn its election.''.
SEC. 411. CUSTODY OF CLIENT ASSETS.
The Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.) is
amended by adding at the end the following new section:
``SEC. 223. CUSTODY OF CLIENT ACCOUNTS.
``An investment adviser registered under this title shall take such
steps to safeguard client assets over which such adviser has custody,
including, without limitation, verification of such assets by an
independent public accountant, as the Commission may, by rule,
prescribe.''.
SEC. 412. ADJUSTING THE ACCREDITED INVESTOR STANDARD FOR INFLATION.
The Commission shall, by rule--
(1) increase the financial threshold for an accredited
investor, as set forth in the rules of the Commission under the
Securities Act of 1933, by calculating an amount that is
greater than the amount in effect on the date of enactment of
this Act of $200,000 income for a natural person (or $300,000
for a couple) and $1,000,000 in assets, as the Commission
determines is appropriate and in the public interest, in light
of price inflation since those figures were determined; and
(2) adjust that threshold not less frequently than once
every 5 years, to reflect the percentage increase in the cost
of living.
SEC. 413. GAO STUDY AND REPORT ON ACCREDITED INVESTORS.
The Comptroller General of the United States shall conduct a study
on the appropriate criteria for determining the financial thresholds or
other criteria needed to qualify for accredited investor status and
eligibility to invest in private funds, and shall submit a report to
the Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives on
the results of such study not later than 1 year after the date of
enactment of this Act.
SEC. 414. GAO STUDY ON SELF-REGULATORY ORGANIZATION FOR PRIVATE FUNDS.
The Comptroller General of the United States shall--
(1) conduct a study of the feasibility of forming a self-
regulatory organization to oversee private funds; and
(2) submit a report to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives on the results of such
study, not later than 1 year after the date of enactment of
this Act.
SEC. 415. COMMISSION STUDY AND REPORT ON SHORT SELLING.
(a) Study.--The Division of Risk, Strategy, and Financial
Innovation of the Commission shall conduct a study, taking into account
current scholarship, on the state of short selling on national
securities exchanges and in the over-the-counter markets, with
particular attention to the impact of recent rule changes and the
incidence of--
(1) the failure to deliver shares sold short; or
(2) delivery of shares on the fourth day following the
short sale transaction.
(b) Report.--The Division of Risk, Strategy, and Financial
Innovation shall submit a report, together with any recommendations for
market improvements, including consideration of real time reporting of
short sale positions, to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the
House of Representatives on the results of the study conducted under
subsection (a), not later than 2 years after the date of enactment of
this Act.
SEC. 416. TRANSITION PERIOD.
Except as otherwise provided in this title, this title and the
amendments made by this title shall become effective 1 year after the
date of enactment of this Act, except that any investment adviser may,
at the discretion of the investment adviser, register with the
Commission under the Investment Advisers Act of 1940 during that 1-year
period, subject to the rules of the Commission.
TITLE V--INSURANCE
Subtitle A--Office of National Insurance
SEC. 501. SHORT TITLE.
This subtitle may be cited as the ``Office of National Insurance
Act of 2010''.
SEC. 502. ESTABLISHMENT OF OFFICE OF NATIONAL INSURANCE.
(a) Establishment of Office.--Subchapter I of chapter 3 of subtitle
I of title 31, United States Code, is amended--
(1) by redesignating section 312 as section 315;
(2) by redesignating section 313 as section 312; and
(3) by inserting after section 312 (as so redesignated) the
following new sections:
``SEC. 313. OFFICE OF NATIONAL INSURANCE.
``(a) Establishment.--There is established within the Department of
the Treasury the Office of National Insurance.
``(b) Leadership.--The Office shall be headed by a Director, who
shall be appointed by the Secretary of the Treasury. The position of
Director shall be a career reserved position in the Senior Executive
Service, as that position is defined under section 3132 of title 5,
United States Code.
``(c) Functions.--
``(1) Authority pursuant to direction of secretary.--The
Office, pursuant to the direction of the Secretary, shall have
the authority--
``(A) to monitor all aspects of the insurance
industry, including identifying issues or gaps in the
regulation of insurers that could contribute to a
systemic crisis in the insurance industry or the United
States financial system;
``(B) to recommend to the Financial Stability
Oversight Council that it designate an insurer,
including the affiliates of such insurer, as an entity
subject to regulation as a nonbank financial company
supervised by the Board of Governors pursuant to title
I of the Restoring American Financial Stability Act of
2010;
``(C) 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);
``(D) to coordinate Federal efforts and develop
Federal policy on prudential aspects of international
insurance matters, including representing the United
States, as appropriate, in the International
Association of Insurance Supervisors (or a successor
entity) and assisting the Secretary in negotiating
International Insurance Agreements on Prudential
Measures;
``(E) to determine, in accordance with subsection
(f), whether State insurance measures are preempted by
International Insurance Agreements on Prudential
Measures;
``(F) to consult with the States (including State
insurance regulators) regarding insurance matters of
national importance and prudential insurance matters of
international importance; and
``(G) to perform such other related duties and
authorities as may be assigned to the Office by the
Secretary.
``(2) Advisory functions.--The Office shall advise the
Secretary on major domestic and prudential international
insurance policy issues.
``(d) Scope.--The authority of the Office shall extend to all lines
of insurance except health insurance, as such insurance is determined
by the Secretary based on section 2791 of the Public Health Service Act
(42 U.S.C. 300gg-91), and crop insurance, as established by the Federal
Crop Insurance Act (7 U.S.C. 1501 et seq.).
``(e) Gathering of Information.--
``(1) In general.--In carrying out the functions required
under subsection (c), the Office may--
``(A) receive and collect data and information on
and from the insurance industry and insurers;
``(B) enter into information-sharing agreements;
``(C) analyze and disseminate data and information;
and
``(D) issue reports regarding all lines of
insurance except health insurance.
``(2) Collection of information from insurers and
affiliates.--
``(A) In general.--Except as provided in paragraph
(3), the Office may require an insurer, or any
affiliate of an insurer, to submit such data or
information as the Office may reasonably require in
carrying out the functions described under subsection
(c).
``(B) Rule of construction.--Notwithstanding any
other provision of this section, for purposes of
subparagraph (A), the term 'insurer' means any person
that is authorized to write insurance or reinsure risks
and issue contracts or policies in 1 or more States.
``(3) Exception for small insurers.--Paragraph (2) shall
not apply with respect to any insurer or affiliate thereof that
meets a minimum size threshold that the Office may establish,
whether by order or rule.
``(4) Advance coordination.--Before collecting any data or
information under paragraph (2) from an insurer, or any
affiliate of an insurer, the Office shall coordinate with each
relevant State insurance regulator (or other relevant Federal
or State regulatory agency, if any, in the case of an affiliate
of an insurer) to determine if the information to be collected
is available from, or may be obtained in a timely manner by,
such State insurance regulator, individually or collectively,
another regulatory agency, or publicly available sources.
Notwithstanding any other provision of law, each such relevant
State insurance regulator or other Federal or State regulatory
agency is authorized to provide to the Office such data or
information.
``(5) Confidentiality.--
``(A) Retention of privilege.--The submission of
any nonpublicly available data and information to the
Office under this subsection shall not constitute a
waiver of, or otherwise affect, any privilege arising
under Federal or State law (including the rules of any
Federal or State court) to which the data or
information is otherwise subject.
``(B) Continued application of prior
confidentiality agreements.--Any requirement under
Federal or State law to the extent otherwise
applicable, or any requirement pursuant to a written
agreement in effect between the original source of any
nonpublicly available data or information and the
source of such data or information to the Office,
regarding the privacy or confidentiality of any data or
information in the possession of the source to the
Office, shall continue to apply to such data or
information after the data or information has been
provided pursuant to this subsection to the Office.
``(C) Information sharing agreement.--Any data or
information obtained by the Office may be made
available to State insurance regulators, individually
or collectively, through an information sharing
agreement that--
``(i) shall comply with applicable Federal
law; and
``(ii) shall not constitute a waiver of, or
otherwise affect, any privilege under Federal
or State law (including the rules of any
Federal or State Court) to which the data or
information is otherwise subject.
``(D) Agency disclosure requirements.--Section 552
of title 5, United States Code, shall apply to any data
or information submitted to the Office by an insurer or
an affiliate of an insurer.
``(6) Subpoenas and enforcement.--The Director shall have
the power to require by subpoena the production of the data or
information requested under paragraph (2), but only upon a
written finding by the Director that such data or information
is required to carry out the functions described under
subsection (c) and that the Office has coordinated with such
regulator or agency as required under paragraph (4). Subpoenas
shall bear the signature of the Director and shall be served by
any person or class of persons designated by the Director for
that purpose. In the case of contumacy or failure to obey a
subpoena, the subpoena shall be enforceable by order of any
appropriate district court of the United States. Any failure to
obey the order of the court may be punished by the court as a
contempt of court.
``(f) Preemption of State Insurance Measures.--
``(1) Standard.--A State insurance measure shall be
preempted if, and only to the extent that the Director
determines, in accordance with this subsection, that the
measure--
``(A) results in less favorable treatment of a non-
United States insurer domiciled in a foreign
jurisdiction that is subject to an international
insurance agreement on prudential measures than a
United States insurer domiciled, licensed, or otherwise
admitted in that State; and
``(B) is inconsistent with an International
Insurance Agreement on Prudential Measures.
``(2) Determination.--
``(A) Notice of potential inconsistency.--Before
making any determination under paragraph (1), the
Director shall--
``(i) notify and consult with the
appropriate State regarding any potential
inconsistency or preemption;
``(ii) 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
International Insurance Agreement on Prudential
Measures;
``(iii) provide interested parties a
reasonable opportunity to submit written
comments to the Office; and
``(iv) consider any comments received.
``(B) Scope of review.--For purposes of this
subsection, the determination of the Director regarding
State insurance measures shall be limited to the
subject matter contained within the international
insurance agreement on prudential measure involved.
``(C) Notice of determination of inconsistency.--
Upon making any determination under paragraph (1), the
Director shall--
``(i) notify the appropriate State of the
determination and the extent of the
inconsistency;
``(ii) establish a reasonable period of
time, which shall not be less than 30 days,
before the determination shall become
effective; and
``(iii) notify the Committee on Banking,
Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the
House of Representatives of the inconsistency.
``(3) Notice of effectiveness.--Upon the conclusion of the
period referred to in paragraph (2)(C)(ii), if the basis for
such determination still exists, the determination shall become
effective and the Director shall--
``(A) cause to be published a notice in the Federal
Register that the preemption has become effective, as
well as the effective date; and
``(B) notify the appropriate State.
``(4) Limitation.--No State may enforce a State insurance
measure to the extent that such measure has been preempted
under this subsection.
``(g) Applicability of Administrative Procedures Act.--
Determinations of inconsistency made pursuant to subsection (f)(2)
shall be subject to the applicable provisions of subchapter II of
chapter 5 of title 5, United States Code (relating to administrative
procedure), and chapter 7 of such title (relating to judicial review).
``(h) Regulations, Policies, and Procedures.--The Secretary may
issue orders, regulations, policies, and procedures to implement this
section.
``(i) Consultation.--The Director shall consult with State
insurance regulators, individually or collectively, to the extent the
Director determines appropriate, in carrying out the functions of the
Office.
``(j) Savings Provisions.--Nothing in this section shall--
``(1) preempt--
``(A) any State insurance measure that governs any
insurer's rates, premiums, underwriting, or sales
practices;
``(B) any State coverage requirements for
insurance;
``(C) the application of the antitrust laws of any
State to the business of insurance; or
``(D) any State insurance measure governing the
capital or solvency of an insurer, except to the extent
that such State insurance measure results in less
favorable treatment of a non-United State insurer than
a United States insurer;
``(2) be construed to alter, amend, or limit any provision
of the Consumer Financial Protection Agency Act of 2010; or
``(3) affect the preemption of any State insurance measure
otherwise inconsistent with and preempted by Federal law.
``(k) Retention of Existing State Regulatory Authority.--Nothing in
this section or section 314 shall be construed to establish or provide
the Office or the Department of the Treasury with general supervisory
or regulatory authority over the business of insurance.
``(l) Annual Report to Congress.--Beginning September 30, 2011, the
Director shall submit a report on or before September 30 of each
calendar year to the President and to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives on the insurance industry, any
actions taken by the Office pursuant to subsection (f) (regarding
preemption of inconsistent State insurance measures), and any other
information as deemed relevant by the Director or as requested by such
Committees.
``(m) Study and Report on Regulation of Insurance.--
``(1) In general.--Not later than 18 months after the date
of enactment of this section, the Director shall conduct a
study and submit a report to Congress on how to modernize and
improve the system of insurance regulation in the United
States.
``(2) Considerations.--The study and report required under
paragraph (1) shall be based on and guided by the following
considerations:
``(A) Systemic risk regulation with respect to
insurance.
``(B) Capital standards and the relationship
between capital allocation and liabilities, including
standards relating to liquidity and duration risk.
``(C) Consumer protection for insurance products
and practices, including gaps in state regulation.
``(D) The degree of national uniformity of state
insurance regulation.
``(E) The regulation of insurance companies and
affiliates on a consolidated basis.
``(F) International coordination of insurance
regulation.
``(3) Additional factors.--The study and report required
under paragraph (1) shall also examine the following factors:
``(A) The costs and benefits of potential Federal
regulation of insurance across various lines of
insurance (except health insurance).
``(B) The feasibility of regulating only certain
lines of insurance at the Federal level, while leaving
other lines of insurance to be regulated at the State
level.
``(C) The ability of any potential Federal
regulation or Federal regulators to eliminate or
minimize regulatory arbitrage.
``(D) The impact that developments in the
regulation of insurance in foreign jurisdictions might
have on the potential Federal regulation of insurance.
``(E) The ability of any potential Federal
regulation or Federal regulator to provide robust
consumer protection for policyholders.
``(F) The potential consequences of subjecting
insurance companies to a Federal resolution authority,
including the effects of any Federal resolution
authority--
``(i) on the operation of State insurance
guaranty fund systems, including the loss of
guaranty fund coverage if an insurance company
is subject to a Federal resolution authority;
``(ii) on policyholder protection,
including the loss of the priority status of
policyholder claims over other unsecured
general creditor claims;
``(iii) in the case of life insurance
companies, the loss of the special status of
separate account assets and separate account
liabilities; and
``(iv) on the international competitiveness
of insurance companies.
``(G) Such other factors as the Director determines
necessary or appropriate, consistent with the
principles set forth in paragraph (2).
``(4) Required recommendations.--The study and report
required under paragraph (1) shall also contain any
legislative, administrative, or regulatory recommendations, as
the Director determines appropriate, to carry out or effectuate
the findings set forth in such report.
``(5) Consultation.--With respect to the study and report
required under paragraph (1), the Director shall consult with
the National Association of Insurance Commissioners, consumer
organizations, representatives of the insurance industry and
policyholders, and other organizations and experts, as
appropriate.
``(n) Use of Existing Resources.--To carry out this section, the
Office may employ personnel, facilities, and any other resource of the
Department of the Treasury available to the Secretary.
``(o) Definitions.--In this section and section 314, the following
definitions shall apply:
``(1) Affiliate.--The term `affiliate' means, with respect
to an insurer, any person who controls, is controlled by, or is
under common control with the insurer.
``(2) Insurer.--The term `insurer' means any person engaged
in the business of insurance, including reinsurance.
``(3) International insurance agreement on prudential
measures.--The term `International Insurance Agreement on
Prudential Measures' means a written bilateral or multilateral
agreement entered into between the United States and a foreign
government, authority, or regulatory entity regarding
prudential measures applicable to the business of insurance or
reinsurance.
``(4) 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.
``(5) Office.--The term `Office' means the Office of
National Insurance established by this section.
``(6) 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.
``(7) State insurance regulator.--The term `State insurance
regulator' means any State regulatory authority responsible for
the supervision of insurers.
``(8) 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.
``(p) Authorization of Appropriations.--There are authorized to be
appropriated for the Office for each fiscal year such sums as may be
necessary.
``SEC. 314. INTERNATIONAL INSURANCE AGREEMENTS ON PRUDENTIAL MEASURES.
``(a) In General.--The Secretary of the Treasury is authorized to
negotiate and enter into International Insurance Agreements on
Prudential Measures on behalf of the United States.
``(b) Savings Provision.--Nothing in this section or section 313
shall be construed to affect the development and coordination of United
States international trade policy or the administration of the United
States trade agreements program. It is to be understood that the
negotiation of International Insurance Agreements on Prudential
Measures under such sections is consistent with the requirement of this
subsection.
``(c) Consultation.--The Secretary shall consult with the United
States Trade Representative on the negotiation of International
Insurance Agreements on Prudential Measures, including prior to
initiating and concluding any such agreements.''.
(b) Duties of Secretary.--Section 321(a) of title 31, United States
Code, is amended--
(1) in paragraph (7), by striking ``; and'' and inserting a
semicolon;
(2) in paragraph (8)(C), by striking the period at the end
and inserting ``; and''; and
(3) by adding at the end the following new paragraph:
``(9) advise the President on major domestic and
international prudential policy issues in connection with all
lines of insurance except health insurance.''.
(c) Clerical Amendment.--The table of sections for subchapter I of
chapter 3 of title 31, United States Code, is amended by striking the
item relating to section 312 and inserting the following new items:
``Sec. 312. Terrorism and financial intelligence.
``Sec. 313. Office of National Insurance.
``Sec. 314. International insurance agreements on prudential measures.
``Sec. 315. Continuing in office.''.
Subtitle B--State-based Insurance Reform
SEC. 511. SHORT TITLE.
This subtitle may be cited as the ``Nonadmitted and Reinsurance
Reform Act of 2010''.
SEC. 512. EFFECTIVE DATE.
Except as otherwise specifically provided in this subtitle, this
subtitle shall take effect upon the expiration of the 12-month period
beginning on the date of the enactment of this subtitle.
PART I--NONADMITTED INSURANCE
SEC. 521. REPORTING, PAYMENT, AND ALLOCATION OF PREMIUM TAXES.
(a) Home State's Exclusive Authority.--No State other than the home
State of an insured may require any premium tax payment for nonadmitted
insurance.
(b) Allocation of Nonadmitted Premium Taxes.--
(1) In general.--The States may enter into a compact or
otherwise establish procedures to allocate among the States the
premium taxes paid to an insured's home State described in
subsection (a).
(2) Effective date.--Except as expressly otherwise provided
in such compact or other procedures, any such compact or other
procedures--
(A) if adopted on or before the expiration of the
330-day period that begins on the date of the enactment
of this subtitle, shall apply to any premium taxes
that, on or after such date of enactment, are required
to be paid to any State that is subject to such compact
or procedures; and
(B) if adopted after the expiration of such 330-day
period, shall apply to any premium taxes that, on or
after January 1 of the first calendar year that begins
after the expiration of such 330-day period, are
required to be paid to any State that is subject to
such compact or procedures.
(3) Report.--Upon the expiration of the 330-day period
referred to in paragraph (2), the NAIC may submit a report to
the Committee on Financial Services and 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. 522. REGULATION OF NONADMITTED INSURANCE BY INSURED'S HOME STATE.
(a) Home State Authority.--Except as otherwise provided in this
section, the placement of nonadmitted insurance shall be subject to the
statutory and regulatory requirements solely of the insured's home
State.
(b) Broker Licensing.--No State other than an insured's home State
may require a surplus lines broker to be licensed in order to sell,
solicit, or negotiate nonadmitted insurance with respect to such
insured.
(c) Enforcement Provision.--With respect to section 521 and
subsections (a) and (b) of this section, any law, regulation,
provision, or action of any State that applies or purports to apply to
nonadmitted insurance sold to, solicited by, or negotiated with an
insured whose home State is another State shall be preempted with
respect to such application.
(d) Workers' Compensation Exception.--This section may not be
construed to preempt any State law, rule, or regulation that restricts
the placement of workers' compensation insurance or excess insurance
for self-funded workers' compensation plans with a nonadmitted insurer.
SEC. 523. PARTICIPATION IN NATIONAL PRODUCER DATABASE.
After the expiration of the 2-year period beginning on the date of
the enactment of this subtitle, a State may not collect any fees
relating to licensing of an individual or entity as a surplus lines
broker in the State unless the State has in effect at such time laws or
regulations that provide for participation by the State in the national
insurance producer database of the NAIC, or any other equivalent
uniform national database, for the licensure of surplus lines brokers
and the renewal of such licenses.
SEC. 524. UNIFORM STANDARDS FOR SURPLUS LINES ELIGIBILITY.
A State may not--
(1) impose eligibility requirements on, or otherwise
establish eligibility criteria for, nonadmitted insurers
domiciled in a United States jurisdiction, except in
conformance with such requirements and criteria in sections
5A(2) and 5C(2)(a) of the Non-Admitted Insurance Model Act,
unless the State has adopted nationwide uniform requirements,
forms, and procedures developed in accordance with section
521(b) of this subtitle that include alternative nationwide
uniform eligibility requirements; or
(2) prohibit a surplus lines broker from placing
nonadmitted insurance with, or procuring nonadmitted insurance
from, a nonadmitted insurer domiciled outside the United States
that is listed on the Quarterly Listing of Alien Insurers
maintained by the International Insurers Department of the
NAIC.
SEC. 525. STREAMLINED APPLICATION FOR COMMERCIAL PURCHASERS.
A surplus lines broker seeking to procure or place nonadmitted
insurance in a State for an exempt commercial purchaser shall not be
required to satisfy any State requirement to make a due diligence
search to determine whether the full amount or type of insurance sought
by such exempt commercial purchaser can be obtained from admitted
insurers if--
(1) the broker procuring or placing the surplus lines
insurance has disclosed to the exempt commercial purchaser that
such insurance may or may not be available from the admitted
market that may provide greater protection with more regulatory
oversight; and
(2) the exempt commercial purchaser has subsequently
requested in writing the broker to procure or place such
insurance from a nonadmitted insurer.
SEC. 526. GAO STUDY OF NONADMITTED INSURANCE MARKET.
(a) In General.--The Comptroller General of the United States shall
conduct a study of the nonadmitted insurance market to determine the
effect of the enactment of this part on the size and market share of
the nonadmitted insurance market for providing coverage typically
provided by the admitted insurance market.
(b) Contents.--The study shall determine and analyze--
(1) the change in the size and market share of the
nonadmitted insurance market and in the number of insurance
companies and insurance holding companies providing such
business in the 18-month period that begins upon the effective
date of this subtitle;
(2) the extent to which insurance coverage typically
provided by the admitted insurance market has shifted to the
nonadmitted insurance market;
(3) the consequences of any change in the size and market
share of the nonadmitted insurance market, including
differences in the price and availability of coverage available
in both the admitted and nonadmitted insurance markets;
(4) the extent to which insurance companies and insurance
holding companies that provide both admitted and nonadmitted
insurance have experienced shifts in the volume of business
between admitted and nonadmitted insurance; and
(5) the extent to which there has been a change in the
number of individuals who have nonadmitted insurance policies,
the type of coverage provided under such policies, and whether
such coverage is available in the admitted insurance market.
(c) Consultation With NAIC.--In conducting the study under this
section, the Comptroller General shall consult with the NAIC.
(d) Report.--The Comptroller General shall complete the study under
this section and submit a report to the Committee on Banking, Housing,
and Urban Affairs of the Senate and the Committee on Financial Services
of the House of Representatives regarding the findings of the study not
later than 30 months after the effective date of this subtitle.
SEC. 527. DEFINITIONS.
For purposes of this part, the following definitions shall apply:
(1) Admitted insurer.--The term ``admitted insurer'' means,
with respect to a State, an insurer licensed to engage in the
business of insurance in such State.
(2) Affiliate.--The term ``affiliate'' means, with respect
to an insured, any entity that controls, is controlled by, or
is under common control with the insured.
(3) Affiliated group.--The term ``affiliated group'' means
any group of entities that are all affiliated.
(4) Control.--An entity has ``control'' over another entity
if--
(A) the entity directly or indirectly or acting
through 1 or more other persons owns, controls, or has
the power to vote 25 percent or more of any class of
voting securities of the other entity; or
(B) the entity controls in any manner the election
of a majority of the directors or trustees of the other
entity.
(5) Exempt commercial purchaser.--The term ``exempt
commercial purchaser'' means any person purchasing commercial
insurance that, at the time of placement, meets the following
requirements:
(A) The person employs or retains a qualified risk
manager to negotiate insurance coverage.
(B) The person has paid aggregate nationwide
commercial property and casualty insurance premiums in
excess of $100,000 in the immediately preceding 12
months.
(C)(i) The person meets at least 1 of the following
criteria:
(I) The person possesses a net worth in
excess of $20,000,000, as such amount is
adjusted pursuant to clause (ii).
(II) The person generates annual revenues
in excess of $50,000,000, as such amount is
adjusted pursuant to clause (ii).
(III) The person employs more than 500
full-time or full-time equivalent employees per
individual insured or is a member of an
affiliated group employing more than 1,000
employees in the aggregate.
(IV) The person is a not-for-profit
organization or public entity generating annual
budgeted expenditures of at least $30,000,000,
as such amount is adjusted pursuant to clause
(ii).
(V) The person is a municipality with a
population in excess of 50,000 persons.
(ii) Effective on the fifth January 1 occurring
after the date of the enactment of this subtitle and
each fifth January 1 occurring thereafter, the amounts
in subclauses (I), (II), and (IV) of clause (i) shall
be adjusted to reflect the percentage change for such
5-year period in the Consumer Price Index for All Urban
Consumers published by the Bureau of Labor Statistics
of the Department of Labor.
(6) Home state.--
(A) In general.--Except as provided in subparagraph
(B), the term ``home State'' means, with respect to an
insured--
(i) the State in which an insured maintains
its principal place of business or, in the case
of an individual, the individual's principal
residence; or
(ii) if 100 percent of the insured risk is
located out of the State referred to in
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 1 insured from
an affiliated group are named insureds on a single
nonadmitted insurance contract, the term ``home State''
means the home State, as determined pursuant to
subparagraph (A), of the member of the affiliated group
that has the largest percentage of premium attributed
to it under such insurance contract.
(7) Independently procured insurance.--The term
``independently procured insurance'' means insurance procured
directly by an insured from a nonadmitted insurer.
(8) NAIC.--The term ``NAIC'' means the National Association
of Insurance Commissioners or any successor entity.
(9) Nonadmitted insurance.--The term ``nonadmitted
insurance'' means any property and casualty insurance permitted
to be placed directly or through a surplus lines broker with a
nonadmitted insurer eligible to accept such insurance.
(10) Non-admitted insurance model act.--The term ``Non-
Admitted Insurance Model Act'' means the provisions of the Non-
Admitted Insurance Model Act, as adopted by the NAIC on August
3, 1994, and amended on September 30, 1996, December 6, 1997,
October 2, 1999, and June 8, 2002.
(11) Nonadmitted insurer.--The term ``nonadmitted
insurer''--
(A) means, with respect to a State, an insurer not
licensed to engage in the business of insurance in such
State; but
(B) does not include a risk retention group, as
that term is defined in section 2(a)(4) of the
Liability Risk Retention Act of 1986 (15 U.S.C.
3901(a)(4)).
(12) Qualified risk manager.--The term ``qualified risk
manager'' means, with respect to a policyholder of commercial
insurance, a person who meets all of the following
requirements:
(A) The person is an employee of, or third party
consultant retained by, the commercial policyholder.
(B) The person provides skilled services in loss
prevention, loss reduction, or risk and insurance
coverage analysis, and purchase of insurance.
(C) The person--
(i)(I) has a bachelor's degree or higher
from an accredited college or university in
risk management, business administration,
finance, economics, or any other field
determined by a State insurance commissioner or
other State regulatory official or entity to
demonstrate minimum competence in risk
management; and
(II)(aa) has 3 years of experience in risk
financing, claims administration, loss
prevention, risk and insurance analysis, or
purchasing commercial lines of insurance; or
(bb) has 1 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 7 years of experience
in risk financing, claims administration, loss
prevention, risk and insurance coverage
analysis, or purchasing commercial lines of
insurance; and
(II) has any 1 of the designations
specified in subitems (AA) through (EE) of
clause (i)(II)(bb);
(iii) has at least 10 years of experience
in risk financing, claims administration, loss
prevention, risk and insurance coverage
analysis, or purchasing commercial lines of
insurance; or
(iv) has a graduate degree from an
accredited college or university in risk
management, business administration, finance,
economics, or any other field determined by a
State insurance commissioner or other State
regulatory official or entity to demonstrate
minimum competence in risk management.
(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.
PART II--REINSURANCE
SEC. 531. REGULATION OF CREDIT FOR REINSURANCE AND REINSURANCE
AGREEMENTS.
(a) Credit for Reinsurance.--If the State of domicile of a ceding
insurer is an NAIC-accredited State, or has financial solvency
requirements substantially similar to the requirements necessary for
NAIC accreditation, and recognizes credit for reinsurance for the
insurer's ceded risk, then no other State may deny such credit for
reinsurance.
(b) Additional Preemption of Extraterritorial Application of State
Law.--In addition to the application of subsection (a), all laws,
regulations, provisions, or other actions of a State that is not the
domiciliary State of the ceding insurer, except those with respect to
taxes and assessments on insurance companies or insurance income, are
preempted to the extent that they--
(1) restrict or eliminate the rights of the ceding insurer
or the assuming insurer to resolve disputes pursuant to
contractual arbitration to the extent such contractual
provision is not inconsistent with the provisions of title 9,
United States Code;
(2) require that a certain State's law shall govern the
reinsurance contract, disputes arising from the reinsurance
contract, or requirements of the reinsurance contract;
(3) attempt to enforce a reinsurance contract on terms
different than those set forth in the reinsurance contract, to
the extent that the terms are not inconsistent with this part;
or
(4) otherwise apply the laws of the State to reinsurance
agreements of ceding insurers not domiciled in that State.
SEC. 532. REGULATION OF REINSURER SOLVENCY.
(a) Domiciliary State Regulation.--If the State of domicile of a
reinsurer is an NAIC-accredited State or has financial solvency
requirements substantially similar to the requirements necessary for
NAIC accreditation, such State shall be solely responsible for
regulating the financial solvency of the reinsurer.
(b) Nondomiciliary States.--
(1) Limitation on financial information requirements.--If
the State of domicile of a reinsurer is an NAIC-accredited
State or has financial solvency requirements substantially
similar to the requirements necessary for NAIC accreditation,
no other State may require the reinsurer to provide any
additional financial information other than the information the
reinsurer is required to file with its domiciliary State.
(2) Receipt of information.--No provision of this section
shall be construed as preventing or prohibiting a State that is
not the State of domicile of a reinsurer from receiving a copy
of any financial statement filed with its domiciliary State.
SEC. 533. DEFINITIONS.
For purposes of this part, the following definitions shall apply:
(1) Ceding insurer.--The term ``ceding insurer'' means an
insurer that purchases reinsurance.
(2) Domiciliary state.--The terms ``State of domicile'' and
``domiciliary State'' mean, with respect to an insurer or
reinsurer, the State in which the insurer or reinsurer is
incorporated or entered through, and licensed.
(3) 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.
PART III--RULE OF CONSTRUCTION
SEC. 541. RULE OF CONSTRUCTION.
Nothing in this subtitle or the amendments made by this subtitle
shall be construed to modify, impair, or supersede the application of
the antitrust laws. Any implied or actual conflict between this
subtitle and any amendments to this subtitle and the antitrust laws
shall be resolved in favor of the operation of the antitrust laws.
SEC. 542. SEVERABILITY.
If any section or subsection of this subtitle, or any application
of such provision to any person or circumstance, is held to be
unconstitutional, the remainder of this subtitle, and the application
of the provision to any other person or circumstance, shall not be
affected.
TITLE VI--IMPROVEMENTS TO REGULATION OF BANK AND SAVINGS ASSOCIATION
HOLDING COMPANIES AND DEPOSITORY INSTITUTIONS
SEC. 601. SHORT TITLE.
This title may be cited as the ``Bank and Savings Association
Holding Company and Depository Institution Regulatory Improvements Act
of 2010''.
SEC. 602. DEFINITION.
In this title, the term ``commercial firm'' means any entity that
derives not less than 15 percent of the consolidated annual gross
revenues of the entity, including all affiliates of the entity, from
engaging in activities that are not financial in nature or incidental
to activities that are financial in nature, as provided in section 4(k)
of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)).
SEC. 603. MORATORIUM AND STUDY ON TREATMENT OF CREDIT CARD BANKS,
INDUSTRIAL LOAN COMPANIES, AND CERTAIN OTHER COMPANIES
UNDER THE BANK HOLDING COMPANY ACT OF 1956.
(a) Moratorium.--
(1) Definitions.--In this subsection--
(A) the term ``credit card bank'' means an
institution described in section 2(c)(2)(F) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(F));
(B) the term ``industrial bank'' means an
institution described in section 2(c)(2)(H) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(c)(2)(H));
and
(C) the term ``trust bank'' means an institution
described in section 2(c)(2)(D) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841(c)(2)(D)).
(2) Moratorium on provision of deposit insurance.--The
Corporation may not approve an application for deposit
insurance under section 5 of the Federal Deposit Insurance Act
(12 U.S.C. 1815) that is received after November 10, 2009, for
an industrial bank, a credit card bank, or a trust bank that is
directly or indirectly owned or controlled by a commercial
firm.
(3) Change in control.--
(A) In general.--Except as provided in subparagraph
(B), the appropriate Federal banking agency shall
disapprove a change in control, as provided in section
7(j) of the Federal Deposit Insurance Act (12 U.S.C.
1817(j)), of an industrial bank, a credit card bank, or
a trust bank if the change in control would result in
direct or indirect control of the industrial bank,
credit card bank, or trust bank by a commercial firm.
(B) Exceptions.--Subparagraph (A) shall not apply
to a change in control of an industrial bank, credit
card bank, or trust bank that--
(i) is in danger of default, as determined
by the appropriate Federal banking agency; or
(ii) results from the merger or whole
acquisition of a commercial firm that directly
or indirectly controls the industrial bank,
credit card bank, or trust bank in a bona fide
merger with or acquisition by another
commercial firm, as determined by the
appropriate Federal banking agency.
(4) Sunset.--This subsection shall cease to have effect 3
years after the date of enactment of this Act.
(b) Government Accountability Office Study of Exceptions Under the
Bank Holding Company Act of 1956.--
(1) Study required.--The Comptroller General of the United
States shall carry out a study to determine whether it is
necessary, in order to strengthen the safety and soundness of
institutions or the stability of the financial system, to
eliminate the exceptions under section 2 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841) for institutions described
in--
(A) section 2(a)(5)(E) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(a)(5)(E));
(B) section 2(a)(5)(F) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(a)(5)(F));
(C) section 2(c)(2)(D) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(D));
(D) section 2(c)(2)(F) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(F));
(E) section 2(c)(2)(H) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(H)); and
(F) section 2(c)(2)(B) of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841(c)(2)(B)).
(2) Content of study.--
(A) In general.--The study required under paragraph
(1), with respect to the institutions referenced in
each of subparagraphs (A) through (E) of paragraph (1),
shall, to the extent feasible be based on information
provided to the Comptroller General by the appropriate
Federal or State regulator, and shall--
(i) identify the types and number of
institutions excepted from section 2 of the
Bank Holding Company Act of 1956 (12 U.S.C.
1841) under each of the subparagraphs described
in subparagraphs (A) through (E) of paragraph
(1);
(ii) generally describe the size and
geographic locations of the institutions
described in clause (i);
(iii) determine the extent to which the
institutions described in clause (i) are held
by holding companies that are commercial firms;
(iv) determine whether the institutions
described in clause (i) have any affiliates
that are commercial firms;
(v) identify the Federal banking agency
responsible for the supervision of the
institutions described in clause (i) on and
after the transfer date;
(vi) determine the adequacy of the Federal
bank regulatory framework applicable to each
category of institution described in clause
(i), including any restrictions (including
limitations on affiliate transactions or cross-
marketing) that apply to transactions between
an institution, the holding company of the
institution, and any other affiliate of the
institution; and
(vii) evaluate the potential consequences
of subjecting the institutions described in
clause (i) to the requirements of the Bank
Holding Company Act of 1956, including with
respect to the availability and allocation of
credit, the stability of the financial system
and the economy, the safe and sound operation
of each category of institution, and the impact
on the types of activities in which such
institutions, and the holding companies of such
institutions, may engage.
(B) Savings associations.--With respect to
institutions described in paragraph (1)(F), the study
required under paragraph (1) shall--
(i) determine the adequacy of the Federal
bank regulatory framework applicable to such
institutions, including any restrictions
(including limitations on affiliate
transactions or cross-marketing) that apply to
transactions between an institution, the
holding company of the institution, and any
other affiliate of the institution; and
(ii) evaluate the potential consequences of
subjecting the institutions described in
paragraph (1)(F) to the requirements of the
Bank Holding Company Act of 1956, including
with respect to the availability and allocation
of credit, the stability of the financial
system and the economy, the safe and sound
operation of such institutions, and the impact
on the types of activities in which such
institutions, and the holding companies of such
institutions, may engage.
(3) Report.--Not later than 18 months after the date of
enactment of this Act, the Comptroller General shall submit to
the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives a report on the study required under paragraph
(1).
SEC. 604. REPORTS AND EXAMINATIONS OF HOLDING COMPANIES; REGULATION OF
FUNCTIONALLY REGULATED SUBSIDIARIES.
(a) Reports by Bank Holding Companies.--Sections 5(c)(1) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(1)) is amended--
(1) by striking subparagraph (B) and inserting the
following:
``(B) Use of existing reports and other supervisory
information.--The appropriate Federal banking agency
for a bank holding company shall, to the fullest extent
possible, use--
``(i) reports and other supervisory
information that the bank holding company or
any subsidiary thereof has been required to
provide to other Federal or State regulatory
agencies;
``(ii) externally audited financial
statements of the bank holding company or
subsidiary;
``(iii) information otherwise available
from Federal or State regulatory agencies; and
``(iv) information that is otherwise
required to be reported publicly.''; and
(2) by adding at the end the following:
``(C) Availability.--Upon the request of the
appropriate Federal banking agency for a bank holding
company, the bank holding company or a subsidiary of
the bank holding company shall promptly provide to the
appropriate Federal banking agency any information
described in clauses (i) through (iii) of subparagraph
(B).''.
(b) Examinations of Bank Holding Companies.--Section 5(c)(2) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(c)(2)) is amended to
read as follows:
``(2) Examinations.--
``(A) In general.--The appropriate Federal banking
agency for a bank holding company may make examinations
of the bank holding company and each subsidiary of the
bank holding company in order to--
``(i) inform such appropriate Federal
banking agency of--
``(I) the nature of the operations
and financial condition of the bank
holding company and the subsidiary;
``(II) the financial, operational,
and other risks within the bank holding
company system that may pose a threat
to--
``(aa) the safety and
soundness of the bank holding
company or of any depository
institution subsidiary of the
bank holding company; or
``(bb) the stability of the
financial system of the United
States; and
``(III) the systems of the bank
holding company for monitoring and
controlling the risks described in
subclause (II); and
``(ii) enforce the compliance of the bank
holding company and the subsidiary with this
Act and any other Federal law that such
appropriate Federal banking agency has specific
jurisdiction to enforce against the bank
holding company or subsidiary.
``(B) Use of reports to reduce examinations.--For
purposes of this paragraph, the appropriate Federal
banking agency for a bank holding company shall, to the
fullest extent possible, rely on--
``(i) examination reports made by other
Federal or State regulatory agencies relating
to the bank holding company and any subsidiary
of the bank holding company; and
``(ii) the reports and other information
required under paragraph (1).
``(C) Coordination with other regulators.--The
appropriate Federal banking agency for a bank holding
company shall--
``(i) provide reasonable notice to, and
consult with, the appropriate Federal banking
agency or State regulatory agency of a
subsidiary that is a depository institution or
a functionally regulated subsidiary before
commencing an examination of the subsidiary
under this section; and
``(ii) to the fullest extent possible,
avoid duplication of examination activities,
reporting requirements, and requests for
information.''.
(c) Authority to Regulate Functionally Regulated Subsidiaries of
Bank Holding Companies.--The Bank Holding Company Act of 1956 (12
U.S.C. 1841 et seq.) is amended--
(1) in section 5(c) (12 U.S.C. 1844(c)), by striking
paragraphs (3) and (4) and inserting the following:
``(3) [Reserved]
``(4) [Reserved]''; and
(2) by striking section 10A (12 U.S.C. 1848a).
(d) Acquisitions of Banks.--Section 3(c) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(c)) is amended by adding at the end
the following:
``(7) Financial stability.--In every case, the appropriate
Federal banking agency of a bank holding company shall take
into consideration the extent to which a proposed acquisition,
merger, or consolidation would result in greater or more
concentrated risks to the stability of the United States
banking or financial system.''.
(e) Acquisitions of Nonbanks.--
(1) Notice procedures.--Section 4(j)(2)(A) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1843(j)(2)(A)) is
amended by striking ``or unsound banking practices'' and
inserting ``unsound banking practices, or risk to the stability
of the United States banking or financial system''.
(2) Activities that are financial in nature.--Section
4(k)(6)(B) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(k)(6)(B)) is amended to read as follows:
``(B) Approval not required for certain financial
activities.--
``(i) In general.--Except as provided in
clause (ii), a financial holding company may
commence any activity or acquire any company,
pursuant to paragraph (4) or any regulation
prescribed or order issued under paragraph (5),
without prior approval of the appropriate
Federal banking agency for the financial
holding company.
``(ii) Exception.--A financial holding
company may not acquire a company, without the
prior approval of the appropriate Federal
banking agency for the financial holding
company, in a transaction in which the total
consolidated assets to be acquired by the
financial holding company exceed
$25,000,000,000.''.
(f) Bank Merger Act Transactions.--Section 18(c)(5) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(c)(5)) is amended, in the matter
immediately following subparagraph (B), by striking ``and the
convenience and needs of the community to be served'' and inserting
``the convenience and needs of the community to be served, and the risk
to the stability of the United States banking or financial system''.
(g) Reports by Savings and Loan Holding Companies.--Section
10(b)(2) of the Home Owners' Loan Act (12 U.S.C. 1467a(b)(2) is
amended--
(1) by striking ``Each savings'' and inserting the
following:
``(A) In general.--Each savings''; and
(2) by adding at the end the following:
``(B) Use of existing reports and other supervisory
information.--The appropriate Federal banking agency
for a savings and loan holding company shall, to the
fullest extent possible, use--
``(i) reports and other supervisory
information that the savings and loan holding
company or any subsidiary thereof has been
required to provide to other Federal or State
regulatory agencies;
``(ii) externally audited financial
statements of the savings and loan holding
company or subsidiary;
``(iii) information that is otherwise
available from Federal or State regulatory
agencies; and
``(iv) information that is otherwise
required to be reported publicly.
``(C) Availability.--Upon the request of the
appropriate Federal banking agency for a savings and
loan holding company, the savings and loan holding
company or a subsidiary of the savings and loan holding
company shall promptly provide to the appropriate
Federal banking agency any information described in
clauses (i) through (iii) of subparagraph (B).''.
(h) Examination of Savings and Loan Holding Companies.--
(1) Definitions.--Section 2 of the Home Owners' Loan Act
(12 U.S.C. 1462) is amended by adding at the end the following:
``(10) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the same meaning as in
section 3(q) of the Federal Deposit Insurance Act (12 U.S.C.
1813(q)).
``(11) Functionally regulated subsidiary.--The term
`functionally regulated subsidiary' has the same meaning as in
section 5(c)(5) of the Bank Holding Company Act of 1956 (12
U.S.C. 1844(c)(5)).''.
(2) Examination.--Section 10(b) of the Home Owners' Loan
Act (12 U.S.C. 1467a(b)) is amended by striking paragraph (4)
and inserting the following:
``(4) Examinations.--
``(A) In general.--The appropriate Federal banking
agency for a savings and loan holding company may make
examinations of the savings and loan holding company
and each subsidiary of the savings and loan holding
company system, in order to--
``(i) inform such appropriate Federal
banking agency of--
``(I) the nature of the operations
and financial condition of the savings
and loan holding company and the
subsidiary;
``(II) the financial, operational,
and other risks within the savings and
loan holding company that may pose a
threat to--
``(aa) the safety and
soundness of the savings and
loan holding company or of any
depository institution
subsidiary of the savings and
loan holding company; or
``(bb) the stability of the
financial system of the United
States; and
``(III) the systems of the savings
and loan holding company for monitoring
and controlling the risks described in
subclause (II); and
``(ii) enforce the compliance of the
savings and loan holding company and the
subsidiary with this Act and any other Federal
law that such appropriate Federal banking
agency has specific jurisdiction to enforce
against the savings and loan holding company or
subsidiary.
``(B) Use of reports to reduce examinations.--For
purposes of this subsection, the appropriate Federal
banking agency for a savings and loan holding company
shall, to the fullest extent possible, rely on--
``(i) the examination reports made by other
Federal or State regulatory agencies relating
to the savings and loan holding company and any
subsidiary; and
``(ii) the reports and other information
required under paragraph (2).
``(C) Coordination with other regulators.--The
appropriate Federal banking agency for a savings and
loan holding company shall--
``(i) provide reasonable notice to, and
consult with, the appropriate Federal banking
agency or State regulatory agency of a
subsidiary that is a depository institution or
a functionally regulated subsidiary before
commencing an examination of the subsidiary
under this section; and
``(ii) to the fullest extent possible,
avoid duplication of examination activities,
reporting requirements, and requests for
information.''.
(i) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 605. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE ACTIVITIES OF
DEPOSITORY INSTITUTION SUBSIDIARIES OF HOLDING COMPANIES.
Section 6 of the Bank Holding Company Act of 1956 (12 U.S.C. 1845)
is amended to read as follows:
``SEC. 6. ASSURING CONSISTENT OVERSIGHT OF PERMISSIBLE ACTIVITIES OF
DEPOSITORY INSTITUTION SUBSIDIARIES OF HOLDING COMPANIES.
``(a) Definitions.--
``(1) Definitions.--In this section--
``(A) the term `depository institution holding
company' has the same meaning as in section 3(w) of the
Federal Deposit Insurance Act (12 U.S.C. 1813(w));
``(B) the term `functionally regulated subsidiary'
has the same meaning as in section 5(c)(5); and
``(C) the term `lead Federal banking agency'
means--
``(i) the Office of the Comptroller of the
Currency, in the case of any depository
institution holding company having--
``(I) a subsidiary that is an
insured depository institution, if all
such insured depository institutions
are Federal depository institutions; or
``(II) a subsidiary that is a
Federal depository institution and a
subsidiary that is a State depository
institution, if the total consolidated
assets of all subsidiaries that are
Federal depository institutions exceed
the total consolidated assets of all
subsidiaries that are State depository
institutions; and
``(ii) the Federal Deposit Insurance
Corporation, in the case of any depository
institution holding company having--
``(I) a subsidiary that is an
insured depository institution, if all
such insured depository institutions
are State depository institutions; or
``(II) a subsidiary that is a
Federal depository institution and a
subsidiary that is a State depository
institution, if the total consolidated
assets of all subsidiaries that are
State depository institutions exceed
the total consolidated assets of all
subsidiaries that are Federal
depository institutions.
``(2) Determination of total consolidated assets.--For
purposes of paragraph (1)(A), the total consolidated assets of
a depository institution shall be determined in the same manner
that total consolidated assets of depository institutions are
determined for purposes of section 3(q) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(q)).
``(b) Lead Agency Supervision.--
``(1) In general.--The lead Federal banking agency for each
depository institution holding company shall make examinations
of the activities of each nondepository institution subsidiary
(other than a functionally regulated subsidiary) of the
depository institution holding company that are permissible for
depository institution subsidiaries of the depository
institution holding company, to determine whether the
activities--
``(A) present safety and soundness risks to any
depository institution subsidiary of the depository
institution holding company;
``(B) are conducted in accordance with applicable
law; and
``(C) are subject to appropriate systems for
monitoring and controlling the financial, operating,
and other risks of the activity and protecting the
depository institution subsidiaries of the holding
company.
``(2) Process for examination.--An examination under
paragraph (1) shall be carried out under the authority of the
lead Federal banking agency, as if the nondepository
institution subsidiary were an insured depository institution
for which the lead Federal banking agency is the appropriate
Federal banking agency.
``(c) Coordination.--For each depository institution holding
company for which the Board of Governors is the appropriate Federal
banking agency, the lead Federal banking agency of the depository
institution holding company shall coordinate the supervision of the
activities of subsidiaries described in subsection (b) with the Board
of Governors, in a manner that--
``(1) avoids duplication;
``(2) shares information relevant to the supervision of the
depository institution holding company by each agency;
``(3) achieves the objectives of subsection (b); and
``(4) ensures that the depository institution holding
company and the subsidiaries of the depository institution
holding company are not subject to conflicting supervisory
demands by the 2 agencies.
``(d) Referrals for Enforcement.--
``(1) Recommendation of action by board of governors.--The
lead Federal banking agency for a depository institution
holding company, based on information obtained pursuant to the
responsibilities of the agency under subsection (b), may submit
to the Board of Governors, in writing, a recommendation that
the Board of Governors take enforcement action against a
nondepository institution subsidiary (other than a functionally
regulated subsidiary) of the depository institution holding
company, together with an explanation of the concerns giving
rise to the recommendation.
``(2) Back-up authority of the lead federal banking
agency.--If, within the 60-day period beginning on the date on
which the Board of Governors receives a recommendation under
paragraph (1), the Board of Governors does not take enforcement
action against a nondepository institution subsidiary or
provide a plan for enforcement action that is acceptable to the
lead Federal banking agency, the lead Federal banking agency
(upon the authorization of the Comptroller, or the Federal
Deposit Insurance Corporation, upon a vote of its members, as
applicable) may take the recommended enforcement action, in the
same manner as if the subsidiary were an insured depository
institution for which the lead Federal banking agency is the
appropriate Federal banking agency.''.
SEC. 606. REQUIREMENTS FOR FINANCIAL HOLDING COMPANIES TO REMAIN WELL
CAPITALIZED AND WELL MANAGED.
(a) Amendment.--Section 4(l)(1) of the Bank Holding Company Act of
1956 (12 U.S.C. 1843(l)(1)) is amended--
(1) in subparagraph (B), by striking ``and'' at the end;
(2) by redesignating subparagraph (C) as subparagraph (D);
(3) by inserting after subparagraph (B) the following:
``(C) the bank holding company is well capitalized
and well managed; and''; and
(4) in subparagraph (D)(ii), as so redesignated, by
striking ``subparagraphs (A) and (B)'' and inserting
``subparagraphs (A), (B), and (C)''.
(b) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 607. STANDARDS FOR INTERSTATE ACQUISITIONS.
(a) Acquisition of Banks.--Section 3(d)(1)(A) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1842(d)(1)(A)) is amended by striking
``adequately capitalized and adequately managed'' and inserting ``well
capitalized and well managed''.
(b) Interstate Bank Mergers.--Section 44(b)(4)(B) of the Federal
Deposit Insurance Act (12 U.S.C. 1831u(b)(4)(B)) is amended by striking
``will continue to be adequately capitalized and adequately managed''
and inserting ``will be well capitalized and well managed''.
(c) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 608. ENHANCING EXISTING RESTRICTIONS ON BANK TRANSACTIONS WITH
AFFILIATES.
(a) Affiliate Transactions.--Section 23A of the Federal Reserve Act
(12 U.S.C. 371c) is amended--
(1) in subsection (b)--
(A) in paragraph (1), by striking subparagraph (D)
and inserting the following:
``(D) any investment fund with respect to which a
member bank or affiliate thereof is an investment
adviser; and''; and
(B) in paragraph (7)--
(i) in subparagraph (A), by inserting
before the semicolon at the end the following:
``, including a purchase of assets subject to
an agreement to repurchase'';
(ii) in subparagraph (C), by striking ``,
including assets subject to an agreement to
repurchase,'';
(iii) in subparagraph (D)--
(I) by inserting ``or other debt
obligations'' after ``acceptance of
securities''; and
(II) by striking ``or'' at the end;
and
(iv) by adding at the end the following:
``(F) a transaction with an affiliate that involves
the borrowing or lending of securities, to the extent
that the transaction causes a member bank or a
subsidiary to have credit exposure to the affiliate; or
``(G) a derivative transaction, as defined in
paragraph (3) of section 5200(b) of the Revised
Statutes of the United States (12 U.S.C. 84(b)), with
an affiliate, to the extent that the transaction causes
a member bank or a subsidiary to have credit exposure
to the affiliate;'';
(2) in subsection (c)--
(A) in paragraph (1)--
(i) in the matter preceding subparagraph
(A), by striking ``subsidiary'' and all that
follows through ``time of the transaction'' and
inserting ``subsidiary, and any credit exposure
of a member bank or a subsidiary to an
affiliate resulting from a securities borrowing
or lending transaction, or a derivative
transaction, shall be secured at all times'';
and
(ii) in each of subparagraphs (A) through
(D), by striking ``or letter of credit'' and
inserting ``letter of credit, or credit
exposure'';
(B) by striking paragraph (2);
(C) by redesignating paragraphs (3) through (5) as
paragraphs (2) through (4), respectively;
(D) in paragraph (2), as so redesignated, by
inserting before the period at the end ``, or credit
exposure to an affiliate resulting from a securities
borrowing or lending transaction, or derivative
transaction''; and
(E) in paragraph (3), as so redesignated--
(i) by inserting ``or other debt
obligations'' after ``securities''; and
(ii) by striking ``or guarantee'' and all
that follows through ``behalf of,'' and
inserting ``guarantee, acceptance, or letter of
credit issued on behalf of, or credit exposure
from a securities borrowing or lending
transaction, or derivative transaction to,'';
(3) in subsection (d)(4), in the matter preceding
subparagraph (A), by striking ``or issuing'' and all that
follows through ``behalf of,'' and inserting ``issuing a
guarantee, acceptance, or letter of credit on behalf of, or
having credit exposure resulting from a securities borrowing or
lending transaction, or derivative transaction to,''; and
(4) in subsection (f)--
(A) in paragraph (2)--
(i) by striking ``or order'';
(ii) by striking ``if it finds'' and all
that follows through the end of the paragraph
and inserting the following: ``if--
``(i) the Board finds the exemption to be
in the public interest and consistent with the
purposes of this section, and notifies the
Federal Deposit Insurance Corporation of such
finding; and
``(ii) before the end of the 60-day period
beginning on the date on which the Federal
Deposit Insurance Corporation receives notice
of the finding under clause (i), the Federal
Deposit Insurance Corporation does not object,
in writing, to the finding, based on a
determination that the exemption presents an
unacceptable risk to the Deposit Insurance
Fund.'';
(iii) by striking the Board and inserting
the following:
``(A) In general.--The Board''; and
(iv) by adding at the end the following:
``(B) Additional exemptions.--
``(i) National banks.--The Comptroller of
the Currency may, by order, exempt a
transaction of a national bank from the
requirements of this section if--
``(I) the Board and the Office of
the Comptroller of the Currency jointly
find the exemption to be in the public
interest and consistent with the
purposes of this section and notify the
Federal Deposit Insurance Corporation
of such finding; and
``(II) before the end of the 60-day
period beginning on the date on which
the Federal Deposit Insurance
Corporation receives notice of the
finding under subclause (I), the
Federal Deposit Insurance Corporation
does not object, in writing, to the
finding, based on a determination that
the exemption presents an unacceptable
risk to the Deposit Insurance Fund.
``(ii) State banks.--The Federal Deposit
Insurance Corporation may, by order, exempt a
transaction of a State bank from the
requirements of this section if--
``(I) the Board and the Federal
Deposit Insurance Corporation jointly
find that the exemption is in the
public interest and consistent with the
purposes of this section; and
``(II) the Federal Deposit
Insurance Corporation finds that the
exemption does not present an
unacceptable risk to the Deposit
Insurance Fund.''; and
(B) by adding at the end the following:
``(4) Amounts of covered transactions.--The Board may issue
such regulations or interpretations as the Board determines are
necessary or appropriate with respect to the manner in which a
netting agreement may be taken into account in determining the
amount of a covered transaction between a member bank or a
subsidiary and an affiliate, including the extent to which
netting agreements between a member bank or a subsidiary and an
affiliate may be taken into account in determining whether a
covered transaction is fully secured for purposes of subsection
(d)(4). An interpretation under this paragraph with respect to
a specific member bank, subsidiary, or affiliate shall be
issued jointly with the appropriate Federal banking agency for
such member bank, subsidiary, or affiliate.''.
(b) Transactions With Affiliates.--Section 23B(e) of the Federal
Reserve Act (12 U.S.C. 371c-1(e)) is amended--
(1) by striking the undesignated matter following
subparagraph (B);
(2) by redesignating subparagraphs (A) and (B) as clauses
(i) and (ii), respectively, and adjusting the clause margins
accordingly;
(3) by redesignating paragraphs (1) and (2) as
subparagraphs (A) and (B), respectively, and adjusting the
subparagraph margins accordingly;
(4) by striking ``The Board'' and inserting the following:
``(1) In general.--The Board'';
(5) in paragraph (1)(B), as so redesignated--
(A) in the matter preceding clause (i), by
inserting before ``regulations'' the following:
``subject to paragraph (2), if the Board finds that an
exemption or exclusion is in the public interest and is
consistent with the purposes of this section, and
notifies the Federal Deposit Insurance Corporation of
such finding,''; and
(B) in clause (ii), by striking the comma at the
end and inserting a period; and
(6) by adding at the end the following:
``(2) Exception.--The Board may grant an exemption or
exclusion under this subsection only if, during the 60-day
period beginning on the date of receipt of notice of the
finding from the Board under paragraph (1)(B), the Federal
Deposit Insurance Corporation does not object, in writing, to
such exemption or exclusion, based on a determination that the
exemption presents an unacceptable risk to the Deposit
Insurance Fund.''.
(c) Home Owners' Loan Act.--Section 11 of the Home Owners' Loan Act
(12 U.S.C. 1468) is amended by adding at the end the following:
``(d) Exemptions.--
``(1) Federal savings associations.--The Comptroller of the
Currency may, by order, exempt a transaction of a Federal
savings association from the requirements of this section if--
``(A) the Board and the Office of the Comptroller
of the Currency jointly find the exemption to be in the
public interest and consistent with the purposes of
this section and notify the Federal Deposit Insurance
Corporation of such finding; and
``(B) before the end of the 60-day period beginning
on the date on which the Federal Deposit Insurance
Corporation receives notice of the finding under
subparagraph (A), the Federal Deposit Insurance
Corporation does not object, in writing, to the
finding, based on a determination that the exemption
presents an unacceptable risk to the Deposit Insurance
Fund.
``(2) State savings association.--The Federal Deposit
Insurance Corporation may, by order, exempt a transaction of a
State savings association from the requirements of this section
if the Board and the Federal Deposit Insurance Corporation
jointly find that--
``(A) the exemption is in the public interest and
consistent with the purposes of this section; and
``(B) the exemption does not present an
unacceptable risk to the Deposit Insurance Fund.''.
(d) Effective Date.--The amendments made by this section shall take
effect 1 year after the transfer date.
SEC. 609. ELIMINATING EXCEPTIONS FOR TRANSACTIONS WITH FINANCIAL
SUBSIDIARIES.
(a) Amendment.--Section 23A(e) of the Federal Reserve Act (12
U.S.C. 371c(e)) is amended--
(1) by striking paragraph (3); and
(2) by redesignating paragraph (4) as paragraph (3).
(b) Prospective Application of Amendment.--The amendments made by
this section shall apply with respect to any covered transaction
between a bank and a subsidiary of the bank, as those terms are defined
in section 23A of the Federal Reserve Act (12 U.S.C. 371c), that is
entered into on or after the date of enactment of this Act.
(c) Effective Date.--The amendments made by this section shall take
effect 1 year after the transfer date.
SEC. 610. LENDING LIMITS APPLICABLE TO CREDIT EXPOSURE ON DERIVATIVE
TRANSACTIONS, REPURCHASE AGREEMENTS, REVERSE REPURCHASE
AGREEMENTS, AND SECURITIES LENDING AND BORROWING
TRANSACTIONS.
(a) National Banks.--Section 5200(b) of the Revised Statutes of the
United States (12 U.S.C. 84(b)) is amended--
(1) in paragraph (1), by striking ``shall include'' and all
that follows through the end of the paragraph and inserting the
following: ``shall include--
``(A) all direct or indirect advances of funds to a
person made on the basis of any obligation of that
person to repay the funds or repayable from specific
property pledged by or on behalf of the person;
``(B) to the extent specified by the Comptroller of
the Currency, any liability of a national banking
association to advance funds to or on behalf of a
person pursuant to a contractual commitment; and
``(C) any credit exposure to a person arising from
a derivative transaction, repurchase agreement, reverse
repurchase agreement, securities lending transaction,
or securities borrowing transaction between the
national banking association and the person;'';
(2) in paragraph (2), by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(3) the term `derivative transaction' includes any
transaction that is a contract, agreement, swap, warrant, note,
or option that is based, in whole or in part, on the value of,
any interest in, or any quantitative measure or the occurrence
of any event relating to, one or more commodities, securities,
currencies, interest or other rates, indices, or other
assets.''.
(b) Savings Associations.--Section 5(u)(3) of the Home Owners' Loan
Act (12 U.S.C. 1464(u)(3)) is amended by striking ``Director'' each
place that term appears and inserting ``Comptroller of the Currency''.
(c) Effective Date.--The amendments made by this section shall take
effect 1 year after the transfer date.
SEC. 611. APPLICATION OF NATIONAL BANK LENDING LIMITS TO INSURED STATE
BANKS.
(a) Amendment.--Section 18 of the Federal Deposit Insurance Act (12
U.S.C. 1828) is amended by adding at the end the following:
``(y) Application of Lending Limits to Insured State Banks.--
Section 5200 of the Revised Statutes of the United States (12 U.S.C.
84) shall apply to each insured State bank, in the same manner and to
the same extent as if the insured State bank were a national banking
association.''.
(b) Effective Date.--The amendment made by this section shall take
effect 1 year after the transfer date.
SEC. 612. RESTRICTION ON CONVERSIONS OF TROUBLED BANKS.
(a) Conversion of a National Banking Association to a State Bank.--
The Act entitled ``An Act to provide for the conversion of national
banking associations into and their merger or consolidation with State
banks, and for other purposes.'' (12 U.S.C. 214 et seq.) is amended by
adding at the end the following:
``SEC. 10. PROHIBITION ON CONVERSION.
``A national banking association may not convert to a State bank or
State savings association during any period in which the national
banking association is subject to a cease and desist order (or other
formal enforcement order) issued by, or a memorandum of understanding
entered into with, the Comptroller of the Currency with respect to a
significant supervisory matter.''.
(b) Conversion of a State Bank to a National Bank.--Section 5154 of
the Revised Statutes of the United States (12 U.S.C. 35) is amended by
adding at the end the following: ``The Comptroller of the Currency may
not approve the conversion of a State bank or State savings association
to a national banking association during any period in which the State
bank or State savings association is subject to a cease and desist
order (or other formal enforcement order) issued by, or a memorandum of
understanding entered into with, a State bank supervisor or the
appropriate Federal banking agency with respect to a significant
supervisory matter.''.
(c) Conversion of a Federal Savings Association to a National or
State Bank or 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:
``(6) Limitation on certain conversions by federal savings
associations.--A Federal savings association may not convert to
a national bank or State bank or State savings association
during any period in which the Federal savings association is
subject to a cease and desist order (or other formal
enforcement order) issued by, or a memorandum of understanding
entered into with, the Office of Thrift Supervision or the
Comptroller of the Currency with respect to a significant
supervisory matter.''.
SEC. 613. DE NOVO BRANCHING INTO STATES.
(a) National Banks.--Section 5155(g)(1)(A) of the Revised Statutes
of the United States (12 U.S.C. 36(g)(1)(A)) is amended to read as
follows:
``(A) the law of the State in which the branch is
located, or is to be located, would permit
establishment of the branch, if the national bank were
a State bank chartered by such State; and''.
(b) State Insured Banks.--Section 18(d)(4)(A)(i) of the Federal
Deposit Insurance Act (12 U.S.C. 1828(d)(4)(A)(i)) is amended to read
as follows:
``(i) the law of the State in which the
branch is located, or is to be located, would
permit establishment of the branch, if the bank
were a State bank chartered by such State;
and''.
SEC. 614. LENDING LIMITS TO INSIDERS.
(a) Extensions of Credit.--Section 22(h)(9)(D)(i) of the Federal
Reserve Act (12 U.S.C. 375b(9)(D)(i)) is amended--
(1) by striking the period at the end and inserting ``;
or'';
(2) by striking ``a person'' and inserting ``the person'';
(3) by striking ``extends credit by making'' and inserting
the following: ``extends credit to a person by--
``(I) making''; and
(4) by adding at the end the following:
``(II) having credit exposure to
the person arising from a derivative
transaction (as defined in section
5200(b) of the Revised Statutes of the
United States (12 U.S.C. 84(b))),
repurchase agreement, reverse
repurchase agreement, securities
lending transaction, or securities
borrowing transaction between the
member bank and the person.''.
(b) Effective Date.--The amendments made by this section shall take
effect 1 year after the transfer date.
SEC. 615. LIMITATIONS ON PURCHASES OF ASSETS FROM INSIDERS.
(a) Amendment to the Federal Deposit Insurance Act.--Section 18 of
the Federal Deposit Insurance Act (12 U.S.C. 1828) is amended by adding
at the end the following:
``(z) General Prohibition on Sale of Assets.--
``(1) In general.--An insured depository institution may
not purchase an asset from, or sell an asset to, an executive
officer, director, or principal shareholder of the insured
depository institution, or any related interest of such person
(as such terms are defined in section 22(h) of Federal Reserve
Act), unless--
``(A) the transaction is on market terms; and
``(B) if the transaction represents more than 10
percent of the capital stock and surplus of the insured
depository institution, the transaction has been
approved in advance by a majority of the members of the
board of directors of the insured depository
institution who do not have an interest in the
transaction.
``(2) Rulemaking.--The Board of Governors of the Federal
Reserve System may issue such rules as may be necessary to
define terms and to carry out the purposes this subsection.
Before proposing or adopting a rule under this paragraph, the
Board of Governors of the Federal Reserve System shall consult
with the Comptroller of the Currency and the Corporation as to
the terms of the rule.''.
(b) Amendments to the Federal Reserve Act.--Section 22(d) of the
Federal Reserve Act (12 U.S.C. 375) is amended to read as follows:
``(d) [Reserved]''.
(c) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 616. REGULATIONS REGARDING CAPITAL LEVELS OF HOLDING COMPANIES.
(a) Capital Levels of Bank Holding Companies.--Section 5(b) of the
Bank Holding Company Act of 1956 (12 U.S.C. 1844(b)) is amended by
inserting after ``regulations'' the following: ``(including regulations
relating to the capital requirements of bank holding companies)''.
(b) Capital Levels of Savings and Loan Holding Companies.--Section
10(g)(1) of the Home Owners' Loan Act (12 U.S.C. 1467a(g)(1)) is
amended by inserting after ``orders'' the following: ``(including
regulations relating to capital requirements for savings and loan
holding companies)''.
(c) Source of Strength.--The Federal Deposit Insurance Act (12
U.S.C. 1811 et seq.) is amended by inserting after section 38 (12
U.S.C. 1831o) the following:
``SEC. 38A. SOURCE OF STRENGTH.
``(a) Holding Companies.--The appropriate Federal banking agency
for a bank holding company or savings and loan holding company shall
require the bank holding company or savings and loan holding company to
serve as a source of financial strength for any subsidiary of the bank
holding company or savings and loan holding company that is a
depository institution.
``(b) Other Companies.--If an insured depository institution is not
the subsidiary of a bank holding company or savings and loan holding
company, the appropriate Federal banking agency for the insured
depository institution shall require any company that directly or
indirectly controls the insured depository institution to serve as a
source of financial strength for such institution.
``(c) Reports.--The appropriate Federal banking agency for an
insured depository institution described in subsection (b) may, from
time to time, require the company, or a company that directly or
indirectly controls the insured depository institution to submit a
report, under oath, for the purposes of--
``(1) assessing the ability of such company to comply with
the requirement under subsection (b); and
``(2) enforcing the compliance of such company with the
requirement under subsection (b).
``(d) Rules.--Not later than 1 year after the transfer date, as
defined in section 311 of the Enhancing Financial Institution Safety
and Soundness Act of 2010, the appropriate Federal banking agencies
shall jointly issue final rules to carry out this section.
``(e) Definition.--In this section, the term `source of financial
strength' means the ability of a company that directly or indirectly
owns or controls an insured depository institution to provide financial
assistance to such insured depository institution in the event of the
financial distress of the insured depository institution.''.
(d) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 617. ELIMINATION OF ELECTIVE INVESTMENT BANK HOLDING COMPANY
FRAMEWORK.
(a) Amendment.--Section 17 of the Securities Exchange Act of 1934
(15 U.S.C. 78q) is amended--
(1) by striking subsection (i); and
(2) by redesignating subsections (j) and (k) as subsections
(i) and (j), respectively.
(b) Effective Date.--The amendments made by this section shall take
effect on the transfer date.
SEC. 618. SECURITIES HOLDING COMPANIES.
(a) Definitions.--In this section--
(1) the term ``associated person of a securities holding
company'' means a person directly or indirectly controlling,
controlled by, or under common control with, a securities
holding company;
(2) the term ``foreign bank'' has the same meaning as in
section 1(b)(7) of the International Banking Act of 1978 (12
U.S.C. 3101(b)(7));
(3) the term ``insured bank'' has the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813);
(4) the term ``securities holding company''--
(A) means--
(i) a person (other than a natural person)
that owns or controls 1 or more brokers or
dealers registered with the Commission; and
(ii) the associated persons of a person
described in clause (i); and
(B) does not include a person that is--
(i) a nonbank financial company supervised
by the Board under title I;
(ii) an affiliate of an insured bank (other
than an institution described in subparagraphs
(D), (F), or (H) of section 2(c)(2) of the Bank
Holding Company Act of 1956 (12 U.S.C.
1841(c)(2)) or an affiliate of a savings
association;
(iii) a foreign bank, foreign company, or
company that is described in section 8(a) of
the International Banking Act of 1978 (12
U.S.C. 3106(a));
(iv) 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
(v) subject to comprehensive consolidated
supervision by a foreign regulator;
(5) the term ``supervised securities holding company''
means a securities holding company that is supervised by the
Board of Governors under this section; and
(6) the terms ``affiliate'', ``bank'', ``bank holding
company'', ``company'', ``control'', ``savings association'',
and ``subsidiary'' have the same meanings as in section 2 of
the Bank Holding Company Act of 1956.
(b) Supervision of a Securities Holding Company Not Having a Bank
or Savings Association Affiliate.--
(1) In general.--A securities holding company that is
required by a foreign regulator or provision of foreign law to
be subject to comprehensive consolidated supervision may
register with the Board of Governors under paragraph (2) to
become a supervised securities holding company. Any securities
holding company filing such a registration shall be supervised
in accordance with this section, and shall comply with the
rules and orders prescribed by the Board of Governors
applicable to supervised securities holding companies.
(2) Registration as a supervised securities holding
company.--
(A) Registration.--A securities holding company
that elects to be subject to comprehensive consolidated
supervision shall register by filing with the Board of
Governors such information and documents as the Board
of Governors, by regulation, may prescribe as necessary
or appropriate in furtherance of the purposes of this
section.
(B) Effective date.--A securities holding company
that registers under subparagraph (A) shall be deemed
to be a supervised securities holding company,
effective on the date that is 45 days after the date of
receipt of the registration information and documents
under subparagraph (A) by the Board of Governors, or
within such shorter period as the Board of Governors,
by rule or order, may determine.
(c) Supervision of Securities Holding Companies.--
(1) Recordkeeping and reporting.--
(A) Recordkeeping and reporting required.--Each
supervised securities holding company and each
affiliate of a supervised securities holding company
shall make and keep for periods determined by the Board
of Governors such records, furnish copies of such
records, and make such reports, as the Board of
Governors determines to be necessary or appropriate to
carry out this section, to prevent evasions thereof,
and to monitor compliance by the supervised securities
holding company or affiliate with applicable provisions
of law.
(B) Form and contents.--
(i) In general.--Any record or report
required to be made, furnished, or kept under
this paragraph shall--
(I) be prepared in such form and
according to such specifications
(including certification by a
registered public accounting firm), as
the Board of Governors may require; and
(II) be provided promptly to the
Board of Governors at any time, upon
request by the Board of Governors.
(ii) Contents.--Records and reports
required to be made, furnished, or kept under
this paragraph may include--
(I) a balance sheet or income
statement of the supervised securities
holding company or an affiliate of a
supervised securities holding company;
(II) an assessment of the
consolidated capital and liquidity of
the supervised securities holding
company;
(III) a report by an independent
auditor attesting to the compliance of
the supervised securities holding
company with the internal risk
management and internal control
objectives of the supervised securities
holding company; and
(IV) a report concerning the extent
to which the supervised securities
holding company or affiliate has
complied with the provisions of this
section and any regulations prescribed
and orders issued under this section.
(2) Use of existing reports.--
(A) In general.--The Board of Governors shall, to
the fullest extent possible, accept reports in
fulfillment of the requirements of this paragraph that
a supervised securities holding company or an affiliate
of a supervised securities holding company has been
required to provide to another regulatory agency or a
self-regulatory organization.
(B) Availability.--A supervised securities holding
company or an affiliate of a supervised securities
holding company shall promptly provide to the Board of
Governors, at the request of the Board of Governors,
any report described in subparagraph (A), as permitted
by law.
(3) Examination authority.--
(A) Focus of examination authority.--The Board of
Governors may make examinations of any supervised
securities holding company and any affiliate of a
supervised securities holding company to carry out this
subsection, to prevent evasions thereof, and to monitor
compliance by the supervised securities holding company
or affiliate with applicable provisions of law.
(B) Deference to other examinations.--For purposes
of this subparagraph, the Board of Governors shall, to
the fullest extent possible, use the reports of
examination made by other appropriate Federal or State
regulatory authorities with respect to any functionally
regulated subsidiary or any institution described in
subparagraph (D), (F), or (H) of section 2(c)(2) of the
Bank Holding Company Act of 1956 (12 U.S.C.
1841(c)(2)).
(d) Capital and Risk Management.--
(1) In general.--The Board of Governors shall, by
regulation or order, prescribe capital adequacy and other risk
management standards for supervised securities holding
companies that are appropriate to protect the safety and
soundness of the supervised securities holding companies and
address the risks posed to financial stability by supervised
securities holding companies.
(2) Differentiation.--In imposing standards under this
subsection, the Board of Governors may differentiate among
supervised securities holding companies on an individual basis,
or by category, taking into consideration the requirements
under paragraph (3).
(3) Content.--Any standards imposed on a supervised
securities holding company under this subsection shall take
into account--
(A) the differences among types of business
activities carried out by the supervised securities
holding company;
(B) the amount and nature of the financial assets
of the supervised securities holding company;
(C) the amount and nature of the liabilities of the
supervised securities holding company, including the
degree of reliance on short-term funding;
(D) the extent and nature of the off-balance sheet
exposures of the supervised securities holding company;
(E) the extent and nature of the transactions and
relationships of the supervised securities holding
company with other financial companies;
(F) the importance of the supervised securities
holding company as a source of credit for households,
businesses, and State and local governments, and as a
source of liquidity for the financial system; and
(G) the nature, scope, and mix of the activities of
the supervised securities holding company.
(4) Notice.--A capital requirement imposed under this
subsection may not take effect earlier than 180 days after the
date on which a supervised securities holding company is
provided notice of the capital requirement.
(e) Exception for Banks.--No bank shall be subject to any of the
requirements set forth in subsections (c) and (d).
(f) Other Provisions of Law Applicable to Supervised Securities
Holding Companies.--
(1) Federal deposit insurance act.--Subsections (b), (c)
through (s), and (u) of section 8 of the Federal Deposit
Insurance Act (12 U.S.C. 1818) shall apply to any supervised
securities holding company, and to any subsidiary (other than a
bank or an institution described in subparagraph (D), (F), or
(H) of section 2(c)(2) of the Bank Holding Company Act of 1956
(12 U.S.C. 1841(c)(2))) of a supervised securities holding
company, in the same manner as such subsections apply to a bank
holding company for which the Board of Governors is the
appropriate Federal banking agency. For purposes of applying
such subsections to a supervised securities holding company or
a subsidiary (other than a bank or an institution described in
subparagraph (D), (F), or (H) of section 2(c)(2) of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841(c)(2))) of a
supervised securities holding company, the Board of Governors
shall be deemed the appropriate Federal banking agency for the
supervised securities holding company or subsidiary.
(2) Bank holding company act of 1956.--Except as the Board
of Governors may otherwise provide by regulation or order, a
supervised securities holding company shall be subject to the
provisions of the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.) in the same manner and to the same extent a bank
holding company is subject to such provisions, except that a
supervised securities holding company may not, by reason of
this paragraph, be deemed to be a bank holding company for
purposes of section 4 of the Bank Holding Company Act of 1956
(12 U.S.C. 1843).
SEC. 619. RESTRICTIONS ON CAPITAL MARKET ACTIVITY BY BANKS AND BANK
HOLDING COMPANIES.
(a) Definitions.--In this section--
(1) the terms ``hedge fund'' and ``private equity fund''
mean a company or other entity that is exempt from registration
as an investment company pursuant to section 3(c)(1) or 3(c)(7)
of the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)(1) or
80a-3(c)(7)), or a similar fund, as jointly determined by the
appropriate Federal banking agencies;
(2) the term ``proprietary trading''--
(A) means purchasing or selling, or otherwise
acquiring or disposing of, stocks, bonds, options,
commodities, derivatives, or other financial
instruments by an insured depository institution, a
company that controls, directly or indirectly, an
insured depository institution or is treated as a bank
holding company for purposes of the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.), and any
subsidiary of such institution or company, for the
trading book (or such other portfolio as the Federal
banking agencies may determine) of such institution,
company, or subsidiary; and
(B) subject to such restrictions as the Federal
banking agencies may determine, does not include
purchasing or selling, or otherwise acquiring or
disposing of, stocks, bonds, options, commodities,
derivatives, or other financial instruments on behalf
of a customer, as part of market making activities, or
otherwise in connection with or in facilitation of
customer relationships, including risk-mitigating
hedging activities related to such a purchase, sale,
acquisition, or disposal; and
(3) the term ``sponsoring'', when used with respect to a
hedge fund or private equity fund, means--
(A) serving as a general partner, managing member,
or trustee of the fund;
(B) in any manner selecting or controlling (or
having employees, officers, directors, or agents who
constitute) a majority of the directors, trustees, or
management of the fund; or
(C) sharing with the fund, for corporate,
marketing, promotional, or other purposes, the same
name or a variation of the same name.
(b) Prohibition on Proprietary Trading.--
(1) In general.--Subject to the recommendations and
modifications of the Council under subsection (g), and except
as provided in paragraph (2) or (3), the appropriate Federal
banking agencies shall, through a rulemaking under subsection
(g), jointly prohibit proprietary trading by an insured
depository institution, a company that controls, directly or
indirectly, an insured depository institution or is treated as
a bank holding company for purposes of the Bank Holding Company
Act of 1956 (12 U.S.C. 1841 et seq.), and any subsidiary of
such institution or company.
(2) Excepted obligations.--
(A) In general.--The prohibition under this
subsection shall not apply with respect to an
investment that is otherwise authorized by Federal law
in--
(i) obligations of the United States or any
agency of the United States, including
obligations fully guaranteed as to principal
and interest by the United States or an agency
of the United States;
(ii) obligations, participations, or other
instruments of, or issued by, the Government
National Mortgage Association, the Federal
National Mortgage Association, or the Federal
Home Loan Mortgage Corporation, including
obligations fully guaranteed as to principal
and interest by such entities; and
(iii) obligations of any State or any
political subdivision of a State.
(B) Conditions.--The appropriate Federal banking
agencies may impose conditions on the conduct of
investments described in subparagraph (A).
(C) Rule of construction.--Nothing in subparagraph
(A) may be construed to grant any authority to any
person that is not otherwise provided in Federal law.
(3) Foreign activities.--An investment or activity
conducted by a company pursuant to paragraph (9) or (13) of
section 4(c) of the Bank Holding Company Act of 1956 (12 U.S.C.
1843(c)) solely outside of the United States shall not be
subject to the prohibition under paragraph (1), provided that
the company is not directly or indirectly controlled by a
company that is organized under the laws of the United States
or of a State.
(c) Prohibition on Sponsoring and Investing in Hedge Funds and
Private Equity Funds.--
(1) In general.--Except as provided in paragraph (2), and
subject to the recommendations and modifications of the Council
under subsection (g), the appropriate Federal banking agencies
shall, through a rulemaking under subsection (g), jointly
prohibit an insured depository institution, a company that
controls, directly or indirectly, an insured depository
institution or is treated as a bank holding company for
purposes of the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.), or any subsidiary of such institution or
company, from sponsoring or investing in a hedge fund or a
private equity fund.
(2) Application to foreign activities of foreign firms.--An
investment or activity conducted by a company pursuant to
paragraph (9) or (13) of section 4(c) of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(c)) solely outside of the
United States shall not be subject to the prohibitions and
restrictions under paragraph (1), provided that the company is
not directly or indirectly controlled by a company that is
organized under the laws of the United States or of a State.
(d) Investments in Small Business Investment Companies and
Investments Designed to Promote the Public Welfare.--
(1) In general.--A prohibition imposed by the appropriate
Federal banking agencies under subsection (c) shall not apply
with respect an investment otherwise authorized under Federal
law that is--
(A) an investment in a small business investment
company, as that term is defined in section 103 of the
Small Business Investment Act of 1958 (15 U.S.C. 662);
or
(B) designed primarily to promote the public
welfare, as provided in the 11th paragraph of section
5136 of the Revised Statutes (12 U.S.C. 24).
(2) Rule of construction.--Nothing in paragraph (1) may be
construed to grant any authority to any person that is not
otherwise provided in Federal law.
(e) Limitations on Relationships With Hedge Funds and Private
Equity Funds.--
(1) Covered transactions.--An insured depository
institution, a company that controls, directly or indirectly,
an insured depository institution or is treated as a bank
holding company for purposes of the Bank Holding Company Act of
1956 (12 U.S.C. 1841 et seq.), and any subsidiary of such
institution or company that serves, directly or indirectly, as
the investment manager or investment adviser to a hedge fund or
private equity fund may not enter into a covered transaction,
as defined in section 23A of the Federal Reserve Act (12 U.S.C.
371c) with such hedge fund or private equity fund.
(2) Affiliation.--An insured depository institution, a
company that controls, directly or indirectly, an insured
depository institution or is treated as a bank holding company
for purposes of the Bank Holding Company Act of 1956 (12 U.S.C.
1841 et seq.), and any subsidiary of such institution or
company that serves, directly or indirectly, as the investment
manager or investment adviser to a hedge fund or private equity
fund shall be subject to section 23B of the Federal Reserve Act
(12 U.S.C. 371c-1) as if such institution, company, or
subsidiary were a member bank and such hedge fund or private
equity fund were an affiliate.
(f) Capital and Quantitative Limitations for Certain Nonbank
Financial Companies.--
(1) In general.--Except as provided in paragraph (2), and
subject to the recommendations and modifications of the Council
under subsection (g), the Board of Governors shall adopt rules
imposing additional capital requirements and specifying
additional quantitative limits for nonbank financial companies
supervised by the Board of Governors under section 113 that
engage in proprietary trading or sponsoring and investing in
hedge funds and private equity funds.
(2) Exceptions.--The rules under this subsection shall not
apply with respect to the trading of an investment that is
otherwise authorized by Federal law--
(A) in obligations of the United States or any
agency of the United States, including obligations
fully guaranteed as to principal and interest by the
United States or an agency of the United States;
(B) in obligations, participations, or other
instruments of, or issued by, the Government National
Mortgage Association, the Federal National Mortgage
Association, or the Federal Home Loan Mortgage
Corporation, including obligations fully guaranteed as
to principal and interest by such entities;
(C) in obligations of any State or any political
subdivision of a State;
(D) in a small business investment company, as that
term is defined in section 103 of the Small Business
Investment Act of 1958 (15 U.S.C. 662); or
(E) that is designed primarily to promote the
public welfare, as provided in the 11th paragraph of
section 5136 of the Revised Statutes (12 U.S.C. 24).
(g) Council Study and Rulemaking.--
(1) Study and recommendations.--Not later than 6 months
after the date of enactment of this Act, the Council--
(A) shall complete a study of the definitions under
subsection (a) and the other provisions under
subsections (b) through (f), to assess the extent to
which the definitions under subsection (a) and the
implementation of subsections (a) through (f) would--
(i) promote and enhance the safety and
soundness of depository institutions and the
affiliates of depository institutions;
(ii) protect taxpayers and enhance
financial stability by minimizing the risk that
depository institutions and the affiliates of
depository institutions will engage in unsafe
and unsound activities;
(iii) limit the inappropriate transfer of
Federal subsidies from institutions that
benefit from deposit insurance and liquidity
facilities of the Federal Government to
unregulated entities;
(iv) reduce inappropriate conflicts of
interest between the self-interest of
depository institutions, affiliates of
depository institutions, and financial
companies supervised by the Board, and the
interests of the customers of such institutions
and companies;
(v) raise the cost of credit or other
financial services, reduce the availability of
credit or other financial services, or impose
other costs on households and businesses in the
United States;
(vi) limit activities that have caused
undue risk or loss in depository institutions,
affiliates of depository institutions, and
financial companies supervised by the Board of
Governors, or that might reasonably be expected
to create undue risk or loss in such
institutions, affiliates, and companies; and
(vii) appropriately accommodates the
business of insurance within an insurance
company subject to regulation in accordance
with State insurance company investment laws;
(B) shall make recommendations regarding the
definitions under subsection (a) and the implementation
of other provisions under subsections (b) through (f),
including any modifications to the definitions,
prohibitions, requirements, and limitations contained
therein that the Council determines would more
effectively implement the purposes of this section; and
(C) may make recommendations for prohibiting the
conduct of the activities described in subsections (b)
and (c) above a specific threshold amount and imposing
additional capital requirements on activities conducted
below such threshold amount.
(2) Rulemaking.--Not earlier than the date of completion of
the study required under paragraph (1), and not later than 9
months after the date of completion of such study--
(A) the appropriate Federal banking agencies shall
jointly issue final regulations implementing
subsections (b) through (e), which shall reflect any
recommendations or modifications made by the Council
pursuant to paragraph (1)(B); and
(B) the Board of Governors shall issue final
regulations implementing subsection (f), which shall
reflect any recommendations or modifications made by
the Council pursuant to paragraph (1)(B).
(h) Transition.--
(1) In general.--The final regulations issued by the
appropriate Federal banking agencies and the Board of Governors
under subsection (g)(2) shall provide that, effective 2 years
after the date on which such final regulations are issued, no
insured depository institution, company that controls, directly
or indirectly, an insured depository institution, company that
is treated as a bank holding company for purposes of the Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.), or
subsidiary of such institution or company, may retain any
investment or relationship prohibited under such regulations.
(2) Extension.--
(A) In general.--The appropriate Federal banking
agency for an insured depository institution or a
company described in paragraph (1) may, upon the
application of any such company, extend the 2-year
period under paragraph (1) with respect to such
company, if the appropriate Federal banking agency
determines that an extension would not be detrimental
to the public interest.
(B) Time period for extension.--An extension
granted under subparagraph (A) may not exceed--
(i) 1 year for each determination made by
the appropriate Federal banking agency under
subparagraph (A); and
(ii) a total of 3 years with respect to any
1 company.
SEC. 620. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.
The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is
amended by adding at the end the following:
``SEC. 13. CONCENTRATION LIMITS ON LARGE FINANCIAL FIRMS.
``(a) Definitions.--In this section--
``(1) the term `Council' means the Financial Stability
Oversight Council;
``(2) the term `financial company' means--
``(A) an insured depository institution;
``(B) a bank holding company;
``(C) a savings and loan holding company;
``(D) a company that controls an insured depository
institution;
``(E) a nonbank financial company supervised by the
Board under title I of the Restoring American Financial
Stability Act of 2010; and
``(F) a foreign bank or company that is treated as
a bank holding company for purposes of this Act; and
``(3) the term `liabilities' means--
``(A) with respect to a United States financial
company--
``(i) the total risk-weighted assets of the
financial company, as determined under the
risk-based capital rules applicable to bank
holding companies, as adjusted to reflect
exposures that are deducted from regulatory
capital; less
``(ii) the total regulatory capital of the
financial company under the risk-based capital
rules applicable to bank holding companies;
``(B) with respect to a foreign-based financial
company--
``(i) the total risk-weighted assets of the
United States operations of the financial
company, as determined under the applicable
risk-based capital rules, as adjusted to
reflect exposures that are deducted from
regulatory capital; less
``(ii) the total regulatory capital of the
United States operations of the financial
company, as determined under the applicable
risk-based capital rules; and
``(C) with respect to an insurance company or other
nonbank financial company supervised by the Board, such
assets of the company as the Board shall specify by
rule, in order to provide for consistent and equitable
treatment of such companies.
``(b) Concentration Limit.--Subject to the recommendations by the
Council under subsection (e), a financial company may not merge or
consolidate with, acquire all or substantially all of the assets of, or
otherwise acquire control of, another company, if the total
consolidated liabilities of the acquiring financial company upon
consummation of the transaction would exceed 10 percent of the
aggregate consolidated liabilities of all financial companies at the
end of the calendar year preceding the transaction.
``(c) Exception to Concentration Limit.--With the prior written
consent of the Board, the concentration limit under subsection (b)
shall not apply to an acquisition--
``(1) of a bank in default or in danger of default;
``(2) with respect to which assistance is provided by the
Federal Deposit Insurance Corporation under section 13(c) of
the Federal Deposit Insurance Act (12 U.S.C. 1823(c)); or
``(3) that would result only in a de minimis increase in
the liabilities of the financial company.
``(d) Rulemaking and Guidance.--The Board shall issue regulations
implementing this section in accordance with the recommendations of the
Council under subsection (e), including the definition of terms, as
necessary. The Board may issue interpretations or guidance regarding
the application of this section to an individual financial company or
to financial companies in general.
``(e) Council Study and Rulemaking.--
``(1) Study and recommendations.--Not later than 6 months
after the date of enactment of this section, the Council
shall--
``(A) complete a study of the extent to which the
concentration limit under this section would affect
financial stability, moral hazard in the financial
system, the efficiency and competitiveness of United
States financial firms and financial markets, and the
cost and availability of credit and other financial
services to households and businesses in the United
States; and
``(B) make recommendations regarding any
modifications to the concentration limit that the
Council determines would more effectively implement
this section.
``(2) Rulemaking.--Not later than 9 months after the date
of completion of the study under paragraph (1), and
notwithstanding subsections (b) and (d), the Board shall issue
final regulations implementing this section, which shall
reflect any recommendations by the Council under paragraph
(1)(B).''.
TITLE VII--IMPROVEMENTS TO REGULATION OF OVER-THE-COUNTER DERIVATIVES
MARKETS
SEC. 701. SHORT TITLE.
This title may be cited as the ``Over-the-Counter Derivatives
Markets Act of 2010''.
SEC. 702. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds that--
(1) in recent years, the global over-the-counter
derivatives market in notional amounts outstanding has grown
rapidly, from $91 trillion in 1998 to $592 trillion in 2008
according to the Bank for International Settlements;
(2) the interconnectedness of the country's largest
financial institutions through the unregulated derivatives
market raised significant concerns about counterparty risk
exposures during the recent financial crisis;
(3) a substantial amount of American taxpayer money was
used to make counterparty payments because there was
insufficient margin and capital held by large financial
institutions;
(4) although derivatives can be used to manage risk, they
can also increase leverage and allow excessive risk-taking
because market participants can take large positions on a
relatively small capital base;
(5) in the over-the-counter derivatives market, margin
requirements are set bilaterally and do not take into account
the risk that each trade imposes on the rest of the financial
system, thereby allowing systemically important exposures to
build up without sufficient capital to mitigate associated
risks to American taxpayers and the financial system;
(6) in the recent crisis, fears about counterparty risk
exposures caused credit markets to freeze, as market
participants questioned the viability of counterparties and the
safety of their own assets;
(7) lack of transparency about counterparty exposures and
valuation of derivatives positions made it more difficult for
regulators to respond to the crisis and made resolution of
these positions more expensive for the taxpayer;
(8) bilaterally-executed derivatives contracts can provide
key benefits to certain market participants and should be
permitted under comprehensive regulation, but all derivatives
activities should be accompanied by appropriate risk management
and prudential standards;
(9) the derivatives market suffers from a lack of reliable
and accurate transaction information that is available to the
public, investors, market participants, and regulators,
hampering surveillance and oversight of such markets;
(10) clearing more derivatives through well-regulated
central counterparties will benefit the public by reducing
costs and risks to American taxpayers, the financial system,
and market participants;
(11) trading more derivatives on regulated exchanges should
be encouraged because it will result in more price
transparency, efficiency in execution, and liquidity; and
(12) the Group of 20 nations agreed that--
(A) all standardized over-the-counter derivative
contracts should be traded on exchanges or electronic
trading platforms, where appropriate, and cleared
through central counterparties by the end of calendar
year 2012 at the latest;
(B) over-the-counter derivative contracts should be
reported to trade repositories; and
(C) non-centrally cleared contracts should be
subject to higher capital requirements.
(b) Purposes.--The purposes of this title are--
(1) to establish well-regulated markets for derivatives to
increase transparency and reduce costs and risks to American
taxpayers, the financial system, and market participants; and
(2) to promote the public interest, the protection of
investors, the protection of market participants, and the
maintenance of fair and orderly markets to assure--
(A) the prompt and accurate clearance and
settlement of transactions in derivatives that can be
cleared through a central counterparty;
(B) the prompt and accurate reporting of
transactions to regulators and trade repositories;
(C) the availability to the public, investors,
market participants, and regulators of reliable and
accurate quotation and transaction information in
derivatives;
(D) economically efficient execution of
transactions in swaps and security-based swaps; and
(E) fair competition among markets in the trading
of swaps and security-based swaps.
Subtitle A--Regulation of Swap Markets
SEC. 711. DEFINITIONS.
(a) Amendments to Definitions in the Commodity Exchange Act.--
Section 1a of the Commodity Exchange Act (7 U.S.C. 1a) is amended--
(1) by redesignating paragraph (34) as paragraph (35);
(2) by adding after paragraph (33) the following:
``(34) 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, nonoccurrence, 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, including any
agreement, contract, or transaction commonly
known as an interest rate swap, a rate floor,
rate cap, rate collar, cross-currency rate
swap, basis swap, currency swap, total return
swap, equity index swap, equity swap, debt
index swap, debt swap, credit spread, credit
default swap, credit swap, weather swap, energy
swap, metal swap, agricultural swap, emissions
swap, or commodity swap;
``(iv) is an agreement, contract, or
transaction that is, or in the future becomes,
commonly known to the trade as a swap; or
``(v) is any combination or permutation of,
or option on, any agreement, contract, or
transaction described in any of clauses (i)
through (iv).
``(B) Exclusions.--The term `swap' does not
include--
``(i) any contract of sale of a commodity
for future delivery or security futures product
traded on or subject to the rules of any board
of trade designated as a contract market under
section 5 or 5f;
``(ii) any sale of a nonfinancial commodity
or any security for deferred shipment or
delivery, so long as such transaction is
physically settled;
``(iii) any put, call, straddle, option, or
privilege on any security, certificate of
deposit, or group or index of securities,
including any interest therein or based on the
value thereof;
``(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;
``(vi) any agreement, contract, or
transaction providing for the purchase or sale
of 1 or more securities on a contingent basis,
unless such agreement, contract, or transaction
predicates such purchase or sale on the
occurrence of a bona fide contingency that
might reasonably be expected to affect or be
affected by the creditworthiness of a party
other than a party to the agreement, contract,
or transaction;
``(vii) any note, bond, or evidence of
indebtedness that is a security as defined in
section 2(a)(1) of the Securities Act of 1933
(15 U.S.C. 77b(a)(1)); or
``(viii) any agreement, contract, or
transaction that is--
``(I) based on a security; and
``(II) entered into directly or
through an underwriter, as that term is
defined in section 2(a)(11) of the
Securities Act of 1933 (15 U.S.C.
77b(a)(11)), by the issuer of such
security for the purposes of raising
capital, unless such agreement,
contract, or transaction is entered
into to manage a risk associated with
capital raising;
``(ix) any foreign exchange swap;
``(x) any foreign exchange forward;
``(xi) any agreement, contract, or
transaction a counterparty of which is a
Federal Reserve bank, the United States
Government, or an agency of the United States
Government that is expressly backed by the full
faith and credit of the United States; and
``(xii) any security-based swap, other than
a security-based swap as described in section
3(a)(68)(C) of the Securities Exchange Act of
1934 (15 U.S.C. 78c(a)(68)(C)).
``(C) Rule of construction regarding master
agreements.--The term `swap' shall be construed to
include a master agreement that provides for an
agreement, contract, or transaction that is a swap
pursuant to subparagraph (A), together with all
supplements to any such master agreement, without
regard to whether the master agreement contains an
agreement, contract, or transaction that is not a swap
pursuant to subparagraph (A), except that the master
agreement shall be considered to be a swap only with
respect to each agreement, contract, or transaction
under the master agreement that is a swap pursuant to
subparagraph (A).'';
(3) in paragraph (12)--
(A) in subparagraph (A)--
(i) in clause (ii), by striking
``determined by the Commission'' and inserting
``determined jointly by the Commission and the
Securities and Exchange Commission'';
(ii) in clause (v)--
(I) in subclause (I)--
(aa) by inserting ``net''
after ``total''; and
(bb) by inserting ``or''
after the semicolon;
(II) in subclause (II), by striking
``the obligations'' and all that
follows through ``$1,000,000; and'' and
inserting the following:
``(II) that---
``(aa) has total net assets
exceeding $5,000,000; and'';
(iii) in clause (vii), by striking ``except
that'' and all that follows through ``section
2(c)(2)(B)(ii);'' and inserting the following:
``except that such term does not include a
State or an entity, political subdivision,
instrumentality, agency, or department referred
to in subclause (I) or (III) of this clause
unless the State, entity, political
subdivision, instrumentality, agency, or
department owns and invests on a discretionary
basis $50,000,000 or more in investments,
provided that, with respect to any State or
entity, political subdivision, instrumentality,
agency or department of a State, such amount is
exclusive of any proceeds from any offering of
municipal securities as defined in section
3(a)(29) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(29));''; and
(iv) in clause (xi), by striking ``total
assets in an amount'' and inserting ``amounts
invested on a discretionary basis'';
(v) in clause (xi), by striking ``an
individual'' and all that follows through
``of--'' and inserting ``a natural person who--
''; and
(vi) in clause (xi)--
(I) in subclause (I), by inserting
``owns and invests on a discretionary
basis in excess of'' before
``$10,000,000''; and
(II) in subclause (II), by
inserting ``owns and invests on a
discretionary basis in excess of''
before ``$5,000,000''; and
(B) in subparagraph (C), by striking ``determines''
and inserting ``and the Securities and Exchange
Commission may further jointly determine'';
(4) in paragraph (29)--
(A) by striking subparagraph (B);
(B) by redesignating subparagraphs (C) and (D) as
subparagraphs (B) and (C), respectively;
(C) by redesignating subparagraph (E) as
subparagraph (F);
(D) in subparagraph (C) (as so redesignated), by
striking ``and''; and
(E) by inserting after subparagraph (C) (as so
redesignated) the following:
``(D) an alternative swap execution facility
registered under section 5h;
``(E) a swap repository; and''; and
(5) by adding after paragraph (35) (as so redesignated) the
following:
``(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
Exchange Act of 1934 (15 U.S.C. 78c(a)(68)).
``(38) Swap dealer.--
``(A) In general.--The term `swap dealer' means any
person engaged in the business of buying and selling
swaps for such person's own account, through a broker
or otherwise.
``(B) Exception.--The term `swap dealer' does not
include a person that buys or sells swaps for such
person's own account, either individually or in a
fiduciary capacity, but not as a part of a regular
business.
``(39) Major swap participant.--
``(A) In general.--The term `major swap
participant' means any person who is not a swap dealer
and--
``(i) who maintains a substantial net
position in outstanding swaps, excluding
positions held primarily for hedging, reducing,
or otherwise mitigating commercial risk; or
``(ii) whose failure to perform under the
terms of its swaps would cause significant
credit losses to its swap counterparties.
``(B) Implementation.--The Commission shall
implement the definition under this paragraph by rule
or regulation in a manner that is prudent for the
effective monitoring, management, and oversight of the
financial system.
``(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 (15
U.S.C. 78c(a)(67)).
``(41) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
``(42) 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 (15 U.S.C. 78c(a)(71)).
``(43) Government security.--The term `government security'
has the same meaning as in section 3(a)(42) of the Securities
Exchange Act of 1934 (15 U.S.C. 78c(a)(42)).
``(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' has the same meaning as in section
3(a)(70) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)(70)).
``(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--
``(A) any partner, officer, director, or branch
manager of such swap dealer or major swap participant
(or any person occupying a similar status or performing
similar functions);
``(B) any person directly or indirectly
controlling, controlled by, or under common control
with such swap dealer or major swap participant; or
``(C) any employee of such swap dealer or major
swap participant, except that any person associated
with a swap dealer or major swap participant whose
functions are solely clerical or ministerial shall not
be included in the meaning of such term other than for
purposes of section 4s(b)(6) of this Act.
``(48) Swap repository.--The term `swap repository' means
any person that collects, calculates, processes, or prepares
information with respect to transactions or positions in swaps
or security-based swaps.
``(49) Primary financial regulatory agency.--The term
`primary financial regulatory agency' has the same meaning as
in section 2 of the Restoring American Financial Stability Act
of 2010.''.
(b) Joint Rulemaking on Further Definition of Terms.--
(1) In general.--The Commodity Futures Trading Commission
and the Securities and Exchange Commission shall jointly adopt
a rule or rules further defining the terms ``swap'',
``security-based swap'', ``swap dealer'', ``security-based swap
dealer'', ``major swap participant'', ``major security-based
swap participant'', and ``eligible contract participant'' not
later than 180 days after the effective date of this title.
(2) Prevention of evasions.--The Commodity Futures Trading
Commission and the Securities and Exchange Commission may
jointly prescribe rules defining the term ``swap'' or
``security-based swap'' to include transactions that have been
structured to evade this title.
(c) Joint Rulemaking Under This Title.--
(1) Uniform rules.--Rules and regulations prescribed
jointly under this title by the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall be
uniform.
(2) Financial stability oversight council.--In the event
that the Commodity Futures Trading Commission and the
Securities and Exchange Commission fail to jointly prescribe
rules pursuant to paragraph (1) in a timely manner, at the
request of either Commission, the Financial Stability Oversight
Council shall resolve the dispute--
(A) within a reasonable time after receiving the
request;
(B) after consideration of relevant information
provided by each Commission; and
(C) by agreeing with one of the Commissions
regarding the entirety of the matter or by determining
a compromise position.
(3) Treatment of similar products.--In adopting joint rules
and regulations under this title, the Commodity Futures Trading
Commission and the Securities and Exchange Commission shall
treat functionally or economically similar products similarly.
(4) Treatment of dissimilar products.--Nothing in this
title shall be construed to require the Commodity Futures
Trading Commission and the Securities and Exchange Commission
to adopt joint rules that treat functionally or economically
different products identically.
(5) Joint interpretation.--Any interpretation of, or
guidance regarding, a provision of this title, shall be
effective only if issued jointly by the Commodity Futures
Trading Commission and the Securities and Exchange Commission
if this title requires the Commodity Futures Trading Commission
and the Securities and Exchange Commission to issue joint
regulations to implement the provision.
(d) Exemptions.--Section 4(c)(1) of the Commodity Exchange Act (7
U.S.C. 6(c)(1)) is amended by adding at the end the following: ``The
Commission shall not have the authority to grant exemptions from the
swap-related provisions of the Over-the-Counter Derivatives Markets Act
of 2010, except as expressly authorized under the provisions of that
Act.''.
SEC. 712. JURISDICTION.
(a) Exclusive Jurisdiction.--The first sentence of section
2(a)(1)(A) of the Commodity Exchange Act (7 U.S.C. 2(a)(1)(A)) is
amended--
(1) by inserting ``the Over-the-Counter Derivatives Markets
Act of 2010 and'' after ``otherwise provided in'';
(2) by striking ``subsections (c) through (i)'' and
inserting ``subsections (c) and (f)''; and
(3) by striking ``involving contracts of sale'' and
inserting ``involving swaps, or contracts of sale''.
(b) Additions.--Section 2(c)(2)(A) of the Commodity Exchange Act (7
U.S.C. 2(c)(2)(A)) is amended--
(1) in clause (i), by striking ``or'';
(2) by redesignating clause (ii) as clause (iii); and
(3) by inserting after clause (i) the following:
``(ii) a swap; or''.
(c) Limitation.--Section 2 of the Commodity Exchange Act (7 U.S.C.
2) is amended by amending subsection (g) to read as follows:
``(g) Exclusion for Securities.--Notwithstanding any other
provision of law, the Over-the-Counter Derivatives Markets Act of 2010
shall not apply to, and the Commodity Futures Trading Commission shall
have no jurisdiction under such Act (or any amendments to the Commodity
Exchange Act made by such Act) with respect to, any security other than
a security-based swap.''.
SEC. 713. CLEARING.
(a) Clearing Requirement.--
(1) Repeals.--Subsections (d), (e), and (h) of section 2 of
the Commodity Exchange Act (7 U.S.C. 2(d), 2(e), and 2(h)) are
repealed.
(2) Applicability.--Section 2 of the Commodity Exchange Act
(7 U.S.C. 2) is further amended by inserting after subsection
(c) the following:
``(d) Swaps.--Nothing in this Act, other than subsections
(a)(1)(A), (a)(1)(B), (a)(1)(C), (a)(1)(G), (f), and (j), sections 4a,
4b, 4b-1, 4c(a), 4c(b), 4o, 4r, 4s, 4t, 4u, 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.''.
(3) Clearing requirement.--Section 2 of the Commodity
Exchange Act (7 U.S.C. 2) is further amended by adding at the
end the following:
``(j) Clearing Requirement.--
``(1) Submission.--
``(A) In general.--Except as provided in paragraph
(9), any person who is a party to a swap shall submit
such swap for clearing to a derivatives clearing
organization that is registered under this Act or a
derivatives clearing organization that is exempt from
registration under section 5b(j) of this Act.
``(B) Required conditions.--The rules of a
derivatives clearing organization described in
subparagraph (A) shall--
``(i) prescribe that all swaps with the
same terms and conditions accepted for clearing
by the derivatives clearing organization are
fungible and may be offset with each other; and
``(ii) provide for nondiscriminatory
clearing of a swap executed on or through the
rules of an unaffiliated designated contract
market or an alternative swap execution
facility.
``(2) Commission approval.--
``(A) In general.--A derivatives clearing
organization shall submit to the Commission for prior
approval any group, category, type, or class of swaps
that the derivatives clearing organization seeks to
accept for clearing, which submission the Commission
shall make available to the public.
``(B) Deadline.--The Commission shall take final
action on a request submitted pursuant to subparagraph
(A) not later than 90 days after submission of the
request, unless the derivatives clearing organization
submitting the request agrees to an extension of the
time limitation established under this subparagraph.
``(C) Approval.--The Commission shall approve,
unconditionally or subject to such terms and conditions
as the Commission determines to be appropriate, any
request submitted pursuant to subparagraph (A) if the
Commission finds that the request is consistent with
section 5b(c)(2). The Commission shall not approve any
such request if the Commission does not make such
finding.
``(D) Rules.--Not later than 180 days after the
date of the enactment of the Over-the-Counter
Derivatives Markets Act of 2010, the Commission shall
adopt rules for a derivatives clearing organization's
submission for approval, pursuant to this paragraph, of
any group, category, type, or class of swaps that the
derivative clearing organization seeks to accept for
clearing.
``(3) Stay of clearing requirement.--At any time after
issuance of an approval pursuant to paragraph (2):
``(A) Review process.--The Commission, on
application of a counterparty to a swap or on its own
initiative, may stay the clearing requirement of
paragraph (1) until the Commission completes a review
of the terms of the swap, or the group, category, type,
or class of swaps, and the clearing arrangement.
``(B) Deadline.--The Commission shall complete a
review undertaken pursuant to subparagraph (A) not
later than 90 days after issuance of the stay, unless
the derivatives clearing organization that clears the
swap, or the 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)--
``(i) the Commission may determine,
unconditionally or subject to such terms and
conditions as the Commission determines to be
appropriate, that the swap, or the group,
category, type, or class of swaps, must be
cleared pursuant to this subsection if the
Commission finds that such clearing--
``(I) is consistent with section
5b(c)(2); and
``(II) is otherwise in the public
interest, for the protection of
investors, and consistent with the
purposes of this title;
``(ii) the Commission may determine that
the clearing requirement of paragraph (1) shall
not apply to the swap, or the group, category,
type, or class of swaps; or
``(iii) if a determination is made that the
clearing requirement of paragraph (1) shall no
longer apply, then it shall still be
permissible to clear such swap, or the group,
category, type, or class of swaps.
``(D) Rules.--Not later than 180 days after the
date of the enactment of the Over-the-Counter
Derivatives Markets Act of 2010, the Commission shall
adopt rules for reviewing, pursuant to this paragraph,
a derivatives clearing organization's clearing of a
swap, or a group, category, type, or class of swaps
that the Commission has accepted for clearing.
``(4) Swaps required to be accepted for clearing.--
``(A) Rulemaking.--Not later than 180 days of the
date of enactment of the Over-the-Counter Derivatives
Markets Act of 2010, the Commission and the Securities
and Exchange Commission shall jointly adopt rules to
further identify any group, category, type, or class of
swaps not submitted for approval under paragraph (2)
that the Commission and Securities and Exchange
Commission deem should be accepted for clearing. In
adopting such rules, the Commission and the Securities
and Exchange Commission shall take into account the
following factors:
``(i) The extent to which any of the terms
of the group, category, type, or class of
swaps, including price, are disseminated to
third parties or are referenced in other
agreements, contracts, or transactions.
``(ii) The volume of transactions in the
group, category, type, or class of swaps.
``(iii) The extent to which the terms of
the group, category, type, or class of swaps
are similar to the terms of other agreements,
contracts, or transactions that are centrally
cleared.
``(iv) Whether any differences in the terms
of the group, category, type, or class of
swaps, compared to other agreements, contracts,
or transactions that are centrally cleared, are
of economic significance.
``(v) Whether a derivatives clearing
organization is prepared to clear the group,
category, type, or class of swaps and such
derivatives clearing organization has in place
effective risk management systems.
``(vi) Any other factors the Commission and
the Securities and Exchange Commission
determine to be appropriate.
``(B) Other designations.--At any time after the
adoption of the rules required under subparagraph (A),
the Commission may separately designate a particular
swap or class of swaps as subject to the clearing
requirement in paragraph (1), taking into account the
factors described in clauses (i) through (vi) of
subparagraph (A) and the joint rules adopted under such
subparagraph.
``(5) Prevention of evasion.--The Commission and the
Securities and Exchange Commission shall have authority to
prescribe rules under this subsection, or issue interpretations
of such rules, as necessary to prevent evasions of this
subsection provided that any such rules or interpretations
shall be issued jointly to be effective.
``(6) Required reporting.--
``(A) Both counterparties.--Both counterparties to
a swap that is not cleared by any derivatives clearing
organization shall report such a swap either to a
registered swap repository described in section 21 or,
if there is no repository that would accept the swap,
to the Commission pursuant to section 4r.
``(B) Timing.--Counterparties to a swap shall
submit the reports required under subparagraph (A) not
later than such time period as the Commission may by
rule or regulation prescribe.
``(7) Transition rules.--
``(A) Reporting transition rules.--Rules adopted by
the Commission under this section shall provide for the
reporting of data, as follows:
``(i) Swaps entered into before the date of
the enactment of this subsection shall be
reported to a registered swap repository or the
Commission not later than 180 days after the
effective date of this subsection.
``(ii) Swaps entered into on or after such
date of enactment shall be reported to a
registered swap repository or the Commission
not 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.
``(B) Clearing transition rules.--
``(i) 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 subparagraph
(A)(i).
``(ii) 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 subparagraph (A)(ii).
``(8) Trade execution.--
``(A) In general.--With respect to transactions
involving swaps subject to the clearing requirement of
paragraph (1), counterparties shall--
``(i) execute the transaction on a board of
trade designated as a contract market under
section 5; or
``(ii) execute the transaction on an
alternative swap execution facility registered
under section 5h or an alternative swap
execution facility that is exempt from
registration under section 5h(f) of this Act.
``(B) Exception.--The requirements of clauses (i)
and (ii) of subparagraph (A) shall not apply if no
board of trade or alternative swap execution facility
makes the swap available to trade.
``(9) Exemptions.--
``(A) Required exemption.--Subject to paragraph
(4), the Commission shall exempt a swap from the
requirements of paragraphs (1) and (8) and any rules
issued under this subsection, if no derivatives
clearing organization registered under this Act or no
derivatives clearing organization that is exempt from
registration under section 5b(j) of this Act will
accept the swap for clearing.
``(B) Permissive exemption.--Subject to paragraph
(4), the Commission by rule or order, as the Commission
deems consistent with the public interest, may
conditionally or unconditionally exempt a swap from the
requirements of paragraphs (1) and (8), and any rules
issued under this subsection, if 1 of the
counterparties to the swap--
``(i) is not a swap dealer or major swap
participant; and
``(ii) does not meet the eligibility
requirements of any derivatives clearing
organization that clears the swap.
``(C) Determination of the financial stability
oversight council.--The Commission may act by rule or
order to exempt a swap from any requirement or rule
under this subsection only if--
``(i) the Commission has provided a written
notice to the Financial Stability Oversight
Council describing the proposed exemption; and
``(ii) the Financial Stability Oversight
Council has not made a determination and
notified the Commission within 60 days of
receipt of such notice that such exemption
would pose a threat to the stability of the
United States financial system.
``(D) Option to clear.--If a swap is exempt from
the clearing requirements of paragraph (1)--
``(i) the parties to the swap may submit
the swap for clearing; and
``(ii) the swap shall be submitted for
clearing upon the request of a party to the
swap.''.
(b) Derivatives Clearing Organizations.--
(1) In general.--Subsections (a) and (b) of section 5b of
the Commodity Exchange Act (7 U.S.C. 7a-1) are amended to read
as follows:
``(a) Registration Requirement.--It shall be unlawful for a
derivatives clearing organization, unless registered with the
Commission, directly or indirectly to make use of the mails or any
means or instrumentality of interstate commerce to perform the
functions of a derivatives clearing organization described in section
1a(9) with respect to--
``(1) a contract of sale of a commodity for future delivery
(or option on such a contract) or option on a commodity, in
each case unless the contract or option is--
``(A) excluded from this Act by section
2(a)(1)(C)(i), 2(c), or 2(f); or
``(B) a security futures product cleared by a
clearing agency registered with the Securities and
Exchange Commission under the Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.); or
``(2) a swap.
``(b) Voluntary Registration.--
``(1) Derivatives clearing organizations.--A person that
clears agreements, contracts, or transactions that are not
required to be cleared under this Act may register with the
Commission as a derivatives clearing organization.
``(2) Clearing agencies.--A derivatives clearing
organization may clear security-based swaps that are required
to be cleared by a person who is registered as a clearing
agency under the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.).''.
(2) Required registration.--Section 5b of the Commodity
Exchange Act (7 U.S.C. 7a-1) is amended by adding at the end
the following:
``(g) Required Registration for Depository Institutions and
Clearing Agencies.--Any person that is required to be registered as a
derivatives clearing organization under this section shall register
with the Commission regardless of whether that person is also a
depository institution (as that term is defined in section 3 of the
Federal Deposit Insurance Act (12 U.S.C. 1813)) or a clearing agency
registered with the Securities and Exchange Commission under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(h) Harmonization of Rules.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act of 2010,
the Commission and the Securities and Exchange Commission shall jointly
adopt uniform rules governing--
``(1) the clearing and settlement of swaps, as well as
persons that are registered as derivatives clearing
organizations for swaps under this section; and
``(2) the clearing and settlement of security-based swaps,
as well as persons that are registered as clearing agencies for
security-based swaps under the Securities Exchange Act of 1934
(15 U.S.C. 78a et seq.).
``(i) Consultation.--The Commission and the Securities and Exchange
Commission shall consult with the appropriate Federal banking agencies
and each other prior to adopting rules under this section with respect
to swaps.
``(j) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a derivatives clearing organization from registration
under this section for the clearing of swaps if the Commission finds
that such derivatives clearing organization is subject to comparable,
comprehensive supervision and regulation on a consolidated basis by the
Securities and Exchange Commission, an appropriate Federal banking
agency, or the appropriate governmental authorities in the
organization's home country.
``(k) Designation of Compliance Officer.--
``(1) In general.--Each derivatives clearing organization
shall designate an individual to serve as a compliance officer.
``(2) Duties.--The compliance officer shall perform the
following duties:
``(A) Reporting directly to the board or to the
senior officer of the derivatives clearing
organization.
``(B) Reviewing the compliance of the derivatives
clearing organization with the core principles
established in section 5b(c)(2).
``(C) Consulting 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, to resolve any
conflicts of interest that may arise.
``(D) Administering the policies and procedures of
the derivatives clearing organization required to be
established pursuant to this section.
``(E) Ensuring compliance with this Act and the
rules and regulations issued thereunder, including
rules prescribed by the Commission pursuant to this
section.
``(F) Establishing procedures for remediation of
noncompliance issues found during compliance office
reviews, lookbacks, internal or external audit
findings, self-reported errors, or through validated
complaints. Procedures to be established under this
subparagraph include procedures related to the
handling, management response, remediation, retesting,
and closing of noncompliance issues.
``(3) Annual reports required.--
``(A) In general.--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 organization,
including the code of ethics and conflict of interest
policies of the organization, in accordance with rules
prescribed by the Commission.
``(B) Submission.--The compliance report required
under subparagraph (A) 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) Core principles.--Section 5b(c)(2) of the Commodity
Exchange Act (7 U.S.C. 7a-1(c)(2)) is amended to read as
follows:
``(2) Core principles for derivatives clearing
organizations.--
``(A) Compliance.--
``(i) In general.--To be registered and to
maintain registration as a derivatives clearing
organization, a derivatives clearing
organization shall comply with the core
principles established in this paragraph and
any requirement that the Commission may impose
by rule or regulation pursuant to section
8a(5).
``(ii) Reasonable discretion.--Except where
the Commission determines otherwise by rule or
regulation, a derivatives clearing organization
shall have reasonable discretion in
establishing the manner in which it complies
with the core principles established in this
paragraph.
``(B) Financial resources.--
``(i) In general.--Each derivatives
clearing organization shall have adequate
financial, operational, and managerial
resources to discharge its responsibilities.
``(ii) Minimum resources.--The financial
resources of each derivatives clearing
organization shall, at a minimum, exceed the
total amount that would--
``(I) enable the organization to
meet its financial obligations to its
members and participants
notwithstanding a default by the member
or participant creating the largest
financial exposure for that
organization in extreme but plausible
market conditions; and
``(II) enable the organization to
cover its operating costs for a period
of 1 year, calculated on a rolling
basis.
``(C) Participant and product eligibility.--
``(i) Standards.--Each derivatives clearing
organization shall establish--
``(I) appropriate admission and
continuing eligibility standards
(including sufficient financial
resources and operational capacity to
meet obligations arising from
participation in the derivatives
clearing organization) for members of
and participants in the organization;
and
``(II) appropriate standards for
determining eligibility of agreements,
contracts, or transactions submitted to
the organization for clearing.
``(ii) Ongoing verification.--Each
derivatives clearing organization shall have
procedures in place to verify that its
participation and membership requirements are
met on an ongoing basis.
``(iii) Fair standards.--Each derivatives
clearing organization's participation and
membership requirements shall be objective,
publicly disclosed, and permit fair and open
access.
``(D) Risk management.--
``(i) In general.--Each 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) Credit exposure.--Each derivatives
clearing organization shall measure its credit
exposures to its members and participants at
least once each business day and shall monitor
such exposures throughout the business day.
``(iii) Limiting exposure.--Through margin
requirements and other risk control mechanisms,
a derivatives clearing organization shall limit
its exposures to potential losses from defaults
by its members and participants so that the
operations of the organization would not be
disrupted and nondefaulting members or
participants would not be exposed to losses
that such members or participants cannot
anticipate or control.
``(iv) Margin requirements.--The margin
required by a derivatives clearing organization
from its members and participants shall be
sufficient to cover potential exposures in
normal market conditions.
``(v) Risk-based margin requirements.--The
models and parameters used by a derivatives
clearing organization in setting the margin
requirements under clause (iv) shall be risk-
based and reviewed regularly.
``(E) Settlement procedures.--Each 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;
``(vi) for physical settlements, establish
rules that clearly state the obligations of the
organization with respect to physical
deliveries; and
``(vii) identify and manage the risks from
the obligations described under clause (vi).
``(F) Treatment of funds.--
``(i) Safety of funds.--Each derivatives
clearing organization shall have standards and
procedures designed to protect and ensure the
safety of member and participant funds and
assets.
``(ii) Holding of funds.--Each derivatives
clearing organization shall hold member and
participant funds and assets in a manner
whereby risk of loss or of delay in the
organization's access to the assets and funds
is minimized.
``(iii) Minimizing risks.--Assets and funds
invested by a derivatives clearing organization
shall be held in instruments with minimal
credit, market, and liquidity risks.
``(G) Default rules and procedures.--
``(i) Insolvency issues.--Each 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) Default procedures.--The default
procedures of each derivatives clearing
organization shall be clearly stated, and shall
ensure that the organization can take timely
action to contain losses and liquidity
pressures and to continue meeting its
obligations.
``(iii) Public availability.--The default
procedures of each derivatives clearing
organization shall be publicly available.
``(H) Enforcement.--Each derivatives clearing
organization shall--
``(i) maintain adequate arrangements and
resources for the effective--
``(I) monitoring and enforcement of
compliance with the rules of the
organization; and
``(II) 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 the rules of the organization.
``(I) System safeguards.--Each derivatives clearing
organization shall--
``(i) establish and maintain a program of
risk analysis and oversight to identify and
minimize sources of operational risk through
the development of appropriate controls and
procedures, and 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 daily processing, clearing, and
settlement.
``(J) Reporting.--Each derivatives clearing
organization shall provide to the Commission all
information necessary for the Commission to conduct
oversight of the organization.
``(K) Recordkeeping.--Each derivatives clearing
organization shall maintain for a period of 5 years
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.
``(L) Public information.--
``(i) In general.--Each 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) Availability of rules.--Each
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) Additional disclosures.--Each
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 its members
and participants;
``(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.--Each 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.--Unless appropriate
to achieve the purposes of this Act, a 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) Transparency.--Each derivatives
clearing organization shall establish
governance arrangements that are transparent in
order to fulfill public interest requirements
and to support the objectives of owners and
participants.
``(ii) Fitness standards.--Each derivatives
clearing organization shall establish and
enforce appropriate fitness standards for
directors, members of any disciplinary
committee, 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
clause.
``(P) Conflicts of interest.--Each 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 such conflicts of interest.
``(Q) Composition of the boards.--Each derivatives
clearing organization shall ensure that the composition
of the governing board or committee includes market
participants.
``(R) Legal risk.--Each derivatives clearing
organization shall have a well-founded, transparent,
and enforceable legal framework for each aspect of its
activities.
``(S) Modification of core principles.--The
Commission may conform the core principles established
in this paragraph to reflect evolving United States and
international standards.''.
(4) Reporting.--Section 5b of the Commodity Exchange Act (7
U.S.C. 7a-1) is further amended by adding after subsection (k),
as added by this section, the following:
``(l) Reporting.--
``(1) Transparency.--
``(A) In general.--A derivatives clearing
organization that clears swaps shall provide to the
Commission and any swap repository designated by the
Commission all information determined by the Commission
to be necessary to perform its responsibilities under
this Act.
``(B) Data collection requirements.--The Commission
shall adopt data collection and maintenance
requirements for swaps cleared by derivatives clearing
organizations that are comparable to the corresponding
requirements for swaps accepted by swap repositories
and swaps traded on alternative swap execution
facilities.
``(C) Reports on security-based swap agreements to
be shared with the securities and exchange
commission.--A derivatives clearing organization that
clears security-based swap agreements (as defined in
section 3(a)(75) of the Securities Exchange Act) shall,
upon request for the protection of investors and in the
public interest, make available to the Securities and
Exchange Commission all information relating to such
security-based swap agreements.
``(D) Sharing of information.--Subject to section
8, the Commission shall share such information, upon
request, with the Board, the Securities and Exchange
Commission, the appropriate Federal banking agencies,
the Financial Stability Oversight Council, and the
Department of Justice or to other persons the
Commission deems appropriate, including foreign
financial supervisors (including foreign futures
authorities), foreign central banks, and foreign
ministries.
``(2) Public information.--A derivatives clearing
organization that clears swaps shall provide to the Commission,
or its designee, such information as is required by, and in a
form and at a frequency to be determined by, the Commission, in
order to comply with the public reporting requirements
contained in section 8(j).''.
(5) Existing depository institutions and clearing
agencies.--Section 5b(c) of the Commodity Exchange Act (7
U.S.C. 7a-1(c)) is amended by adding at the end the following:
``(4) Existing depository institutions and clearing
agencies.--A depository institution (as that term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)) 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 depository
institution 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 date of the
enactment of this paragraph. Such depository institution or
clearing agency shall be subject to the requirements of this
Act and the regulations thereunder that are applicable to
registered derivatives clearing organizations. A depository
institution to which this paragraph applies may, by the vote of
the shareholders owning not less than 51 percent of the voting
interests of the institution, 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.''.
(6) Technical change.--Section 8(e) of the Commodity
Exchange Act (7 U.S.C. 12(e)) is amended in the last sentence--
(A) by inserting ``, central bank and ministries,''
after ``department'' each place that term appears; and
(B) by striking ``futures authority.'' and
inserting ``futures authority,''.
(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)(75) 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(34)
of the Commodity Exchange Act or security-based swap in section
3(a)(68) of the Securities Exchange Act of 1934; and
``(2) has become known to the trade as a swap or security-
based swap, or otherwise has been structured as an identified
banking product for the purpose of evading the provisions of
the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities
Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.).
``(c) Exception.--The exclusions in subsection (a) shall not apply
to an identified 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(34) of the
Commodity Exchange Act or security-based swap in section
3(a)(68) of the Securities Exchange Act of 1934; and
``(3) has become known to the trade as a swap or security-
based swap, or otherwise has been structured as an identified
banking product for the purpose of evading the provisions of
the Commodity Exchange Act (7 U.S.C. 1 et seq.), the Securities
Act of 1933 (15 U.S.C. 77a et seq.), or the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.).''.
SEC. 714. 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(k)(2);
``(B) swap repositories pursuant to section
21(c)(3); and
``(C) reports received by the Commission pursuant
to section 4r.''.
SEC. 715. 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.--A person may register as a swap
repository by filing with the Commission an application in such
form as the Commission, by rule, may prescribe, containing the
rules of the swap repository and such other information and
documentation as the Commission, by rule, may prescribe as
necessary or appropriate in the public interest, for the
protection of investors, or in the furtherance of the purposes
of this section.
``(2) Inspection and examination.--Registered swap
repositories shall be subject to inspection and examination by
any representative of the Commission.
``(3) Sharing of information with securities and exchange
commission.--Registered swap repositories shall make available
to the Securities and Exchange Commission, upon request, all
information relating to security-based swap agreements that are
maintained by such swap repository.
``(b) Standard Setting.--
``(1) Data identification.--The Commission shall prescribe
standards that specify the data elements for each swap that
shall be collected and maintained by each registered swap
repository.
``(2) Data collection and maintenance.--The Commission
shall prescribe data collection and data maintenance standards
for swap repositories.
``(3) Comparability.--The standards prescribed by the
Commission under this subsection shall be comparable to the
data standards imposed by the Commission on derivatives
clearing organizations that clear swaps.
``(c) Duties.--A swap repository shall--
``(1) accept data prescribed by the Commission for each
swap under subsection (b);
``(2) maintain such data in such form and manner and for
such period as may be required by the Commission;
``(3) provide to the Commission, or its designee, such
information as is required by, and in a form and at a frequency
to be determined by, the Commission, in order to comply with
the public reporting requirements contained in section 8(j);
and
``(4) make available, on a confidential basis pursuant to
section 8, all data obtained by the swap repository, including
individual counterparty trade and position data, to the
Commission, the appropriate Federal banking agencies, the
Financial Stability Oversight Council, the Securities and
Exchange Commission, and the Department of Justice or to other
persons the Commission deems appropriate, including foreign
financial supervisors (including foreign futures authorities),
foreign central banks, and foreign ministries.
``(d) Required Registration for Security-based Swap Repositories.--
Any person that is required to be registered as a swap repository under
this section shall register with the Commission regardless of whether
that person also is registered with the Securities and Exchange
Commission as a security-based swap repository.
``(e) Harmonization of Rules.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act of 2010,
the Commission and the Securities and Exchange Commission shall jointly
adopt uniform rules governing persons that are registered under this
section and persons that are registered as security-based swap
repositories under the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.), including uniform rules that specify the data elements that
shall be collected and maintained by each repository.
``(f) Exemptions.--The Commission may exempt, conditionally or
unconditionally, a swap repository from the requirements of this
section if the Commission finds that such swap repository is subject to
comparable, comprehensive supervision and regulation on a consolidated
basis by the Securities and Exchange Commission, an appropriate Federal
banking agency, or the appropriate governmental authorities in the
organization's home country.''.
SEC. 716. 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 shall satisfy
the reporting requirements of subsection (b), if such person--
``(1) did not clear the swap in accordance with section
2(j)(1); and
``(2) did not have data regarding the swap accepted by a
swap repository in accordance with rules (including time
frames) adopted by the Commission under section 21.
``(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 Stability
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. 717. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP
PARTICIPANTS.
(a) In General.--The Commodity Exchange Act (7 U.S.C. 1 et seq.) is
amended by inserting after section 4r (as added by section 716) the
following:
``SEC. 4S. REGISTRATION AND REGULATION OF SWAP DEALERS AND MAJOR SWAP
PARTICIPANTS.
``(a) Registration.--It shall be unlawful for any person--
``(1) to act as a swap dealer unless such person is
registered as a swap dealer with the Commission; and
``(2) to act as a major swap participant unless such person
shall have registered as a major swap participant with the
Commission.
``(b) Requirements.--
``(1) In general.--A person shall register as a swap dealer
or major swap participant by filing a registration application
with the Commission.
``(2) Contents.--The application required under paragraph
(1) shall be made in such form and manner as prescribed by the
Commission, giving any information and facts as the Commission
may deem necessary concerning the business in which the
applicant is or will be engaged. Such person, when registered
as a swap dealer or major swap participant, shall continue to
report and furnish to the Commission such information
pertaining to such person's business as the Commission may
require.
``(3) Expiration.--Each registration shall expire at such
time as the Commission may by rule or regulation prescribe.
``(4) Rules.--Except as provided in subsections (c), (d),
and (e), the Commission may prescribe rules applicable to swap
dealers and major swap participants, including rules that limit
the activities of swap dealers and major swap participants.
``(5) Transition.--Rules adopted under this section shall
provide for the registration of swap dealers and major swap
participants not later than 1 year after the effective date of
the Over-the-Counter Derivatives Markets Act of 2010.
``(6) Statutory disqualification.--Except to the extent
otherwise specifically provided by rule, regulation, or order,
it shall be unlawful for a swap dealer or a major swap
participant to permit any person associated with a swap dealer
or a major swap participant who is subject to a statutory
disqualification to effect or be involved in effecting swaps on
behalf of such swap dealer or major swap participant, if such
swap dealer or major swap participant knew, or in the exercise
of reasonable care should have known, of such statutory
disqualification.
``(c) Dual Registration.--
``(1) Swap dealer.--Any person that is required to be
registered as a swap dealer under this section shall register
with the Commission regardless of whether that person also is a
depository institution or is registered with the Securities and
Exchange Commission as a security-based swap dealer.
``(2) Major swap participant.--Any person that is required
to be registered as a major swap participant under this section
shall register with the Commission regardless of whether that
person also is a depository institution or is registered with
the Securities and Exchange Commission as a major security-
based swap participant.
``(d) Joint Rules.--
``(1) In general.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act
of 2010, the Commission and the Securities and Exchange
Commission shall jointly adopt uniform rules for persons that
are registered--
``(A) as swap dealers or major swap participants
under this section; and
``(B) as security-based swap dealers or major
security-based swap participants under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et seq.).
``(2) Exception for prudential requirements.--The
Commission and the Securities and Exchange Commission shall not
prescribe rules imposing prudential requirements (including
activity restrictions) on swap dealers, major swap
participants, security-based swap dealers, or major security-
based swap participants that are depository institutions, as
that term is defined in section 3 of the Federal Deposit
Insurance Act (12 U.S.C. 1813). This provision shall not be
construed as limiting the authority of the Commission and the
Securities and Exchange Commission to prescribe appropriate
business conduct, reporting, and recordkeeping requirements to
protect investors.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Swap dealers and major swap participants that
are depository institutions.--Each registered swap
dealer and major swap participant that is a depository
institution, as that term is defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813),
shall meet such minimum capital requirements and
minimum initial and variation margin requirements as
the appropriate Federal banking agency shall by rule or
regulation prescribe under paragraph (2)(A) to help
ensure the safety and soundness of the swap dealer or
major swap participant.
``(B) Swap dealers and major swap participants that
are not depository institutions.--Each registered swap
dealer and major swap participant that is not a
depository institution, as that term is defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813), shall meet such minimum capital
requirements and minimum initial and variation margin
requirements as the Commission and the Securities and
Exchange Commission shall by rule or regulation jointly
prescribe under paragraph (2)(B) to help ensure the
safety and soundness of the swap dealer or major swap
participant.
``(2) Joint rules.--
``(A) Swap dealers and major swap participants that
are depository institutions.--Not later than 180 days
after the date of the enactment of the Over-the-Counter
Derivatives Markets Act of 2010, the appropriate
Federal banking agencies, in consultation with the
Commission and the Securities and Exchange Commission,
shall jointly adopt rules imposing capital and margin
requirements under this subsection for swap dealers and
major swap participants that are depository
institutions, as that term is defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813).
``(B) Swap dealers and major swap participants that
are not depository institutions.--Not later than 180
days after the date of the enactment of the Over-the-
Counter Derivatives Markets Act of 2010, the Commission
and the Securities and Exchange Commission shall
jointly adopt rules imposing capital and margin
requirements under this subsection for swap dealers and
major swap participants that are not depository
institutions, as that term is defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813).
``(3) Capital.--
``(A) Swap dealers and major swap participants that
are depository institutions.--The capital requirements
prescribed under paragraph (2)(A) for swap dealers and
major swap participants that are depository
institutions shall contain--
``(i) a capital requirement that is greater
than zero for swaps that are cleared by a
registered derivatives clearing organization or
a derivatives clearing organization that is
exempt from registration under section 5b(j) of
this Act; and
``(ii) to offset the greater risk to the
swap dealer or major swap participant and to
the financial system arising from the use of
swaps that are not centrally cleared,
substantially higher capital requirements for
swaps that are not cleared by a registered
derivatives clearing organization or a
derivatives clearing organization that is
exempt from registration under section 5b(j) of
this Act than for swaps that are centrally
cleared.
``(B) Swap dealers and major swap participants that
are not depository institutions.--The capital
requirements prescribed under paragraph (2)(B) for swap
dealers and major swap participants that are not
depository institutions shall be as strict as or
stricter than the capital requirements prescribed for
swap dealers and major swap participants that are
depository institutions under paragraph (2)(A).
``(C) Rule of construction.--
``(i) In general.--Nothing in this section
shall limit, or be construed to limit, the
authority--
``(I) of the Commission to set
financial responsibility rules for a
futures commission merchant or
introducing broker registered pursuant
to section 4f(a) of this title (except
for section 4f(a)(3) thereof) in
accordance with section 4f(b) of this
title; or
``(II) of the Securities and
Exchange Commission to set financial
responsibility rules for a broker or
dealer registered pursuant to section
15(b) of the Securities Exchange Act of
1934 (except for section 15(b)(11)
thereof) in accordance with section
15(c)(3) of the Securities Exchange Act
of 1934.
``(ii) Futures commission merchants and
other dealers.--A futures commission merchant,
introducing broker, broker, or dealer shall
maintain sufficient capital to comply with the
stricter of any applicable capital requirements
to which such futures commission merchant,
introducing broker, broker, or dealer is
subject to under this title or the Securities
Exchange Act of 1934.
``(4) Margin.--
``(A) Swap dealers and major swap participants that
are depository institutions.--
``(i) In general.--The appropriate Federal
banking agency for swap dealers and major swap
participants that are depository institutions
shall impose both initial and variation margin
requirements in accordance with paragraph
(2)(A) on all swaps that are not cleared by a
registered derivatives clearing organization or
a derivatives clearing organization that is
exempt from registration under section 5b(j) of
this Act.
``(ii) Exemption.--The appropriate Federal
banking agency for swap dealers and major swap
participants that are depository institutions,
by rule or order, as the agency deems
consistent with the public interest, may
conditionally or unconditionally exempt a swap
dealer or a major swap participant that is a
depository institution from the requirements of
this subparagraph and the rules issued under
this subparagraph with regard to any swap in
which 1 of the counterparties is--
``(I) not a swap dealer, major swap
participant, security-based swap
dealer, or a major security-based swap
participant;
``(II) using the swap as part of an
effective hedge under generally
accepted accounting principles; and
``(III) predominantly engaged in
activities that are not financial in
nature, as defined in section 4(k) of
the Bank Holding Company Act of 1956
(12 U.S.C. 1843(k)).
``(iii) Determination of the financial
stability oversight council.--The appropriate
Federal banking agency may act by rule or order
to exempt a swap dealer or major swap
participant for which it is the primary
financial regulatory agency from any
requirement or rule under this subsection only
if--
``(I) the appropriate Federal
banking agency has provided a written
notice to the Financial Stability
Oversight Council describing the
proposed exemption; and
``(II) the Financial Stability
Oversight Council has not made a
determination and notified the
appropriate Federal banking agency
within 60 days of receipt of such
notice that such exemption would pose a
threat to the stability of the United
States financial system.
``(B) Swap dealers and major swap participants that
are not depository institutions.--
``(i) In general.--The Commission and the
Securities and Exchange Commission shall impose
both initial and variation margin requirements
in accordance with paragraph (2)(B) for swap
dealers and major swap participants that are
not depository institutions on all swaps that
are not cleared by a registered derivatives
clearing organization or a derivatives clearing
organization that is exempt from registration
under section 5b(j) of this Act. Any such
initial and variation margin requirements shall
be as strict as or stricter than the margin
requirements prescribed under paragraph (4)(A).
``(ii) Exemption.--The Commission by rule
or order, as the Commission deems consistent
with the public interest, may conditionally or
unconditionally exempt a swap dealer or a major
swap participant that is not a depository
institution from the requirements of this
subparagraph and the rules issued under this
subparagraph with regard to any swap in which 1
of the counterparties is--
``(I) not a swap dealer, major swap
participant, security-based swap
dealer, or a major security-based swap
participant;
``(II) using the swap as part of an
effective hedge under generally
accepted accounting principles; and
``(III) predominantly engaged in
activities that are not financial in
nature, as defined in section 4(k) of
the Bank Holding Company Act of 1956
(12 U.S.C. 1843(k)).
``(iii) Determination of the financial
stability oversight council.--The Commission
may act by rule or order to exempt a swap
dealer or major swap participant that is not a
depository institution from any requirement or
rule under this subsection only if--
``(I) the Commission has provided a
written notice to the Financial
Stability Oversight Council describing
the proposed exemption; and
``(II) the Financial Stability
Oversight Council has not made a
determination and notified the
Commission within 60 days of receipt of
such notice that such exemption would
pose a threat to the stability of the
United States financial system.
``(5) Margin requirements.--In prescribing margin
requirements under this subsection, the appropriate Federal
banking agency with respect to swap dealers and major swap
participants that are depository institutions and the
Commission and the Securities and Exchange Commission with
respect to swap dealers and major swap participants that are
not depository institutions may permit the use of noncash
collateral, as the agency or the Commission and the Securities
and Exchange Commission determines to be consistent with--
``(A) preserving the financial integrity of markets
trading swaps; and
``(B) preserving the stability of the United States
financial system.
``(6) Requested margin.--If any party to a swap that is
exempt from the margin requirements of paragraph (4)(A)(i)
pursuant to the provisions of paragraph (4)(A)(ii) or from the
margin requirements of paragraph (4)(B)(i) pursuant to the
provisions of paragraph (4)(B)(ii) requests that such swap be
margined, then--
``(A) the exemption shall not apply; and
``(B) the counterparty to such swap shall provide
the requested margin.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered swap dealer and major
swap participant--
``(A) shall make such reports as are prescribed by
rule or regulation regarding the transactions and
positions and financial condition of such dealer or
participant;
``(B) that is--
``(i) a depository institution 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 rule or
regulation by the appropriate Federal banking
agency; and
``(ii) not a depository institution shall
keep books and records in such form and manner
and for such period as may be prescribed by
rule or regulation pursuant to paragraph (2);
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 the
enactment of the Over-the-Counter Derivatives Markets Act of
2010, the Commission and the Securities and Exchange Commission
shall jointly adopt rules governing reporting and recordkeeping
for swap dealers, major swap participants, security-based swap
dealers, and major security-based swap participants that are
not depository institutions.
``(g) Daily Trading Records.--
``(1) In general.--Each registered swap dealer and major
swap participant shall, for such period as may be prescribed by
rule or regulation, maintain daily trading records of that
dealer's or participant's--
``(A) swaps and all related records (including
related cash or forward transactions); and
``(B) recorded communications, including the
electronic mail, instant messages, and recordings of
telephone calls.
``(2) Information requirements.--The daily trading records
required to be maintained under paragraph (1) shall include
such information as shall be prescribed 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.--
``(A) Maintenance of audit trail.--Each registered
swap dealer and major swap participant shall maintain a
complete audit trail for conducting comprehensive and
accurate trade reconstructions.
``(B) Permissible compliance by entity other than
dealer or participant.--A registered swap repository
may, at the request of a registered swap dealer or
major swap participant, satisfy the requirement of
subparagraph (A) on behalf of such registered swap
dealer or major swap participant.
``(5) Rules.--Not later than 1 year after the date of the
enactment of the Over-the-Counter Derivatives Markets Act of
2010, the Commission and the Securities and Exchange Commission
shall jointly adopt rules governing daily trading records for
swap dealers, major swap participants, security-based swap
dealers, and major security-based swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered swap dealer and major
swap participant shall conform with such business conduct
standards as may be prescribed by rule or regulation, including
any standards 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 pursuant to paragraph
(1) shall--
``(A) establish the standard of care for a swap
dealer or major swap participant to verify that any
counterparty meets the eligibility standards for an
eligible contract participant;
``(B) require disclosure by the swap dealer or
major swap participant to any counterparty to the
transaction (other than a swap dealer, major swap
participant, security-based swap dealer, or major
security-based swap participant) of--
``(i) information about the material risks
and characteristics of the swap;
``(ii) the source and amount of any fees or
other material remuneration that the swap
dealer or major swap participant would directly
or indirectly expect to receive in connection
with the swap; 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;
``(C) establish a standard of conduct for a swap
dealer or major swap participant to communicate in a
fair and balanced manner based on principles of fair
dealing and good faith;
``(D) establish a standard of conduct for a swap
dealer or major swap participant, with respect to a
counterparty that is an eligible contract participant
within the meaning of subclause (I) or (II) of clause
(vii) of section 1a(12) of this Act, to have a
reasonable basis to believe that the counterparty has
an independent representative that--
``(i) has sufficient knowledge to evaluate
the transaction and risks;
``(ii) is not subject to a statutory
disqualification;
``(iii) is independent of the swap dealer
or major swap participant;
``(iv) undertakes a duty to act in the best
interests of the counterparty it represents;
``(v) makes appropriate disclosures; and
``(vi) will provide written representations
to the eligible contract participant regarding
fair pricing and the appropriateness of the
transaction; and
``(E) establish such other standards and
requirements as the Commission may determine are
necessary or appropriate in the public interest, for
the protection of investors, or otherwise in
furtherance of the purposes of this title.
``(3) Rules.--Not later than 1 year after the date of
enactment of the Over-the-Counter Derivatives Markets Act of
2010, the Commission and the Securities and Exchange Commission
shall jointly prescribe rules under this subsection governing
business conduct standards for swap dealers, major swap
participants, security-based swap dealers, and major security-
based swap participants.
``(i) Documentation and Back Office Standards.--
``(1) In general.--Each registered swap dealer and major
swap participant shall conform with standards, as may be
prescribed by rule or regulation, addressing timely and
accurate confirmation, processing, netting, documentation, and
valuation of all swaps.
``(2) Rules.--Not later than 1 year after the date of the
enactment of the Over-the-Counter Derivatives Markets Act of
2010, the Commission and the Securities and Exchange Commission
shall jointly adopt rules governing documentation and back
office standards for swap dealers, major swap participants,
security-based swap dealers, and major security-based swap
participants.
``(j) Dealer Responsibilities.--Each registered swap dealer and
major swap participant shall, at all times, 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
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
upon request.
``(4) Conflicts of interest.--The swap dealer and major
swap participant shall implement conflict of interest systems
and procedures that--
``(A) establish structural and institutional
safeguards to assure that the activities of any person
within the firm relating to research or analysis of the
price or market for any commodity are separated by
appropriate informational partitions within the firm
from the review, pressure, or oversight of those whose
involvement in trading or clearing activities might
potentially bias their judgment or supervision; and
``(B) address such other issues as the Commission
determines appropriate.
``(5) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a swap dealer
or major swap participant shall avoid--
``(A) adopting any processes or taking any actions
that result in any unreasonable restraints of trade; or
``(B) imposing any material anticompetitive burden
on trading.
``(k) Rules.--The Commission and the Securities and Exchange
Commission shall consult with each other prior to adopting any rules
under the Over-the-Counter Derivatives Markets Act of 2010.''.
(b) Conflict of Interests.--The Commodity Futures Trading
Commission and the Securities and Exchange Commission shall jointly
adopt rules mitigating conflicts of interest in connection with a swap
dealer, security-based swap dealer, major swap participant, or major
security-based swap participant's conduct of business with a
derivatives clearing organization, clearing agency, board of trade, or
an alternative swap execution facility that clears or trades swaps in
which such swap dealer, security-based swap dealer, major swap
participant, or major security-based swap participant has a material
debt or equity investment.
SEC. 718. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SWAP
TRANSACTIONS.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
inserting after section 4s (as added by section 717) the following:
``SEC. 4T. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SWAP
TRANSACTIONS.
``(a) Cleared Swaps.--A swap dealer, futures commission merchant,
or derivatives clearing organization by or through which funds or other
property provided as initial margin or collateral are held to margin,
guarantee, or secure the obligations of a counterparty under a swap to
be cleared by or through a derivatives clearing organization shall
segregate, maintain, and use the funds or other property provided as
initial margin or collateral for the benefit of the counterparty, in
accordance with such rules and regulations as the Commission shall
prescribe for swap dealers that are not depository institutions, as
that term is defined in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813) or the appropriate Federal banking agency shall
prescribe for swap dealers that are depository institutions. Any such
funds or other property provided as initial margin or collateral shall
be treated as customer property under this Act.
``(b) Other Swaps.--At the request of a swap counterparty who
provides funds or other property as initial margin or collateral to a
swap dealer to margin, guarantee, or 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 provided as initial margin or collateral for the benefit of
the counterparty, and maintain the funds or other property in an
account that 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 shall prescribe for
swap dealers that are not depository institutions, as that term is
defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813) or the appropriate Federal banking agency shall prescribe for
swap dealers that are depository institutions. Any segregation
requested under this subsection shall be made available by a swap
dealer to a counterparty on fair and reasonable terms on a non-
discriminatory basis. 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, provided, however, that
the segregated funds or other property under this subsection may be
invested only in such investments as the Commission or the appropriate
Federal banking agency, as applicable, permits by rule or regulation,
and shall not be pledged, re-hypothecated, or otherwise encumbered by a
swap dealer.''.
SEC. 719. 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. 720. ALTERNATIVE 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. ALTERNATIVE SWAP EXECUTION FACILITIES.
``(a) Definition.--For purposes of this section, the term
`alternative swap execution facility' means an electronic trading
system with pre-trade and post-trade transparency in which multiple
participants have the ability to execute or trade swaps by accepting
bids and offers made by other participants that are open to multiple
participants in the system, but which is not an exchange.
``(b) Registration.--
``(1) In general.--No person may operate a facility for the
trading of swaps unless the facility is registered as an
alternative swap execution facility under this section or as a
designated contract market registered under this Act.
``(2) Required registration for alternative swap execution
facilities.--Any person that is required to be registered as an
alternative swap execution facility under this section shall
register with the Commission regardless of whether that person
also is registered with the Securities and Exchange Commission
as an alternative swap execution facility.
``(c) Requirements for Trading.--An alternative swap execution
facility that is registered under subsection (b) may trade any swap.
``(d) Trading by Contract Markets.--A board of trade that operates
a contract market shall, to the extent that the board of trade also
operates an alternative swap execution facility and uses the same
electronic trade execution system for trading on the contract market
and the alternative swap execution facility, identify whether
electronic trading is taking place on the contract market or the
alternative swap execution facility.
``(e) Criteria for Registration.--
``(1) In general.--To be registered as an alternative swap
execution facility, the facility shall be required to
demonstrate to the Commission that such facility meets the
criteria established under this section.
``(2) Deterrence of abuses.--Each alternative swap
execution facility shall establish and enforce trading and
participation rules that will deter abuses and have the
capacity to detect, investigate, and enforce those rules,
including--
``(A) means to obtain information necessary to
perform the functions required under this section; or
``(B) means to--
``(i) provide market participants with
impartial access to the market; and
``(ii) capture information that may be used
in establishing whether any violations of this
section have occurred.
``(3) Trading procedures.--Each alternative swap execution
facility shall establish and enforce rules or terms and
conditions defining, or specifications detailing, trading
procedures to be used in entering and executing orders traded
on or through its facilities.
``(4) Financial integrity of transactions.--Each
alternative 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).
``(f) Core Principles for Alternative Swap Execution Facilities.--
``(1) Compliance.--
``(A) In general.--To maintain its registration as
an alternative swap execution facility, the facility
shall comply with the core principles established in
this subsection and any requirement that the Commission
may impose by rule or regulation pursuant to section
8a(5).
``(B) Reasonable discretion.--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 the
core principles established in this subsection.
``(2) Compliance with rules.--Each alternative swap
execution facility shall monitor and enforce compliance with
any of the rules of the facility, including the terms and
conditions of the swaps traded on or through the facility and
any limitations on access to the facility.
``(3) Swaps not readily susceptible to manipulation.--Each
alternative swap execution facility shall permit trading only
in swaps that are not readily susceptible to manipulation.
``(4) Monitoring of trading.--Each alternative swap
execution facility shall monitor trading in swaps to prevent
manipulation, price distortion, and disruptions of the delivery
or cash settlement process through surveillance, compliance,
and disciplinary practices and procedures, including methods
for conducting real-time monitoring of trading and
comprehensive and accurate trade reconstructions.
``(5) Ability to obtain information.--Each alternative swap
execution facility shall--
``(A) establish and enforce rules that will allow
the facility to obtain any necessary information to
perform any of the functions described in this
subsection;
``(B) provide the information to the Commission
upon request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(6) Position limits or accountability.--
``(A) In general.--To reduce the potential threat
of market manipulation or congestion, especially during
trading in the delivery month, and to eliminate or
prevent excessive speculation as described in section
4a(a), an alternative swap execution facility shall
adopt for each of its contracts, where necessary and
appropriate, position limitations or position
accountability for speculators.
``(B) For certain contracts.--For any contract that
is subject to a position limitation established by the
Commission pursuant to section 4a(a), an alternative
swap execution facility shall set its position
limitation at a level no higher than the Commission
limitation.
``(7) Emergency authority.--Each alternative 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--
``(A) to liquidate or transfer open positions in
any swap; or
``(B) to suspend or curtail trading in a swap.
``(8) Timely publication of trading information.--Each
alternative 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.
``(9) Recordkeeping and reporting.--
``(A) In general.--Each alternative swap execution
facility shall--
``(i) 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;
``(ii) 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;
and
``(iii) make available to the Securities
and Exchange Commission, upon request, all
information, including a complete audit trail,
relating to transactions in security-based swap
agreements (as such term is defined in section
3(a)(75) of the Securities Exchange Act of
1934).
``(B) Data collection requirements.--The Commission
shall adopt data collection and reporting requirements
for alternative swap execution facilities that are
comparable to corresponding requirements for
derivatives clearing organizations and swap
repositories.
``(10) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, an alternative
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.
``(11) Conflicts of interest.--Each alternative 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 any
conflicts of interest.
``(12) Designation of compliance officer.--
``(A) In general.--Each alternative swap execution
facility shall designate an individual to serve as a
compliance officer.
``(B) Duties.--The compliance officer shall perform
the following duties:
``(i) Reporting directly to the board or to
the senior officer of the facility.
``(ii) Reviewing the compliance of the
facility with the core principles established
in this subsection.
``(iii) Consulting with the board of the
facility, a body performing a function similar
to that of a board, or the senior officer of
the facility, to resolve any conflicts of
interest that may arise.
``(iv) Administering the policies and
procedures of the facility required to be
established pursuant to this section.
``(v) Ensuring compliance with commodity
laws and the rules and regulations issued
thereunder, including any rules prescribed by
the Commission pursuant to this section.
``(vi) Establishing procedures for
remediation of noncompliance issues found
during compliance office reviews, lookbacks,
internal or external audit findings, self-
reported errors, or through validated
complaints. Procedures to be established under
this clause include procedures related to the
handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(C) Annual reports required.--
``(i) In general.--The compliance officer
shall annually prepare and sign a report on the
compliance of the alternative swap execution
facility with the commodity laws and the
policies and procedures of the facility,
including the code of ethics and conflict of
interest policies of the facility, in
accordance with rules prescribed by the
Commission.
``(ii) Submission.--The compliance report
required under clause (i) shall accompany the
financial reports of the alternative swap
execution 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.
``(g) Exemptions.--The Commission may exempt, conditionally or
unconditionally, an alternative swap execution facility from
registration under this section if the Commission finds that such
facility is subject to comparable, comprehensive supervision and
regulation on a consolidated basis by the Securities and Exchange
Commission, an appropriate Federal banking agency, or the appropriate
governmental authorities in the organization's home country.
``(h) Harmonization of Rules.--Not later than 180 days after the
date of the enactment of the Over-the-Counter Derivatives Markets Act
of 2010, the Commission and the Securities and Exchange Commission
shall jointly prescribe rules governing the regulation of alternative
swap execution facilities under this section and section 3C of the
Securities Exchange Act of 1934.''.
SEC. 721. DERIVATIVES TRANSACTION EXECUTION FACILITIES AND EXEMPT
BOARDS OF TRADE.
(a) In General.--Sections 5a and 5d of the Commodity Exchange Act
(7 U.S.C. 7a and 7a-3) are repealed.
(b) Conforming Amendments.--
(1) Section 2 of the Commodity Exchange Act (7 U.S.C. 2) is
amended--
(A) in subsection (a)(1)(A), in the first sentence,
by striking ``or 5a'';
(B) in subsection (a)(1)(C)--
(i) in clause (ii)--
(I) by striking ``, or register a
derivatives transaction execution
facility that trades or executes,'';
(II) by striking ``, and no
derivatives transaction execution
facility shall trade or execute such
contracts of sale (or options on such
contracts) for future delivery,''; and
(III) by striking ``or the
derivatives transaction execution
facility,''; and
(ii) in clause (v)--
(I) in subclause (II), by striking
``or derivatives transaction execution
facility''; and
(II) in subclause (V), by striking
``or registered derivatives transaction
execution facility,'';
(C) in subsection (a)(1)(D)--
(i) in clause (i)--
(I) in the matter preceding
subclause (I)--
(aa) by striking ``, or
register a derivatives
transaction execution facility
that trades or executes,''; and
(bb) by striking ``, or
registered as a derivatives
transaction execution facility
for,''; and
(II) in subclause (IV), by striking
``registered derivatives transaction
execution facility,'' each place that
term appears;
(ii) by amending clause (ii)(I) to read as
follows:
``(I) the transaction is conducted
on or subject to the rules of a board
of trade that has been designated by
the Commission as a contract market in
such security futures product;'';
(iii) in clause (ii)(II), by striking ``or
registered derivatives transaction execution
facility''; and
(iv) in clause (ii)(III), by striking ``or
registered derivatives transaction execution
facility'';
(D) in subsection (a)(9)(B)(ii), by striking ``or
derivatives transaction execution facility'', each
place that term appears;
(E) in subsection (c)(1), by striking ``section 5a
of this Act'' and all that follows through ``5d of this
Act'' and inserting ``section 5b of this Act'';
(F) in subsection (c)(2)(B)(iv)--
(i) in subclause (II)(cc), by striking ``or
a derivatives transaction execution facility'';
and
(ii) in subclause (IV)(cc), by striking
``or a derivatives transaction execution
facility'';
(G) in subsection (c)(2)(C)(iii)--
(i) in subclause (II)(cc), by striking ``or
a derivatives transaction execution facility'';
and
(ii) in subclause (IV)(cc), by striking
``or a derivatives transaction execution
facility'';
(H) in subsection (e)(2), by striking ``or a
derivatives transaction execution facility,'';
(I) in subsection (g), by striking ``section 5a of
this Act'' and all that follows through ``5d of this
Act'' and inserting ``section 5b of this Act'';
(J) in subsection (h)(7)(B)--
(i) in clause (i), by striking ``, or a
derivatives transaction execution facility,'';
(ii) in clause (ii), by striking ``, or a
derivatives transaction execution facility,'';
and
(iii) in clause (iv), ``, a derivatives
transaction execution facility,''; and
(K) in subsection (i)(2), by striking ``section 5a
of this Act'' and all that follows through ``5d of this
Act'' and inserting ``section 5b of this Act''.
(2) The Commodity Exchange Act (7 U.S.C. 1 et seq.) is
amended--
(A) by striking ``or derivatives transaction
execution facility'' each place that term appears;
(B) by striking ``or derivatives transaction
execution facility,'' each place that term appears;
(C) by striking ``, derivatives transaction
execution facility,'' each place that term appears;
(D) by striking ``derivatives transaction execution
facility'' each place that term appears;
(E) by striking ``or derivatives transaction
execution facilities,'' each place that term appears;
(F) by striking ``or derivatives transaction
execution facilities'' each place that term appears;
(G) by striking ``or registered derivatives
transaction execution facility'' each place that term
appears;
(H) by striking ``or registered derivatives
transaction execution facility,'' each place that term
appears; and
(I) by striking ``and registered derivatives
transaction execution facility'' each place that term
appears.
(3) Section 4j of the Commodity Exchange Act (7 U.S.C. 6j)
is amended in the heading by striking ``and registered
derivatives transaction execution facilities''.
(4) Section 5(e)(2) of the Commodity Exchange Act (7 U.S.C.
5(e)) is repealed.
(5) Sections 555, 556, 559, and 560 of title 11, United
States Code, are each amended by striking ``, a derivatives
transaction execution facility registered under the Commodity
Exchange Act,'' each place that term appears.
(6) Section 561 of title 11, United States Code, is amended
by striking ``or a derivatives transaction execution facility
registered under the Commodity Exchange Act''.
(7) Section 3(55)(C)(iii)(I) of the Securities Exchange Act
of 1934 (15 U.S.C. 78c(55)(C)(iii)(I)) is amended by striking
``or registered derivatives transaction execution facility''.
(8) Section 6(g)(1)(A) of the Securities Exchange Act of
1934 (15 U.S.C. 78f(g)(1)(A)) is amended--
(A) by striking ``that--'' and all that follows
through ``(i) has been designated'' and inserting
``that has been designated'';
(B) by striking ``; or'' and inserting ``; and'';
and
(C) by striking clause (ii).
(9) Section 5(b)(2)(C)(iii) of the Securities Investor
Protection Act of 1970 (15 U.S.C. 78eee(b)(2)(C)(iii)) is
amended by striking ``, a derivatives transaction execution
facility registered under the Commodity Exchange Act,''.
SEC. 722. DESIGNATED CONTRACT MARKETS.
(a) Execution of Transactions.--Section 5(d) of the Commodity
Exchange Act (7 U.S.C. 7(d)) is amended by amending paragraph (9) to
read as follows:
``(9) Execution of transactions.--
``(A) Open market.--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) Permissible transactions.--The rules may
authorize, for bona fide business purposes--
``(i) transfer trades or office trades;
``(ii) an exchange of--
``(I) futures in connection with a
cash commodity transaction;
``(II) futures for cash
commodities; or
``(III) futures for swaps; or
``(iii) a futures commission merchant,
acting as principal or agent, to enter into or
confirm the execution of a contract for the
purchase or sale of a commodity for future
delivery if the contract is reported, recorded,
or cleared in accordance with the rules of the
contract market or a derivatives clearing
organization.''.
(b) Additional Principles.--Section 5(d) of the Commodity Exchange
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
board of trade's financial resources to be considered adequate,
their value shall exceed the total amount that would enable the
contract market to cover its operating costs for a period of 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
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.''.
SEC. 723. MARGIN.
Section 8a of the Commodity Exchange Act (7 U.S.C. 12a) is amended
in paragraph (7)(C) by striking ``, excepting the setting of levels of
margin''.
SEC. 724. POSITION LIMITS.
(a) Excessive Speculation.--Section 4a(a) of the Commodity Exchange
Act (7 U.S.C. 6a(a)) is amended--
(1) by inserting ``(1)'' after ``(a)'';
(2) in the first sentence, by striking ``on electronic
trading facilities with respect to a significant price
discovery contract'' and inserting ``swaps that perform or
affect a significant price discovery function with respect to
regulated markets'';
(3) in the second sentence, by--
(A) inserting ``, including any group or class of
traders,'' after ``held by any person''; and
(B) striking ``on an electronic trading facility
with respect to a significant price discovery
contract,'' and inserting ``swaps that perform or
affect a significant price discovery function with
respect to regulated markets,''; and
(4) inserting at the end the following:
``(2) Aggregate position limits.--The Commission may, by
rule or regulation, establish limits (including related hedge
exemption provisions) on the aggregate number or amount of
positions in contracts based upon the same underlying commodity
(as defined by the Commission) that may be held by any person,
including any group or class of traders, for each month
across--
``(A) contracts listed by designated contract
markets;
``(B) contracts traded on a foreign board of trade
that provides members or other participants located in
the United States with direct access to its electronic
trading and order matching system; and
``(C) swap contracts that perform or affect a
significant price discovery function with respect to
regulated markets.
``(3) Significant price discovery function.--In making a
determination under paragraph (2) whether a swap performs or
affects a significant price discovery function with respect to
regulated markets, the Commission shall consider, as
appropriate, the following:
``(A) Price linkage.--The extent to which the swap
uses or otherwise relies on a daily or final settlement
price, or other major price parameter, of another
contract traded on a regulated market based upon the
same underlying commodity, to value a position,
transfer or convert a position, financially settle a
position, or close out a position.
``(B) Arbitrage.--The extent to which the price for
the swap is sufficiently related to the price of
another contract traded on a regulated market based
upon the same underlying commodity so as to permit
market participants to effectively arbitrage between
the markets by simultaneously maintaining positions or
executing trades in the swaps on a frequent and
recurring basis.
``(C) Material price reference.--The extent to
which, on a frequent and recurring basis, bids, offers,
or transactions in a contract traded on a regulated
market are directly based on, or are determined by
referencing, the price generated by the swap.
``(D) Material liquidity.--The extent to which the
volume of swaps being traded in the commodity is
sufficient to have a material effect on another
contract traded on a regulated market.
``(E) Other material factors.--Such other material
factors as the Commission specifies by rule or
regulation as relevant to determine whether a swap
serves a significant price discovery function with
respect to a regulated market.
``(4) Exemptions.--The Commission, by rule, regulation, or
order, may exempt, conditionally or unconditionally, any person
or class of persons, any swap or class of swaps, or any
transaction or class of transactions from any requirement the
Commission may establish under this section with respect to
position limits.''.
(b) Tracking Position Limits.--Section 4a(b) of the Commodity
Exchange Act (7 U.S.C. 6a(b)) is amended--
(1) in paragraph (1), by striking ``or derivatives
transaction execution facility or facilities or electronic
trading facility'' and inserting ``or alternative 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 alternative swap
execution facility''.
SEC. 725. ENHANCED AUTHORITY OVER REGISTERED ENTITIES.
(a) Section 5(d)(1) of the Commodity Exchange Act (7 U.S.C.
7(d)(1)) is amended by striking ``The board of trade shall have'' and
inserting ``Except where the Commission otherwise determines by rule or
regulation pursuant to section 8a(5), the board of trade shall have''.
(b) Section 5b(c)(2)(A) of the Commodity Exchange Act (7 U.S.C. 7a-
1(c)(2)(A)) is amended by striking ``The applicant shall have'' and
inserting ``Except where the Commission otherwise determines by rule or
regulation pursuant to section 8a(5), the applicant shall have''.
(c) 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''.
(d) Section 5c(c)(1) of the Commodity Exchange Act (7 U.S.C. 7a-
2(c)(1)) is amended--
(1) by striking ``(1) In general.--Subject to'' and
inserting the following:
``(1) In general.--
``(A) Subject to''; and
(2) by adding at the end the following:
``(B) Unless section 805(e) of the Payment,
Clearing, and Settlement Supervision Act of 2009
applies, the new contract or instrument or clearing of
the new contract or instrument, new rule, or new
amendment shall become effective, pursuant to the
registered entity's certification, 10 business days
after the Commission's receipt of the certification (or
such shorter period as may be determined by the
Commission by rule or regulation) unless the Commission
notifies the registered entity within such time that
the Commission 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) 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 such
notification.''.
(e) Section 5c(d) of the Commodity Exchange Act (7 U.S.C. 7a-2(d))
is repealed.
SEC. 726. FOREIGN BOARDS OF TRADE.
(a) Technical Amendment.--Section 4(b) of the Commodity Exchange
Act (7 U.S.C. 6(b)) is amended in the third sentence by striking ``No
rule or regulation'' and inserting ``Except as provided in paragraphs
(1) and (2), no rule or regulation''.
(b) Registration.--Section 4(b) of the Commodity Exchange Act (7
U.S.C. 6(b)) is further amended by inserting before ``The Commission''
the following:
``(1) Registration.--The Commission may adopt rules and
regulations requiring registration with the Commission for a
foreign board of trade that provides the members of the foreign
board of trade or other participants located in the United
States direct access to the electronic trading and order
matching system of the foreign board of trade, including rules
and regulations prescribing procedures and requirements
applicable to the registration of such foreign boards of trade.
For purposes of this paragraph, `direct access' refers to an
explicit grant of authority by a foreign board of trade to an
identified member or other participant located in the United
States to enter trades directly into the electronic trading and
order matching system of the foreign board of trade.
``(2) Linked contracts.--It shall be unlawful for a foreign
board of trade to provide to the members of the foreign board
of trade or other participants located in the United States
direct access to the electronic trading and order matching
system of the foreign board of trade with respect to an
agreement, contract, or transaction that settles against any
price (including the daily or final settlement price) of 1 or
more contracts listed for trading on a registered entity,
unless the Commission determines that--
``(A) the foreign board of trade makes public daily
trading information regarding the agreement, contract,
or transaction that is comparable to the daily trading
information published by the registered entity for the
1 or more contracts against which the agreement,
contract, or transaction traded on the foreign board of
trade settles; and
``(B) the foreign board of trade (or the foreign
futures authority that oversees the foreign board of
trade)--
``(i) adopts position limits (including
related hedge exemption provisions) for the
agreement, contract, or transaction that are
comparable to the position limits (including
related hedge exemption provisions) adopted by
the registered entity for the 1 or more
contracts against which the agreement,
contract, or transaction traded on the foreign
board of trade settles;
``(ii) has the authority to require or
direct market participants to limit, reduce, or
liquidate any position the foreign board of
trade (or the foreign futures authority that
oversees the foreign board of trade) determines
to be necessary to prevent or reduce the threat
of price manipulation, excessive speculation as
described in section 4a, price distortion, or
disruption of delivery or the cash settlement
process;
``(iii) agrees to promptly notify the
Commission, with regard to the agreement,
contract, or transaction that settles against
any price (including the daily or final
settlement price) of 1 or more contracts listed
for trading on a registered entity, of any
change regarding--
``(I) the information that the
foreign board of trade will make
publicly available;
``(II) the position limits that the
foreign board of trade or foreign
futures authority will adopt and
enforce;
``(III) the position reductions
required to prevent manipulation,
excessive speculation as described in
section 4a, price distortion, or
disruption of delivery or the cash
settlement process; and
``(IV) any other area of interest
expressed by the Commission to the
foreign board of trade or foreign
futures authority;
``(iv) provides information to the
Commission regarding large trader positions in
the agreement, contract, or transaction that is
comparable to the large trader position
information collected by the Commission for the
1 or more contracts against which the
agreement, contract, or transaction traded on
the foreign board of trade settles; and
``(v) provides the Commission with
information necessary to publish reports on
aggregate trader positions for the agreement,
contract, or transaction traded on the foreign
board of trade that are comparable to such
reports on aggregate trader positions for the 1
or more contracts against which the agreement,
contract, or transaction traded on the foreign
board of trade settles.
``(3) Existing foreign boards of trade.--Paragraphs (1) and
(2) shall not be effective with respect to any foreign board of
trade to which the Commission has granted direct access
permission before the date of the enactment of this subsection
until the date that is 180 days after such date of enactment.
``(4) Persons located in the united states.--''.
(c) Liability of Registered Persons Trading on a Foreign Board of
Trade.--
(1) Section 4(a) of the Commodity Exchange Act (7 U.S.C.
6(a)) is amended by inserting ``or by subsection (f)'' after
``Unless exempted by the Commission pursuant to subsection
(c)''.
(2) Section 4 of the Commodity Exchange Act (7 U.S.C. 6) is
further amended by adding at the end the following:
``(f) Additional Exemption.--A person registered with the
Commission, or exempt from registration by the Commission, under this
Act may not be found to have violated subsection (a) with respect to a
transaction in, or in connection with, a contract of sale of a
commodity for future delivery if the person has reason to believe that
the transaction and the contract is made on or subject to the rules of
a foreign board of trade that has complied with paragraphs (1) and (2)
of subsection (b).''.
(d) Contract Enforcement for Foreign Futures Contracts.--Section
22(a) of the Commodity Exchange Act (7 U.S.C. 25(a)) is amended by
adding at the end the following:
``(5) Contract enforcement for foreign futures contracts.--
A contract of sale of a commodity for future delivery traded or
executed on or through the facilities of a board of trade,
exchange, or market located outside the United States for
purposes of section 4(a) shall not be void, voidable, or
unenforceable, and a party to such a contract shall not be
entitled to rescind or recover any payment made with respect to
the contract, based on the failure of the foreign board of
trade to comply with any provision of this Act.''.
SEC. 727. 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) Hybrids.--No hybrid instrument sold to any
investor shall be void, voidable, or unenforceable, and
no party to such hybrid instrument shall be entitled to
rescind, or recover any payment made with respect to,
such a hybrid instrument under this section or any
other provision of Federal or State law, based solely
on the failure of the hybrid instrument to comply with
the terms or conditions of section 2(f) or regulations
of the Commission.
``(B) Agreements between contract participants.--No
agreement, contract, or transaction between eligible
contract participants or persons reasonably believed to
be eligible contract participants shall be void,
voidable, or unenforceable, and no party thereto shall
be entitled to rescind, or recover any payment made
with respect to, such agreement, contract, or
transaction under this section or any other provision
of Federal or State law, based solely on the failure of
the agreement, contract, or transaction to meet the
definition of a swap set forth in section 1a or to be
cleared pursuant to section 2(j)(1).''.
SEC. 728. FDICIA AMENDMENTS.
Sections 408 and 409 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 (12 U.S.C. 4421-4422) are hereby repealed.
SEC. 729. PRIMARY ENFORCEMENT AUTHORITY.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
adding the following new section after section 4b:
``SEC. 4B-1. PRIMARY ENFORCEMENT AUTHORITY.
``(a) Commodity Futures Trading Commission.--Except as provided in
subsections (b), (c), and (d), the Commission shall have primary
authority to enforce the provisions of subtitle A of the Over-the-
Counter Derivatives Markets Act of 2010 with respect to any person.
``(b) Appropriate Federal Banking Agency.--The appropriate Federal
banking agency shall have exclusive authority to enforce the provisions
of section 4s(e) and other prudential requirements of this Act with
respect to depository institutions (as that term is defined in section
3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) that are swap
dealers or major swap participants.
``(c) Referral.--If the appropriate Federal banking agency has
cause to believe that a swap dealer or major swap participant that is a
depository institution may have engaged in conduct that constitutes a
violation of the nonprudential requirements of section 4s or rules
adopted by the Commission thereunder, the agency may recommend in
writing to the Commission that the Commission initiate an enforcement
proceeding as authorized under this Act. The recommendation shall be
accompanied by a written explanation of the concerns giving rise to the
recommendation.
``(d) Backstop Enforcement Authority.--If the Commission does not
initiate an enforcement proceeding before the end of the 90-day period
beginning on the date on which the Commission receives a recommendation
under subsection (c), the appropriate Federal banking agency may
initiate an enforcement proceeding as permitted under Federal law.''.
SEC. 730. ENFORCEMENT.
(a) Section 4b(a)(2) of the Commodity Exchange Act (7 U.S.C.
6b(a)(2)) is amended by striking ``or other agreement, contract, or
transaction subject to paragraphs (1) and (2) of section 5a(g),'' and
inserting ``or swap,''.
(b) Section 4b(b) of the Commodity Exchange Act (7 U.S.C. 6b(b)) is
amended by striking ``or other agreement, contract or transaction
subject to paragraphs (1) and (2) of section 5a(g),'' and inserting
``or swap,''.
(c) Section 4c(a) of the Commodity Exchange Act (7 U.S.C. 6c(a)) is
amended by inserting ``or swap'' before ``if the transaction is used or
may be used''.
(d) Section 6(c) of the Commodity Exchange Act (7 U.S.C. 9) is
amended by inserting ``or of any swap,'' before ``or has willfully
made''.
(e) Section 6(d) of the Commodity Exchange Act (7 U.S.C. 13b) is
amended by inserting ``or of any swap,'' before ``or otherwise is
violating''.
(f) Section 6c of the Commodity Exchange Act (7 U.S.C. 13a-1) is
amended by inserting ``or any swap'' after ``commodity for future
delivery''.
(g) Section 9(a)(2) of the Commodity Exchange Act (7 U.S.C.
13(a)(2)) is amended by inserting ``or of any swap,'' before ``or to
corner''.
(h) Section 9(a)(4) of the Commodity Exchange Act (7 U.S.C.
13(a)(4)) is amended by inserting ``swap repository,'' before ``or
futures association''.
(i) Section 9(e)(1) of the Commodity Exchange Act (7 U.S.C.
13(e)(1)) is amended--
(1) by inserting ``swap repository,'' before ``or
registered futures association''; and
(2) by inserting ``, or swaps,'' before ``on the basis''.
(j) Section 8(b) of the Federal Deposit Insurance Act (12 U.S.C.
1818(b)) is amended--
(1) by redesignating paragraphs (6), (7), (8), (9), and
(10) as paragraphs (7), (8), (9), (10), and (11), respectively;
and
(2) by inserting after paragraph (5), the following:
``(6) This section shall apply to any swap dealer, major
swap participant, security-based swap dealer, major security-
based swap participant, derivatives clearing organization, swap
repository, or alternative swap execution facility, whether or
not it is an insured depository institution, for which there is
an appropriate Federal banking agency for purposes of the Over-
the-Counter Derivatives Markets Act of 2010.''.
SEC. 731. RETAIL COMMODITY TRANSACTIONS.
Section 2(c) of the Commodity Exchange Act (7 U.S.C. 2(c)) is
amended--
(1) in paragraph (1), by striking ``(to the extent provided
in section 5a(g), 5b, 5d, or 12(e)(2)(B))'' and inserting ``5b,
or 12(e)(2)(B))''; and
(2) in paragraph (2), by adding at the end the following:
``(D) Retail commodity transactions.--
``(i) This subparagraph shall apply to any
agreement, contract, or transaction in any
commodity that is--
``(I) entered into with, or offered
to (even if not entered into with), a
person that is not an eligible contract
participant or eligible commercial
entity; and
``(II) entered into, or offered
(even if not entered into), on a
leveraged or margined basis, or
financed by the offeror, the
counterparty, or a person acting in
concert with the offeror or
counterparty on a similar basis.
``(ii) Clause (i) shall not apply to--
``(I) an agreement, contract, or
transaction described in paragraph (1)
or subparagraph (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 not later than 28 days
or such other period as the
Commission may determine by
rule or regulation based upon
the typical commercial practice
in cash or spot markets for the
commodity involved; or
``(bb) creates an
enforceable obligation to
deliver between a seller and a
buyer that have the ability to
deliver and accept delivery,
respectively, in connection
with their line of business;
``(IV) an agreement, contract, or
transaction that is listed on a
national securities exchange registered
under section 6(a) of the Securities
Exchange Act of 1934 (15 U.S.C.
78f(a)); or
``(V) an identified banking
product, as defined in section 402(b)
of the Legal Certainty for Bank
Products Act of 2000 (7 U.S.C. 27(b)).
``(iii) Sections 4(a), 4(b), and 4b shall
apply to any agreement, contract or transaction
described in clause (i), that is not excluded
from clause (i) by clause (ii), as if the
agreement, contract, or transaction were a
contract of sale of a commodity for future
delivery.
``(iv) This subparagraph shall not be
construed to limit any jurisdiction that the
Commission may otherwise have under any other
provision of this Act over an agreement,
contract, or transaction that is a contract of
sale of a commodity for future delivery.
``(v) This subparagraph shall not be
construed to limit any jurisdiction that the
Commission or the Securities and Exchange
Commission may otherwise have under any other
provisions of this Act with respect to security
futures products and persons effecting
transactions in security futures products.
``(vi) For the purposes of this
subparagraph, an agricultural producer, packer,
or handler shall be considered an eligible
commercial entity for any agreement, contract,
or transaction for a commodity in connection
with its line of business.''.
SEC. 732. LARGE SWAP TRADER REPORTING.
The Commodity Exchange Act (7 U.S.C. 1 et seq.) is amended by
adding after section 4t (as added by section 718) the following:
``SEC. 4U. LARGE SWAP TRADER REPORTING.
``(a) Mandatory Reporting of Certain Swaps.--
``(1) In general.--A person that enters into any swap shall
file or cause to be filed with the properly designated officer
of the Commission the reports described in paragraph (2).
``(2) Reports.--
``(A) Swap reports.--Each person described in
paragraph (1) shall, in accordance with the rules and
regulations of the Commission, keep books and records
of any swaps or transactions and positions in any
related commodity traded on or subject to the rules of
any board of trade.
``(B) Cash or spot transactions.--Each person
described in paragraph (1) shall, in accordance with
the rules and regulations of the Commission, keep books
and records of any cash or spot transactions in,
inventories of, and purchase and sale commitments of,
any related commodity traded on or subject to the rules
of any board of trade, if--
``(i) such 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
``(ii) 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.
``(b) Recordkeeping.--Any books and records required to be kept
under subsection (a) shall--
``(1) show complete details concerning all transactions and
positions as the Commission may by rule or regulation
prescribe;
``(2) be open at all times to inspection and examination by
any representative of the Commission; and
``(3) be open at all times to inspection and examination by
the Securities and Exchange Commission, to the extent such
books and records relate to transactions in security-based swap
agreements (as that term is defined in section 3(a)(75) of the
Securities Exchange Act of 1934).
``(c) Rule of Construction.--For the purpose of this section, the
swaps, futures, and cash or spot transactions and positions of any
person shall include such transactions and positions of any persons
directly or indirectly controlled by such person.
``(d) Considerations.--In making a determination under this section
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. 733. 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. 734. 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 such term in subsection (a) of the first section
of the Clayton Act, except that such term includes section 5 of the
Federal Trade Commission Act to the extent that such section 5 applies
to unfair methods of competition.
Subtitle B--Regulation of Security-Based Swap Markets
SEC. 751. DEFINITIONS UNDER THE SECURITIES EXCHANGE ACT OF 1934.
Section 3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)) is amended--
(1) in subparagraphs (A) and (B) of paragraph (5), by
inserting ``(but not security-based swaps, other than security-
based swaps with or for persons that are not eligible contract
participants)'' after ``securities'' each place that term
appears;
(2) in paragraph (10), by inserting ``security-based
swap,'' after ``security future,'';
(3) in paragraph (13), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or
extinguishing of rights or obligations under, a security-based
swap, as the context may require.'';
(4) in paragraph (14), by adding at the end the following:
``For security-based swaps, such terms include the execution,
termination (prior to its scheduled maturity date), assignment,
exchange, or similar transfer or conveyance of, or
extinguishing of rights or obligations under, a security-based
swap, as the context may require.'';
(5) in paragraph (39)--
(A) by striking ``or government securities dealer''
and inserting ``government securities dealer, security-
based swap dealer, or major security-based swap
participant'' each place that term appears; and
(B) in subparagraph (B)(i)(II), by inserting
``security-based swap dealer, major security-based swap
participant,'' after ``government securities dealer,'';
and
(6) by adding at the end the following:
``(65) Eligible contract participant.--The term `eligible
contract participant' has the same meaning as in section 1a(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--
``(i) who maintains a substantial net
position in outstanding security-based swaps,
excluding positions held primarily for hedging,
reducing, or otherwise mitigating commercial
risk; or
``(ii) whose failure to perform under the
terms of its security-based swaps would cause
significant credit losses to its security-based
swap counterparties.
``(B) Implementation.--The Commission shall
implement the definition under this paragraph by rule
or regulation in a manner that is prudent for the
effective monitoring, management, and oversight of the
financial system.
``(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(34) of the Commodity Exchange Act
(7 U.S.C. 1a(34)) (without regard to paragraph
(34)(B)(xii) of such section), and that is based on--
``(i) an index that is a narrow-based
security index, including any interest therein
or based on the value thereof;
``(ii) a single security or loan, including
any interest therein or based on the value
thereof; or
``(iii) the occurrence, nonoccurrence, or
extent of the occurrence of an event relating
to a single issuer of a security or the issuers
of securities in a narrow-based security index,
provided that such event directly affects the
financial statements, financial condition, or
financial obligations of the issuer.
``(B) Exclusion.--The term `security-based swap'
does not include any agreement, contract, or
transaction that meets the definition of security-based
swap only because such agreement, contract, or
transaction references or is based upon a government
security.
``(C) Mixed swap.--
``(i) In general.--The term `security-based
swap' includes any agreement, contract, or
transaction that is as described in
subparagraph (A) and also is based on--
``(I) the value of 1 or more
interest or other rates, currencies,
commodities, instruments of
indebtedness, indices, quantitative
measures, other financial or economic
interest or property of any kind (other
than securities or any other financial
or economic interest or property
described in subparagraph (A) or a
narrow-based security index); or
``(II) the occurrence,
nonoccurrence, or the extent of the
occurrence of an event or contingency
associated with a potential financial,
economic, or commercial consequence
(other than an event or contingency
described in subparagraph (A)(iii)).
``(ii) Rule of construction.--A security-
based swap shall not constitute, nor shall be
construed to constitute, a mixed swap solely
because the obligations or rights of 1 party to
the swap agreement are defined by reference to
1 or more interest rates or currencies.
``(D) Rule of construction regarding master
agreements.--The term `security-based swap' shall be
construed to include a master agreement that provides
for an agreement, contract, or transaction that is a
security-based swap pursuant to subparagraph (A),
together with all supplements to any such master
agreement, without regard to whether the master
agreement contains an agreement, contract, or
transaction that is not a security-based swap pursuant
to subparagraph (A), except that the master agreement
shall be considered to be a security-based swap only
with respect to each agreement, contract, or
transaction under the master agreement that is a
security-based swap pursuant to subparagraph (A).
``(69) Swap.--The term `swap' has the same meaning as in
section 1a(34) of the Commodity Exchange Act (7 U.S.C. 1a(34)).
``(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--
``(A) 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);
``(B) 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
``(C) 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(l).
``(71) Security-based swap dealer.--
``(A) In general.--The term `security-based swap
dealer' means any person engaged in the business of
buying and selling security-based swaps for such
person's own account, through a broker or otherwise.
``(B) Exception.--The term `security-based swap
dealer' does not include a person that buys or sells
security-based swaps for such person's own account,
either individually or in a fiduciary capacity, but not
as a part of a regular business.
``(72) Appropriate federal banking agency.--The term
`appropriate Federal banking agency' has the same meaning as in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
``(73) Board.--The term `Board' means the Board of
Governors of the Federal Reserve System.
``(74) 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)).
``(75) Security-based swap agreement.--
``(A) In general.--For purposes of sections 9, 10,
10B, 16, 20, and 21A of this Act, and section 17 of the
Securities Act of 1933, 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) Primary financial regulatory agency.--The term
`primary financial regulatory agency' has the same meaning as
in section 2 of the Restoring American Financial Stability Act
of 2010.''.
SEC. 752. REPEAL OF PROHIBITION ON REGULATION OF SECURITY-BASED SWAPS.
(a) Repeal.--Sections 206B and 206C of the Gramm-Leach-Bliley Act
(15 U.S.C. 78c note) are hereby repealed.
(b) Conforming Amendments to Gramm-Leach-Bliley.--Section 206A(a)
of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) is amended in the
material preceding paragraph (1), by striking ``Except as'' and all
that follows through ``that--'' and inserting the following: ``Except
as provided in subsection (b), as used in this section, the term `swap
agreement' means any agreement, contract, or transaction that--''
(c) Conforming Amendments to the Securities Act of 1933.--
(1) Section 2A(b) of the Securities Act of 1933 (15 U.S.C.
77b-1) is amended--
(A) by striking subsection (a) and reserving the
subsection; and
(B) in subsection (b)--
(i) by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'' each
place that term appears;
(ii) by striking paragraph (1); and
(iii) by redesignating paragraphs (2), (3),
and (4) as paragraphs (1), (2), and (3),
respectively.
(2) Section 17 of the Securities Act of 1933 (15 U.S.C.
77q) is amended--
(A) in subsection (a), by striking ``206B of the
Gramm-Leach-Bliley Act'' and inserting ``3(a)(75) 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)(75) of
the Securities Exchange Act of 1934''.
(d) Conforming Amendments to the Securities Exchange Act of 1934.--
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended--
(1) in section 3A (15 U.S.C. 78c-1)--
(A) by striking ``(as defined in section 206B of
the Gramm-Leach-Bliley Act)'' each place that term
appears;
(B) by striking subsection (a) and reserving the
subsection; and
(C) in subsection (b)--
(i) by striking paragraph (1);
(ii) by redesignating paragraphs (2), (3),
and (4) as paragraphs (1), (2), and (3),
respectively; and
(iii) in paragraph (2) (as so
redesignated), by inserting ``or section 9(j)
with respect to rulemaking authority to prevent
fraudulent, deceptive, or manipulative
practices'' after ``reporting requirements'';
(2) in section 9(a) (15 U.S.C. 78i(a)), by striking
paragraphs (2) through (5) and inserting the following:
``(2) To effect, alone or with 1 or more other persons, a
series of transactions in any security registered on a national
securities exchange 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 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 1 or
more persons conducted for the purpose of raising or depressing
the price of such security.
``(4) If a dealer, broker, security-based swap dealer,
major security-based swap participant, or other person selling
or offering for sale or purchasing or offering to purchase the
security 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 or she 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 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 of information to the effect that the price of
any such security will or is likely to rise or fall because of
the market operations of any 1 or more persons conducted for
the purpose of raising or depressing the price of such
security.'';
(3) in section 9(i) (15 U.S.C. 78i(i)), by striking ``(as
defined in section 206B of the Gramm-Leach-Bliley Act)'';
(4) in section 10 (15 U.S.C. 78j), by striking ``(as
defined in section 206B of the Gramm-Leach-Bliley Act)'' each
place that term appears;
(5) in section 15(c)(1) (15 U.S.C. 78o(c)(1))--
(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)'' each place that term appears;
(6) in 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)), by striking
``(as defined in section 206B of the Gramm-Leach-Bliley Act)'';
(7) in section 16 (15 U.S.C. 78p)--
(A) in subsection (a)(2)(C), by striking ``(as
defined in section 206(b) of the Gramm-Leach-Bliley
Act)'' and inserting ``or a security-based swap'';
(B) in subsection (a)(3)(B), by inserting ``or
security-based swaps'' after ``security-based swap
agreements'';
(C) in subsection (b)--
(i) by striking ``(as defined in section
206B of the Gramm-Leach-Bliley Act)'' each
place that term appears; and
(ii) inserting ``or a security-based swap''
after ``security-based swap agreement'' each
place that term appears; and
(D) in subsection (g), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)'';
(8) in section 20 (15 U.S.C. 78t)--
(A) in subsection (d), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''; and
(B) in subsection (f), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''; and
(9) in section 21A (15 U.S.C. 78u-1)--
(A) in subsection (a)(1), by striking ``(as defined
in section 206B of the Gramm-Leach-Bliley Act)''; and
(B) in subsection (g), by striking ``(as defined in
section 206B of the Gramm-Leach-Bliley Act)''.
SEC. 753. AMENDMENTS TO THE SECURITIES EXCHANGE ACT OF 1934.
(a) Clearing for Security-based Swaps.--
(1) In general.--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) Clearing Requirement.--
``(1) Submission.--
``(A) In general.--Except as provided in paragraph
(9), any person who is a party to a security-based swap
shall submit such security-based swap for clearing to a
clearing agency registered under section 17A of this
Act.
``(B) Required conditions.--The rules of a clearing
agency described in subparagraph (A) shall--
``(i) prescribe that all security-based
swaps with the same terms and conditions
accepted for clearing by the clearing agency
are fungible and may be offset with each other;
and
``(ii) provide for nondiscriminatory
clearing of a security-based swap executed on
or through the rules of an unaffiliated
national securities exchange or an alternative
swap execution facility.
``(2) Commission approval.--
``(A) In general.--A clearing agency shall submit
to the Commission for prior approval any group,
category, type, or class of security-based swaps that
the clearing agency seeks to accept for clearing, which
submission the Commission shall make available to the
public.
``(B) Deadline.--The Commission shall take final
action on a request submitted pursuant to subparagraph
(A) not later than 90 days after submission of the
request, unless the clearing agency submitting the
request agrees to an extension of the time limitation
established under this subparagraph.
``(C) Approval.--The Commission shall approve,
unconditionally or subject to such terms and conditions
as the Commission determines to be appropriate, any
request submitted pursuant to subparagraph (A) if the
Commission finds that the request is consistent with
the requirements of section 17A. The Commission shall
not approve any such request if the Commission does not
make such finding.
``(D) Rules.--Not later than 180 days after the
date of the enactment of the Over-the-Counter
Derivatives Markets Act of 2010, the Commission shall
adopt rules for a clearing agency's submission for
approval, pursuant to this paragraph, of any group,
category, type, or class of security-based swaps that
the clearing agency seeks to accept for clearing.
``(3) Stay of clearing requirement.--At any time after
issuance of an approval pursuant to paragraph (2):
``(A) Review process.--The Commission, on
application of a counterparty to a security-based swap
or on its own initiative, may stay the clearing
requirement of paragraph (1) until the Commission
completes a review of the terms of the security-based
swap, or the group, category, type, or class of
security-based swaps, and the clearing arrangement.
``(B) Deadline.--The Commission shall complete a
review undertaken pursuant to subparagraph (A) not
later than 90 days after issuance of the stay, unless
the clearing agency that clears the security-based
swap, or the group, category, type or class of
security-based swaps, agrees to an extension of the
time limitation established under this subparagraph.
``(C) Determination.--Upon completion of the review
undertaken pursuant to subparagraph (A)--
``(i) the Commission may determine,
unconditionally or subject to such terms and
conditions as the Commission determines to be
appropriate, that the security-based swap, or
the group, category, type, or class of
security-based swaps, must be cleared pursuant
to this subsection if the Commission finds that
such clearing--
``(I) is consistent with the
requirements of section 17A; and
``(II) is otherwise in the public
interest, for the protection of
investors, and consistent with the
purposes of this title;
``(ii) the Commission may determine that
the clearing requirement of paragraph (1) shall
not apply to the security-based swap, or the
group, category, type, or class of security-
based swaps; or
``(iii) if a determination is made that the
clearing requirement of paragraph (1) shall no
longer apply, then it shall still be
permissible to clear such security-based swap,
or the group, category, type, or class of
security-based swaps.
``(D) Rules.--Not later than 180 days after the
date of the enactment of the Over-the-Counter
Derivatives Markets Act of 2010, the Commission shall
adopt rules for reviewing, pursuant to this paragraph,
a clearing agency's clearing of a security-based swap,
or a group, category, type, or class of security-based
swaps that the Commission has accepted for clearing.
``(4) Security-based swaps required to be accepted for
clearing.--
``(A) Rulemaking.--Not later than 180 days of the
date of enactment of the Over-the-Counter Derivatives
Markets Act of 2010, the Commission and the Commodity
Futures Trading Commission shall jointly adopt rules to
further identify any group, category, type, or class of
security-based swaps not submitted for approval under
paragraph (2) that the Commission and the Commodity
Futures Trading Commission deem should be accepted for
clearing. In adopting such rules, the Commission and
the Commodity Futures Trading Commission shall take
into account the following factors:
``(i) The extent to which any of the terms
of the group, category, type, or class of
security-based swaps, including price, are
disseminated to third parties or are referenced
in other agreements, contracts, or
transactions.
``(ii) The volume of transactions in the
group, category, type, or class of security-
based swaps.
``(iii) The extent to which the terms of
the group, category, type, or class of
security-based swaps are similar to the terms
of other agreements, contracts, or transactions
that are centrally cleared.
``(iv) Whether any differences in the terms
of the group, category, type, or class of
security-based swaps, compared to other
agreements, contracts, or transactions that are
centrally cleared, are of economic
significance.
``(v) Whether a clearing agency is prepared
to clear the group, category, type, or class of
security-based swaps and such clearing agency
has in place effective risk management systems.
``(vi) Any other factors the Commission and
the Commodity Futures Trading Commission
determine to be appropriate.
``(B) Other designations.--At any time after the
adoption of the rules required under subparagraph (A),
the Commission may separately designate a particular
security-based swap or class of security-based swaps as
subject to the clearing requirement in paragraph (1),
taking into account the factors established in clauses
(i) through (vi) of subparagraph (A) and the joint
rules adopted in such subparagraph.
``(5) Prevention of evasion.--The Commission shall have
authority to prescribe rules under this section, or issue
interpretations of such rules, as necessary to prevent evasions
of this section.
``(6) Required reporting.--
``(A) Both counterparties.--Both counterparties to
a security-based swap that is not cleared by any
clearing agency shall report such a security-based swap
either to a registered security-based swap repository
described in section 13(n) or, if there is no
repository that would accept the security-based swap,
to the Commission pursuant to section 13A.
``(B) Timing.--Counterparties to a security-based
swap shall submit the reports required under
subparagraph (A) not later than such time period as the
Commission may by rule or regulation prescribe.
``(7) Transition rules.--
``(A) Reporting transition rules.--Rules adopted by
the Commission under this section shall provide for the
reporting of data, as follows:
``(i) 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 not later than 180 days after the
effective date of this section.
``(ii) 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 not later than the
later of--
``(I) 90 days after such effective
date; or
``(II) such other time after
entering into the security-based swap
as the Commission may prescribe by rule
or regulation.
``(B) Clearing transition rules.--
``(i) 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 subparagraph (A)(i).
``(ii) 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 subparagraph (A)(ii).
``(8) Trade execution.--
``(A) In general.--With respect to transactions
involving security-based swaps subject to the clearing
requirement of paragraph (1), counterparties shall--
``(i) execute the transaction on an
exchange; or
``(ii) execute the transaction on an
alternative swap execution facility registered
under section 3C or an alternative swap
execution facility that is exempt from
registration under section 3C(f) of this Act.
``(B) Exception.--The requirements of clauses (i)
and (ii) of subparagraph (A) shall not apply if no
exchange or alternative swap execution facility makes
the swap available to trade.
``(9) Exemptions.--
``(A) Required exemption.--Subject to paragraph
(4), the Commission shall exempt a security-based swap
from the requirements of paragraphs (1) and (8) and any
rules issued under this subsection, if no clearing
agency registered under this Act will accept the
security-based swap for clearing.
``(B) Permissive exemption.--Subject to paragraph
(4), the Commission by rule or order, as the Commission
deems consistent with the public interest, may
conditionally or unconditionally exempt a security-
based swap from the requirements of paragraphs (1) and
(8), and any rules issued under this subsection, if 1
of the counterparties to the security-based swap--
``(i) is not a security-based swap dealer
or major security-based swap participant; and
``(ii) does not meet the eligibility
requirements of any clearing agency that clears
the security-based swap.
``(C) Determination of the financial stability
oversight council.--The Commission may act by rule or
order to exempt a security-based swap from any
requirement or rule under this subsection only if--
``(i) the Commission has provided a written
notice to the Financial Stability Oversight
Council describing the proposed exemption; and
``(ii) the Financial Stability Oversight
Council has not made a determination and
notified the Commission within 60 days of
receipt of such notice that such exemption
would pose a threat to the stability of the
United States financial system.
``(D) Option to clear.--If a security-based swap is
exempt from the clearing requirements of paragraph
(1)--
``(i) the parties to the security-based
swap may submit the security-based swap for
clearing; and
``(ii) the security-based swap shall be
submitted for clearing upon the request of a
party to the security-based swap.
``(10) Relationship to derivatives clearing
organizations.--A clearing agency may clear swaps that are
required to be cleared by a person who is registered as a
derivatives clearing organization under the Commodity Exchange
Act (7 U.S.C. 1 et seq.).
``(11) Required registration for depository institutions
and clearing agencies.--Any person that is required to be
registered as a clearing agency under this title shall register
with the Commission regardless of whether that person is also a
depository institution (as that term is defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813)) or a
derivatives clearing organization registered with the Commodity
Futures Trading Commission under the Commodity Exchange Act (7
U.S.C. 1 et seq.).
``(b) Reporting.--
``(1) Transparency.--
``(A) In general.--A clearing agency that clears
security-based swaps shall provide to the Commission
and any security-based swap repository designated by
the Commission all information determined by the
Commission to be necessary to perform its
responsibilities under this Act.
``(B) Data collection requirements.--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 alternative swap
execution facilities.
``(C) Sharing of information.--The Commission shall
share such information, upon request, with the Board,
the Commodity Futures Trading Commission, the
appropriate Federal banking agencies, the Financial
Stability 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.
``(c) Designation of Compliance Officer.--
``(1) In general.--Each clearing agency shall designate an
individual to serve as a compliance officer.
``(2) Duties.--The compliance officer shall perform the
following duties:
``(A) Reporting directly to the board or to the
senior officer of the clearing agency.
``(B) Consulting 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,
to resolve any conflicts of interest that may arise.
``(C) Administering the policies and procedures of
the clearing agency required to be established pursuant
to this section.
``(D) Ensuring compliance with securities laws and
the rules and regulations issued thereunder, including
rules prescribed by the Commission pursuant to this
section.
``(E) Establishing procedures for remediation of
noncompliance issues found during compliance office
reviews, lookbacks, internal or external audit
findings, self-reported errors, or through validated
complaints. Procedures to be established under this
subparagraph include procedures related to the
handling, management response, remediation, retesting,
and closing of noncompliance issues.
``(3) Annual reports required.--
``(A) In general.--The compliance officer shall
annually prepare and sign a report on the compliance of
the clearing agency with the securities laws and the
policies and procedures of the agency, including the
code of ethics and conflict of interest policies of the
agency, in accordance with rules prescribed by the
Commission.
``(B) Submission.--The compliance report required
under subparagraph (A) 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.
``(d) Consultation.--The Commission and the Commodity Futures
Trading Commission shall consult with the appropriate Federal banking
agencies and each other prior to adopting rules under this section with
respect to security-based swaps.
``(e) Harmonization of Rules.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act of 2010,
the Commission and the Commodity Futures Trading Commission shall
jointly adopt uniform rules governing--
``(1) the clearing and settlement of swaps, as well as
persons that are registered as derivatives clearing
organizations for swaps under the Commodity Exchange Act (7
U.S.C. 1 et seq.); and
``(2) the clearing and settlement of security-based swaps,
as well as persons that are registered as clearing agencies for
security-based swaps under this Act.''.
(2) Existing depository institutions and derivatives
clearing organizations.--Section 17A(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78q-1(b)) is amended by adding
at the end the following:
``(9) A depository institution (as that term is defined in
section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813)) or a derivatives clearing organization registered with
the Commodity Futures Trading Commission under the Commodities
Exchange Act required to be registered as a clearing agency
under this section is deemed to be registered under this
section to the extent that the depository institution 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 Act, before
the date of the enactment of this paragraph. Such depository
institution or derivatives clearing organization shall be
subject to the requirements of this Act and the regulations
thereunder that are applicable to registered clearing agencies.
A depository institution to which this paragraph applies may,
by the vote of the shareholders owning not less than 51 percent
of the voting interests of the institution, 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) Alternative Swap Execution Facilities.--The Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.) is further amended by adding after
section 3B the following:
``SEC. 3C. ALTERNATIVE SWAP EXECUTION FACILITIES.
``(a) Definition.--For purposes of this section, the term
`alternative swap execution facility' means an electronic trading
system with pre-trade and post-trade transparency in which multiple
participants have the ability to execute or trade swaps by accepting
bids and offers made by other participants that are open to multiple
participants in the system, but which is not a designated contract
market.
``(b) Registration.--
``(1) In general.--No person may operate a facility for the
trading of security-based swaps unless the facility is
registered as an alternative swap execution facility under this
section or as a securities exchange registered under this Act.
``(2) Dual registration.--Any person that is required to be
registered as an alternative swap execution facility under this
section shall register with the Commission regardless of
whether that person also is registered with the Commodity
Futures Trading Commission as an alternative swap execution
facility.
``(c) Requirements for Trading.--An alternative swap execution
facility that is registered under subsection (b) may trade any
security-based swap.
``(d) Trading by Exchanges.--An exchange shall, to the extent that
the exchange also operates an alternative swap execution facility and
uses the same electronic trade execution system for trading on the
exchange and the alternative swap execution facility, identify whether
the electronic trading is taking place on the exchange or the
alternative swap execution facility.
``(e) Criteria for Registration.--
``(1) In general.--To be registered as an alternative swap
execution facility, the facility shall be required to
demonstrate to the Commission such facility meets the criteria
established by this section.
``(2) Deterrence of abuses.--Each alternative swap
execution facility shall establish and enforce trading and
participation rules that will deter abuses and have the
capacity to detect, investigate, and enforce those rules,
including--
``(A) means to obtain information necessary to
perform the functions required under this section; or
``(B) means to--
``(i) provide market participants with
impartial access to the market; and
``(ii) capture information that may be used
in establishing whether any violations of this
section have occurred.
``(3) Trading procedures.--Each alternative swap execution
facility shall establish and enforce rules or terms and
conditions defining, or specifications detailing, trading
procedures to be used in entering and executing orders traded
on or through its facilities.
``(4) Financial integrity of transactions.--Each
alternative 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.
``(f) Core Principles for Alternative Swap Execution Facilities.--
``(1) Compliance.--
``(A) In general.--To maintain its registration as
an alternative swap execution facility, the facility
shall comply with the core principles established in
this subsection and any requirement that the Commission
may impose by rule or regulation.
``(B) Reasonable discretion.--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 the
core principles established in this subsection.
``(2) Compliance with rules.--Each alternative swap
execution facility shall monitor and enforce compliance with
any of the rules of the facility, including the terms and
conditions of the security-based swaps traded on or through the
facility and any limitations on access to the facility.
``(3) Security-based swaps not readily susceptible to
manipulation.--Each alternative swap execution facility shall
permit trading only in security-based swaps that are not
readily susceptible to manipulation.
``(4) Monitoring of trading.--Each alternative swap
execution facility shall monitor trading in security-based
swaps to prevent manipulation and price distortion through
surveillance, compliance, and disciplinary practices and
procedures, including methods for conducting real-time
monitoring of trading and comprehensive and accurate trade
reconstructions.
``(5) Ability to obtain information.--Each alternative swap
execution facility shall--
``(A) establish and enforce rules that will allow
the facility to obtain any necessary information to
perform any of the functions described in this
subsection;
``(B) provide the information to the Commission
upon request; and
``(C) have the capacity to carry out such
international information-sharing agreements as the
Commission may require.
``(6) Position limits or accountability.--
``(A) In general.--To reduce the potential threat
of market manipulation or congestion, an alternative
swap execution facility shall adopt for each of its
contracts, where necessary and appropriate, position
limitations or position accountability.
``(B) For certain contracts.--For any contract that
is subject to a position limitation established by the
Commission pursuant to section 10B, an alternative swap
execution facility shall set its position limitation at
a level no higher than the Commission limitation.
``(7) Emergency authority.--Each alternative 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.--Each
alternative swap execution facility shall make public timely
information on price, trading volume, and other trading data to
the extent prescribed by the Commission.
``(9) Recordkeeping and reporting.--
``(A) In general.--Each alternative swap execution
facility shall--
``(i) 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
``(ii) 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.
``(B) Data collection requirements.--The Commission
shall adopt data collection and reporting requirements
for alternative swap execution facilities that are
comparable to corresponding requirements for clearing
agencies and security-based swap repositories.
``(10) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, an alternative
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.
``(11) Conflicts of interest.--Each alternative 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 any
conflicts of interest.
``(12) Designation of compliance officer.--
``(A) In general.--Each alternative swap execution
facility shall designate an individual to serve as a
compliance officer.
``(B) Duties.--The compliance officer shall perform
the following duties:
``(i) Reporting directly to the board or to
the senior officer of the facility.
``(ii) Reviewing the compliance of the
facility with the core principles established
in this subsection.
``(iii) Consulting with the board of the
facility, a body performing a function similar
to that of a board, or the senior officer of
the facility, to resolve any conflicts of
interest that may arise.
``(iv) Administering the policies and
procedures of the facility required to be
established pursuant to this section.
``(v) Ensuring compliance with securities
laws and the rules and regulations issued
thereunder, including any rules prescribed by
the Commission pursuant to this section.
``(vi) Establishing procedures for
remediation of noncompliance issues found
during compliance office reviews, lookbacks,
internal or external audit findings, self-
reported errors, or through validated
complaints. Procedures to be established under
this clause include procedures related to the
handling, management response, remediation,
retesting, and closing of noncompliance issues.
``(C) Annual reports required.--
``(i) In general.--The compliance officer
shall annually prepare and sign a report on the
compliance of the alternative swap execution
facility with the securities laws and the
policies and procedures of the facility,
including the code of ethics and conflict of
interest policies of the facility, in
accordance with rules prescribed by the
Commission.
``(ii) Submission.--The compliance report
required under clause (i) shall accompany the
financial reports of the alternative swap
execution 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.
``(g) Exemptions.--The Commission may exempt, conditionally or
unconditionally, an alternative 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, an appropriate Federal banking agency, or the appropriate
governmental authorities in the organization's home country.
``(h) Harmonization of Rules.--Not later than 180 days of the
effective date of the Over-the-Counter Derivatives Markets Act of 2010,
the Commission and the Commodity Futures Trading Commission shall
jointly prescribe rules governing the regulation of alternative swap
execution facilities under this section and section 5h of the Commodity
Exchange Act.''.
(c) Trading in Security-based Swap Agreements.--Section 6 of the
Securities Exchange Act of 1934 (15 U.S.C. 78f) is amended by adding at
the end the following:
``(l) Prohibition.--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).''.
(d) Registration and Regulation of Security-based Swap Dealers and
Major Security-based 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.--It shall be unlawful for any person--
``(1) to act as a security-based swap dealer unless such
person is registered as a security-based swap dealer with the
Commission; and
``(2) 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 required under paragraph
(1) shall be made in such form and manner as prescribed by the
Commission, giving any information and facts as the Commission
may deem necessary concerning the business in which the
applicant is or will be engaged. Such person, when registered
as a security-based swap dealer or major security-based swap
participant, shall continue to report and furnish to the
Commission such information pertaining to such person's
business as the Commission may require.
``(3) Expiration.--Each registration shall expire at such
time as the Commission may by rule or regulation prescribe.
``(4) Rules.--Except as provided in subsections (c), (d),
and (e), the Commission may prescribe rules applicable to
security-based swap dealers and major security-based swap
participants, including rules that limit the activities of
security-based swap dealers and major security-based swap
participants. Except as provided in subsections (c) and (e),
the Commission may provide conditional or unconditional
exemptions from rules prescribed under this section for
security-based swap dealers and major security-based swap
participants that are subject to substantially similar
requirements as brokers or dealers.
``(5) Transition.--Rules adopted under this section shall
provide for the registration of security-based swap dealers and
major security-based swap participants not later than 1 year
after the effective date of the Over-the-Counter Derivatives
Markets Act of 2010.
``(c) Dual Registration.--
``(1) Security-based swap dealer.--Any person that is
required to be registered as a security-based swap dealer under
this section shall register with the Commission regardless of
whether that person also is a depository institution or is
registered with the Commodity Futures Trading Commission as a
swap dealer.
``(2) Major security-based swap participant.--Any person
that is required to be registered as a major security-based
swap participant under this section shall register with the
Commission regardless of whether that person also is a
depository institution or is registered with the Commodity
Futures Trading Commission as a major swap participant.
``(d) Joint Rules.--
``(1) In general.--Not later than 180 days after the
effective date of the Over-the-Counter Derivatives Markets Act
of 2010, the Commission and the Commodity Futures Trading
Commission shall jointly adopt uniform rules for persons that
are registered--
``(A) as security-based swap dealers or major
security-based swap participants under this section;
and
``(B) as swap dealers or major swap participants
under the Commodity Exchange Act (7 U.S.C. 1 et seq.).
``(2) Exception for prudential requirements.--The
Commission and the Commodity Futures Trading Commission shall
not prescribe rules imposing prudential requirements (including
activity restrictions) on security-based swap dealers, major
security-based swap participants, swap dealers, or major swap
participants that are depository institutions, as that term is
defined in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813). This provision shall not be construed as limiting
the authority of the Commission and the Commodity Futures
Trading Commission to prescribe appropriate business conduct,
reporting, and recordkeeping requirements to protect investors.
``(e) Capital and Margin Requirements.--
``(1) In general.--
``(A) Security-based swap dealers and major
security-based swap participants that are depository
institutions.--Each registered security-based swap
dealer and major security-based swap participant that
is a depository institution, as that term is defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813), shall meet such minimum capital
requirements and minimum initial and variation margin
requirements as the appropriate Federal banking agency
shall by rule or regulation prescribe under paragraph
(2)(A) to help ensure the safety and soundness of the
security-based swap dealer or major security-based swap
participant.
``(B) Security-based swap dealers and major
security-based swap participants that are not
depository institutions.--Each registered security-
based swap dealer and major security-based swap
participant that is not a depository institution, as
that term is defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813), shall meet such
minimum capital requirements and minimum initial and
variation margin requirements as the Commission and the
Commodity Futures Trading Commission shall by rule or
regulation jointly prescribe under paragraph (2)(B) to
help ensure the safety and soundness of the security-
based swap dealer or major security-based swap
participant.
``(2) Joint rules.--
``(A) Security-based swap dealers and major
security-based swap participants that are depository
institutions.--Not later than 180 days after the date
of the enactment of the Over-the-Counter Derivatives
Markets Act of 2010, the appropriate Federal banking
agencies, in consultation with the Commission and the
Commodity Futures Trading Commission, shall jointly
adopt rules imposing capital and margin requirements
under this subsection for security-based swap dealers
and major security-based swap participants that are
depository institutions, as that term is defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813).
``(B) Security-based swap dealers and major
security-based swap participants that are not
depository institutions.--Not later than 180 days after
the date of the enactment of the Over-the-Counter
Derivatives Markets Act of 2010, the Commission and the
Commodity Futures Trading Commission shall jointly
adopt rules imposing capital and margin requirements
under this subsection for security-based swap dealers
and major security-based swap participants that are not
depository institutions, as that term is defined in
section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813).
``(3) Capital.--
``(A) Security-based swap dealers and major
security-based swap participants that are depository
institutions.--The capital requirements prescribed
under paragraph (2)(A) for security-based swap dealers
and major security-based swap participants that are
depository institutions shall contain--
``(i) a capital requirement that is greater
than zero for security-based swaps that are
cleared by a clearing agency; and
``(ii) to offset the greater risk to the
security-based swap dealer or major security-
based swap participant and to the financial
system arising from the use of security-based
swaps that are not centrally cleared,
substantially higher capital requirements for
security-based swaps that are not cleared by a
clearing agency than for security-based swaps
that are centrally cleared.
``(B) Security-based swap dealers and major
security-based swap participants that are not
depository institutions.--The capital requirements
prescribed under paragraph (2)(B) for security-based
swap dealers and major security-based swap participants
that are not depository institutions shall be as strict
as or stricter than the capital requirements prescribed
for security-based swap dealers and major security-
based swap participants that are depository
institutions under paragraph (2)(A).
``(C) Rule of construction.--
``(i) In general.--Nothing in this section
shall limit, or be construed to limit, the
authority--
``(I) of the Commission to set
financial responsibility rules for a
broker or dealer registered pursuant to
section 15(b) (except for section
15(b)(11) thereof) in accordance with
section 15(c)(3); or
``(II) of the Commodity Futures
Trading Commission to set financial
responsibility rules for a futures
commission merchant or introducing
broker registered pursuant to section
4f(a) of the Commodity Exchange Act
(except for section 4f(a)(3) thereof)
in accordance with section 4f(b) of the
Commodity Exchange Act.
``(ii) Futures commission merchants and
other dealers.--A futures commission merchant,
introducing broker, broker, or dealer shall
maintain sufficient capital to comply with the
stricter of any applicable capital requirements
to which such futures commission merchant,
introducing broker, broker, or dealer is
subject to under this title or the Commodity
Exchange Act.
``(4) Margin.--
``(A) Security-based swap dealers and major
security-based swap participants that are depository
institutions.--
``(i) In general.--The appropriate Federal
banking agency for security-based swap dealers
and major security-based swap participants that
are depository institutions shall impose both
initial and variation margin requirements in
accordance with paragraph (2)(A) on all
security-based swaps that are not cleared by a
clearing agency.
``(ii) Exemption.--The appropriate Federal
banking agency for security-based swap dealers
and major security-based swap participants that
are depository institutions, by rule or order,
as the agency deems consistent with the public
interest, may conditionally or unconditionally
exempt a security-based swap dealer or a major
security-based swap participant that is a
depository institution from the requirements of
this subparagraph and the rules issued under
this subparagraph with regard to any security-
based swap in which 1 of the counterparties
is--
``(I) not a security-based swap
dealer, major security-based swap
participant, swap dealer, or a major
swap participant;
``(II) using the security-based
swap as part of an effective hedge
under generally accepted accounting
principles; and
``(III) predominantly engaged in
activities that are not financial in
nature, as defined in section 4(k) of
the Bank Holding Company Act of 1956
(12 U.S.C. 1843(k)).
``(iii) Determination of the financial
stability oversight council.--The appropriate
Federal banking agency may act by rule or order
to exempt a security-based swap dealer or major
security-based swap participant for which it is
the primary financial regulatory agency from
any requirement or rule under this subsection
only if--
``(I) the appropriate Federal
banking agency has provided a written
notice to the Financial Stability
Oversight Council describing the
proposed exemption; and
``(II) the Financial Stability
Oversight Council has not made a
determination and notified the
appropriate Federal banking agency
within 60 days of receipt of such
notice that such exemption would pose a
threat to the stability of the United
States financial system.
``(B) Security-based swap dealers and major
security-based swap participants that are not
depository institutions.--
``(i) In general.--The Commission and the
Commodity Futures Trading Commission shall
impose both initial and variation margin
requirements in accordance with paragraph
(2)(B) for security-based swap dealers and
major security-based swap participants that are
not depository institutions on all security-
based swaps that are not cleared by a clearing
agency. Any such initial and variation margin
requirements shall be as strict as or stricter
than the margin requirements prescribed under
paragraph (4)(A).
``(ii) Exemption.--The Commission by rule
or order, as the Commission deems consistent
with the public interest, may conditionally or
unconditionally exempt a security-based swap
dealer or a major security-based swap
participant that is not a depository
institution from the requirements of this
subparagraph and the rules issued under this
subparagraph with regard to any security-based
swap in which 1 of the counterparties is--
``(I) not a security-based swap
dealer, major security-based swap
participant, swap dealer, or a major
swap participant;
``(II) using the security-based
swap as part of an effective hedge
under generally accepted accounting
principles; and
``(III) predominantly engaged in
activities that are not financial in
nature, as defined in section 4(k) of
the Bank Holding Company Act of 1956
(12 U.S.C. 1843(k)).
``(iii) Determination of the financial
stability oversight council.--The Commission
may act by rule or order to exempt a security-
based swap dealer or major security-based swap
participant that is not a depository
institution from any requirement or rule under
this subsection only if--
``(I) the Commission has provided a
written notice to the Financial
Stability Oversight Council describing
the proposed exemption; and
``(II) the Financial Stability
Oversight Council has not made a
determination and notified the
Commission within 60 days of receipt of
such notice that such exemption would
pose a threat to the stability of the
United States financial system.
``(5) Margin requirements.--In prescribing margin
requirements under this subsection, the appropriate Federal
banking agency with respect to security-based swap dealers and
major security-based swap participants that are depository
institutions and the Commission and the Commodity Futures
Trading Commission with respect to security-based swap dealers
and major security-based swap participants that are not
depository institutions may permit the use of noncash
collateral, as the agency or the Commission and the Commodity
Futures Trading Commission determines to be consistent with--
``(A) preserving the financial integrity of markets
trading security-based swaps; and
``(B) preserving the stability of the United States
financial system.
``(6) Requested margin.--If any party to a security-based
swap that is exempt from the margin requirements of paragraph
(4)(A)(i) pursuant to the provisions of paragraph (4)(A)(ii) or
from the margin requirements of paragraph (4)(B)(i) pursuant to
the provisions of paragraph (4)(B)(ii) requests that such
security-based swap be margined, then--
``(A) the exemption shall not apply; and
``(B) the counterparty to such security-based swap
shall provide the requested margin.
``(f) Reporting and Recordkeeping.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant--
``(A) shall make such reports as are prescribed by
rule or regulation regarding the transactions and
positions and financial condition of such dealer or
participant;
``(B) that is--
``(i) a depository institution 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 rule or regulation by the
appropriate Federal banking agency; and
``(ii) not a depository institution shall
keep books and records in such form and manner
and for such period as may be prescribed by
rule or regulation pursuant to paragraph (2);
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 the
enactment of the Over-the-Counter Derivatives Markets Act of
2010, the Commission and the Commodity Futures Trading
Commission shall jointly adopt rules governing reporting and
recordkeeping for security-based swap dealers, major security-
based swap participants, swap dealers, and major swap
participants that are not depository institutions.
``(g) Daily Trading Records.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall, for
such period as may be prescribed by rule or regulation,
maintain daily trading records of that dealer's or
participant's--
``(A) security-based swaps and all related records
(including related transactions); and
``(B) recorded communications, including electronic
mail, instant messages, and recordings of telephone
calls.
``(2) Information requirements.--The daily trading records
required to be maintained under paragraph (1) shall include
such information as shall be prescribed 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.--
``(A) Maintenance of 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.
``(B) Permissible compliance by entity other than
dealer or participant.--A registered security-based
swap repository may, at the request of a registered
security-based swap dealer or major security-based swap
participant, satisfy the requirement of subparagraph
(A) on behalf of such registered security-based swap
dealer or major security-based swap participant.
``(5) Rules.--Not later than 1 year after the date of the
enactment of the Over-the-Counter Derivatives Markets Act of
2010, the Commission and the Commodity Futures Trading
Commission shall jointly adopt rules governing daily trading
records for swap dealers, major swap participants, security-
based swap dealers, and major security-based swap participants.
``(h) Business Conduct Standards.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall conform
with such business conduct standards as may be prescribed by
rule or regulation, including any standards 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 pursuant to paragraph
(1) shall--
``(A) establish a standard of care for a security-
based swap dealer or major security-based swap
participant to verify that any security-based swap
counterparty meets the eligibility standards for an
eligible contract participant;
``(B) require disclosure by the security-based swap
dealer or major security-based swap participant to any
counterparty to the security-based swap (other than a
swap dealer, major swap participant, security-based
swap dealer, or major security-based swap participant)
of--
``(i) information about the material risks
and characteristics of the security-based swap;
``(ii) the source and amount of any fees or
other material remuneration that the security-
based swap dealer or major security-based swap
participant would directly or indirectly expect
to receive in connection with the security-
based swap; 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;
``(C) establish a standard of conduct for a
security-based swap dealer or major security-based swap
participant to communicate in a fair and balanced
manner based on principles of fair dealing and good
faith;
``(D) establish a standard of conduct for a
security-based swap dealer or major security-based swap
participant, with respect to a counterparty that is an
eligible contract participant within the meaning of
subclause (I) or (II) of clause (vii) section 1a(12) of
the Commodity Exchange Act (7 U.S.C. 1a(12)), to have a
reasonable basis to believe that the counterparty has
an independent representative that--
``(i) has sufficient knowledge to evaluate
the transaction and risks;
``(ii) is not subject to a statutory
disqualification;
``(iii) is independent of the security-
based swap dealer or major security-based swap
participant;
``(iv) undertakes a duty to act in the best
interests of the counterparty it represents;
``(v) makes appropriate disclosures; and
``(vi) will provide written representations
to the eligible contract participant regarding
fair pricing and the appropriateness of the
transaction; and
``(E) establish such other standards and
requirements as the Commission may determine are
necessary or appropriate in the public interest, for
the protection of investors, or otherwise in
furtherance of the purposes of this title.
``(3) Rules.--Not later than 1 year after the date of the
enactment of the Over-the-Counter Derivatives Markets Act of
2010, the Commission and the Commodity Futures Trading
Commission shall jointly prescribe rules under this subsection
governing business conduct standards for swap dealers, major
swap participants, security-based swap dealers, and major
security-based swap participants.
``(i) Documentation and Back Office Standards.--
``(1) In general.--Each registered security-based swap
dealer and major security-based swap participant shall conform
with standards, as may be prescribed by 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 the
enactment of the Over-the-Counter Derivatives Markets Act of
2010, the Commission and the Commodity Futures Trading
Commission shall jointly adopt rules governing documentation
and back office standards for swap dealers, major swap
participants, security-based swap dealers, and major security-
based swap participants.
``(j) Dealer Responsibilities.--Each registered security-based swap
dealer and major security-based swap participant shall, at all times,
comply with the following requirements:
``(1) Monitoring of trading.--The security-based swap
dealer or major security-based swap participant shall monitor
its trading in security-based swaps to prevent violations of
applicable position limits.
``(2) Disclosure of general information.--The security-
based swap dealer or major security-based swap participant
shall disclose to the Commission 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 security-based swap participant shall--
``(A) establish and enforce internal systems and
procedures to obtain any necessary information to
perform any of the functions described in this section;
and
``(B) provide the information to the Commission
upon request.
``(4) Conflicts of interest.--The security-based swap
dealer and major security-based swap participant shall
implement conflict of interest systems and procedures that--
``(A) establish structural and institutional
safeguards to assure that the activities of any person
within the firm relating to research or analysis of the
price or market for any security are separated by
appropriate informational partitions within the firm
from the review, pressure, or oversight of those whose
involvement in trading or clearing activities might
potentially bias their judgment or supervision; and
``(B) address such other issues as the Commission
determines appropriate.
``(5) Antitrust considerations.--Unless necessary or
appropriate to achieve the purposes of this Act, a security-
based swap dealer or major security-based swap participant
shall avoid--
``(A) adopting any processes or taking any actions
that result in any unreasonable restraints of trade; or
``(B) imposing any material anticompetitive burden
on trading.
``(k) Rules.--The Commission and the Commodity Futures Trading
Commission shall consult with each other prior to adopting any rules
under the Over-the-Counter Derivatives Markets Act of 2010.
``(l) Statutory Disqualification.--Except to the extent otherwise
specifically provided by rule, regulation, or order of the Commission,
it shall be unlawful for a security-based swap dealer or a major
security-based swap participant to permit any person associated with a
security-based swap dealer or a major security-based swap participant
who is subject to a statutory disqualification to effect or be involved
in effecting security-based swaps on behalf of such security-based swap
dealer or major security-based swap participant, if such security-based
swap dealer or major security-based swap participant knew, or in the
exercise of reasonable care should have known, of such statutory
disqualification.
``(m) Enforcement and Administrative Proceeding Authority.--
``(1) Primary enforcement authority.--
``(A) Securities and exchange commission.--Except
as provided in subsection (b), the Commission shall
have primary authority to enforce the provisions of
subtitle B of the Over-the-Counter Derivatives Markets
Act of 2010 with respect to any person.
``(B) Appropriate federal banking agency.--The
appropriate Federal banking agency for security-based
swap dealers and major security-based swap participants
that are depository institutions, as that term is
defined in section 3 of the Federal Deposit Insurance
Act (12 U.S.C. 1813), shall have exclusive authority to
enforce the provisions of subsection (e) and other
prudential requirements of this Act with respect to
depository institutions that are security-based swap
dealers or major security-based swap participants.
``(C) Referral.--If the appropriate Federal banking
agency for security-based swap dealers and major
security-based swap participants that are depository
institutions has cause to believe that such security-
based swap dealer or major security-based swap
participant may have engaged in conduct that
constitutes a violation of the nonprudential
requirements of this section or rules adopted by the
Commission thereunder, the agency may recommend in
writing to the Commission that the Commission initiate
an enforcement proceeding as authorized under this Act.
The recommendation shall be accompanied by a written
explanation of the concerns giving rise to the
recommendation.
``(D) Backstop enforcement authority.--If the
Commission does not initiate an enforcement proceeding
before the end of the 90-day period beginning on the
date on which the Commission receives a recommendation
under subparagraph (C), the appropriate Federal banking
agency for security-based swap dealers and major
security-based swap participants that are depository
institutions may initiate an enforcement proceeding as
permitted under Federal law.
``(2) Enforcement actions.--The Commission, by order, shall
censure, place limitations on the activities, functions, or
operations of, or reject the filing 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 rejection 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, described 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) not later
than 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,
described in subparagraph (G) of such paragraph (4).
``(3) Personnel enforcement actions.--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, described 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) not later
than 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,
described in subparagraph (G) of such paragraph (4).
``(4) No violations of orders.--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.''.
(e) Additions of Security-based Swaps to Certain Enforcement
Provisions.--Paragraphs (1) through (3) of section 9(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78i(b)(1)-(3)) are amended
to read as follows:
``(1) any transaction in connection with any security
whereby any party to such transaction acquires--
``(A) any put, call, straddle, or other option or
privilege of buying the security from or selling the
security to another without being bound to do so;
``(B) any security futures product on the security;
or
``(C) any security-based swap involving the
security or the issuer of the security;
``(2) any transaction in connection with any security with
relation to which he has, directly or indirectly, any interest
in any--
``(A) such put, call, straddle, option, or
privilege;
``(B) such security futures product; or
``(C) such security-based swap; or
``(3) any transaction in any security for the account of
any person who he has reason to believe has, and who actually
has, directly or indirectly, any interest in 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.''.
(f) Rulemaking Authority to Prevent Fraud, Manipulation, and
Deceptive Conduct in Security-based Swaps and Security-based Swap
Agreements.--Section 9 of the Securities Exchange Act of 1934 (15
U.S.C. 78i) is amended by adding at the end the following:
``(j) Prohibition.--It shall be unlawful for any person, directly
or indirectly, by the use of any means or instrumentality of interstate
commerce or of the mails, or of any facility of any national securities
exchange, to effect any transaction in, or to induce or attempt to
induce the purchase or sale of, any security-based swap or any
security-based swap agreement, in connection with which such person
engages in any fraudulent, deceptive, or manipulative act or practice,
makes any fictitious quotation, or engages in any transaction,
practice, or course of business which operates as a fraud or deceit
upon any person. The Commission shall, for the purposes of this
subsection, by rules and regulations define, and prescribe means
reasonably designed to prevent, such transactions, acts, practices, and
courses of business as are fraudulent, deceptive, or manipulative, and
such quotations as are fictitious.''.
(g) 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) Aggregate 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 aggregate number or amount of positions
that may be held by any person or persons across security-based swaps
that perform or affect a significant price discovery function with
respect to regulated markets.
``(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) Self-regulatory Organization Rules.--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--
``(1) to adopt rules regarding the size of positions in any
security-based swap and any security on which such security-
based swap is based that may be held by--
``(A) any member of such self-regulatory
organization; or
``(B) any person for whom a member of such self-
regulatory organization effects transactions in such
security-based swap or other security; and
``(2) to adopt rules reasonably designed to ensure
compliance with requirements prescribed by the Commission under
subsection (a).
``(d) Large Security-based Swap Trader Reporting.--
``(1) In general.--A person that enters into any security-
based swap shall file or cause to be filed with the properly
designated officer of the Commission the reports described in
paragraph (2).
``(2) Reports.--
``(A) Security-based swap reports.--Each person
described in paragraph (1) shall, in accordance with
the rules and regulations of the Commission, keep books
and records of any security-based swaps or transactions
and positions in any related security traded on or
subject to the rules of any national securities
exchange.
``(B) Cash or spot transactions.--Each person
described in paragraph (1) shall, in accordance with
the rules and regulations of the Commission, keep books
and records of any cash or spot transactions in,
inventories of, and purchase and sale commitments of,
any related security traded on or subject to the rules
of any national securities exchange, if--
``(i) such person directly or indirectly
enters into such security-based 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
``(ii) such person directly or indirectly
has or obtains a position in such security-
based swaps equal to or in excess of such
amount as shall be fixed from time to time by
the Commission.
``(3) Recordkeeping.--The books and records required to be
kept under paragraph (2) shall--
``(A) show complete details concerning all
transactions and positions as the Commission may by
rule or regulation prescribe; and
``(B) be open at all times to inspection and
examination by any representative of the Commission.
``(4) Rule of construction.--For the purpose of this
subsection, the security-based swaps, and securities
transactions and positions of any person shall include such
security-based swaps, transactions and positions of any persons
directly or indirectly controlled by such person.''.
(h) Public Reporting and Repositories for Security-based Swap
Agreements.--Section 13 of the Securities Exchange Act of 1934 (15
U.S.C. 78m) is amended by adding at the end the following:
``(m) Public Reporting of Aggregate Security-based Swap Data.--
``(1) In general.--The Commission, or a person designated
by the Commission pursuant to paragraph (2), shall make
available to the public, in a manner that does not disclose the
business transactions and market positions of any person,
aggregate data on security-based swap trading volumes and
positions from the sources set forth in paragraph (3).
``(2) Designee of the commission.--The Commission may
designate a clearing agency or a security-based swap repository
to carry out the public reporting requirement 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 3B;
``(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.--A person may register as a
security-based swap repository by filing with the
Commission an application in such form as the
Commission, by rule, may prescribe, containing the
rules of the security-based swap repository and such
other information and documentation as the Commission,
by rule, may prescribe as necessary or appropriate in
the public interest, for the protection of investors,
or in the furtherance of the purposes of this section.
``(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 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 Stability Oversight Council,
and the Department of Justice or to other persons the
Commission deems appropriate, including foreign
financial supervisors (including foreign futures
authorities), foreign central banks, and foreign
ministries.
``(4) Required registration for security-based swap
repositories.--Any person that is required to be registered as
a securities-based swap repository under this subsection shall
register with the Commission, regardless of whether that person
also is registered with the Commodity Futures Trading
Commission as a swap repository.
``(5) Harmonization of rules.--Not later than 180 days
after the effective date of the Over-the-Counter Derivatives
Markets Act of 2010, the Commission and the Commodity Futures
Trading Commission shall jointly adopt uniform rules governing
persons that are registered under this section and persons that
are registered as swap repositories under the Commodity
Exchange Act (7 U.S.C. 1 et seq.), including uniform rules that
specify the data elements that shall be collected and
maintained by each repository.
``(6) Exemptions.--The Commission may exempt, conditionally
or unconditionally, a security-based swap repository from the
requirements of this section if the Commission finds that such
security-based swap repository is subject to comparable,
comprehensive supervision or regulation on a consolidated basis
by the Commodity Futures Trading Commission, an appropriate
Federal banking agency, or the appropriate governmental
authorities in the organization's home country.''.
(i) Recordkeeping by Security-based Swap Repositories.--Section
17(a)(1) of the Securities Exchange Act of 1934 (15 U.S.C. 78m) is
amended by inserting ``registered security-based swap repository,''
after ``registered securities information processor,''.
SEC. 754. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED
SWAP TRANSACTIONS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
further amended by adding after section 3C (as added by section 753)
the following:
``SEC. 3D. SEGREGATION OF ASSETS HELD AS COLLATERAL IN SECURITY-BASED
SWAP TRANSACTIONS.
``(a) Cleared Security-based Swaps.--A security-based swap dealer
or clearing agency by or through which funds or other property provided
as initial margin or collateral are held to margin, guarantee, or
secure the obligations of a counterparty under a security-based swap to
be cleared by or through a clearing agency shall segregate, maintain,
and use the funds or other property provided as initial margin or
collateral for the benefit of the counterparty, in accordance with such
rules and regulations as the Commission shall prescribe for security-
based swap dealers that are not depository institutions, as that term
is defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813), or clearing agencies, or the appropriate Federal banking agency
shall prescribe for security-based swap dealers that are depository
institutions. Any such funds or other property provided as initial
margin or collateral shall be treated as customer property under this
Act.
``(b) Other Security-based Swaps.--At the request of a security-
based swap counterparty who provides funds or other property as initial
margin or collateral to a security-based swap dealer to margin,
guarantee, or 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 clearing agency,
the security-based swap dealer shall segregate the funds or other
property provided as initial margin or collateral for the benefit of
the counterparty, and maintain the funds or other property 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 shall prescribe for
security-based swap dealers that are not depository institutions, as
that term is defined in section 3 of the Federal Deposit Insurance Act
(12 U.S.C. 1813), or clearing agencies, or the appropriate Federal
banking agency shall prescribe for security-based swap dealers that are
depository institutions. Any segregation requested under this
subsection shall be made available by a security-based swap dealer to a
counterparty on fair and reasonable terms on a non-discriminatory
basis. 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, provided, however, that the segregated funds or
other property under this subsection may be invested only in such
investments as the Commission or the appropriate Federal banking
agency, as applicable, permits by rule or regulation, and shall not be
pledged, re-hypothecated, or otherwise encumbered by a security-based
swap dealer.''.
SEC. 755. REPORTING AND RECORDKEEPING.
(a) Additional Reporting Requirements.--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
shall satisfy the reporting requirements under subsection (b), if such
person--
``(1) did not clear the security-based swap in accordance
with section 3B; 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).
``(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 Stability
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 section 13(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,''.
(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) of
the Securities Exchange Act of 1934 (15 U.S.C. 78m(f)(1)) is amended--
(1) in paragraph (1)--
(A) by inserting ``(A)'' after ``accounts
holding''; and
(B) by inserting ``or (B) security-based derivative
instruments or other derivative securities that the
Commission may determine by rule, having such values as
the Commission, by rule, may determine'' after ``less
than $10,000,000) as the Commission, by rule, may
determine.''; and
(2) in paragraph (3), by striking ``section 13(d)(1) of
this title'' and inserting ``subsection (d)(1) of this section
and of security-based swaps or other derivative instrument that
the Commission may determine by rule,''.
(d) Administrative Proceeding Authority.--Section 15(b)(4) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(4)) is amended--
(1) in subparagraph (C), by inserting ``security-based swap
dealer, major security-based swap participant,'' after
``government securities dealer,''; and
(2) in subparagraph (F), by inserting ``, or security-based
swap dealer, or a major security-based swap participant'' after
``or dealer''.
(e) Transactions by Corporate Insiders.--Section 16(f) of the
Securities Exchange Act of 1934 (15 U.S.C. 78p) is amended by inserting
``or security-based swaps'' after ``security futures products''.
SEC. 756. 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) Additional Rights and Remedies; Recovery of Actual Damages;
State Securities Commissions.--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 1 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 that prohibits or
regulates the making or promoting of wagering or gaming contracts, or
the operation of `bucket shops' or other similar or related activities,
shall invalidate--
``(1) any put, call, straddle, option, privilege, or other
security subject to this title (except a security-based swap
agreement and any security that has a pari-mutuel payout or
otherwise is determined by the Commission, acting by rule,
regulation, or order, to be appropriately subject to such
laws), or apply to any activity which is incidental or related
to the offer, purchase, sale, exercise, settlement, or closeout
of any such security;
``(2) any security-based swap between eligible contract
participants; or
``(3) any security-based swap effected on a national
securities exchange registered pursuant to section 6(b).
No provision of State law regarding the offer, sale, or distribution of
securities shall apply to any transaction in a security-based swap or a
security futures product, except that this sentence shall not be
construed as limiting any State antifraud law of general
applicability.''.
SEC. 757. 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(34) of the Commodity
Exchange Act (7 U.S.C. 1a(34)) and section 3(a)(68) of the
Securities Exchange Act of 1934 (15 U.S.C. 78(c)(a)(68)),
respectively.
``(18) The terms `purchase' or `sale' of a security-based
swap shall be deemed to mean the execution, termination (prior
to its scheduled maturity date), assignment, exchange, or
similar transfer or conveyance of, or extinguishing of rights
or obligations under, a security-based swap, as the context may
require.''.
(b) Registration of Security-based Swaps.--Section 5 of the
Securities Act of 1933 (15 U.S.C. 77e) is amended by adding at the end
the following:
``(d) Mandatory Registration: Prohibition on Sale.--Notwithstanding
the provisions of section 3 or section 4, except as the Commission
shall otherwise exempt by rule or regulation pursuant to this title,
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. 758. 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. 759. JURISDICTION.
Section 36 of the Securities Exchange Act of 1934 (15 U.S.C. 78mm)
is amended--
(1) in subsection (a)(1), by inserting ``and (c) and
subject to subsection (d)'' after ``Except as provided in
subsection (b)''; and
(2) by adding at the end the following:
``(c) Limitation on Authority.--The Commission shall not have the
authority to grant exemptions from the security-based swap provisions
of this Act or the Over-the-Counter Derivatives Markets Act of 2010,
except as expressly authorized under the provisions of that Act.
``(d) Express Authority.--The Commission is expressly authorized to
use any authority granted to the Commission under subsection (a) to
exempt any person, security, or transaction, or any class or classes of
persons, securities, or transactions from any provision or provisions
of this title, or of any rule or regulation thereunder, that applies to
such person, security, or transaction solely because a `security-based
swap' is a `security' under section 3(a).''.
Subtitle C--Other Provisions
SEC. 761. INTERNATIONAL HARMONIZATION.
In order to promote effective and consistent global regulation of
swaps and security-based swaps, the Securities and Exchange Commission,
the Commodity Futures Trading Commission, the Financial Stability
Oversight Council, and the Treasury Department--
(1) shall, both individually and collectively, consult and
coordinate with foreign regulatory authorities on the
establishment of consistent international standards with
respect to the regulation of such swaps; and
(2) may, both individually and collectively, agree to such
information-sharing arrangements as may be deemed to be
necessary or appropriate in the public interest or for the
protection of investors and swap counterparties.
SEC. 762. INTERAGENCY COOPERATION.
(a) Joint Advisory Committee.--
(1) Establishment.--The Securities and Exchange Commission
and the Commodity Futures Trading Commission, shall establish a
joint advisory committee or work through an established joint
advisory committee to consider and develop solutions to
emerging and ongoing issues of common interest relating to the
trading and regulation of products regulated by the Securities
and Exchange Commission and the Commodity Futures Trading
Commission, including securities, commodity futures, swaps and
securities-based swaps.
(2) Membership.--The joint advisory committee shall--
(A) be fairly balanced in terms of the points of
view represented and the functions to be performed by
the committee;
(B) include at least 1 representative from each of
the Securities and Exchange Commission and the
Commodity Futures Trading Commission; and
(C) include other individuals with expertise in
commodities and securities trading, commodities and
securities law, investor protection, consumer
protection, or international markets.
(3) Reporting.--Not later than 6 months after the date of
enactment of this title, and every 6 months thereafter, the
joint advisory committee shall report its findings and
recommendations to the--
(A) Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) Committee on Financial Services of the House of
Representatives;
(C) Committee on Agriculture, Nutrition, and
Forestry of the Senate; and
(D) Committee on Agriculture of the House of
Representatives.
(4) Joint funding.--Notwithstanding any other provision of
law, amounts made available to the Commodity Futures Trading
Commission and the Securities and Exchange Commission for the
current or subsequent fiscal years by a current or future
appropriations Act may be used for the interagency funding of
the joint advisory committee sponsored by such agencies
pursuant to this section.
(b) Joint Enforcement Task Force.--The Securities and Exchange
Commission and the Commodity Futures Trading Commission shall jointly
establish an inter-agency group to be known as the Joint Enforcement
Task Force in order to improve market oversight, enhance enforcement,
and relieve duplicative regulatory burdens. The Task Force shall
consist of staff from each agency to coordinate and develop processes
for conducting joint investigations in response to events that affect
both the commodities and securities markets. The Task Force shall
prepare and offer training programs for the staffs of both agencies,
develop enforcement and examination standards and protocols, and
coordinate information sharing.
(c) Trading and Markets Fellowship Program.--
(1) In general.--The Securities and Exchange Commission,
the Commodity Futures Trading Commission, and the Board of
Governors of the Federal Reserve System shall jointly establish
a Trading and Markets Fellowship Program in order to enhance
staff understanding about the interactions between financial
markets and the economy.
(2) Selection of fellows.--On January 1 of each calendar
year, the Chairmen of the Securities and Exchange Commission,
the Commodity Futures Trading Commission, and the Board of
Governors of the Federal Reserve System shall jointly announce
the selection of 3 employees from their respective agencies to
participate in the fellowship program established under
paragraph (1), for a total annual class size of 9 fellows per
calendar year.
(3) Joint training curriculum.--
(A) Development.--The Securities and Exchange
Commission, the Commodity Futures Trading Commission,
and the Board of Governors of the Federal Reserve
System shall jointly develop a 1-month long training
curriculum that focuses on the mission and activities
of each agency, enforcement matters, and economic and
financial analysis.
(B) Faculty.--The training curriculum developed
under subparagraph (A) shall be taught by senior
officials from each agency, experienced academics, and
professionals from commodities and securities trading.
(C) Mandatory attendance.--Each of the 9 fellows
selected under paragraph (2) shall complete the
training curriculum developed under this paragraph.
(4) Cross-agency rotation.--
(A) In general.--Following the completion of the 1-
month training curriculum developed under paragraph
(3), each fellow shall be assigned to serve at each
participating agency for 3 months each.
(B) Submission of paper.--Upon completion of the
Trading and Markets Fellowship Program, each fellow
shall submit a written paper to the Chairmen of the
Securities and Exchange Commission, the Commodity
Futures Trading Commission, and the Board of Governors
of the Federal Reserve System--
(i) summarizing his or her observations
from participating in the program; and
(ii) providing recommendations for
enhancing the contribution of each agency to
the stable functioning of the financial markets
and economy of the nation.
(d) Cross-agency Enforcement.--The Securities and Exchange
Commission and the Commodity Futures Trading Commission shall jointly
establish a cross-agency training and education curriculum for
enforcement personnel in order to improve the ability of employees at
both agencies to understand and respond to matters where both agencies
have enforcement jurisdiction and interest.
(e) Detailing of Staff.--The Securities and Exchange Commission and
the Commodity Futures Trading Commission shall jointly establish a
program for the regular detailing of staff between such agencies.
SEC. 763. STUDY AND REPORT ON IMPLEMENTATION.
(a) Study Required.--The Comptroller General of the United States
shall conduct a study of--
(1) how the Commodity Futures Trading Commission and the
Securities and Exchange Commission have implemented this title
and the amendments made by this title;
(2) the extent to which jurisdictional disputes have
created challenges in the process of implementing this title
and the amendments made by this title;
(3) the benefits and drawbacks of harmonizing laws
implemented by the Commodity Futures Trading Commission and the
Securities and Exchange Commission, and merging those agencies;
(4) the benefits and feasibility of--
(A) holding of both futures and securities products
in the same account to allow cross-netting; and
(B) creating the ability to cross-net across
securities and futures accounts; and
(5) the benefits and feasibility of imposing a uniform
fiduciary duty on financial intermediaries who provide similar
investment advisory services.
(b) Report Required.--Not later than 1 year after the date of
enactment of this title, the Comptroller General shall submit a report
on the results of the study required by this section to Congress, the
Commodity Futures Trading Commission, and the Securities and Exchange
Commission.
SEC. 764. RECOMMENDATIONS FOR CHANGES TO INSOLVENCY LAWS.
Not later than 180 days after the date of enactment of this Act,
the Securities and Exchange Commission and the Commodity Futures
Trading Commission shall transmit to Congress recommendations on
legislative changes to the Federal insolvency laws--
(1) in order to enhance the legal certainty with respect to
swap participants clearing swaps and security-based swaps
through a derivatives clearing organization or clearing agency,
including--
(A) customer rights to cover margin deposits or
custodial property held at or through an insolvent swap
clearinghouse or clearing participant; and
(B) the enforceability or clearing rules relating
to the portability of customer swap positions (and
associated margins) 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
commodities 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(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a))).
SEC. 765. EFFECTIVE DATE.
Except as specifically provided in the amendments made by this
title, this title, and the amendments made by this title, shall take
effect 180 days after the date of enactment of this Act.
TITLE VIII--PAYMENT, CLEARING, AND SETTLEMENT SUPERVISION
SEC. 801. SHORT TITLE.
This title may be cited as the ``Payment, Clearing, and Settlement
Supervision Act of 2010''.
SEC. 802. FINDINGS AND PURPOSES.
(a) Findings.--Congress finds the following:
(1) The proper functioning of the financial markets is
dependent upon safe and efficient arrangements for the clearing
and settlement of payment, securities, and other financial
transactions.
(2) Financial market utilities that conduct or support
multilateral payment, clearing, or settlement activities may
reduce risks for their participants and the broader financial
system, but such utilities may also concentrate and create new
risks and thus must be well designed and operated in a safe and
sound manner.
(3) Payment, clearing, and settlement activities conducted
by financial institutions also present important risks to the
participating financial institutions and to the financial
system.
(4) Enhancements to the regulation and supervision of
systemically important financial market utilities and the
conduct of systemically important payment, clearing, and
settlement activities by financial institutions are necessary--
(A) to provide consistency;
(B) to promote robust risk management and safety
and soundness;
(C) to reduce systemic risks; and
(D) to support the stability of the broader
financial system.
(b) Purpose.--The purpose of this title is to mitigate systemic
risk in the financial system and promote financial stability by--
(1) authorizing the Board of Governors to prescribe uniform
standards for the--
(A) management of risks by systemically important
financial market utilities; and
(B) conduct of systemically important payment,
clearing, and settlement activities by financial
institutions;
(2) providing the Board of Governors an enhanced role in
the supervision of risk management standards for systemically
important financial market utilities;
(3) strengthening the liquidity of systemically important
financial market utilities; and
(4) providing the Board of Governors an enhanced role in
the supervision of risk management standards for systemically
important payment, clearing, and settlement activities by
financial institutions.
SEC. 803. DEFINITIONS.
In this title, the following definitions shall apply:
(1) Appropriate financial regulator.--The term
``appropriate financial regulator'' means--
(A) the primary financial regulatory agency, as
defined in section 2 of this Act;
(B) the National Credit Union Administration, with
respect to any insured credit union under the Federal
Credit Union Act (12 U.S.C. 1751 et seq.); and
(C) the Board of Governors, with respect to
organizations operating under section 25A of the
Federal Reserve Act (12 U.S.C. 611), and any other
financial institution engaged in a designated activity.
(2) Designated activity.--The term ``designated activity''
means a payment, clearing, or settlement activity that the
Council has designated as systemically important under section
804.
(3) Designated financial market utility.--The term
``designated financial market utility'' means a financial
market utility that the Council has designated as systemically
important under section 804.
(4) Financial institution.--The term ``financial
institution'' means--
(A) a depository institution, as defined in section
3 of the Federal Deposit Insurance Act (12 U.S.C.
1813);
(B) a branch or agency of a foreign bank, as
defined in section 1(b) of the International Banking
Act of 1978 (12 U.S.C. 3101);
(C) an organization operating under section 25 or
25A of the Federal Reserve Act (12 U.S.C. 601-604a and
611 through 631);
(D) a credit union, as defined in section 101 of
the Federal Credit Union Act (12 U.S.C. 1752);
(E) a broker or dealer, as defined in section 3 of
the Securities Exchange Act of 1934 (15 U.S.C. 78c);
(F) an investment company, as defined in section 3
of the Investment Company Act of 1940 (15 U.S.C. 80a-
3);
(G) an insurance company, as defined in section 2
of the Investment Company Act of 1940 (15 U.S.C. 80a-
2);
(H) an investment adviser, as defined in section
202 of the Investment Advisers Act of 1940 (15 U.S.C.
80b-2);
(I) a futures commission merchant, commodity
trading advisor, or commodity pool operator, as defined
in section 1a of the Commodity Exchange Act (7 U.S.C.
1a); and
(J) any company engaged in activities that are
financial in nature or incidental to a financial
activity, as described in section 4 of the Bank Holding
Company Act of 1956 (12 U.S.C. 1843(k)).
(5) Financial market utility.--The term ``financial market
utility'' means any person that manages or operates a
multilateral system for the purpose of transferring, clearing,
or settling payments, securities, or other financial
transactions among financial institutions or between financial
institutions and the person.
(6) Payment, clearing, or settlement activity.--
(A) In general.--The term ``payment, clearing, or
settlement activity'' means an activity carried out by
1 or more financial institutions to facilitate the
completion of financial transactions.
(B) Financial transaction.--For the purposes of
subparagraph (A), the term ``financial transaction''
includes--
(i) funds transfers;
(ii) securities contracts;
(iii) contracts of sale of a commodity for
future delivery;
(iv) forward contracts;
(v) repurchase agreements;
(vi) swaps;
(vii) security-based swaps;
(viii) swap agreements;
(ix) security-based swap agreements;
(x) foreign exchange contracts;
(xi) financial derivatives contracts; and
(xii) any similar transaction that the
Council determines to be a financial
transaction for purposes of this title.
(C) Included activities.--When conducted with
respect to a financial transaction, payment, clearing,
and settlement activities may include--
(i) the calculation and communication of
unsettled financial transactions between
counterparties;
(ii) the netting of transactions;
(iii) provision and maintenance of trade,
contract, or instrument information;
(iv) the management of risks and activities
associated with continuing financial
transactions;
(v) transmittal and storage of payment
instructions;
(vi) the movement of funds;
(vii) the final settlement of financial
transactions; and
(viii) other similar functions that the
Council may determine.
(7) Supervisory agency.--
(A) In general.--The term ``Supervisory Agency''
means the Federal agency that has primary jurisdiction
over a designated financial market utility under
Federal banking, securities, or commodity futures laws,
as follows:
(i) The Securities and Exchange Commission,
with respect to a designated financial market
utility that is a clearing agency registered
with the Securities and Exchange Commission.
(ii) The Commodity Futures Trading
Commission, with respect to a designated
financial market utility that is a derivatives
clearing organization registered with the
Commodity Futures Trading Commission.
(iii) The appropriate Federal banking
agency, with respect to a designated financial
market utility that is an institution described
in section 3(q) of the Federal Deposit
Insurance Act.
(iv) The Board of Governors, with respect
to a designated financial market utility that
is otherwise not subject to the jurisdiction of
any agency listed in clauses (i), (ii), and
(iii).
(B) Multiple agency jurisdiction.--If a designated
financial market utility is subject to the
jurisdictional supervision of more than 1 agency listed
in subparagraph (A), then such agencies should agree on
1 agency to act as the Supervisory Agency, and if such
agencies cannot agree on which agency has primary
jurisdiction, the Council shall decide which agency is
the Supervisory Agency for purposes of this title.
(8) Systemically important and systemic importance.--The
terms ``systemically important'' and ``systemic importance''
mean a situation where the failure of or a disruption to the
functioning of a financial market utility or the conduct of a
payment, clearing, or settlement activity could create, or
increase, the risk of significant liquidity or credit problems
spreading among financial institutions or markets and thereby
threaten the stability of the financial system.
SEC. 804. DESIGNATION OF SYSTEMIC IMPORTANCE.
(a) Designation.--
(1) Financial stability oversight council.--The Council, on
a nondelegable basis and by a vote of not fewer than \2/3\ of
members then serving, including an affirmative vote by the
Chairperson of the Council, shall designate those financial
market utilities or payment, clearing, or settlement activities
that the Council determines are, or are likely to become,
systemically important.
(2) Considerations.--In determining whether a financial
market utility or payment, clearing, or settlement activity is,
or is likely to become, systemically important, the Council
shall take into consideration the following:
(A) The aggregate monetary value of transactions
processed by the financial market utility or carried
out through the payment, clearing, or settlement
activity.
(B) The aggregate exposure of the financial market
utility or a financial institution engaged in payment,
clearing, or settlement activities to its
counterparties.
(C) The relationship, interdependencies, or other
interactions of the financial market utility or
payment, clearing, or settlement activity with other
financial market utilities or payment, clearing, or
settlement activities.
(D) The effect that the failure of or a disruption
to the financial market utility or payment, clearing,
or settlement activity would have on critical markets,
financial institutions, or the broader financial
system.
(E) Any other factors that the Council deems
appropriate.
(b) Rescission of Designation.--
(1) In general.--The Council, on a nondelegable basis and
by a vote of not fewer than \2/3\ of members then serving,
including an affirmative vote by the Chairperson of the
Council, shall rescind a designation of systemic importance for
a designated financial market utility or designated activity if
the Council determines that the utility or activity no longer
meets the standards for systemic importance.
(2) Effect of rescission.--Upon rescission, the financial
market utility or financial institutions conducting the
activity will no longer be subject to the provisions of this
title or any rules or orders prescribed by the Council under
this title.
(c) Consultation and Notice and Opportunity for Hearing.--
(1) Consultation.--Before making any determination under
subsection (a) or (b), the Council shall consult with the
relevant Supervisory Agency and the Board of Governors.
(2) Advance notice and opportunity for hearing.--
(A) In general.--Before making any determination
under subsection (a) or (b), the Council shall provide
the financial market utility or, in the case of a
payment, clearing, or settlement activity, financial
institutions with advance notice of the proposed
determination of the Council.
(B) Notice in federal register.--The Council shall
provide such advance notice to financial institutions
by publishing a notice in the Federal Register.
(C) Requests for hearing.--Within 30 days from the
date of any notice of the proposed determination of the
Council, the financial market utility or, in the case
of a payment, clearing, or settlement activity, a
financial institution engaged in the designated
activity may request, in writing, an opportunity for a
written or oral hearing before the Council to
demonstrate that the proposed designation or rescission
of designation is not supported by substantial
evidence.
(D) Written submissions.--Upon receipt of a timely
request, the Council shall fix a time, not more than 30
days after receipt of the request, unless extended at
the request of the financial market utility or
financial institution, and place at which the financial
market utility or financial institution may appear,
personally or through counsel, to submit written
materials, or, at the sole discretion of the Council,
oral testimony or oral argument.
(3) Emergency exception.--
(A) Waiver or modification by vote of the
council.--The Council may waive or modify the
requirements of paragraph (2) if the Council
determines, by an affirmative vote of not less than \2/
3\ of all members then serving, including an
affirmative vote by the Chairperson of the Council,
that the waiver or modification is necessary to prevent
or mitigate an immediate threat to the financial system
posed by the financial market utility or the payment,
clearing, or settlement activity.
(B) Notice of waiver or modification.--The Council
shall provide notice of the waiver or modification to
the financial market utility concerned or, in the case
of a payment, clearing, or settlement activity, to
financial institutions, as soon as practicable, which
shall be no later than 24 hours after the waiver or
modification in the case of a financial market utility
and 3 business days in the case of financial
institutions. The Council shall provide the notice to
financial institutions by posting a notice on the
website of the Council and by publishing a notice in
the Federal Register.
(d) Notification of Final Determination.--
(1) After hearing.--Within 60 days of any hearing under
subsection (c)(3), the Council shall notify the financial
market utility or financial institutions of the final
determination of the Council in writing, which shall include
findings of fact upon which the determination of the Council is
based.
(2) When no hearing requested.--If the Council does not
receive a timely request for a hearing under subsection (c)(3),
the Council shall notify the financial market utility or
financial institutions of the final determination of the
Council in writing not later than 30 days after the expiration
of the date by which a financial market utility or a financial
institution could have requested a hearing. All notices to
financial institutions under this subsection shall be published
in the Federal Register.
(e) Extension of Time Periods.--The Council may extend the time
periods established in subsections (c) and (d) as the Council
determines to be necessary or appropriate.
SEC. 805. STANDARDS FOR SYSTEMICALLY IMPORTANT FINANCIAL MARKET
UTILITIES AND PAYMENT, CLEARING, OR SETTLEMENT
ACTIVITIES.
(a) Authority To Prescribe Standards.--The Board, by rule or order,
and in consultation with the Council and the Supervisory Agencies,
shall prescribe risk management standards, taking into consideration
relevant international standards and existing prudential requirements,
governing--
(1) the operations related to the payment, clearing, and
settlement activities of designated financial market utilities;
and
(2) the conduct of designated activities by financial
institutions.
(b) Objectives and Principles.--The objectives and principles for
the risk management standards prescribed under subsection (a) shall be
to--
(1) promote robust risk management;
(2) promote safety and soundness;
(3) reduce systemic risks; and
(4) support the stability of the broader financial system.
(c) Scope.--The standards prescribed under subsection (a) may
address areas such as--
(1) risk management policies and procedures;
(2) margin and collateral requirements;
(3) participant or counterparty default policies and
procedures;
(4) the ability to complete timely clearing and settlement
of financial transactions;
(5) capital and financial resource requirements for
designated financial market utilities; and
(6) other areas that the Board determines are necessary to
achieve the objectives and principles in subsection (b).
(d) Threshold Level.--The standards prescribed under subsection (a)
governing the conduct of designated activities by financial
institutions shall, where appropriate, establish a threshold as to the
level or significance of engagement in the activity at which a
financial institution will become subject to the standards with respect
to that activity.
(e) Compliance Required.--Designated financial market utilities and
financial institutions subject to the standards prescribed by the Board
of Governors for a designated activity shall conduct their operations
in compliance with the applicable risk management standards prescribed
by the Board of Governors.
SEC. 806. OPERATIONS OF DESIGNATED FINANCIAL MARKET UTILITIES.
(a) Federal Reserve Account and Services.--The Board of Governors
may authorize a Federal Reserve Bank to establish and maintain an
account for a designated financial market utility and provide services
to the designated financial market utility that the Federal Reserve
Bank is authorized under the Federal Reserve Act to provide to a
depository institution, subject to any applicable rules, orders,
standards, or guidelines prescribed by the Board of Governors.
(b) Advances.--The Board of Governors may authorize a Federal
Reserve Bank to provide to a designated financial market utility the
same discount and borrowing privileges as the Federal Reserve Bank may
provide to a depository institution under the Federal Reserve Act,
subject to any applicable rules, orders, standards, or guidelines
prescribed by the Board of Governors.
(c) Earnings on Federal Reserve Balances.--A Federal Reserve Bank
may pay earnings on balances maintained by or on behalf of a designated
financial market utility in the same manner and to the same extent as
the Federal Reserve Bank may pay earnings to a depository institution
under the Federal Reserve Act, subject to any applicable rules, orders,
standards, or guidelines prescribed by the Board of Governors.
(d) Reserve Requirements.--The Board of Governors may exempt a
designated financial market utility from, or modify any, reserve
requirements under section 19 of the Federal Reserve Act (12 U.S.C.
461) applicable to a designated financial market utility.
(e) Changes to Rules, Procedures, or Operations.--
(1) Advance notice.--
(A) Advance notice of proposed changes required.--A
designated financial market utility shall provide
notice 60 days in advance advance notice to its
Supervisory Agency and the Board of Governors of any
proposed change to its rules, procedures, or operations
that could, as defined in rules of the Board of
Governors, materially affect, the nature or level of
risks presented by the designated financial market
utility.
(B) Terms and standards prescribed by the board of
governors.--The Board of Governors shall prescribe
regulations that define and describe the standards for
determining when notice is required to be provided
under subparagraph (A).
(C) Contents of notice.--The notice of a proposed
change shall describe--
(i) the nature of the change and expected
effects on risks to the designated financial
market utility, its participants, or the
market; and
(ii) how the designated financial market
utility plans to manage any identified risks.
(D) Additional information.--The Supervisory Agency
or the Board of Governors may require a designated
financial market utility to provide any information
necessary to assess the effect the proposed change
would have on the nature or level of risks associated
with the designated financial market utility's payment,
clearing, or settlement activities and the sufficiency
of any proposed risk management techniques.
(E) Notice of objection.--The Supervisory Agency or
the Board of Governors shall notify the designated
financial market utility of any objection regarding the
proposed change within 60 days from the later of--
(i) the date that the notice of the
proposed change is received; or
(ii) the date any further information
requested for consideration of the notice is
received.
(F) Change not allowed if objection.--A designated
financial market utility shall not implement a change
to which the Board of Governors or the Supervisory
Agency has an objection.
(G) Change allowed if no objection within 60
days.--A designated financial market utility may
implement a change if it has not received an objection
to the proposed change within 60 days of the later of--
(i) the date that the Supervisory Agency or
the Board of Governors receives the notice of
proposed change; or
(ii) the date the Supervisory Agency or the
Board of Governors receives any further
information it requests for consideration of
the notice.
(H) Review extension for novel or complex issues.--
The Supervisory Agency or the Board of Governors may,
during the 60-day review period, extend the review
period for an additional 60 days for proposed changes
that raise novel or complex issues, subject to the
Supervisory Agency or the Board of Governors providing
the designated financial market utility with prompt
written notice of the extension. Any extension under
this subparagraph will extend the time periods under
subparagraphs (D) and (F).
(I) Change allowed earlier if notified of no
objection.--A designated financial market utility may
implement a change in less than 60 days from the date
of receipt of the notice of proposed change by the
Supervisory Agency or the Board of Governors, or the
date the Supervisory Agency or the Board of Governors
receives any further information it requested, if the
Supervisory Agency or the Board of Governors notifies
the designated financial market utility in writing that
it does not object to the proposed change and
authorizes the designated financial market utility to
implement the change on an earlier date, subject to any
conditions imposed by the Supervisory Agency or the
Board of Governors.
(2) Emergency changes.--
(A) In general.--A designated financial market
utility may implement a change that would otherwise
require advance notice under this subsection if it
determines that--
(i) an emergency exists; and
(ii) immediate implementation of the change
is necessary for the designated financial
market utility to continue to provide its
services in a safe and sound manner.
(B) Notice required within 24 hours.--The
designated financial market utility shall provide
notice of any such emergency change to its Supervisory
Agency and the Board of Governors, as soon as
practicable, which shall be no later than 24 hours
after implementation of the change.
(C) Contents of emergency notice.--In addition to
the information required for changes requiring advance
notice, the notice of an emergency change shall
describe--
(i) the nature of the emergency; and
(ii) the reason the change was necessary
for the designated financial market utility to
continue to provide its services in a safe and
sound manner.
(D) Modification or rescission of change may be
required.--The Supervisory Agency or the Board of
Governors may require modification or rescission of the
change if it finds that the change is not consistent
with the purposes of this Act or any rules, orders, or
standards prescribed by the Board of Governors
hereunder.
(3) Copying the board of governors.--The Supervisory Agency
shall provide the Board of Governors concurrently with a
complete copy of any notice, request, or other information it
issues, submits, or receives under this subsection.
(4) Consultation with board of governors.--Before taking
any action on, or completing its review of, a change proposed
by a designated financial market utility, the Supervisory
Agency shall consult with the Board of Governors.
SEC. 807. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST DESIGNATED
FINANCIAL MARKET UTILITIES.
(a) Examination.--Notwithstanding any other provision of law and
subject to subsection (d), the Supervisory Agency shall conduct
examinations of a designated financial market utility at least once
annually in order to determine the following:
(1) The nature of the operations of, and the risks borne
by, the designated financial market utility.
(2) The financial and operational risks presented by the
designated financial market utility to financial institutions,
critical markets, or the broader financial system.
(3) The resources and capabilities of the designated
financial market utility to monitor and control such risks.
(4) The safety and soundness of the designated financial
market utility.
(5) The designated financial market utility's compliance
with--
(A) this title; and
(B) the rules and orders prescribed by the Board of
Governors under this title.
(b) Service Providers.--Whenever a service integral to the
operation of a designated financial market utility is performed for the
designated financial market utility by another entity, whether an
affiliate or non-affiliate and whether on or off the premises of the
designated financial market utility, the Supervisory Agency may examine
whether the provision of that service is in compliance with applicable
law, rules, orders, and standards to the same extent as if the
designated financial market utility were performing the service on its
own premises.
(c) Enforcement.--For purposes of enforcing the provisions of this
section, a designated financial market utility shall be subject to, and
the appropriate Supervisory Agency shall have authority under the
provisions of subsections (b) through (n) of section 8 of the Federal
Deposit Insurance Act (12 U.S.C. 1818) in the same manner and to the
same extent as if the designated financial market utility was an
insured depository institution and the Supervisory Agency was the
appropriate Federal banking agency for such insured depository
institution.
(d) Board of Governors Involvement in Examinations.--
(1) Board of governors consultation on examination
planning.--The Supervisory Agency shall consult with the Board
of Governors regarding the scope and methodology of any
examination conducted under subsections (a) and (b).
(2) Board of governors participation in examination.--The
Board of Governors may, in its discretion, participate in any
examination led by a Supervisory Agency and conducted under
subsections (a) and (b).
(e) Board of Governors Enforcement Recommendations.--
(1) Recommendation.--The Board of Governors may at any time
recommend to the Supervisory Agency that such agency take
enforcement action against a designated financial market
utility. Any such recommendation for enforcement action shall
provide a detailed analysis supporting the recommendation of
the Board of Governors.
(2) Consideration.--The Supervisory Agency shall consider
the recommendation of the Board of Governors and submit a
response to the Board of Governors within 60 days.
(3) Mediation.--If the Supervisory Agency rejects, in whole
or in part, the recommendation of the Board of Governors, the
Board of Governors may dispute the matter by referring the
recommendation to the Council, which shall attempt to resolve
the dispute.
(4) Enforcement action.--If the Council is unable to
resolve the dispute under paragraph (3) within 30 days from the
date of referral, the Board of Governors may, upon a vote of
its members--
(A) exercise the enforcement authority referenced
in subsection (c) as if it were the Supervisory Agency;
and
(B) take enforcement action against the designated
financial market utility.
(f) Emergency Enforcement Actions by the Board of Governors.--
(1) Imminent risk of substantial harm.--The Board of
Governors may, after consulting with the Council and the
Supervisory Agency, take enforcement action against a
designated financial market utility if the Board of Governors
has reasonable cause to believe that--
(A) either--
(i) an action engaged in, or contemplated
by, a designated financial market utility
(including any change proposed by the
designated financial market utility to its
rules, procedures, or operations that would
otherwise be subject to section 806(e)) poses
an imminent risk of substantial harm to
financial institutions, critical markets, or
the broader financial system; or
(ii) the condition of a designated
financial market utility poses an imminent risk
of substantial harm to financial institutions,
critical markets, or the broader financial
system; and
(B) the imminent risk of substantial harm precludes
the Board of Governors' use of the procedures in
subsection (e).
(2) Enforcement authority.--For purposes of taking
enforcement action under paragraph (1), a designated financial
market utility shall be subject to, and the Board of Governors
shall have authority under the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818) in the same manner and to the same extent as
if the designated financial market utility was an insured
depository institution and the Board of Governors was the
appropriate Federal banking agency for such insured depository
institution.
(3) Prompt notice to supervisory agency of enforcement
action.--Within 24 hours of taking an enforcement action under
this subsection, the Board of Governors shall provide written
notice to the designated financial market utility's Supervisory
Agency containing a detailed analysis of the action of the
Board of Governors, with supporting documentation included.
SEC. 808. EXAMINATION OF AND ENFORCEMENT ACTIONS AGAINST FINANCIAL
INSTITUTIONS SUBJECT TO STANDARDS FOR DESIGNATED
ACTIVITIES.
(a) Examination.--The appropriate financial regulator is authorized
to examine a financial institution subject to the standards prescribed
by the Board of Governors for a designated activity in order to
determine the following:
(1) The nature and scope of the designated activities
engaged in by the financial institution.
(2) The financial and operational risks the designated
activities engaged in by the financial institution may pose to
the safety and soundness of the financial institution.
(3) The financial and operational risks the designated
activities engaged in by the financial institution may pose to
other financial institutions, critical markets, or the broader
financial system.
(4) The resources available to and the capabilities of the
financial institution to monitor and control the risks
described in paragraphs (2) and (3).
(5) The financial institution's compliance with this title
and the rules and orders prescribed by the Board of Governors
under this title.
(b) Enforcement.--For purposes of enforcing the provisions of this
section, and the rules and orders prescribed by the Board of Governors
under this section, a financial institution subject to the standards
prescribed by the Board of Governors for a designated activity shall be
subject to, and the appropriate financial regulator shall have
authority under the provisions of subsections (b) through (n) of
section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1818) in the
same manner and to the same extent as if the financial institution was
an insured depository institution and the appropriate financial
regulator was the appropriate Federal banking agency for such insured
depository institution.
(c) Technical Assistance.--The Board of Governors shall consult
with and provide such technical assistance as may be required by the
appropriate financial regulators to ensure that the rules and orders
prescribed by the Board of Governors under this title are interpreted
and applied in as consistent and uniform a manner as practicable.
(d) Delegation.--
(1) Examination.--
(A) Request to board of governors.--The appropriate
financial regulator may request the Board of Governors
to conduct or participate in an examination of a
financial institution subject to the standards
prescribed by the Board of Governors for a designated
activity in order to assess the compliance of such
financial institution with--
(i) this title; or
(ii) the rules or orders prescribed by the
Board of Governors under this title.
(B) Examination by board of governors.--Upon
receipt of an appropriate written request, the Board of
Governors will conduct the examination under such terms
and conditions to which the Board of Governors and the
appropriate financial regulator mutually agree.
(2) Enforcement.--
(A) Request to board of governors.--The appropriate
financial regulator may request the Board of Governors
to enforce this title or the rules or orders prescribed
by the Board of Governors under this title against a
financial institution that is subject to the standards
prescribed by the Board of Governors for a designated
activity.
(B) Enforcement by board of governors.--Upon
receipt of an appropriate written request, the Board of
Governors shall determine whether an enforcement action
is warranted, and, if so, it shall enforce compliance
with this title or the rules or orders prescribed by
the Board of Governors under this title and, if so, the
financial institution shall be subject to, and the
Board of Governors shall have authority under the
provisions of subsections (b) through (n) of section 8
of the Federal Deposit Insurance Act (12 U.S.C. 1818)
in the same manner and to the same extent as if the
financial institution was an insured depository
institution and the Board of Governors was the
appropriate Federal banking agency for such insured
depository institution
(e) Back-up Authority of the Board of Governors.--
(1) Examination and enforcement.--Notwithstanding any other
provision of law, the Board of Governors may--
(A) conduct an examination of the type described in
subsection (a) of any financial institution that is
subject to the standards prescribed by the Board of
Governors for a designated activity; and
(B) enforce the provisions of this title or any
rules or orders prescribed by the Board of Governors
under this title against any financial institution that
is subject to the standards prescribed by the Board of
Governors for a designated activity.
(2) Limitations.--
(A) Examination.--The Board of Governors may
exercise the authority described in paragraph (1)(A)
only if the Board of Governors has--
(i) reasonable cause to believe that a
financial institution is not in compliance with
this title or the rules or orders prescribed by
the Board of Governors under this title with
respect to a designated activity;
(ii) notified, in writing, the appropriate
financial regulator and the Council of its
belief under clause (i) with supporting
documentation included;
(iii) requested the appropriate financial
regulator to conduct a prompt examination of
the financial institution; and
(iv) either--
(I) not been afforded a reasonable
opportunity to participate in an
examination of the financial
institution by the appropriate
financial regulator within 30 days
after the date of the Board's
notification under clause (ii); or
(II) reasonable cause to believe
that the financial institution's
noncompliance with this title or the
rules or orders prescribed by the Board
of Governors under this title poses a
substantial risk to other financial
institutions, critical markets, or the
broader financial system, subject to
the Board of Governors affording the
appropriate financial regulator a
reasonable opportunity to participate
in the examination.
(B) Enforcement.--The Board of Governors may
exercise the authority described in paragraph (1)(B)
only if the Board of Governors has--
(i) reasonable cause to believe that a
financial institution is not in compliance with
this title or the rules or orders prescribed by
the Board of Governors under this title with
respect to a designated activity;
(ii) notified, in writing, the appropriate
financial regulator and the Council of its
belief under clause (i) with supporting
documentation included and with a
recommendation that the appropriate financial
regulator take 1 or more specific enforcement
actions against the financial institution; and
(iii) either--
(I) not been notified, in writing,
by the appropriate financial regulator
of the commencement of an enforcement
action recommended by the Board of
Governors against the financial
institution within 60 days from the
date of the notification under clause
(ii); or
(II) reasonable cause to believe
that the financial institution's
noncompliance with this title or the
rules or orders prescribed by the Board
of Governors under this title poses a
substantial risk to other financial
institutions, critical markets, or the
broader financial system, subject to
the Board of Governors notifying the
appropriate financial regulator of the
Board's enforcement action.
(3) Enforcement provisions.--For purposes of taking
enforcement action under paragraph (1), the financial
institution shall be subject to, and the Board of Governors
shall have authority under the provisions of subsections (b)
through (n) of section 8 of the Federal Deposit Insurance Act
(12 U.S.C. 1818) in the same manner and to the same extent as
if the financial institution was an insured depository
institution and the Board of Governors was the appropriate
Federal banking agency for such insured depository institution.
SEC. 809. REQUESTS FOR INFORMATION, REPORTS, OR RECORDS.
(a) Information to Assess Systemic Importance.--
(1) Financial market utilities.--The Council is authorized
to require any financial market utility to submit such
information as the Council may require for the sole purpose of
assessing whether that financial market utility is systemically
important, but only if the Council has reasonable cause to
believe that the financial market utility meets the standards
for systemic importance set forth in section 804.
(2) Financial institutions engaged in payment, clearing, or
settlement activities.--The Council is authorized to require
any financial institution to submit such information as the
Council may require for the sole purpose of assessing whether
any payment, clearing, or settlement activity engaged in or
supported by a financial institution is systemically important,
but only if the Council has reasonable cause to believe that
the activity meets the standards for systemic importance set
forth in section 804.
(b) Reporting After Designation.--
(1) Designated financial market utilities.--The Board of
Governors and the Council may require a designated financial
market utility to submit reports or data to the Board of
Governors and the Council in such frequency and form as deemed
necessary by the Board of Governors and the Council in order to
assess the safety and soundness of the utility and the systemic
risk that the utility's operations pose to the financial
system.
(2) Financial institutions subject to standards for
designated activities.--The Board of Governors and the Council
may require 1 or more financial institutions subject to the
standards prescribed by the Board of Governors for a designated
activity to submit, in such frequency and form as deemed
necessary by the Board of Governors and the Council, reports
and data to the Board of Governors and the Council solely with
respect to the conduct of the designated activity and solely to
assess whether--
(A) the rules, orders, or standards prescribed by
the Board of Governors with respect to the designated
activity appropriately address the risks to the
financial system presented by such activity; and
(B) the financial institutions are in compliance
with this title and the rules and orders prescribed by
the Board of Governors under this title with respect to
the designated activity.
(c) Coordination With Appropriate Federal Supervisory Agency.--
(1) Advance coordination.--Before directly requesting any
material information from, or imposing reporting or
recordkeeping requirements on, any financial market utility or
any financial institution engaged in a payment, clearing, or
settlement activity, the Board of Governors and the Council
shall coordinate with the Supervisory Agency for a financial
market utility or the appropriate financial regulator for a
financial institution to determine if the information is
available from or may be obtained by the agency in the form,
format, or detail required by the Board of Governors and the
Council.
(2) Supervisory reports.--Notwithstanding any other
provision of law, the Supervisory Agency, the appropriate
financial regulator, and the Board of Governors are authorized
to disclose to each other and the Council copies of its
examination reports or similar reports regarding any financial
market utility or any financial institution engaged in payment,
clearing, or settlement activities.
(d) Timing of Response From Appropriate Federal Supervisory
Agency.--If the information, report, records, or data requested by the
Board of Governors or the Council under subsection (c)(1) are not
provided in full by the Supervisory Agency or the appropriate financial
regulator in less than 15 days after the date on which the material is
requested, the Board of Governors or the Council may request the
information or impose recordkeeping or reporting requirements directly
on such persons as provided in subsections (a) and (b) with notice to
the agency.
(e) Sharing of Information.--
(1) Material concerns.--Notwithstanding any other provision
of law, the Board of Governors, the Council, the appropriate
financial regulator, and any Supervisory Agency are authorized
to--
(A) promptly notify each other of material concerns
about a designated financial market utility or any
financial institution engaged in designated activities;
and
(B) share appropriate reports, information, or data
relating to such concerns.
(2) Other information.--Notwithstanding any other provision
of law, the Board of Governors, the Council, the appropriate
financial regulator, or any Supervisory Agency may, under such
terms and conditions as it deems appropriate, provide
confidential supervisory information and other information
obtained under this title to other persons it deems
appropriate, including the Secretary, State financial
institution supervisory agencies, foreign financial
supervisors, foreign central banks, and foreign finance
ministries, subject to reasonable assurances of
confidentiality.
(f) Privilege Maintained.--The Board of Governors, the Council, the
appropriate financial regulator, and any Supervisory Agency providing
reports or data under this section shall not be deemed to have waived
any privilege applicable to those reports or data, or any portion
thereof, by providing the reports or data to the other party or by
permitting the reports or data, or any copies thereof, to be used by
the other party.
(g) Disclosure Exemption.--Information obtained by the Board of
Governors or the Council under this section and any materials prepared
by the Board of Governors or the Council regarding its assessment of
the systemic importance of financial market utilities or any payment,
clearing, or settlement activities engaged in by financial
institutions, and in connection with its supervision of designated
financial market utilities and designated activities, shall be
confidential supervisory information exempt from disclosure under
section 552 of title 5, United States Code. For purposes of such
section 552, this subsection shall be considered a statute described in
subsection (b)(3) of such section 552.
SEC. 810. RULEMAKING.
The Board of Governors and the Council are authorized to prescribe
such rules and issue such orders as may be necessary to administer and
carry out the authorities and duties granted to the Board of Governors
or the Council, respectively, and prevent evasions thereof.
SEC. 811. OTHER AUTHORITY.
Unless otherwise provided by its terms, this title does not divest
any appropriate financial regulator, any Supervisory Agency, or any
other Federal or State agency, of any authority derived from any other
applicable law, except that any standards prescribed by the Board of
Governors under section 805 shall supersede any less stringent
requirements established under other authority to the extent of any
conflict.
SEC. 812. EFFECTIVE DATE.
This title is effective as of the date of enactment of this Act.
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
Subtitle A--Increasing Investor Protection
SEC. 911. INVESTOR ADVISORY COMMITTEE ESTABLISHED.
Title I of the Securities Exchange Act of 1934 (15 U.S.C. 78a et
seq.) is amended by adding at the end the following:
``SEC. 39. INVESTOR ADVISORY COMMITTEE.
``(a) Establishment and Purpose.--
``(1) Establishment.--There is established within the
Commission the Investor Advisory Committee (referred to in this
section as the `Committee').
``(2) Purpose.--The Committee shall--
``(A) advise and consult with the Commission on--
``(i) regulatory priorities of the
Commission;
``(ii) issues relating to the regulation of
securities products, trading strategies, and
fee structures, and the effectiveness of
disclosure;
``(iii) initiatives to protect investor
interest; and
``(iv) initiatives to promote investor
confidence and the integrity of the securities
marketplace; and
``(B) submit to the Commission such findings and
recommendations as the Committee determines are
appropriate, including recommendations for proposed
legislative changes.
``(b) Membership.--
``(1) In general.--The members of the Committee shall be--
``(A) the Investor Advocate;
``(B) a representative of State securities
commissions;
``(C) a representative of the interests of senior
citizens; and
``(D) not fewer than 10, and not more than 20,
members appointed by the Commission, from among
individuals who--
``(i) represent the interests of individual
equity and debt investors, including investors
in mutual funds;
``(ii) represent the interests of
institutional investors, including the
interests of pension funds and registered
investment companies;
``(iii) are knowledgeable about investment
issues and decisions; and
``(iv) have reputations of integrity.
``(2) Term.--Each member of the Committee appointed under
paragraph (1)(B) shall serve for a term of 4 years.
``(3) Members not commission employees.--Members appointed
under paragraph (1)(B) shall not be deemed to be employees or
agents of the Commission solely because of membership on the
Committee.
``(c) Chairman; Vice Chairman; Secretary; Assistant Secretary.--
``(1) In general.--The members of the Committee shall
elect, from among the members of the Committee--
``(A) a chairman, who may not be employed by an
issuer;
``(B) a vice chairman, who may not be employed by
an issuer;
``(C) a secretary; and
``(D) an assistant secretary.
``(2) Term.--Each member elected under paragraph (1) shall
serve for a term of 3 years in the capacity for which the
member was elected under paragraph (1).
``(d) Meetings.--
``(1) Frequency of meetings.--The Committee shall meet--
``(A) not less frequently than twice annually, at
the call of the chairman of the Committee; and
``(B) from time to time, at the call of the
Commission.
``(2) Notice.--The chairman of the Committee shall give the
members of the Committee written notice of each meeting, not
later than 2 weeks before the date of the meeting.
``(e) Compensation and Travel Expenses.--Each member of the
Committee who is not a full-time employee of the United States shall--
``(1) be compensated at a rate not to exceed the daily
equivalent of the annual rate of basic pay in effect for a
position at level V of the Executive Schedule under section
5316 of title 5, United States Code, for each day during which
the member is engaged in the actual performance of the duties
of the Committee; and
``(2) while away from the home or regular place of business
of the member in the performance of services for the Committee,
be allowed travel expenses, including per diem in lieu of
subsistence, in the same manner as persons employed
intermittently in the Government service are allowed expenses
under section 5703(b) of title 5, United States Code.
``(f) Staff.--The Commission shall make available to the Committee
such staff as the chairman of the Committee determines are necessary to
carry out this section.
``(g) Review by Commission.--The Commission shall--
``(1) review the findings and recommendations of the
Committee; and
``(2) each time the Committee submits a finding or
recommendation to the Commission, issue a public statement--
``(A) assessing the finding or recommendation of
the Committee; and
``(B) disclosing the action, if any, the Commission
intends to take with respect to the finding or
recommendation.
``(h) Committee Findings.--Nothing in this section shall require
the Commission to agree to or act upon any finding or recommendation of
the Committee.
``(i) Federal Advisory Committee Act.--The Federal Advisory
Committee Act (5 U.S.C. App.) shall not apply with respect to the
Committee and its activities.
``(j) Authorization of Appropriations.--There is authorized to be
appropriated to the Commission such sums as are necessary to carry out
this section.''.
SEC. 912. CLARIFICATION OF AUTHORITY OF THE COMMISSION TO ENGAGE IN
INVESTOR TESTING.
Section 19 of the Securities Act of 1933 (15 U.S.C. 77s) is amended
by adding at the end the following:
``(e) Evaluation of Rules or Programs.--For the purpose of
evaluating any rule or program of the Commission issued or carried out
under any provision of the securities laws, as defined in section 3 of
the Securities Exchange Act of 1934 (15 U.S.C. 78c), and the purposes
of considering, proposing, adopting, or engaging in any such rule or
program or developing new rules or programs, the Commission may--
``(1) gather information from and communicate with
investors or other members of the public;
``(2) engage in such temporary investor testing programs as
the Commission determines are in the public interest or would
protect investors; and
``(3) consult with academics and consultants, as necessary
to carry out this subsection.
``(f) Rule of Construction.--For purposes of the Paperwork
Reduction Act (44 U.S.C. 3501 et seq.), any action taken under
subsection (e) shall not be construed to be a collection of
information.''.
SEC. 913. STUDY AND RULEMAKING REGARDING OBLIGATIONS OF BROKERS,
DEALERS, AND INVESTMENT ADVISERS.
(a) Definitions.--In this section--
(1) the term ``FINRA'' means the Financial Industry
Regulatory Authority; and
(2) the term ``retail customer'' means an individual
customer of a broker, dealer, investment adviser, person
associated with a broker or dealer, or a person associated with
an investment adviser.
(b) In General.--The Commission shall conduct a study to evaluate--
(1) the effectiveness of existing legal or regulatory
standards of care for brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers for providing personalized
investment advice and recommendations about securities to
retail customers imposed by the Commission and FINRA, and other
Federal and State legal or regulatory standards; and
(2) whether there are legal or regulatory gaps or overlap
in legal or regulatory standards in the protection of retail
customers relating to the standards of care for brokers,
dealers, investment advisers, persons associated with brokers
or dealers, and persons associated with investment advisers for
providing personalized investment advice about securities to
retail customers that should be addressed by rule or statute.
(c) Considerations.--In conducting the study required under
subsection (b), the Commission shall consider--
(1) the regulatory, examination, and enforcement resources
devoted to, and activities of, the Commission and FINRA to
enforce the standards of care for brokers, dealers, investment
advisers, persons associated with brokers or dealers, and
persons associated with investment advisers when providing
personalized investment advice and recommendations about
securities to retail customers, including--
(A) the frequency of examinations of brokers,
dealers, and investment advisers; and
(B) the length of time of the examinations;
(2) the substantive differences, compared and contrasted in
detail, in the regulation of brokers, dealers, and investment
advisers, when providing personalized investment advice and
recommendations about securities to retail customers, including
the differences in the amount of resources devoted to the
regulation and examination of brokers, dealers, and investment
advisers, by the Commission and FINRA;
(3) the specific instances in which--
(A) the regulation and oversight of investment
advisers provide greater protection to retail customers
than the regulation and oversight of brokers and
dealers; and
(B) the regulation and oversight of brokers and
dealers provide greater protection to retail customers
than the regulation and oversight of investment
advisers;
(4) the existing legal or regulatory standards of State
securities regulators and other regulators intended to protect
retail customers;
(5) the potential impact on retail customers, including the
potential impact on access of retail customers to the range of
products and services offered by brokers and dealers, of
imposing upon brokers, dealers, and persons associated with
brokers or dealers--
(A) the standard of care applied under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-1 et
seq.) for providing personalized investment advice
about securities to retail customers of investment
advisers; and
(B) other requirements of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-1 et seq.);
(6) the potential impact of--
(A) imposing on investment advisers the standard of
care applied by the Commission and FINRA under the
Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.)
for providing recommendations about securities to
retail customers of brokers and dealers and other
Commission and FINRA requirements applicable to brokers
and dealers; and
(B) authorizing the Commission to designate 1 or
more self-regulatory organizations to augment the
efforts of the Commission to oversee investment
advisers;
(7) the potential impact of eliminating the broker and
dealer exclusion from the definition of ``investment adviser''
under section 202(a)(11)(C) of the Investment Advisers Act of
1940 (15 U.S.C. 80b-2(a)(11)(C)), in terms of--
(A) the potential benefits or harm to retail
customers that could result from such a change,
including any potential impact on access to
personalized investment advice and recommendations
about securities to retail customers or the
availability of such advice and recommendations;
(B) the number of additional entities and
individuals that would be required to register under,
or become subject to, the Investment Advisers Act of
1940 (15 U.S.C. 80b-1 et seq.), and the additional
requirements to which brokers, dealers, and persons
associated with brokers and dealers would become
subject, including--
(i) any potential additional associated
person licensing, registration, and examination
requirements; and
(ii) the additional costs, if any, to the
additional entities and individuals; and
(C) the impact on Commission resources to--
(i) conduct examinations of registered
investment advisers and the representatives of
registered investment advisers, including the
impact on the examination cycle; and
(ii) enforce the standard of care and other
applicable requirements imposed under the
Investment Advisers Act of 1940 (15 U.S.C. 80b-
1 et seq.);
(8) the ability of investors to understand the differences
in terms of regulatory oversight and examinations between
brokers, dealers, and investment advisers;
(9) the varying level of services provided by brokers,
dealers, investment advisers, persons associated with brokers
or dealers, and persons associated with investment advisers to
retail customers and the varying scope and terms of retail
customer relationships of brokers, dealers, investment
advisers, persons associated with brokers or dealers, and
persons associated with investment advisers with such retail
customers;
(10) any potential benefits or harm to retail customers
that could result from any potential changes in the regulatory
requirements or legal standards affecting brokers, dealers,
investment advisers, persons associated with brokers or
dealers, and persons associated with investment advisers
relating to their obligations to retail customers, including
any potential impact on--
(A) protection from fraud;
(B) access to personalized investment advice, and
recommendations about securities to retail customers;
or
(C) the availability of such advice and
recommendations;
(11) the additional costs and expenses to retail customers
and to brokers, dealers, and investment advisers resulting from
potential changes in the regulatory requirements or legal
standards affecting brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers relating to their
obligations to retail customers; and
(12) any other consideration that the Commission deems
necessary and appropriate to effectively execute the study
required under subsection (b).
(d) Report.--
(1) In general.--Not later than 1 year after the date of
enactment of this Act, the Commission shall submit a report on
the study required under subsection (b) to--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate; and
(B) the Committee on Financial Services of the
House of Representatives.
(2) Content requirements.--The report required under
paragraph (1) shall describe the findings, conclusions, and
recommendations of the Commission from the study required under
subsection (b), including--
(A) a description of the considerations, analysis,
and public and industry input that the Commission
considered, as required under subsection (e), to make
such findings, conclusions, and policy recommendations;
and
(B) an analysis of--
(i) whether any identified legal or
regulatory gaps or overlap in legal or
regulatory standards in the protection of
retail customers relating to the standards of
care for brokers, dealers, investment advisers,
persons associated with brokers or dealers, and
persons associated with investment advisers for
providing personalized investment advice about
securities to retail customers can be addressed
by rule; and
(ii) whether, and the extent to which, the
Commission would require additional statutory
authority to address such gaps or overlap.
(e) Public Comment.--The Commission shall seek and consider public
input, comments, and data in order to prepare the report required under
subsection (d).
(f) Rulemaking.--
(1) In general.--If the study required under subsection (b)
identifies any gaps or overlap in the legal or regulatory
standards in the protection of retail customers relating to the
standards of care for brokers, dealers, investment advisers,
persons associated with brokers or dealers, and persons
associated with investment advisers for providing personalized
investment advice about securities to such retail customers,
the Commission, not later than 2 years after the date of
enactment of this Act, shall--
(A) commence a rulemaking, as necessary or
appropriate in the public interest and for the
protection of retail customers, to address such
regulatory gaps and overlap that can be addressed by
rule, using its authority under the Securities Exchange
Act of 1934 (15 U.S.C. 78a et seq.) and the Investment
Advisers Act of 1940 (15 U.S.C. 80b-1 et seq.); and
(B) consider and take into account the findings,
conclusions, and recommendations of the study required
under this section.
(2) Rule of construction.--Nothing in this section shall be
construed to limit the rulemaking authority of the Commission
under any other provision of Federal law.
SEC. 914. OFFICE OF THE INVESTOR ADVOCATE.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
amended by adding at the end the following:
``(g) Office of the Investor Advocate.--
``(1) Office established.--There is established within the
Commission the Office of the Investor Advocate (in this
subsection referred to as the `Office').
``(2) Investor advocate.--
``(A) In general.--The head of the Office shall be
the Investor Advocate, who shall--
``(i) report directly to the Chairman; and
``(ii) be appointed by the Chairman, in
consultation with the Commission, from among
individuals having experience in advocating for
the interests of investors in securities and
investor protection issues, from the
perspective of investors.
``(B) Compensation.--The annual rate of pay for the
Investor Advocate shall be equal to the highest rate of
annual pay for a Senior Executive Service position
within the Commission.
``(C) Limitation on service.--An individual who
serves as the Investor Advocate may not be employed by
the Commission--
``(i) during the 2-year period ending on
the date of appointment as Investor Advocate;
or
``(ii) during the 5-year period beginning
on the date on which the person ceases to serve
as the Investor Advocate.
``(3) Staff of office.--The Investor Advocate may retain or
employ independent counsel, research staff, and service staff,
as the Investor Advocate deems necessary to carry out the
functions, powers, and duties of the Office.
``(4) Functions of the investor advocate.--The Investor
Advocate shall--
``(A) assist retail investors in resolving
significant problems such investors may have with the
Commission or with self-regulatory organizations;
``(B) identify areas in which investors would
benefit from changes in the regulations of the
Commission or the rules of self-regulatory
organizations;
``(C) identify problems that investors have with
financial service providers and investment products;
``(D) analyze the potential impact on investors
of--
``(i) proposed regulations of the
Commission; and
``(ii) proposed rules of self-regulatory
organizations registered under this title; and
``(E) to the extent practicable, propose to the
Commission changes in the regulations or orders of the
Commission and to Congress any legislative,
administrative, or personnel changes that may be
appropriate to mitigate problems identified under this
paragraph and to promote the interests of investors.
``(5) Access to documents.--The Commission shall ensure
that the Investor Advocate has full access to the documents of
the Commission and any self-regulatory organization, as
necessary to carry out the functions of the Office.
``(6) Annual reports.--
``(A) Report on objectives.--
``(i) In general.--Not later than June 30
of each year after 2010, the Investor Advocate
shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the
House of Representatives a report on the
objectives of the Investor Advocate for the
following fiscal year.
``(ii) Contents.--Each report required
under clause (i) shall contain full and
substantive analysis and explanation.
``(B) Report on activities.--
``(i) In general.--Not later than December
31 of each year after 2010, the Investor
Advocate shall submit to the Committee on
Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services
of the House of Representatives a report on the
activities of the Investor Advocate during the
immediately preceding fiscal year.
``(ii) Contents.--Each report required
under clause (i) shall include--
``(I) appropriate statistical
information and full and substantive
analysis;
``(II) information on steps that
the Investor Advocate has taken during
the reporting period to improve
investor services and the
responsiveness of the Commission and
self-regulatory organizations to
investor concerns;
``(III) a summary of the most
serious problems encountered by
investors during the reporting period;
``(IV) an inventory of the items
described in subclauses (III) that
includes--
``(aa) identification of
any action taken by the
Commission or the self-
regulatory organization and the
result of such action;
``(bb) the length of time
that each item has remained on
such inventory; and
``(cc) for items on which
no action has been taken, the
reasons for inaction, and an
identification of any official
who is responsible for such
action;
``(V) recommendations for such
administrative and legislative actions
as may be appropriate to resolve
problems encountered by investors; and
``(VI) any other information, as
determined appropriate by the Investor
Advocate.
``(iii) Independence.--Each report required
under this paragraph shall be provided directly
to the Committees listed in clause (i) without
any prior review or comment from the
Commission, any commissioner, any other officer
or employee of the Commission, or the Office of
Management and Budget.
``(iv) Confidentiality.--No report required
under clause (i) may contain confidential
information.
``(7) Regulations.--The Commission shall, by regulation,
establish procedures requiring a formal response to all
recommendations submitted to the Commission by the Investor
Advocate, not later than 3 months after the date of such
submission.''.
SEC. 915. STREAMLINING OF FILING PROCEDURES FOR SELF-REGULATORY
ORGANIZATIONS.
(a) Filing Procedures.--Section 19(b) of the Securities Exchange
Act of 1934 (15 U.S.C. 78s(b)) is amended by striking paragraph (2)
(including the undesignated matter immediately following subparagraph
(B)) and inserting the following:
``(2) Approval process.--
``(A) Approval process established.--
``(i) In general.--Except as provided in
clause (ii), not later than 45 days after the
date of publication of a proposed rule change
under paragraph (1), the Commission shall--
``(I) by order, approve the
proposed rule change; or
``(II) institute proceedings under
subparagraph (B) to determine whether
the proposed rule change should be
disapproved.
``(ii) Extension of time period.--The
Commission may extend the period established
under clause (i) by not more than an additional
45 days, if--
``(I) the Commission determines
that a longer period is appropriate and
publishes the reasons for such
determination; or
``(II) the self-regulatory
organization that filed the proposed
rule change consents to the longer
period.
``(B) Proceedings.--
``(i) Notice and hearing.--If the
Commission does not approve a proposed rule
change under subparagraph (A), the Commission
shall provide to the self-regulatory
organization that filed the proposed rule
change--
``(I) notice of the grounds for
disapproval under consideration; and
``(II) opportunity for hearing, to
be concluded not later than 180 days
after the date of publication of notice
of the filing of the proposed rule
change.
``(ii) Order of approval or disapproval.--
``(I) In general.--Except as
provided in subclause (II), not later
than 180 days after the date of
publication under paragraph (1), the
Commission shall issue an order
approving or disapproving the proposed
rule change.
``(II) Extension of time period.--
The Commission may extend the period
for issuance under clause (I) by not
more than 60 days, if--
``(aa) the Commission
determines that a longer period
is appropriate and publishes
the reasons for such
determination; or
``(bb) the self-regulatory
organization that filed the
proposed rule change consents
to the longer period.
``(C) Standards for approval and disapproval.--
``(i) Approval.--The Commission shall
approve a proposed rule change of a self-
regulatory organization if it finds that such
proposed rule change is consistent with the
requirements of this title and the rules and
regulations issued under this title that are
applicable to such organization.
``(ii) Disapproval.--The Commission shall
disapprove a proposed rule change of a self-
regulatory organization if it does not make a
finding described in clause (i).
``(iii) Time for approval.--The Commission
may not approve a proposed rule change earlier
than 30 days after the date of publication
under paragraph (1), unless the Commission
finds good cause for so doing and publishes the
reason for the finding.
``(D) Result of failure to institute or conclude
proceedings.--A proposed rule change shall be deemed to
have been approved by the Commission, if--
``(i) the Commission does not approve the
proposed rule change or begin proceedings under
subparagraph (B) within the period described in
subparagraph (A); or
``(ii) the Commission does not issue an
order approving or disapproving the proposed
rule change under subparagraph (B) within the
period described in subparagraph (B)(ii).
``(E) Publication date based on federal register
publishing.--For purposes of this paragraph, if, after
filing a proposed rule change with the Commission
pursuant to paragraph (1), a self-regulatory
organization publishes a notice of the filing of such
proposed rule change, together with the substantive
terms of such proposed rule change, on a publicly
accessible website, the Commission shall thereafter
send the notice to the Federal Register for publication
thereof under paragraph (1) within 15 days of the date
on which such website publication is made. If the
Commission fails to send the notice for publication
thereof within such 15 day period, then the date of
publication shall be deemed to be the date on which
such website publication was made.''.
(b) Clarification of Filing Date.--
(1) Rule of construction.--Section 19(b) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)) is amended by adding at
the end the following:
``(10) Rule of construction relating to filing date of
proposed rule changes.--
``(A) In general.--For purposes of this subsection,
the date of filing of a proposed rule change shall be
deemed to be the date on which the Commission receives
the proposed rule change.
``(B) Exception.--A proposed rule change has not
been received by the Commission for purposes of
subparagraph (A) if, not later than 7 days after the
date of receipt by the Commission, the Commission
notifies the self-regulatory organization that such
proposed rule change does not comply with the rules of
the Commission relating to the required form of a
proposed rule change.''.
(2) Publication.--Section 19(b)(1) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)(1)) is amended by
striking ``upon'' and inserting ``as soon as practicable after
the date of''.
(c) Effective Date of Proposed Rules.--Section 19(b)(3) of the
Securities Exchange Act of 1934 (15 U.S.C. 78s(b)(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``may take effect'' and inserting
``shall take effect''; and
(B) by inserting ``on any person, whether or not
the person is a member of the self-regulatory
organization'' after ``charge imposed by the self-
regulatory organization''; and
(2) in subparagraph (C)--
(A) by amending the second sentence to read as
follows: ``At any time within the 60-day period
beginning on the date of filing of such a proposed rule
change in accordance with the provisions of paragraph
(1), the Commission summarily may temporarily suspend
the change in the rules of the self-regulatory
organization made thereby, if it appears to the
Commission that such action is necessary or appropriate
in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes
of this title.'';
(B) by inserting after the second sentence the
following: ``If the Commission takes such action, the
Commission shall institute proceedings under paragraph
(2)(B) to determine whether the proposed rule should be
approved or disapproved.''; and
(C) in the third sentence, by striking ``the
preceding sentence'' and inserting ``this
subparagraph''.
(d) Conforming Change.--Section 19(b)(4)(D) of the Securities
Exchange Act of 1934 (15 U.S.C. 78s(b)(4)(D)) is amended to read as
follows:
``(D)(i) The Commission shall order the temporary
suspension of any change in the rules of a clearing
agency made by a proposed rule change that has taken
effect under paragraph (3), if the appropriate
regulatory agency for the clearing agency notifies the
Commission not later than 30 days after the date on
which the proposed rule change was filed of--
``(I) the determination by the appropriate
regulatory agency that the rules of such
clearing agency, as so changed, may be
inconsistent with the safeguarding of
securities or funds in the custody or control
of such clearing agency or for which it is
responsible; and
``(II) the reasons for the determination
described in subclause (I).
``(ii) If the Commission takes action under clause
(i), the Commission shall institute proceedings under
paragraph (2)(B) to determine if the proposed rule
change should be approved or disapproved.''.
SEC. 916. STUDY REGARDING FINANCIAL LITERACY AMONG INVESTORS.
(a) In General.--The Commission shall conduct a study to identify--
(1) the existing level of financial literacy among retail
investors, including subgroups of investors identified by the
Commission;
(2) methods to improve the timing, content, and format of
disclosures to investors with respect to financial
intermediaries, investment products, and investment services;
(3) the most useful and understandable relevant information
that retail investors need to make informed financial decisions
before engaging a financial intermediary or purchasing an
investment product or service that is typically sold to retail
investors, including shares of open-end companies, as that term
is defined in section 5 of the Investment Company Act of 1940
(15 U.S.C. 80a-5) that are registered under section 8 of that
Act;
(4) methods to increase the transparency of expenses and
conflicts of interests in transactions involving investment
services and products, including shares of open-end companies
described in paragraph (3);
(5) the most effective existing private and public efforts
to educate investors; and
(6) in consultation with the Financial Literacy and
Education Commission, a strategy (including, to the extent
practicable, measurable goals and objectives) to increase the
financial literacy of investors in order to bring about a
positive change in investor behavior.
(b) Report.--Not later than 2 years after the date of enactment of
this Act, the Commission shall submit a report on the study required
under subsection (a) to--
(1) the Committee on Banking, Housing, and Urban Affairs of
the Senate; and
(2) the Committee on Financial Services of the House of
Representatives.
SEC. 917. STUDY REGARDING MUTUAL FUND ADVERTISING.
(a) In General.--The Comptroller General of the United States shall
conduct a study on mutual fund advertising to identify--
(1) existing and proposed regulatory requirements for open-
end investment company advertisements;
(2) current marketing practices for the sale of open-end
investment company shares, including the use of past
performance data, funds that have merged, and incubator funds;
(3) the impact of such advertising on consumers; and
(4) recommendations to improve investor protections in
mutual fund advertising and additional information necessary to
ensure that investors can make informed financial decisions
when purchasing shares.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall submit a
report on the results of the study conducted under subsection (a) to--
(1) the Committee on Banking, Housing, and Urban Affairs of
the United States Senate; and
(2) the Committee on Financial Services of the House of
Representatives.
SEC. 918. CLARIFICATION OF COMMISSION AUTHORITY TO REQUIRE INVESTOR
DISCLOSURES BEFORE PURCHASE OF INVESTMENT PRODUCTS AND
SERVICES.
Section 15 of the Securities Exchange Act of 1934 (15 U.S.C. 78o)
is amended by adding at the end the following:
``(k) Disclosures to Retail Investors.--
``(1) In general.--Notwithstanding any other provision of
the securities laws, the Commission may issue rules designating
documents or information that shall be provided by a broker or
dealer to a retail investor before the purchase of an
investment product or service by the retail investor.
``(2) Considerations.--In developing any rules under
paragraph (1), the Commission shall consider whether the rules
will promote investor protection, efficiency, competition, and
capital formation.
``(3) Form and contents of documents and information.--Any
documents or information designated under a rule promulgated
under paragraph (1) shall--
``(A) be in a summary format; and
``(B) contain clear and concise information about--
``(i) investment objectives, strategies,
costs, and risks; and
``(ii) any compensation or other financial
incentive received by a broker, dealer, or
other intermediary in connection with the
purchase of retail investment products.''.
SEC. 919. STUDY ON CONFLICTS OF INTEREST.
(a) In General.--The Comptroller General of the United States shall
conduct a study--
(1) to identify and examine potential conflicts of interest
that exist between the staffs of the investment banking and
equity and fixed income securities analyst functions within the
same firm; and
(2) to make recommendations to Congress designed to protect
investors in light of such conflicts.
(b) Considerations.--In conducting the study under subsection (a),
the Comptroller General shall--
(1) consider--
(A) the potential for investor harm resulting from
conflicts, including consideration of the forms of
misconduct engaged in by the several securities firms
and individuals that entered into the Global Analyst
Research Settlements in 2003 (also known as the
``Global Settlement'');
(B) the nature and benefits of the undertakings to
which those firms agreed in enforcement proceedings,
including firewalls between research and investment
banking, separate reporting lines, dedicated legal and
compliance staffs, allocation of budget, physical
separation, compensation, employee performance
evaluations, coverage decisions, limitations on
soliciting investment banking business, disclosures,
transparency, and other measures;
(C) whether any such undertakings should be
codified and applied permanently to securities firms,
or whether the Commission should adopt rules applying
any such undertakings to securities firms; and
(D) whether to recommend regulatory or legislative
measures designed to mitigate possible adverse
consequences to investors arising from the conflicts of
interest or to enhance investor protection or
confidence in the integrity of the securities markets;
and
(2) consult with State attorneys general, State securities
officials, the Commission, the Financial Industry Regulatory
Authority (``FINRA''), NYSE Regulation, investor advocates,
brokers, dealers, retail investors, institutional investors,
and academics.
(c) Report.--The Comptroller General shall submit a report on the
results of the study required by this section to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives, not later than 18
months after the date of enactment of this Act.
SEC. 919A. STUDY ON IMPROVED INVESTOR ACCESS TO INFORMATION ON
INVESTMENT ADVISERS AND BROKER-DEALERS.
(a) Study.--
(1) In general.--Not later than 6 months after the date of
enactment of this Act, the Commission shall complete a study,
including recommendations, of ways to improve the access of
investors to registration information (including disciplinary
actions, regulatory, judicial, and arbitration proceedings, and
other information) about registered and previously registered
investment advisers, associated persons of investment advisers,
brokers and dealers and their associated persons on the
existing Central Registration Depository and Investment Adviser
Registration Depository systems, as well as identify additional
information that should be made publicly available.
(2) Contents.--The study required by subsection (a) shall
include an analysis of the advantages and disadvantages of
further centralizing access to the information contained in the
2 systems, including--
(A) identification of those data pertinent to
investors; and
(B) the identification of the method and format for
displaying and publishing such data to enhance
accessibility by and utility to investors.
(b) Implementation.--Not later than 18 months after the date of
completion of the study required by subsection (a), the Commission
shall implement any recommendations of the study.
SEC. 919B. STUDY ON FINANCIAL PLANNERS AND THE USE OF FINANCIAL
DESIGNATIONS.
(a) In General.--The Comptroller General of the United States shall
conduct a study to evaluate--
(1) the effectiveness of State and Federal regulations to
protect consumers from individuals who hold themselves out as
financial planners through the use of misleading designations;
(2) current State and Federal oversight structure and
regulations for financial planners; and
(3) legal or regulatory gaps in the regulation of financial
planners and other individuals who provide or offer to provide
financial planning services to consumers.
(b) Considerations.--In conducting the study required under
subsection (a), the Comptroller General shall consider--
(1) the role of financial planners in providing advice
regarding the management of financial resources, including
investment planning, income tax planning, education planning,
retirement planning, estate planning, and risk management;
(2) whether current regulations at the State and Federal
level provide adequate ethical and professional standards for
financial planners;
(3) the use of the title ``financial planner'' and
misleading designations in connection with sale of financial
products, including insurance and securities;
(4) the possible risk posed to consumers by individuals who
hold themselves out as financial planners through the use of
misleading designations, including ``financial advisor'' and
``financial consultant'';
(5) the ability of consumers to understand licensing
requirements and standards of care that apply to individuals
who provide financial advice;
(6) the possible benefits to consumers of regulation and
professional oversight of financial planners; and
(7) any other consideration that the Comptroller General
deems necessary or appropriate to effectively execute the study
required under subsection (a).
(c) Recommendations.--In providing recommendations for the
appropriate regulation of financial planners and other individuals who
provide or offer to provide financial planning services, in order to
protect consumers of financial planning services, the Comptroller
General shall consider--
(1) the appropriate structure for regulation of financial
planners and individuals providing financial planning services;
and
(2) the appropriate scope of the regulations needed to
protect consumers, including but not limited to the need to
establish competency standards, practice standards, ethical
guidelines, disciplinary authority, and transparency to
consumers.
(d) Report.--
(1) In general.--Not later than 180 days after the date of
enactment of this Act, the Comptroller General shall submit a
report on the study required under subsection (a) to--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate;
(B) the Special Committee on Aging of the Senate;
and
(C) the Committee on Financial Services of the
House of Representatives.
(2) Content requirements.--The report required under
paragraph (1) shall describe the findings and determinations
made by the Comptroller General in carrying out the study
required under subsection (a), including a description of the
considerations, analysis, and government, public, industry,
nonprofit and consumer input that the Comptroller General
considered to make such findings, conclusions, and legislative,
regulatory, or other recommendations.
Subtitle B--Increasing Regulatory Enforcement and Remedies
SEC. 921. AUTHORITY TO ISSUE RULES RELATED TO MANDATORY PREDISPUTE
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 918, is amended by adding at the end the following:
``(l) Authority to Restrict Mandatory Predispute Arbitration.--The
Commission may conduct a rulemaking to reaffirm or prohibit, or impose
or not 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 dispute between them and such
broker, dealer, or municipal securities dealer that arises under the
securities laws or the rules of a self-regulatory organization, if the
Commission finds that such reaffirmation, prohibition, imposition of
conditions or limitations, or other action is 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:
``(f) Authority to Issue Rules Related to Mandatory Predispute
Arbitration.--The Commission may conduct rulemaking to reaffirm or
prohibit, or impose or not impose conditions or limitations on the use
of, agreements that require customers or clients of any investment
adviser to arbitrate any dispute between them and such investment
adviser that arises under the securities laws, as defined in section 3
of the Securities Exchange Act of 1934 (15 U.S.C. 78c), or the rules of
a self-regulatory organization, if the Commission finds that such
reaffirmation, prohibition, imposition of conditions or limitations, or
other action is in the public interest and for the protection of
investors.''.
SEC. 922. WHISTLEBLOWER PROTECTION.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 21E the following:
``SEC. 21F. SECURITIES WHISTLEBLOWER INCENTIVES AND PROTECTION.
``(a) Definitions.--In this section the following definitions shall
apply:
``(1) Covered judicial or administrative action.--The term
`covered judicial or administrative action' means any judicial
or administrative action brought by the Commission under the
securities laws that results in monetary sanctions exceeding
$1,000,000.
``(2) Fund.--The term `Fund' means the Securities and
Exchange Commission Investor Protection Fund.
``(3) Original information.--The term `original
information' means information that--
``(A) is derived from the independent knowledge or
analysis of a whistleblower;
``(B) is not known to the Commission from any other
source, unless the whistleblower is the original source
of the information; and
``(C) is not exclusively derived from an allegation
made in a judicial or administrative hearing, in a
governmental report, hearing, audit, or investigation,
or from the news media, unless the whistleblower is a
source of the information.
``(4) Monetary sanctions.--The term `monetary sanctions',
when used with respect to any judicial or administrative
action, means--
``(A) any monies, including penalties,
disgorgement, and interest, ordered to be paid; and
``(B) any monies deposited into a disgorgement fund
or other fund pursuant to section 308(b) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(b)), as a
result of such action or any settlement of such action.
``(5) Related action.--The term `related action', when used
with respect to any judicial or administrative action brought
by the Commission under the securities laws, means any judicial
or administrative action brought by an entity described in
subclauses (I) through (IV) of subsection (h)(2)(D)(i) that is
based upon the original information provided by a whistleblower
pursuant to subsection (a) that led to the successful
enforcement of the Commission action.
``(6) Whistleblower.--The term `whistleblower' means any
individual, or 2 or more individuals acting jointly, who
provides information relating to a violation of the securities
laws to the Commission, in a manner established, by rule or
regulation, by the Commission.
``(b) Awards.--
``(1) In general.--In any covered judicial or
administrative action, or related action, the Commission, under
regulations prescribed by the Commission and subject to
subsection (c), shall pay an award or awards to 1 or more
whistleblowers who voluntarily provided original information to
the Commission that led to the successful enforcement of the
covered judicial or administrative action, or related action,
in an aggregate amount equal to--
``(A) not less than 10 percent, in total, of what
has been collected of the monetary sanctions imposed in
the action or related actions; and
``(B) not more than 30 percent, in total, of what
has been collected of the monetary sanctions imposed in
the action or related actions.
``(2) Payment of awards.--Any amount paid under paragraph
(1) shall be paid from the Fund.
``(c) Determination of Amount of Award; Denial of Award.--
``(1) Determination of amount of award.--
``(A) Discretion.--The determination of the amount
of an award made under subsection (b) shall be in the
discretion of the Commission.
``(B) Criteria.--In determining the amount of an
award made under subsection (b), the Commission shall
take into account--
``(i) the significance of the information
provided by the whistleblower to the success of
the covered judicial or administrative action;
``(ii) the degree of assistance provided by
the whistleblower and any legal representative
of the whistleblower in a covered judicial or
administrative action;
``(iii) the programmatic interest of the
Commission in deterring violations of the
securities laws by making awards to
whistleblowers who provide information that
lead to the successful enforcement of such
laws; and
``(iv) such additional relevant factors as
the Commission may establish by rule or
regulation.
``(2) Denial of award.--No award under subsection (b) shall
be made--
``(A) to any whistleblower who is, or was at the
time the whistleblower acquired the original
information submitted to the Commission, a member,
officer, or employee of--
``(i) an appropriate regulatory agency;
``(ii) the Department of Justice;
``(iii) a self-regulatory organization;
``(iv) the Public Company Accounting
Oversight Board; or
``(v) a law enforcement organization;
``(B) to any whistleblower who is convicted of a
criminal violation related to the judicial or
administrative action for which the whistleblower
otherwise could receive an award under this section;
``(C) to any whistleblower who gains the
information through the performance of an audit of
financial statements required under the securities laws
and for whom such submission would be contrary to the
requirements of section 101A of the Securities Exchange
Act of 1934 (15 U.S.C. 78j-1); or
``(D) to any whistleblower who fails to submit
information to the Commission in such form as the
Commission may, by rule, require.
``(d) Representation.--
``(1) Permitted representation.--Any whistleblower who
makes a claim for an award under subsection (b) may be
represented by counsel.
``(2) Required representation.--
``(A) In general.--Any whistleblower who
anonymously makes a claim for an award under subsection
(b) shall be represented by counsel if the
whistleblower anonymously submits the information upon
which the claim is based.
``(B) Disclosure of identity.--Prior to the payment
of an award, a whistleblower shall disclose the
identity of the whistleblower and provide such other
information as the Commission may require, directly or
through counsel for the whistleblower.
``(e) No Contract Necessary.--No contract with the Commission is
necessary for any whistleblower to receive an award under subsection
(b), unless otherwise required by the Commission by rule or regulation.
``(f) Appeals.--Any determination made under this section,
including whether, to whom, or in what amount to make awards, shall be
in the discretion of the Commission. Any such determination may be
appealed to the appropriate court of appeals of the United States not
more than 30 days after the determination is issued by the Commission.
The court shall review the determination made by the Commission in
accordance with section 706 of title 5, United States Code.
``(g) Investor Protection Fund.--
``(1) Fund established.--There is established in the
Treasury of the United States a fund to be known as the
`Securities and Exchange Commission Investor Protection Fund'.
``(2) Use of fund.--The Fund shall be available to the
Commission, without further appropriation or fiscal year
limitation, for--
``(A) paying awards to whistleblowers as provided
in subsection (b); and
``(B) funding the activities of the Inspector
General of the Commission under section 4(i).
``(3) Deposits and credits.--There shall be deposited into
or credited to the Fund an amount equal to--
``(A) the amount awarded under subsection (b) from
any monetary sanction collected by the Commission in
any judicial or administrative action brought by the
Commission that is based on information provided by a
whistleblower under the securities laws, unless, the
balance of the Fund at the time the monetary sanction
is collected exceeds $200,000,000;
``(B) any monetary sanction added to a disgorgement
fund or other fund pursuant to section 308 of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246) that is not
distributed to the victims for whom the disgorgement
fund was established, unless the balance of the
disgorgement fund at the time the determination is made
not to distribute the monetary sanction to such victims
exceeds $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
discretion of the Commission, required to meet the
current needs of the Fund.
``(B) Eligible investments.--Investments shall be
made by the Secretary of the Treasury in obligations of
the United States or obligations that are guaranteed as
to principal and interest by the United States, with
maturities suitable to the needs of the Fund as
determined by the Commission on the record.
``(C) Interest and proceeds credited.--The interest
on, and the proceeds from the sale or redemption of,
any obligations held in the Fund shall be credited to
the Fund.
``(5) Reports to congress.--Not later than October 30 of
each fiscal year beginning after the date of enactment of this
subsection, the Commission shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate, and the
Committee on Financial Services of the House of Representatives
a report on--
``(A) the whistleblower award program, established
under this section, including--
``(i) a description of the number of awards
granted; and
``(ii) the types of cases in which awards
were granted during the preceding fiscal year;
``(B) the balance of the Fund at the beginning of
the preceding fiscal year;
``(C) the amounts deposited into or credited to the
Fund during the preceding fiscal year;
``(D) the amount of earnings on investments made
under paragraph (4) during the preceding fiscal year;
``(E) the amount paid from the Fund during the
preceding fiscal year to whistleblowers pursuant to
subsection (b);
``(F) the balance of the Fund at the end of the
preceding fiscal year; and
``(G) a complete set of audited financial
statements, including--
``(i) a balance sheet;
``(ii) income statement; and
``(iii) cash flow analysis.
``(h) Protection of Whistleblowers.--
``(1) Prohibition against retaliation.--
``(A) In general.--No employer may discharge,
demote, suspend, threaten, harass, directly or
indirectly, or in any other manner discriminate
against, a whistleblower in the terms and conditions of
employment because of any lawful act done by the
whistleblower--
``(i) in providing information to the
Commission in accordance with subsection (a);
or
``(ii) in assisting in any investigation or
judicial or administrative action of the
Commission based upon or related to such
information.
``(B) Enforcement.--
``(i) Cause of action.--An individual who
alleges discharge or other discrimination in
violation of subparagraph (A) may bring an
action under this subsection in the appropriate
district court of the United States for the
relief provided in subparagraph (C).
``(ii) Subpoenas.--A subpoena requiring the
attendance of a witness at a trial or hearing
conducted under this section may be served at
any place in the United States.
``(iii) Statute of limitations.--
``(I) In general.--An action under
this subsection may not be brought--
``(aa) more than 6 years
after the date on which the
violation of subparagraph (A)
occurred; or
``(bb) more than 3 years
after the date when facts
material to the right of action
are known or reasonably should
have been known by the employee
alleging a violation of
subparagraph (A).
``(II) Required action within 10
years.--Notwithstanding subclause (I),
an action under this subsection may not
in any circumstance be brought more
than 10 years after the date on which
the violation occurs.
``(C) Relief.--Relief for an individual prevailing
in an action brought under subparagraph (B) shall
include--
``(i) reinstatement with the same seniority
status that the individual would have had, but
for the discrimination;
``(ii) 2 times the amount of back pay
otherwise owed to the individual, with
interest; and
``(iii) compensation for litigation costs,
expert witness fees, and reasonable attorneys'
fees.
``(2) Confidentiality.--
``(A) In general.--Unless and until required to be
disclosed to a defendant or respondent in connection
with a proceeding instituted by the Commission or any
entity described in subparagraph (D), all information
provided to the Commission by a whistleblower--
``(i) in any proceeding in any Federal or
State court or administrative agency--
``(I) shall be confidential and
privileged as an evidentiary matter;
and
``(II) shall not be subject to
civil discovery or other legal process;
and
``(ii) shall not be subject to disclosure
under section 552 of title 5, United States
Code (commonly referred to as the Freedom of
Information Act) or under any proceeding under
that section.
``(B) Exempted statute.--For purposes of section
552 of title 5, United States Code, this paragraph
shall be considered a statute described in subsection
(b)(3)(B) of such section 552.
``(C) Rule of construction.--Nothing in this
section is intended to limit, or shall be construed to
limit, the ability of the Attorney General to present
such evidence to a grand jury or to share such evidence
with potential witnesses or defendants in the course of
an ongoing criminal investigation.
``(D) Availability to government agencies.--
``(i) In general.--Without the loss of its
status as confidential 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 to protect
investors, be made available to--
``(I) the Attorney General of the
United States;
``(II) an appropriate regulatory
authority;
``(III) a self-regulatory
organization;
``(IV) a State attorney general in
connection with any criminal
investigation;
``(V) any appropriate State
regulatory authority;
``(VI) the Public Company
Accounting Oversight Board;
``(VII) a foreign securities
authority; and
``(VIII) a foreign law enforcement
authority.
``(ii) Confidentiality.--
``(I) In general.--Each of the
entities described in subclauses (I)
through (VI) of clause (i) shall
maintain such information as
confidential and privileged, in
accordance with the requirements
established under subparagraph (A).
``(II) Foreign authorities.--Each
of the entities described in subclauses
(VII) and (VIII) of clause (i) shall
maintain such information in accordance
with such assurances of confidentiality
as the Commission determines
appropriate.
``(3) Rights retained.--Nothing in this section shall be
deemed to diminish the rights, privileges, or remedies of any
whistleblower under any Federal or State law, or under any
collective bargaining agreement.
``(i) Provision of False Information.--A whistleblower shall not be
entitled to an award under this section if the whistleblower--
``(1) knowingly and willfully makes any false, fictitious,
or fraudulent statement or representation; or
``(2) uses any false writing or document knowing the
writing or document contains any false, fictitious, or
fraudulent statement or entry.
``(j) Rulemaking Authority.--The Commission shall have the
authority to issue such rules and regulations as may be necessary or
appropriate to implement the provisions of this section consistent with
the purposes of this section.''.
SEC. 923. CONFORMING AMENDMENTS FOR WHISTLEBLOWER PROTECTION.
(a) In General.--
(1) Securities act of 1933.--Section 20(d)(3)(A) of the
Securities Act of 1933 (15 U.S.C. 77t(d)(3)(A)) is amended by
inserting ``and section 21F of the Securities Exchange Act of
1934'' after ``the Sarbanes-Oxley Act of 2002''.
(2) Investment company act of 1940.--Section 42(e)(3)(A) of
the Investment Company Act of 1940 (15 U.S.C. 80a-41(e)(3)(A))
is amended by inserting ``and section 21F of the Securities
Exchange Act of 1934'' after ``the Sarbanes-Oxley Act of
2002''.
(3) Investment advisers act of 1940.--Section 209(e)(3)(A)
of the Investment Advisers Act of 1940 (15 U.S.C. 80b-
9(e)(3)(A)) is amended by inserting ``and section 21F of the
Securities Exchange Act of 1934'' after ``the Sarbanes-Oxley
Act of 2002''.
(b) Securities Exchange Act.--
(1) Section 21.--Section 21(d)(3)(C)(i) of the Securities
Exchange Act of 1934 (15 U.S.C. 78u(d)(3)(C)(i)) is amended by
inserting ``and section 21F of this title'' after ``the
Sarbanes-Oxley Act of 2002''.
(2) Section 21a.--Section 21A of the Securities Exchange
Act of 1934 (15 U.S.C. 78u-1) is amended--
(A) in subsection (d)(1) by--
(i) striking ``(subject to subsection
(e))''; and
(ii) inserting ``and section 21F of this
title'' after ``the Sarbanes-Oxley Act of
2002'';
(B) by striking subsection (e); and
(C) by redesignating subsections (f) and (g) as
subsections (e) and (f), respectively.
SEC. 924. IMPLEMENTATION AND TRANSITION PROVISIONS FOR WHISTLEBLOWER
PROTECTION.
(a) Implementing Rules.--The Commission shall issue final
regulations implementing the provisions of section 21F of the
Securities Exchange Act of 1934, as added by this subtitle, not later
than 270 days after the date of enactment of this Act.
(b) Original Information.--Information provided to the Commission
by a whistleblower in accordance with the regulations referenced in
subsection (a) shall not lose the status of original information (as
defined in section 21F(i)(1) of the Securities Exchange Act of 1934, as
added by this subtitle) solely because the whistleblower provided the
information prior to the effective date of the regulations, provided
that the information is--
(1) provided by the whistleblower after the date of
enactment of this subtitle, or monetary sanctions are collected
after the date of enactment of this subtitle; or
(2) related to a violation for which an award under section
21F of the Securities Exchange Act of 1934, as added by this
subtitle, could have been paid at the time the information was
provided by the whistleblower.
(c) Awards.--A whistleblower may receive an award pursuant to
section 21F of the Securities Exchange Act of 1934, as added by this
subtitle, regardless of whether any violation of a provision of the
securities laws, or a rule or regulation thereunder, underlying the
judicial or administrative action upon which the award is based,
occurred prior to the date of enactment of this subtitle.
SEC. 925. COLLATERAL BARS.
(a) Securities Exchange Act of 1934.--
(1) Section 15.--Section 15(b)(6)(A) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o(b)(6)(A)) is amended by
striking ``12 months, or bar such person from being associated
with a broker or dealer,'' and inserting ``12 months, or bar
any such person from being associated with a broker, dealer,
investment adviser, municipal securities dealer, municipal
advisor, transfer agent, or nationally recognized statistical
rating organization,''.
(2) Section 15b.--Section 15B(c)(4) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-4(c)(4)) is amended by
striking ``twelve months or bar any such person from being
associated with a municipal securities dealer,'' and inserting
``12 months or bar any such person from being associated with a
broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, transfer agent, or nationally
recognized statistical rating organization,''.
(3) Section 17a.--Section 17A(c)(4)(C) of the Securities
Exchange Act of 1934 (15 U.S.C. 78q-1(c)(4)(C)) is amended by
striking ``twelve months or bar any such person from being
associated with the transfer agent,'' and inserting ``12 months
or bar any such person from being associated with any transfer
agent, broker, dealer, investment adviser, municipal securities
dealer, municipal advisor, or nationally recognized statistical
rating organization,''.
(b) Investment Advisers Act of 1940.--Section 203(f) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-3(f)) is amended by
striking ``twelve months or bar any such person from being associated
with an investment adviser,'' and inserting ``12 months or bar any such
person from being associated with an investment adviser, broker,
dealer, municipal securities dealer, municipal advisor, transfer agent,
or nationally recognized statistical rating organization,''.
SEC. 926. AUTHORITY OF STATE REGULATORS OVER REGULATION D OFFERINGS.
Section 18(b)(4) of the Securities Act of 1933 (15 U.S.C.
77r(b)(4)) is amended--
(1) by striking ``A security'' and inserting ``(A) In
general--A security'';
(2) by redesignating subparagraphs (A) through (D) as
clauses (i) through (iv), respectively, and adjusting the
margins accordingly; and
(3) by striking clause (iv), as so redesignated, and
inserting the following:
``(iv) Commission rules or regulations
issued under section 4(2), except that the
Commission may designate, by rule, a class of
securities that it deems not to be covered
securities because the offering of such
securities is not of sufficient size or scope.
``(v) Not later than 360 days after the
date of enactment of the Restoring American
Financial Stability Act of 2010, the Commission
shall conduct a rulemaking to determine whether
to designate a class of securities because the
offering of such securities is not of
sufficient size or scope.
``(B) Designation of non-covered securities.--In
making a designation under subparagraph (A)(iv), the
Commission shall consider--
``(i) the size of the offering;
``(ii) the number of States in which the
security is being offered; and
``(iii) the nature of the persons to whom
the security is being offered.
``(C) Review of filings.--
``(i) In general.--The Commission shall
review any filings made relating to any
security issued under Commission rules or
regulations under section 4(2), other than one
designated as a non-covered security under
subparagraph (A)(iv), not later than 120 days
of the filing with the Commission.
``(ii) Failure to review within 120 days.--
If the Commission fails to review a filing
required under clause (i), the security shall
no longer be a covered security, except that--
``(I) the failure of the Commission
to review a filing shall not result in
the loss of status as a covered
security if the Commission, not later
than 120 days of the filing with the
Commission, has determined that there
has been a good faith and reasonable
attempt by the issuer to comply with
all applicable terms, conditions, and
requirements of the filing; and
``(II) upon review of the filing,
if the Commission, not later than 120
days of the filing with the Commission,
determines that any failure to comply
with the applicable filing terms,
conditions, and requirements is
insignificant to the offering as a
whole.
``(D) Effect on state filing requirements.--
``(i) In general.--Nothing in subparagraph
(A)(iv), (B), or (C) shall be construed to
prohibit a State from imposing notice filing
requirements that are substantially similar to
filing requirements required by rule or
regulation under section 4(4) that were in
effect on September 1, 1996.
``(ii) Notification.--Not later than 180
days after the date of enactment of the
Restoring American Financial Stability Act of
2010, the Commission shall implement
procedures, after consultation with the States,
to promptly notify States upon completion of
review of securities offerings described in
subparagraph (A)(iv) by the Commission.
``(E) Offerings affected.--The requirements of this
section shall apply to offerings filed on or after the
date of enactment of the Restoring Financial Stability
Act of 2010.''.
SEC. 927. EQUAL TREATMENT OF SELF-REGULATORY ORGANIZATION RULES.
Section 29(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78cc(a)) is amended by striking ``an exchange required thereby'' and
inserting ``a self-regulatory organization,''.
SEC. 928. CLARIFICATION THAT SECTION 205 OF THE INVESTMENT ADVISERS ACT
OF 1940 DOES NOT APPLY TO STATE-REGISTERED ADVISERS.
Section 205(a) of the Investment Advisers Act of 1940 (15 U.S.C.
80b-5(a)) is amended, in the matter preceding paragraph (1)--
(1) by striking ``, unless exempt from registration
pursuant to section 203(b),'' and inserting ``registered or
required to be registered with the Commission'';
(2) by striking ``make use of the mails or any means or
instrumentality of interstate commerce, directly or indirectly,
to''; and
(3) by striking ``to'' after ``in any way''.
SEC. 929. UNLAWFUL MARGIN LENDING.
Section 7(c)(1)(A) of the Securities Exchange Act of 1934 (15
U.S.C. 78g(c)(1)(A)) is amended by striking ``; and'' and inserting ``;
or''.
SEC. 929A. PROTECTION FOR EMPLOYEES OF SUBSIDIARIES AND AFFILIATES OF
PUBLICLY TRADED COMPANIES.
Section 1514A of title 18, United States Code, is amended by
inserting ``including any subsidiary or affiliate whose financial
information is included in the consolidated financial statements of
such company'' after ``the Securities Exchange Act of 1934 (15 U.S.C.
78o(d))''.
SEC. 929B. FAIR FUND AMENDMENTS.
Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a))
is amended--
(1) by striking subsection (a) and inserting the following:
``(a) Civil Penalties To Be Used for the Relief of Victims.--If, in
any judicial or administrative action brought by the Commission under
the securities laws, the Commission obtains a civil penalty against any
person for a violation of such laws, or such person agrees, in
settlement of any such action, to such civil penalty, the amount of
such civil penalty shall, on the motion or at the direction of the
Commission, be added to and become part of a disgorgement fund or other
fund established for the benefit of the victims of such violation.'';
(2) in subsection (b)--
(A) by striking ``for a disgorgement fund described
in subsection (a)'' and inserting ``for a disgorgement
fund or other fund described in subsection (a)''; and
(B) by striking ``in the disgorgement fund'' and
inserting ``in such fund''; and
(3) by striking subsection (e).
SEC. 929C. INCREASING THE BORROWING LIMIT ON TREASURY LOANS.
Section 4(h) of the Securities Investor Protection Act of 1970 (15
U.S.C. 78ddd(h)) is amended in the first sentence, by striking
``$1,000,000,000'' and inserting ``$2,500,000,000''.
Subtitle C--Improvements to the Regulation of Credit Rating Agencies
SEC. 931. FINDINGS.
Congress finds the following:
(1) Because of the systemic importance of credit ratings
and the reliance placed on credit ratings by individual and
institutional investors and financial regulators, the
activities and performances of credit rating agencies,
including nationally recognized statistical rating
organizations, are matters of national public interest, as
credit rating agencies are central to capital formation,
investor confidence, and the efficient performance of the
United States economy.
(2) Credit rating agencies, including nationally recognized
statistical rating organizations, play a critical
``gatekeeper'' role in the debt market that is functionally
similar to that of securities analysts, who evaluate the
quality of securities in the equity market, and auditors, who
review the financial statements of firms. Such role justifies a
similar level of public oversight and accountability.
(3) Because credit rating agencies perform evaluative and
analytical services on behalf of clients, much as other
financial ``gatekeepers'' do, the activities of credit rating
agencies are fundamentally commercial in character and should
be subject to the same standards of liability and oversight as
apply to auditors, securities analysts, and investment bankers.
(4) In certain activities, particularly in advising
arrangers of structured financial products on potential ratings
of such products, credit rating agencies face conflicts of
interest that need to be carefully monitored and that therefore
should be addressed explicitly in legislation in order to give
clearer authority to the Securities and Exchange Commission.
(5) In the recent financial crisis, the ratings on
structured financial products have proven to be inaccurate.
This inaccuracy contributed significantly to the mismanagement
of risks by financial institutions and investors, which in turn
adversely impacted the health of the economy in the United
States and around the world. Such inaccuracy necessitates
increased accountability on the part of credit rating agencies.
SEC. 932. ENHANCED REGULATION, ACCOUNTABILITY, AND TRANSPARENCY OF
NATIONALLY RECOGNIZED STATISTICAL RATING ORGANIZATIONS.
Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7) is amended--
(1) in subsection (c)--
(A) in paragraph (2)--
(i) in the second sentence, by inserting
``any other provision of this section, or''
after ``Notwithstanding''; and
(ii) by inserting after the period at the
end the following: ``Nothing in this paragraph
may be construed to afford a defense against
any action or proceeding brought by the
Commission to enforce the antifraud provisions
of the securities laws.''; and
(B) by adding at the end the following:
``(3) Internal controls over processes for determining
credit ratings.--
``(A) In general.--Each nationally recognized
statistical rating organization shall establish,
maintain, enforce, and document an effective internal
control structure governing the implementation of and
adherence to policies, procedures, and methodologies
for determining credit ratings, taking into
consideration such factors as the Commission may
prescribe, by rule.
``(B) Attestation requirement.--The Commission
shall prescribe rules requiring each nationally
recognized statistical rating organization to submit to
the Commission an annual internal controls report,
which shall contain--
``(i) a description of the responsibility
of the management of the nationally recognized
statistical rating organization in establishing
and maintaining an effective internal control
structure under subparagraph (A);
``(ii) an assessment of the effectiveness
of the internal control structure of the
nationally recognized statistical rating
organization; and
``(iii) the attestation of the chief
executive officer, or equivalent individual, of
the nationally recognized statistical rating
organization.'';
(2) in subsection (d)--
(A) in the subsection heading, by inserting
``Fine,'' after ``Censure,'';
(B) by inserting ``fine,'' after ``censure,'' each
place that term appears;
(C) in paragraph (2), by redesignating
subparagraphs (A) and (B) as clauses (i) and (ii),
respectively, and adjusting the clause margins
accordingly;
(D) by redesignating paragraphs (1) through (5) as
subparagraphs (A) through (E), respectively, and
adjusting the subparagraph margins accordingly;
(E) in the matter preceding subparagraph (A), as so
redesignated, by striking ``The Commission'' and
inserting the following:
``(1) In general.--The Commission'';
(F) in subparagraph (D), as so redesignated, by
striking ``or'' at the end;
(G) in subparagraph (E), as so redesignated, by
striking the period at the end and inserting a
semicolon; and
(H) by adding at the end the following:
``(F) has failed reasonably to supervise, with a
view to preventing a violation of the securities laws,
an individual who commits such a violation, if the
individual is subject to the supervision of that
person.
``(2) Suspension or revocation for particular class of
securities.--
``(A) In general.--The Commission may temporarily
suspend or permanently revoke the registration of a
nationally recognized statistical rating organization
with respect to a particular class or subclass of
securities, if the Commission finds, on the record
after notice and opportunity for hearing, that the
nationally recognized statistical rating organization
does not have adequate financial and managerial
resources to consistently produce credit ratings with
integrity.
``(B) Considerations.--In making any determination
under subparagraph (A), the Commission shall consider--
``(i) whether the nationally recognized
statistical rating organization has failed over
a sustained period of time, as determined by
the Commission, to produce ratings that are
accurate for that class or subclass of
securities; and
``(ii) such other factors as the Commission
may determine.'';
(3) in subsection (h), by adding at the end the following:
``(3) Separation of ratings from sales and marketing.--
``(A) Rules required.--The Commission shall issue
rules to prevent the sales and marketing considerations
of a nationally recognized statistical rating
organization from influencing the production of ratings
by the nationally recognized statistical rating
organization.
``(B) Contents of rules.--The rules issued under
subparagraph (A) shall provide for--
``(i) exceptions for small nationally
recognized statistical rating organizations
with respect to which the Commission determines
that the separation of the production of
ratings and sales and marketing activities is
not appropriate; and
``(ii) suspension or revocation of the
registration of a nationally recognized
statistical rating organization, if the
Commission finds, on the record, after notice
and opportunity for a hearing, that--
``(I) the nationally recognized
statistical rating organization has
committed a violation of a rule issued
under this subsection; and
``(II) the violation of a rule
issued under this subsection affected a
rating.'';
(4) in subsection (j)--
(A) by striking ``Each'' and inserting the
following:
``(1) In general.--Each''; and
(B) by adding at the end the following:
``(2) Limitations.--
``(A) In general.--Except as provided in
subparagraph (B), an individual designated under
paragraph (1) may not, while serving in the designated
capacity--
``(i) perform credit ratings;
``(ii) participate in the development of
ratings methodologies or models;
``(iii) perform marketing or sales
functions; or
``(iv) participate in establishing
compensation levels, other than for employees
working for that individual.
``(B) Exception.--The Commission may exempt a small
nationally recognized statistical rating organization
from the limitations under this paragraph, if the
Commission finds that compliance with such limitations
would impose an unreasonable burden on the nationally
recognized statistical rating organization.
``(3) Other duties.--Each individual designated under
paragraph (1) shall establish procedures for the receipt,
retention, and treatment of--
``(A) complaints regarding credit ratings, models,
methodologies, and compliance with the securities laws
and the policies and procedures developed under this
section; and
``(B) confidential, anonymous complaints by
employees or users of credit ratings.
``(4) Annual reports required.--
``(A) Annual reports required.--Each individual
designated under paragraph (1) shall submit to the
nationally recognized statistical rating organization
an annual report on the compliance of the nationally
recognized statistical rating organization with the
securities laws and the policies and procedures of the
nationally recognized statistical rating organization
that includes--
``(i) a description of any material changes
to the code of ethics and conflict of interest
policies of the nationally recognized
statistical rating organization; and
``(ii) a certification that the report is
accurate and complete.
``(B) Submission of reports to the commission.--
Each nationally recognized statistical rating
organization shall file the reports required under
subparagraph (A) together with the financial report
that is required to be submitted to the Commission
under this section.''; and
(5) by striking subsection (p) and inserting the following:
``(p) Regulation of Nationally Recognized Statistical Rating
Organizations.--
``(1) Establishment of office of credit ratings.--
``(A) Office established.--The Commission shall
establish within the Commission an Office of Credit
Ratings (referred to in this subsection as the
`Office') to administer the rules of the Commission--
``(i) with respect to the practices of
nationally recognized statistical rating
organizations in determining ratings, for the
protection of users of credit ratings and in
the public interest;
``(ii) to promote accuracy in credit
ratings issued by nationally recognized
statistical rating organizations; and
``(iii) to ensure that such ratings are not
unduly influenced by conflicts of interest.
``(B) Director of the office.--The head of the
Office shall be the Director, who shall report to the
Chairman.
``(2) Staffing.--The Office established under this
subsection shall be staffed sufficiently to carry out fully the
requirements of this section. The staff shall include persons
with knowledge of and expertise in corporate, municipal, and
structured debt finance.
``(3) Commission examinations.--
``(A) Annual examinations required.--The Office
shall conduct an examination of each nationally
recognized statistical rating organization at least
annually.
``(B) Conduct of examinations.--Each examination
under subparagraph (A) shall include a review of--
``(i) whether the nationally recognized
statistical rating organization conducts
business in accordance with the policies,
procedures, and rating methodologies of the
nationally recognized statistical rating
organization;
``(ii) the management of conflicts of
interest by the nationally recognized
statistical rating organization;
``(iii) implementation of ethics policies
by the nationally recognized statistical rating
organization;
``(iv) the internal supervisory controls of
the nationally recognized statistical rating
organization;
``(v) the governance of the nationally
recognized statistical rating organization;
``(vi) the activities of the individual
designated by the nationally recognized
statistical rating organization under
subsection (j)(1);
``(vii) the processing of complaints by the
nationally recognized statistical rating
organization; and
``(viii) the policies of the nationally
recognized statistical rating organization
governing the post-employment activities of
former staff of the nationally recognized
statistical rating organization.
``(C) Inspection reports.--The Commission shall
make available to the public, in an easily
understandable format, an annual report summarizing--
``(i) the essential findings of all
examinations conducted under subparagraph (A),
as deemed appropriate by the Commission;
``(ii) the responses by the nationally
recognized statistical rating organizations to
any material regulatory deficiencies identified
by the Commission under clause (i); and
``(iii) whether the nationally recognized
statistical rating organizations have
appropriately addressed the recommendations of
the Commission contained in previous reports
under this subparagraph.
``(4) Rulemaking authority.--The Commission shall--
``(A) establish, by rule, fines, and other
penalties applicable to any nationally recognized
statistical rating organization that violates the
requirements of this subsection and the rules
thereunder; and
``(B) issue such rules as may be necessary to carry
out this subsection.
``(q) Transparency of Ratings Performance.--
``(1) Rulemaking required.--The Commission shall, by rule,
require that each nationally recognized statistical rating
organization publicly disclose information on the initial
credit ratings determined by the nationally recognized
statistical rating organization for each type of obligor,
security, and money market instrument, and any subsequent
changes to such credit ratings, for the purpose of allowing
users of credit ratings to evaluate the accuracy of ratings and
compare the performance of ratings by different nationally
recognized statistical rating organizations.
``(2) Content.--The rules of the Commission under this
subsection shall require, at a minimum, disclosures that--
``(A) are comparable among nationally recognized
statistical rating organizations, to allow users of
credit ratings to compare the performance of credit
ratings across nationally recognized statistical rating
organizations;
``(B) are clear and informative for investors who
use or might use credit ratings;
``(C) include performance information over a range
of years and for a variety of types of credit ratings,
including for credit ratings withdrawn by the
nationally recognized statistical rating organization;
``(D) are published and made freely available by
the nationally recognized statistical rating
organization, on an easily accessible portion of its
website, and in writing, when requested; and
``(E) are appropriate to the business model of a
nationally recognized statistical rating organization.
``(r) Credit Ratings Methodologies.--The Commission shall prescribe
rules, for the protection of investors and in the public interest, with
respect to the procedures and methodologies, including qualitative and
quantitative data and models, used by nationally recognized statistical
rating organizations that require each nationally recognized
statistical rating organization--
``(1) to ensure that credit ratings are determined using
procedures and methodologies, including qualitative and
quantitative data and models, that are--
``(A) approved by the board of the nationally
recognized statistical rating organization, a body
performing a function similar to that of a board, or
the senior credit officer of the nationally recognized
statistical rating organization; and
``(B) in accordance with the policies and
procedures of the nationally recognized statistical
rating organization for the development and
modification of credit rating procedures and
methodologies;
``(2) to ensure that when material changes to credit rating
procedures and methodologies (including changes to qualitative
and quantitative data and models) are made, that--
``(A) the changes are applied consistently to all
credit ratings to which the changed procedures and
methodologies apply;
``(B) to the extent that changes are made to credit
rating surveillance procedures and methodologies, the
changes are applied to then-current credit ratings by
the nationally recognized statistical rating
organization within a reasonable time period determined
by the Commission, by rule; and
``(C) the nationally recognized statistical rating
organization publicly discloses the reason for the
change; and
``(3) to notify users of credit ratings--
``(A) of the version of a procedure or methodology,
including the qualitative methodology or quantitative
inputs, used with respect to a particular credit
rating;
``(B) when a material change is made to a procedure
or methodology, including to a qualitative model or
quantitative inputs;
``(C) when a significant error is identified in a
procedure or methodology, including a qualitative or
quantitative model, that may result in credit rating
actions; and
``(D) of the likelihood of a material change
described in subparagraph (B) resulting in a change in
current credit ratings.
``(s) Transparency of Credit Rating Methodologies and Information
Reviewed.--
``(1) Form for disclosures.--The Commission shall require,
by rule, each nationally recognized statistical rating
organization to prescribe a form to accompany the publication
of each credit rating that discloses--
``(A) information relating to--
``(i) the assumptions underlying the credit
rating procedures and methodologies;
``(ii) the data that was relied on to
determine the credit rating; and
``(iii) if applicable, how the nationally
recognized statistical rating organization used
servicer or remittance reports, and with what
frequency, to conduct surveillance of the
credit rating; and
``(B) information that can be used by investors and
other users of credit ratings to better understand
credit ratings in each class of credit rating issued by
the nationally recognized statistical rating
organization.
``(2) Format.--The form developed under paragraph (1)
shall--
``(A) be easy to use and helpful for users of
credit ratings to understand the information contained
in the report;
``(B) require the nationally recognized statistical
rating organization to provide the content described in
paragraph (3)(B) in a manner that is directly
comparable across types of securities; and
``(C) be made readily available to users of credit
ratings, in electronic or paper form, as the Commission
may, by rule, determine.
``(3) Content of form.--
``(A) Qualitative content.--Each nationally
recognized statistical rating organization shall
disclose on the form developed under paragraph (1)--
``(i) the credit ratings produced by the
nationally recognized statistical rating
organization;
``(ii) the main assumptions and principles
used in constructing procedures and
methodologies, including qualitative
methodologies and quantitative inputs and
assumptions about the correlation of defaults
across obligors used in rating structured
products;
``(iii) the potential limitations of the
credit ratings, and the types of risks excluded
from the credit ratings that the nationally
recognized statistical rating organization does
not comment on, including liquidity, market,
and other risks;
``(iv) information on the uncertainty of
the credit rating, including--
``(I) information on the
reliability, accuracy, and quality of
the data relied on in determining the
credit rating; and
``(II) a statement relating to the
extent to which data essential to the
determination of the credit rating were
reliable or limited, including--
``(aa) any limits on the
scope of historical data; and
``(bb) any limits in
accessibility to certain
documents or other types of
information that would have
better informed the credit
rating;
``(v) whether and to what extent third
party due diligence services have been used by
the nationally recognized statistical rating
organization, a description of the information
that such third party reviewed in conducting
due diligence services, and a description of
the findings or conclusions of such third
party;
``(vi) a description of the data about any
obligor, issuer, security, or money market
instrument that were relied upon for the
purpose of determining the credit rating;
``(vii) a statement containing an overall
assessment of the quality of information
available and considered in producing a rating
for an obligor, security, or money market
instrument, in relation to the quality of
information available to the nationally
recognized statistical rating organization in
rating similar issuances;
``(viii) information relating to conflicts
of interest of the nationally recognized
statistical rating organization; and
``(ix) such additional information as the
Commission may require.
``(B) Quantitative content.--Each nationally
recognized statistical rating organization shall
disclose on the form developed under this subsection--
``(i) an explanation or measure of the
potential volatility of the credit rating,
including--
``(I) any factors that might lead
to a change in the credit ratings; and
``(II) the magnitude of the change
that a user can expect under different
market conditions;
``(ii) information on the content of the
rating, including--
``(I) the historical performance of
the rating; and
``(II) the expected probability of
default and the expected loss in the
event of default;
``(iii) information on the sensitivity of
the rating to assumptions made by the
nationally recognized statistical rating
organization; and
``(iv) such additional information as may
be required by the Commission.
``(4) Due diligence services for asset-backed securities.--
``(A) Findings.--The issuer or underwriter of any
asset-backed security shall make publicly available the
findings and conclusions of any third-party due
diligence report obtained by the issuer or underwriter.
``(B) Certification required.--In any case in which
third-party due diligence services are employed by a
nationally recognized statistical rating organization,
an issuer, or an underwriter, the person providing the
due diligence services shall provide to any nationally
recognized statistical rating organization that
produces a rating to which such services relate,
written certification, as provided in subparagraph (C).
``(C) Format and content.--The Commission shall
establish the appropriate format and content for the
written certifications required under subparagraph (B),
to ensure that providers of due diligence services have
conducted a thorough review of data, documentation, and
other relevant information necessary for a nationally
recognized statistical rating organization to provide
an accurate rating.
``(D) Disclosure of certification.--The Commission
shall adopt rules requiring a nationally recognized
statistical rating organization, at the time at which
the nationally recognized statistical rating
organization produces a rating, to disclose the
certification described in subparagraph (B) to the
public in a manner that allows the public to determine
the adequacy and level of due diligence services
provided by a third party.
``(t) Corporate Governance, Organization, and Management of
Conflicts of Interest.--
``(1) Board of directors.--Each nationally recognized
statistical rating organization shall have a board of
directors.
``(2) Independent directors.--
``(A) In general.--At least \1/2\ of the board of
directors, but not fewer than 2 of the members thereof,
shall be independent of the nationally recognized
statistical rating agency. A portion of the independent
directors shall include users of ratings from a
nationally recognized statistical rating organization.
``(B) Independence determination.--In order to be
considered independent for purposes of this subsection,
a member of the board of directors of a nationally
recognized statistical rating organization--
``(i) may not, other than in his or her
capacity as a member of the board of directors
or any committee thereof--
``(I) accept any consulting,
advisory, or other compensatory fee
from the nationally recognized
statistical rating organization; or
``(II) be a person associated with
the nationally recognized statistical
rating organization or with any
affiliated company thereof; and
``(ii) shall be disqualified from any
deliberation involving a specific rating in
which the independent board member has a
financial interest in the outcome of the
rating.
``(C) Compensation and term.--The compensation of
the independent members of the board of directors of a
nationally recognized statistical rating organization
shall not be linked to the business performance of the
nationally recognized statistical rating organization,
and shall be arranged so as to ensure the independence
of their judgment. The term of office of the
independent directors shall be for a pre-agreed fixed
period, not to exceed 5 years, and shall not be
renewable.
``(3) Duties of board of directors.--In addition to the
overall responsibilities of the board of directors, the board
shall oversee--
``(A) the establishment, maintenance, and
enforcement of policies and procedures for determining
credit ratings;
``(B) the establishment, maintenance, and
enforcement of policies and procedures to address,
manage, and disclose any conflicts of interest;
``(C) the effectiveness of the internal control
system with respect to policies and procedures for
determining credit ratings; and
``(D) the compensation and promotion policies and
practices of the nationally recognized statistical
rating organization.
``(4) Treatment of nrsro subsidiaries.--If a nationally
recognized statistical rating organization is a subsidiary of a
parent entity, the board of the directors of the parent entity
may satisfy the requirements of this subsection by assigning to
a committee of such board of directors the duties under
paragraph (3), if--
``(A) at least \1/2\ of the members of the
committee (including the chairperson of the committee)
are independent, as defined in this section; and
``(B) at least 1 member of the committee is a user
of ratings from a nationally recognized statistical
rating organization.
``(5) Exception authority.--If the Commission finds that
compliance with the provisions of this subsection present an
unreasonable burden on a small nationally recognized
statistical rating organization, the Commission may permit the
nationally recognized statistical rating organization to
delegate such responsibilities to a committee that includes at
least one individual who is a user of ratings of a nationally
recognized statistical rating organization.''.
SEC. 933. STATE OF MIND IN PRIVATE ACTIONS.
(a) Accountability.--Section 15E(m) of the Securities Exchange Act
of 1934 (15 U.S.C. 78o-7(m)) is amended to read as follows:
``(m) Accountability.--
``(1) In general.--The enforcement and penalty provisions
of this title shall apply to statements made by a credit rating
agency in the same manner and to the same extent as such
provisions apply to statements made by a registered public
accounting firm or a securities analyst under the securities
laws, and such statements shall not be deemed forward-looking
statements for the purposes of section 21E.
``(2) Rulemaking.--The Commission shall issue such rules as
may be necessary to carry out this subsection.''.
(b) State of Mind.--Section 21D(b)(2) of the Securities Exchange
Act of 1934 (15 U.S.C. 78u-4(b)(2)) is amended--
(1) by striking ``In any'' and inserting the following:
``(A) In general.--Except as provided in
subparagraph (B), in any''; and
(2) by adding at the end the following:
``(B) Exception.--In the case of an action for
money damages brought against a credit rating agency or
a controlling person under this title, it shall be
sufficient, for purposes of pleading any required state
of mind in relation to such action, that the complaint
state with particularity facts giving rise to a strong
inference that the credit rating agency knowingly or
recklessly failed--
``(i) to conduct a reasonable investigation
of the rated security with respect to the
factual elements relied upon by its own
methodology for evaluating credit risk; or
``(ii) to obtain reasonable verification of
such factual elements (which verification may
be based on a sampling technique that does not
amount to an audit) from other sources that the
credit rating agency considered to be competent
and that were independent of the issuer and
underwriter.''.
SEC. 934. REFERRING TIPS TO LAW ENFORCEMENT OR REGULATORY AUTHORITIES.
Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7), as amended by this subtitle, is amended by adding at the end the
following:
``(u) Duty To Report Tips Alleging Material Violations of Law.--
``(1) Duty to report.--Each nationally recognized
statistical rating organization shall refer to the appropriate
law enforcement or regulatory authorities any information that
the nationally recognized statistical rating organization
receives from a third party and finds credible that alleges
that an issuer of securities rated by the nationally recognized
statistical rating organization has committed or is committing
a material violation of law that has not been adjudicated by a
Federal or State court.
``(2) Rule of construction.--Nothing in paragraph (1) may
be construed to require a nationally recognized statistical
rating organization to verify the accuracy of the information
described in paragraph (1).''.
SEC. 935. CONSIDERATION OF INFORMATION FROM SOURCES OTHER THAN THE
ISSUER IN RATING DECISIONS.
Section 15E of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
7), as amended by this subtitle, is amended by adding at the end the
following:
``(v) Information From Sources Other Than the Issuer.--In producing
a credit rating, a nationally recognized statistical rating
organization shall consider information about an issuer that the
nationally recognized statistical rating organization has, or receives
from a source other than the issuer, that the nationally recognized
statistical rating organization finds credible and potentially
significant to a rating decision.''.
SEC. 936. QUALIFICATION STANDARDS FOR CREDIT RATING ANALYSTS.
Not later than 1 year after the date of enactment of this Act, the
Commission shall issue rules that are reasonably designed to ensure
that any person employed by a nationally recognized statistical rating
organization to perform credit ratings--
(1) meets standards of training, experience, and competence
necessary to produce accurate ratings for the categories of
issuers whose securities the person rates; and
(2) is tested for knowledge of the credit rating process.
SEC. 937. TIMING OF REGULATIONS.
Unless otherwise specifically provided in this subtitle, the
Commission shall issue final regulations, as required by this subtitle
and the amendments made by this subtitle, not later than 1 year after
the date of enactment of this Act.
SEC. 938. UNIVERSAL RATINGS SYMBOLS.
(a) Rulemaking.--The Commission shall require, by rule, each
nationally recognized statistical rating organization to establish,
maintain, and enforce written policies and procedures that--
(1) assess the probability that an issuer of a security or
money market instrument will default, fail to make timely
payments, or otherwise not make payments to investors in
accordance with the terms of the security or money market
instrument;
(2) clearly define and disclose the meaning of any symbol
used by the nationally recognized statistical rating
organization to denote a credit rating; and
(3) apply any symbol described in paragraph (2) in a manner
that is consistent for all types of securities and money market
instruments for which the symbol is used.
(b) Rule of Construction.--Nothing in this section shall prohibit a
nationally recognized statistical rating organization from using
distinct sets of symbols to denote credit ratings for different types
of securities or money market instruments.
SEC. 939. GOVERNMENT ACCOUNTABILITY OFFICE STUDY AND FEDERAL AGENCY
REVIEW OF REQUIRED USES OF NATIONALLY RECOGNIZED
STATISTICAL RATING ORGANIZATION RATINGS.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the scope of provisions of Federal and State laws
and regulations with respect to the regulation of securities markets,
banking, insurance, and other areas that require the use of ratings
issued by nationally recognized statistical rating organizations (in
this section referred to as the ``ratings requirements'').
(b) Subjects for Evaluation; Process of Evaluation.--
(1) Subjects for evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States
shall evaluate--
(A) the necessity for and purpose of ratings
requirements;
(B) which ratings requirements, if any, could be
removed with minimal disruption to the financial
markets;
(C) the potential impact on the financial markets
and on investors if the ratings requirements identified
under subparagraph (B) were rescinded; and
(D) whether the financial markets and investors
would benefit from the rescission of such ratings
requirements.
(2) Process of evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States
shall research and take into consideration the views of--
(A) the Federal financial regulatory agencies;
(B) hedge funds;
(C) banks;
(D) brokerage firms;
(E) mutual funds;
(F) pension funds; and
(G) all other interested parties.
(c) Report and Recommendations.--Not later than 2 years after the
date of enactment of this Act, the Comptroller General of the United
States shall submit to the Committee on Banking, Housing, and Urban
Affairs of the Senate and the Committee on Financial Services of the
House of Representatives a report on the results of the study conducted
under subsection (a), including recommendations, if any, on--
(1) which ratings requirements, if any, could be removed
with minimal disruption to the markets; and
(2) whether the financial markets and investors would
benefit from the rescission of the ratings requirements
identified under paragraph (1).
(d) Federal Agency Review of Ratings Requirements.--
(1) Review.--Each covered Federal agency shall review--
(A) any regulation of the covered Federal agency
that requires the use of an assessment of the credit
worthiness of a security or money market instrument;
(B) any other reference to credit ratings or
requirement relating to credit ratings in a regulation
of the covered Federal agency; and
(C) alternative standards of creditworthiness that
are based on market-generated indicators, including
yield spreads, bond prices, and credit default swap
spreads.
(2) Modifications required.--Except as provided in
paragraph (3), each covered Federal agency shall modify any
regulation identified under paragraph (1)--
(A) to remove any reference to credit ratings or a
credit ratings requirement in the regulation; and
(B) to amend the regulation to require the use of a
standard of credit worthiness that--
(i) is not related to credit ratings; and
(ii) the covered Federal agency determines
appropriate.
(3) Exception.--A covered Federal agency may elect not to
amend a regulation identified under paragraph (1), if the
covered Federal agency determines that--
(A) there is no reasonable alternative standard of
credit worthiness that could replace a credit rating
for purposes of the regulation; and
(B) an amendment to the regulation would be
inconsistent with the purposes of the statute that
authorized the regulation and not in the public
interest.
(4) Report.--Not later than 1 year after the date on which
the Comptroller General submits the report required under
subsection (c), each covered Federal agency shall submit to
Congress a report that contains--
(A) a description of any amendment under paragraph
(2); and
(B) an explanation of any determination under
paragraph (3).
(5) Definition.--In this subsection, the term ``covered
Federal agency'' means--
(A) the Commission;
(B) the Corporation;
(C) the Office of the Comptroller of the Currency;
(D) the Board of Governors;
(E) the National Credit Union Administration; and
(F) the Federal Housing Finance Agency.
SEC. 939A. SECURITIES AND EXCHANGE COMMISSION STUDY ON STRENGTHENING
CREDIT RATING AGENCY INDEPENDENCE.
(a) Study.--The Commission shall conduct a study of--
(1) the independence of nationally recognized statistical
rating organizations; and
(2) how the independence of nationally recognized
statistical rating organizations affects the ratings issued by
the nationally recognized statistical rating organizations.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Commission shall evaluate--
(1) the management of conflicts of interest raised by a
nationally recognized statistical rating organization providing
other services, including risk management advisory services,
ancillary assistance, or consulting services;
(2) the potential impact of rules prohibiting a nationally
recognized statistical rating organization that provides a
rating to an issuer from providing other services to the
issuer; and
(3) any other issue relating to nationally recognized
statistical rating organizations, as the Chairman of the
Commission determines is appropriate.
(c) Report.--Not later than 3 years after the date of enactment of
this Act, the Chairman of the Commission shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives a report on the
results of the study conducted under subsection (a), including
recommendations, if any, for improving the integrity of ratings issued
by nationally recognized statistical rating organizations.
SEC. 939B. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON ALTERNATIVE
BUSINESS MODELS.
(a) Study.--The Comptroller General of the United States shall
conduct a study on alternative means for compensating nationally
recognized statistical rating organizations in order to create
incentives for nationally recognized statistical rating organizations
to provide more accurate credit ratings, including any statutory
changes that would be required to facilitate the use of an alternative
means of compensation.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on the
results of the study conducted under subsection (a), including
recommendations, if any, for providing incentives to credit rating
agencies to improve the credit rating process.
SEC. 939C. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE CREATION OF AN
INDEPENDENT PROFESSIONAL ANALYST ORGANIZATION.
(a) Study.--The Comptroller General of the United States shall
conduct a study on the feasibility and merits of creating an
independent professional organization for rating analysts employed by
nationally recognized statistical rating organizations that would be
responsible for--
(1) establishing independent standards for governing the
profession of rating analysts;
(2) establishing a code of ethical conduct; and
(3) overseeing the profession of rating analysts.
(b) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General shall submit to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives a report on the
results of the study conducted under subsection (a).
Subtitle D--Improvements to the Asset-Backed Securitization Process
SEC. 941. REGULATION OF CREDIT RISK RETENTION.
(a) Definition of Asset-backed Security.--Section 3(a) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)) is amended by adding
at the end the following:
``(77) Asset-backed security.--The term `asset-backed
security'--
``(A) means a fixed-income or other security
collateralized by any type of self-liquidating
financial asset (including a loan, a lease, a mortgage,
or a secured or unsecured receivable) that allows the
holder of the security to receive payments that depend
primarily on cash flow from the asset, including--
``(i) a collateralized mortgage obligation;
``(ii) a collateralized debt obligation;
``(iii) a collateralized bond obligation;
``(iv) a collateralized debt obligation of
asset-backed securities;
``(v) a collateralized debt obligation of
collateralized debt obligations; and
``(vi) a security that the Commission, by
rule, determines to be an asset-backed security
for purposes of this section; and
``(B) does not include a security issued by a
finance subsidiary held by the parent company or a
company controlled by the parent company, if none of
the securities issued by the finance subsidiary are
held by an entity that is not controlled by the parent
company.''.
(b) Credit Risk Retention.--The Securities Exchange Act of 1934 (15
U.S.C. 78a et seq.) is amended by inserting after section 15F, as added
by this Act, the following:
``SEC. 15G. CREDIT RISK RETENTION.
``(a) Definitions.--In this section--
``(1) the term `Federal banking agencies' means the Office
of the Comptroller of the Currency and the Federal Deposit
Insurance Corporation;
``(2) the term `insured depository institution' has the
same meaning as in section 3(c) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(c));
``(3) the term `securitizer' means--
``(A) an issuer of an asset-backed security; or
``(B) a person who organizes and initiates an
asset-backed securities transaction by selling or
transferring assets, either directly or indirectly,
including through an affiliate, to the issuer; and
``(4) the term `originator' means a person who--
``(A) through the extension of credit or otherwise,
creates a financial asset that collateralizes an asset-
backed security; and
``(B) sells an asset to a securitizer.
``(b) In General.--Not later than 270 days after the date of
enactment of this section, the Federal banking agencies and the
Commission shall jointly prescribe regulations to require any
securitizer to retain an economic interest in a portion of the credit
risk for any asset that the securitizer, through the issuance of an
asset-backed security, transfers, sells, or conveys to a third party.
``(c) Standards for Regulations.--
``(1) Standards.--The regulations prescribed under
subsection (b) shall--
``(A) prohibit a securitizer from directly or
indirectly hedging or otherwise transferring the credit
risk that the securitizer is required to retain with
respect to an asset;
``(B) require a securitizer to retain--
``(i) not less than 5 percent of the credit
risk for any asset that is transferred, sold,
or conveyed through the issuance of an asset-
backed security by the securitizer; or
``(ii) less than 5 percent of the credit
risk for an asset that is transferred, sold, or
conveyed through the issuance of an asset-
backed security by the securitizer, if the
originator of the asset meets the underwriting
standards prescribed under paragraph (2)(B);
``(C) specify--
``(i) the permissible forms of risk
retention for purposes of this section; and
``(ii) the minimum duration of the risk
retention required under this section;
``(D) apply, regardless of whether the securitizer
is an insured depository institution; and
``(E) provide for--
``(i) a total or partial exemption of any
securitization, as may be appropriate in the
public interest and for the protection of
investors; and
``(ii) the allocation of risk retention
obligations between a securitizer and an
originator in the case of a securitizer that
purchases assets from an originator, as the
Federal banking agencies and the Commission
jointly determine appropriate.
``(2) Asset classes.--
``(A) Asset classes.--The regulations prescribed
under subsection (b) shall establish asset classes with
separate rules for securitizers of different classes of
assets, including residential mortgages, commercial
mortgages, commercial loans, auto loans, and any other
class of assets that the Federal banking agencies and
the Commission deem appropriate.
``(B) Contents.--For each asset class established
under subparagraph (A), the regulations prescribed
under subsection (b) shall establish underwriting
standards that specify the terms, conditions, and
characteristics of a loan within the asset class that
indicate a reduced credit risk with respect to the
loan.
``(d) Originators.--In determining how to allocate risk retention
obligations between a securitizer and an originator under subsection
(c)(1)(E)(ii), the Federal banking agencies and the Commission shall--
``(1) reduce the percentage of risk retention obligations
required of the securitizer by the percentage of risk retention
obligations required of the originator; and
``(2) consider--
``(A) whether the assets sold to the securitizer
have terms, conditions, and characteristics that
reflect reduced credit risk;
``(B) whether the form or volume of transactions in
securitization markets creates incentives for imprudent
origination of the type of loan or asset to be sold to
the securitizer; and
``(C) the potential impact of the risk retention
obligations on the access of consumers and businesses
to credit on reasonable terms, which may not include
the transfer of credit risk to a third party.
``(e) Exemptions, Exceptions, and Adjustments.--
``(1) In general.--The Federal banking agencies and the
Commission may jointly adopt or issue exemptions, exceptions,
or adjustments to the rules issued under this section,
including exemptions, exceptions, or adjustments for classes of
institutions or assets relating to the risk retention
requirement and the prohibition on hedging under subsection
(c)(1).
``(2) Applicable standards.--Any exemption, exception, or
adjustment adopted or issued by the Federal banking agencies
and the Commission under this paragraph shall--
``(A) help ensure high quality underwriting
standards for the securitizers and originators of
assets that are securitized or available for
securitization; and
``(B) encourage appropriate risk management
practices by the securitizers and originators of
assets, improve the access of consumers and businesses
to credit on reasonable terms, or otherwise be in the
public interest and for the protection of investors.
``(3) Farm credit system institutions.--A Farm Credit
System institution, including the Federal Agricultural Mortgage
Corporation, that is chartered and subject to the provisions of
the Farm Credit Act of 1971, as amended (12 U.S.C. 2001 et
seq.), shall be exempt from the risk retention provisions of
this subsection.
``(f) Enforcement.--The regulations issued under this section shall
be enforced by--
``(1) the appropriate Federal banking agency, with respect
to any securitizer that is an insured depository institution;
and
``(2) the Commission, with respect to any securitizer that
is not an insured depository institution.
``(g) Authority of Commission.--The authority of the Commission
under this section shall be in addition to the authority of the
Commission to otherwise enforce the securities laws.
``(h) Effective Date of Regulations.--The regulations issued under
this section shall become effective--
``(1) with respect to securitizers and originators of
asset-backed securities backed by residential mortgages, 1 year
after the date on which final rules under this section are
published in the Federal Register; and
``(2) with respect to securitizers and originators of all
other classes of asset-backed securities, 2 years after the
date on which final rules under this section are published in
the Federal Register.''.
SEC. 942. DISCLOSURES AND REPORTING FOR ASSET-BACKED SECURITIES.
(a) Securities Exchange Act of 1934.--Section 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o(d)) is amended--
(1) by striking ``(d) Each'' and inserting the following:
``(d) Supplementary and Periodic Information.--
``(1) In general.--Each'';
(2) in the third sentence, by inserting after ``securities
of each class'' the following: ``, other than any class of
asset-backed securities,''; and
(3) by adding at the end the following:
``(2) Asset-backed securities.--
``(A) Suspension of duty to file.--The Commission
may, by rule or regulation, provide for the suspension
or termination of the duty to file under this
subsection for any class of asset-backed security, on
such terms and conditions and for such period or
periods as the Commission deems necessary or
appropriate in the public interest or for the
protection of investors.
``(B) Classification of issuers.--The Commission
may, for purposes of this subsection, classify issuers
and prescribe requirements appropriate for each class
of issuers of asset-backed securities.''.
(b) Securities Act of 1933.--Section 7 of the Securities Act of
1933 (15 U.S.C. 77g) is amended by adding at the end the following:
``(c) Disclosure Requirements.--
``(1) In general.--The Commission shall adopt regulations
under this subsection requiring each issuer of an asset-backed
security to disclose, for each tranche or class of security,
information regarding the assets backing that security.
``(2) Content of regulations.--In adopting regulations
under this subsection, the Commission shall--
``(A) set standards for the format of the data
provided by issuers of an asset-backed security, which
shall, to the extent feasible, facilitate comparison of
such data across securities in similar types of asset
classes; and
``(B) require issuers of asset-backed securities,
at a minimum, to disclose asset-level or loan-level
data necessary for investors to independently perform
due diligence, including--
``(i) data having unique identifiers
relating to loan brokers or originators;
``(ii) the nature and extent of the
compensation of the broker or originator of the
assets backing the security; and
``(iii) the amount of risk retention by the
originator and the securitizer of such
assets.''.
SEC. 943. REPRESENTATIONS AND WARRANTIES IN ASSET-BACKED OFFERINGS.
Not later than 180 days after the date of enactment of this Act,
the Securities and Exchange Commission shall prescribe regulations on
the use of representations and warranties in the market for asset-
backed securities (as that term is defined in section 3(a)(77) of the
Securities Exchange Act of 1934, as added by this subtitle) that--
(1) require each national recognized statistical rating
organization to include in any report accompanying a credit
rating a description of--
(A) the representations, warranties, and
enforcement mechanisms available to investors; and
(B) how they differ from the representations,
warranties, and enforcement mechanisms in issuances of
similar securities; and
(2) require any securitizer (as that term is defined in
section 15G(a) of the Securities Exchange Act of 1934, as added
by this subtitle) to disclose fulfilled and unfulfilled
repurchase requests across all trusts aggregated by the
securitizer, so that investors may identify asset originators
with clear underwriting deficiencies.
SEC. 944. EXEMPTED TRANSACTIONS UNDER THE SECURITIES ACT OF 1933.
(a) Exemption Eliminated.--Section 4 of the Securities Act of 1933
(15 U.S.C. 77d) is amended--
(1) by striking paragraph (5); and
(2) by striking ``(6) transactions'' and inserting the
following:
``(5) transactions''.
(b) Conforming Amendment.--Section 3(a)(4)(B)(vii)(I) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(B)(vii)(I)) is
amended by striking ``4(6)'' and inserting ``4(5)''.
SEC. 945. DUE DILIGENCE ANALYSIS AND DISCLOSURE IN ASSET-BACKED
SECURITIES ISSUES.
Section 7 of the Securities Act of 1933 (15 U.S.C. 77g), as amended
by this subtitle, is amended by adding at the end the following:
``(d) Registration Statement for Asset-backed Securities.--Not
later than 180 days after the date of enactment of this subsection, the
Commission shall issue rules relating to the registration statement
required to be filed by any issuer of an asset-backed security (as that
term is defined in section 3(a)(77) of the Securities Exchange Act of
1934) that require any issuer of an asset-backed security--
``(1) to perform a due diligence analysis of the assets
underlying the asset-backed security; and
``(2) to disclose the nature of the analysis under
paragraph (1).''.
Subtitle E--Accountability and Executive Compensation
SEC. 951. SHAREHOLDER VOTE ON EXECUTIVE COMPENSATION DISCLOSURES.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 14 (15 U.S.C. 78n) the following:
``SEC. 14A. ANNUAL SHAREHOLDER APPROVAL OF EXECUTIVE COMPENSATION.
``(a) Separate Resolution Required.--Any proxy or consent or
authorization for an annual or other meeting of the shareholders
occurring after the end of the 6-month period beginning on the date of
enactment of this section, for which the proxy solicitation rules of
the Commission require compensation disclosure, shall include a
separate resolution subject to shareholder vote to approve the
compensation of executives, as disclosed pursuant to section 229.402 of
title 17, Code of Federal Regulations, or any successor thereto.
``(b) Rule of Construction.--The shareholder vote referred to in
subsection (a) shall not be binding on the issuer or the board of
directors of an issuer, and may not be construed--
``(1) as overruling a decision by such issuer or board of
directors;
``(2) to create or imply any change to the fiduciary duties
of such issuer or board of directors;
``(3) to create or imply any additional fiduciary duties
for such issuer or board of directors; or
``(4) to restrict or limit the ability of shareholders to
make proposals for inclusion in proxy materials related to
executive compensation.''.
SEC. 952. COMPENSATION COMMITTEE INDEPENDENCE.
The Securities Exchange Act of 1934 (15 U.S.C. 78 et seq.) is
amended by inserting after section 10B, as added by section 753, the
following:
``SEC. 10C. COMPENSATION COMMITTEES.
``(a) Independence of Compensation Committees.--
``(1) Listing standards.--The Commission shall, by rule,
direct the national securities exchanges and national
securities associations to prohibit the listing of any security
of an issuer that does not comply with the requirements of this
subsection.
``(2) Independence of compensation committees.--The rules
of the Commission under paragraph (1) shall require that each
member of the compensation committee of the board of directors
of an issuer be--
``(A) a member of the board of directors of the
issuer; and
``(B) independent.
``(3) Independence.--The rules of the Commission under
paragraph (1) shall require that, in determining the definition
of the term `independence' for purposes of paragraph (2), the
national securities exchanges and the national securities
associations shall consider relevant factors, including--
``(A) the source of compensation of a member of the
board of directors of an issuer, including any
consulting, advisory, or other compensatory fee paid by
the issuer to such member of the board of directors;
and
``(B) whether a member of the board of directors of
an issuer is affiliated with the issuer, a subsidiary
of the issuer, or an affiliate of a subsidiary of the
issuer.
``(4) Exemption authority.--The rules of the Commission
under paragraph (1) shall permit a national securities exchange
or a national securities association to exempt a particular
relationship from the requirements of paragraph (2), with
respect to the members of a compensation committee, as the
national securities exchange or national securities association
determines is appropriate, taking into consideration the size
of an issuer and any other relevant factors.
``(b) Independence of Compensation Consultants and Other
Compensation Committee Advisers.--
``(1) In general.--The compensation committee of an issuer
may only select a compensation consultant, legal counsel, or
other adviser to the compensation committee after taking into
consideration the factors identified by the Commission under
paragraph (2).
``(2) Rules.--The Commission shall identify factors that
affect the independence of a compensation consultant, legal
counsel, or other adviser to a compensation committee of an
issuer, including--
``(A) the provision of other services to the issuer
by the person that employs the compensation consultant,
legal counsel, or other adviser;
``(B) the amount of fees received from the issuer
by the person that employs the compensation consultant,
legal counsel, or other adviser, as a percentage of the
total revenue of the person that employs the
compensation consultant, legal counsel, or other
adviser;
``(C) the policies and procedures of the person
that employs the compensation consultant, legal
counsel, or other adviser that are designed to prevent
conflicts of interest;
``(D) any business or personal relationship of the
compensation consultant, legal counsel, or other
adviser with a member of the compensation committee;
and
``(E) any stock of the issuer owned by the
compensation consultant, legal counsel, or other
adviser.
``(c) Compensation Committee Authority Relating to Compensation
Consultants.--
``(1) Authority to retain compensation consultant.--
``(A) In general.--The compensation committee of an
issuer, in its capacity as a committee of the board of
directors, may, in its sole discretion, retain or
obtain the advice of a compensation consultant.
``(B) Direct responsibility of compensation
committee.--The compensation committee of an issuer
shall be directly responsible for the appointment,
compensation, and oversight of the work of a
compensation consultant.
``(C) Rule of construction.--This paragraph may not
be construed--
``(i) to require the compensation committee
to implement or act consistently with the
advice or recommendations of the compensation
consultant; or
``(ii) to affect the ability or obligation
of a compensation committee to exercise its own
judgment in fulfillment of the duties of the
compensation committee.
``(2) Disclosure.--In any proxy or consent solicitation
material for an annual meeting of the shareholders (or a
special meeting in lieu of the annual meeting) occurring on or
after the date that is 1 year after the date of enactment of
this section, each issuer shall disclose in the proxy or
consent material, in accordance with regulations of the
Commission, whether--
``(A) the compensation committee of the issuer
retained or obtained the advice of a compensation
consultant; and
``(B) the work of the compensation consultant has
raised any conflict of interest and, if so, the nature
of the conflict and how the conflict is being
addressed.
``(d) Authority To Engage Independent Legal Counsel and Other
Advisers.--
``(1) In general.--The compensation committee of an issuer,
in its capacity as a committee of the board of directors, may,
in its sole discretion, retain and obtain the advice of
independent legal counsel and other advisers.
``(2) Direct responsibility of compensation committee.--The
compensation committee of an issuer shall be directly
responsible for the appointment, compensation, and oversight of
the work of independent legal counsel and other advisers.
``(3) Rule of construction.--This subsection may not be
construed--
``(A) to require a compensation committee to
implement or act consistently with the advice or
recommendations of independent legal counsel or other
advisers under this subsection; or
``(B) to affect the ability or obligation of a
compensation committee to exercise its own judgment in
fulfillment of the duties of the compensation
committee.
``(e) Compensation of Compensation Consultants, Independent Legal
Counsel, and Other Advisers.--Each issuer shall provide for appropriate
funding, as determined by the compensation committee in its capacity as
a committee of the board of directors, for payment of reasonable
compensation--
``(1) to a compensation consultant; and
``(2) to independent legal counsel or any other adviser to
the compensation committee.
``(f) Commission Rules.--
``(1) In general.--Not later than 360 days after the date
of enactment of this section, the Commission shall, by rule,
direct the national securities exchanges and national
securities associations to prohibit the listing of any security
of an issuer that is not in compliance with the requirements of
this section.
``(2) Opportunity to cure defects.--The rules of the
Commission under paragraph (1) shall provide for appropriate
procedures for an issuer to have a reasonable opportunity to
cure any defects that would be the basis for the prohibition
under paragraph (1), before the imposition of such prohibition.
``(3) Exemption authority.--
``(A) In general.--The rules of the Commission
under paragraph (1) shall permit a national securities
exchange or a national securities association to exempt
a category of issuers from the requirements under this
section, as the national securities exchange or the
national securities association determines is
appropriate.
``(B) Considerations.--In determining appropriate
exemptions under subparagraph (A), the national
securities exchange or the national securities
association shall take into account the potential
impact of the requirements of this section on smaller
reporting issuers.''.
SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES.
(a) Disclosure of Pay Versus Performance.--Section 14 of the
Securities Exchange Act of 1934 (15 U.S.C. 78n), as amended by this
title, is amended by adding at the end the following:
``(i) Disclosure of Pay Versus Performance.--The Commission shall,
by rule, require each issuer to disclose in any proxy or consent
solicitation material for an annual meeting of the shareholders of the
issuer a clear description of any compensation required to be disclosed
by the issuer under section 229.402 of title 17, Code of Federal
Regulations (or any successor thereto), including information that
shows the relationship between executive compensation actually paid and
the financial performance of the issuer, taking into account any change
in the value of the shares of stock and dividends of the issuer and any
distributions. The disclosure under this subsection may include a
graphic representation of the information required to be disclosed.''.
(b) Additional Disclosure Requirements.--
(1) In general.--The Commission shall amend section 229.402
of title 17, Code of Federal Regulations, to require each
issuer to disclose in any filing of the issuer described in
section 229.10(a) of title 17, Code of Federal Regulations (or
any successor thereto)--
(A) the median of the annual total compensation of
all employees of the issuer, except the chief executive
officer (or any equivalent position) of the issuer;
(B) the annual total compensation of the chief
executive officer (or any equivalent position) of the
issuer; and
(C) the ratio of the amount described in
subparagraph (A) to the amount described in
subparagraph (B).
(2) Total compensation.--For purposes of this subsection,
the total compensation of an employee of an issuer shall be
determined in accordance with section 229.402(c)(2)(x) of title
17, Code of Federal Regulations, as in effect on the day before
the date of enactment of this Act.
SEC. 954. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION.
The Securities Exchange Act of 1934 is amended by inserting after
section 10C, as added by section 952, the following:
``SEC. 10D. RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION POLICY.
``(a) Listing Standards.--The Commission shall, by rule, direct the
national securities exchanges and national securities associations to
prohibit the listing of any security of an issuer that does not comply
with the requirements of this section.
``(b) Recovery of Funds.--The rules of the Commission under
subsection (a) shall require each issuer to develop and implement a
policy providing--
``(1) for disclosure of the policy of the issuer on
incentive-based compensation that is based on financial
information required to be reported under the securities laws;
and
``(2) that, in the event that the issuer is required to
prepare an accounting restatement due to the material
noncompliance of the issuer with any financial reporting
requirement under the securities laws, the issuer will recover
from any current or former executive officer of the issuer who
received incentive-based compensation (including stock options
awarded as compensation) during the 3-year period preceding the
date on which the issuer is required to prepare an accounting
restatement, based on the erroneous data, in excess of what
would have been paid to the executive officer under the
accounting restatement.''.
SEC. 955. DISCLOSURE REGARDING EMPLOYEE AND DIRECTOR HEDGING.
Section 14 of the Securities Exchange Act of 1934 (15 U.S.C. 78n),
as amended by this title, is amended by adding at the end the
following:
``(j) Disclosure of Hedging by Employees and Directors.--The
Commission shall, by rule, require each issuer to disclose in any proxy
or consent solicitation material for an annual meeting of the
shareholders of the issuer whether any employee or member of the board
of directors of the issuer, or any designee of such employee or member,
is permitted to purchase financial instruments (including prepaid
variable forward contracts, equity swaps, collars, and exchange funds)
that are designed to hedge or offset any decrease in the market value
of equity securities--
``(1) granted to the employee or member of the board of
directors by the issuer as part of the compensation of the
employee or member of the board of directors; or
``(2) held, directly or indirectly, by the employee or
member of the board of directors.''.
SEC. 956. EXCESSIVE COMPENSATION BY HOLDING COMPANIES OF DEPOSITORY
INSTITUTIONS.
Section 5 of the Bank Holding Company Act of 1956 (12 U.S.C. 1844)
is amended by adding at the end the following:
``(i) Excessive Compensation.--
``(1) In general.--Not later than 180 days after the
transfer date established under section 311 of the Restoring
American Financial Stability Act of 2010, the Board of
Governors, in consultation with the Comptroller of the Currency
and the Federal Deposit Insurance Corporation, shall, by rule,
establish standards prohibiting as an unsafe and unsound
practice any compensation plan of a bank holding company that--
``(A) provides an executive officer, employee,
director, or principal shareholder of the bank holding
company with excessive compensation, fees, or benefits;
or
``(B) could lead to material financial loss to the
bank holding company.
``(2) Considerations.--In establishing the standards under
paragraph (1), the Board of Governors shall take into
consideration the compensation standards described in section
39(c) of the Federal Deposit Insurance Act (12 U.S.C. 1831p-
1(c)) and the views and recommendations of the Comptroller of
the Currency and the Federal Deposit Insurance Corporation.''.
SEC. 957. VOTING BY BROKERS.
Section 6(b) of the Securities Exchange Act of 1934 (15 U.S.C.
78f(b)) is amended--
(1) in paragraph (9)--
(A) in subparagraph (A), by redesignating clauses
(i) through (v) as subclauses (I) through (V),
respectively, and adjusting the margins accordingly;
(B) by redesignating subparagraphs (A) through (D)
as clauses (i) through (iv), respectively, and
adjusting the margins accordingly;
(C) by inserting ``(A)'' after ``(9)''; and
(D) in the matter immediately following clause
(iv), as so redesignated, by striking ``As used'' and
inserting the following:
``(B) As used''.
(2) by adding at the end the following:
``(10)(A) The rules of the exchange prohibit any member
that is not the beneficial owner of a security registered under
section 12 from granting a proxy to vote the security in
connection with a shareholder vote described in subparagraph
(B), unless the beneficial owner of the security has instructed
the member to vote the proxy in accordance with the voting
instructions of the beneficial owner.
``(B) A shareholder vote described in this subparagraph is
a shareholder vote with respect to the election of a member of
the board of directors of an issuer, executive compensation, or
any other significant matter, as determined by the Commission,
by rule.
``(C) Nothing in this paragraph shall be construed to
prohibit a national securities exchange from prohibiting a
member that is not the beneficial owner of a security
registered under section 12 from granting a proxy to vote the
security in connection with a shareholder vote not described in
subparagraph (A).''.
Subtitle F--Improvements to the Management of the Securities and
Exchange Commission
SEC. 961. REPORT AND CERTIFICATION OF INTERNAL SUPERVISORY CONTROLS.
(a) Annual Reports and Certification.--Not later than 90 days after
the end of each fiscal year, the Commission shall submit a report to
the Committee on Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of Representatives on
the conduct by the Commission of examinations of registered entities,
enforcement investigations, and review of corporate financial
securities filings.
(b) Contents of Reports.--Each report under subsection (a) shall
contain--
(1) an assessment, as of the end of the most recent fiscal
year, of the effectiveness of--
(A) the internal supervisory controls of the
Commission; and
(B) the procedures of the Commission applicable to
the staff of the Commission who perform examinations of
registered entities, enforcement investigations, and
reviews of corporate financial securities filings;
(2) a certification that the Commission has adequate
internal supervisory controls to carry out the duties of the
Commission described in paragraph (1)(B); and
(3) a summary by the Comptroller General of the United
States of the review carried out under subsection (d).
(c) Certification.--
(1) Signature.--The certification under subsection (b)(2)
shall be signed by the Director of the Division of Enforcement,
the Director of the Division of Corporation Finance, and the
Director of the Office of Compliance Inspections and
Examinations (or the head of any successor division or office).
(2) Content of certification.--Each individual described in
paragraph (1) shall certify that the individual--
(A) is directly responsible for establishing and
maintaining the internal supervisory controls of the
Division or Office of which the individual is the head;
(B) is knowledgeable about the internal supervisory
controls of the Division or Office of which the
individual is the head;
(C) has evaluated the effectiveness of the internal
supervisory controls during the 90-day period ending on
the final day of the fiscal year to which the report
relates; and
(D) has disclosed to the Commission any significant
deficiencies in the design or operation of internal
supervisory controls that could adversely affect the
ability of the Division or Office to consistently
conduct inspections, or investigations, or reviews of
filings with professional competence and integrity.
(d) Review by the Comptroller General.--Not later than the date on
which the first report is submitted under subsection (a), the
Comptroller General of the United States shall submit to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives an initial report
that contains a review of the adequacy and effectiveness of the
internal supervisory control structure and procedures described in
subsection (b)(1).
SEC. 962. TRIENNIAL REPORT ON PERSONNEL MANAGEMENT.
(a) Triennial Report Required.--Once every 3 years, the Comptroller
General of the United States shall submit a report to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives on the quality of
personnel management by the Commission.
(b) Contents of Report.--Each report under subsection (a) shall
include--
(1) an evaluation of--
(A) the effectiveness of supervisors in using the
skills, talents, and motivation of the employees of the
Commission to achieve the goals of the Commission;
(B) the criteria for promoting employees of the
Commission to supervisory positions;
(C) the fairness of the application of the
promotion criteria to the decisions of the Commission;
(D) the competence of the professional staff of the
Commission;
(E) the efficiency of communication between the
units of the Commission regarding the work of the
Commission (including communication between divisions
and between subunits of a division) and the efforts by
the Commission to promote such communication;
(F) the turnover within subunits of the Commission,
including the identification of supervisors whose
subordinates have an unusually high rate of turnover;
(G) whether there are excessive numbers of low-
level, mid-level, or senior-level managers;
(H) any initiatives of the Commission that increase
the competence of the staff of the Commission;
(I) the actions taken by the Commission regarding
employees of the Commission who have failed to perform
their duties; and
(J) such other factors relating to the management
of the Commission as the Comptroller General determines
are appropriate;
(2) an evaluation of any improvements made with respect to
the areas described in paragraph (1) since the date of
submission of the previous report; and
(3) recommendations for how the Commission can use the
human resources of the Commission more effectively and
efficiently to carry out the mission of the Commission.
(c) Consultation.--In preparing the report under subsection (a),
the Comptroller General shall consult with current employees of the
Commission, retired employees and other former employees of the
Commission, the Inspector General of the Commission, persons that have
business before the Commission, any union representing the employees of
the Commission, private management consultants, academics, and any
other source that the Comptroller General deems appropriate.
(d) Report by Commission.--Not later than 90 days after the date on
which the Comptroller General submits each report under subsection (a),
the Commission shall submit to the Committee on Banking, Housing, and
Urban Affairs of the Senate and the Committee on Financial Services of
the House of Representatives a report describing the actions taken by
the Commission in response to the recommendations contained in the
report under subsection (a).
(e) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under this section, as billed
therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account
``Salaries and Expenses, Government Accountability
Office'' current when the payment is received; and
(B) remain available until expended.
SEC. 963. ANNUAL FINANCIAL CONTROLS AUDIT.
(a) Reports of Commission.--
(1) Annual reports required.--Not later than 6 months after
the end of each fiscal year, the Commission shall publish and
submit to Congress a report that--
(A) describes the responsibility of the management
of the Commission for establishing and maintaining an
adequate internal control structure and procedures for
financial reporting; and
(B) contains an assessment of the effectiveness of
the internal control structure and procedures for
financial reporting of the Commission during that
fiscal year.
(2) Attestation.--The reports required under paragraph (1)
shall be attested to by the Chairman and chief financial
officer of the Commission.
(b) Report by Comptroller General.--
(1) Report required.--Not later than 6 months after the end
of the first fiscal year after the date of enactment of this
Act, the Comptroller General of the United States shall submit
a report to Congress that assesses--
(A) the effectiveness of the internal control
structure and procedures of the Commission for
financial reporting; and
(B) the assessment of the Commission under
subsection (a)(1)(B).
(2) Attestation.--The Comptroller General shall attest to,
and report on, the assessment made by the Commission under
subsection (a).
(c) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under subsection (b), as billed
therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account
``Salaries and Expenses, Government Accountability
Office'' current when the payment is received; and
(B) remain available until expended.
SEC. 964. REPORT ON OVERSIGHT OF NATIONAL SECURITIES ASSOCIATIONS.
(a) Report Required.--Not later than 2 years after the date of
enactment of this Act, and every 3 years thereafter, the Comptroller
General of the United States shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report that includes an
evaluation of the oversight by the Commission of national securities
associations registered under section 15A of the Securities Exchange
Act of 1934 (15 U.S.C. 78o-3) with respect to--
(1) the governance of such national securities
associations, including the identification and management of
conflicts of interest by such national securities associations,
together with an analysis of the impact of any conflicts of
interest on the regulatory enforcement or rulemaking by such
national securities associations;
(2) the examinations carried out by the national securities
associations, including the expertise of the examiners;
(3) the executive compensation practices of such national
securities associations;
(4) the arbitration services provided by the national
securities associations;
(5) the review performed by national securities
associations of advertising by the members of the national
securities associations;
(6) the cooperation with and assistance to State securities
administrators by the national securities associations to
promote investor protection;
(7) how the funding of national securities associations is
used to support the mission of the national securities
associations, including--
(A) the methods of funding;
(B) the sufficiency of funds;
(C) how funds are invested by the national
securities association pending use; and
(D) the impact of the methods, sufficiency, and
investment of funds on regulatory enforcement by the
national securities associations;
(8) the policies regarding the employment of former
employees of national securities associations by regulated
entities;
(9) the ongoing effectiveness of the rules of the national
securities associations in achieving the goals of the rules;
(10) the transparency of governance and activities of the
national securities associations; and
(11) any other issue that has an impact, as determined by
the Comptroller General, on the effectiveness of such national
securities associations in performing their mission and in
dealing fairly with investors and members;
(b) Reimbursements for Cost of Reports.--
(1) Reimbursements required.--The Commission shall
reimburse the Government Accountability Office for the full
cost of making the reports under subsection (a), as billed
therefor by the Comptroller General.
(2) Crediting and use of reimbursements.--Such
reimbursements shall--
(A) be credited to the appropriation account
``Salaries and Expenses, Government Accountability
Office'' current when the payment is received; and
(B) remain available until expended.
SEC. 965. COMPLIANCE EXAMINERS.
Section 4 of the Securities Exchange Act of 1934 (15 U.S.C. 78d) is
amended by adding at the end the following:
``(h) Examiners.--
``(1) Division of trading and markets.--The Division of
Trading and Markets of the Commission, or any successor
organizational unit, shall have a staff of examiners who
shall--
``(A) perform compliance inspections and
examinations of entities under the jurisdiction of that
Division; and
``(B) report to the Director of that Division.
``(2) Division of investment management.--The Division of
Investment Management of the Commission, or any successor
organizational unit, shall have a staff of examiners who
shall--
``(A) perform compliance inspections and
examinations of entities under the jurisdiction of that
Division; and
``(B) report to the Director of that Division.''.
SEC. 966. SUGGESTION PROGRAM FOR EMPLOYEES OF THE COMMISSION.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 4C (15 U.S.C. 78d-3) the following:
``SEC. 4D. ADDITIONAL DUTIES OF INSPECTOR GENERAL.
``(a) Suggestion Submissions by Commission Employees.--
``(1) Hotline established.--The Inspector General of the
Commission shall establish and maintain a telephone hotline or
other electronic means for the receipt of--
``(A) suggestions by employees of the Commission
for improvements in the work efficiency, effectiveness,
and productivity, and the use of the resources, of the
Commission; and
``(B) allegations by employees of the Commission of
waste, abuse, misconduct, or mismanagement within the
Commission.
``(2) Confidentiality.--The Inspector General shall
maintain as confidential--
``(A) the identity of any individual who provides
information by the means established under paragraph
(1), unless the individual requests otherwise, in
writing; and
``(B) at the request of any such individual, any
specific information provided by the individual.
``(b) Consideration of Reports.--The Inspector General shall
consider any suggestions or allegations received by the means
established under subsection (a)(1), and shall recommend appropriate
action in relation to such suggestions or allegations.
``(c) Recognition.--The Inspector General may recognize any
employee who makes a suggestion under subsection (a)(1) (or by other
means) that would or does--
``(1) increase the work efficiency, effectiveness, or
productivity of the Commission; or
``(2) reduce waste, abuse, misconduct, or mismanagement
within the Commission.
``(d) Report.--The Inspector General of the Commission shall submit
to Congress an annual report containing a description of--
``(1) the nature, number, and potential benefits of any
suggestions received under subsection (a);
``(2) the nature, number, and seriousness of any
allegations received under subsection (a);
``(3) any recommendations made or actions taken by the
Inspector General in response to substantiated allegations
received under subsection (a); and
``(4) any action the Commission has taken in response to
suggestions or allegations received under subsection (a).
``(e) Funding.--The activities of the Inspector General under this
subsection shall be funded by the Securities and Exchange Commission
Investor Protection Fund established under section 21F.''.
Subtitle G--Strengthening Corporate Governance
SEC. 971. ELECTION OF DIRECTORS BY MAJORITY VOTE IN UNCONTESTED
ELECTIONS.
The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is
amended by inserting after section 14A, as added by this title, the
following:
``SEC. 14B. CORPORATE GOVERNANCE.
``(a) Corporate Governance Standards.--
``(1) Listing standards.--
``(A) In general.--Not later than 1 year after the
date of enactment of this subsection, the Commission
shall, by rule, direct the national securities
exchanges and national securities associations to
prohibit the listing of any security of an issuer that
is not in compliance with any of the requirements of
this subsection.
``(B) Opportunity to comply and cure.--The rules
established under this paragraph shall allow an issuer
to have an opportunity to come into compliance with the
requirements of this subsection, and to cure any defect
that would be the basis for a prohibition under
subparagraph (A), before the imposition of such
prohibition.
``(C) Authority to exempt.--The Commission may, by
rule or order, exempt an issuer from any or all of the
requirements of this subsection and the rules issued
under this subsection, based on the size of the issuer,
the market capitalization of the issuer, the number of
shareholders of record of the issuer, or any other
criteria, as the Commission deems necessary and
appropriate in the public interest or for the
protection of investors.
``(2) Commission rules on elections.--In an election for
membership on the board of directors of an issuer--
``(A) that is uncontested, each director who
receives a majority of the votes cast shall be deemed
to be elected;
``(B) that is contested, if the number of nominees
exceeds the number of directors to be elected, each
director shall be elected by the vote of a plurality of
the shares represented at a meeting and entitled to
vote; and
``(C) if a director of an issuer receives less than
a majority of the votes cast in an uncontested
election--
``(i) the director shall tender the
resignation of the director to the board of
directors; and
``(ii) the board of directors--
``(I) shall--
``(aa) accept the
resignation of the director;
``(bb) determine a date on
which the resignation will take
effect, within a reasonable
period of time, as established
by the Commission; and
``(cc) make the date under
item (bb) public within a
reasonable period of time, as
established by the Commission;
or
``(II) shall, upon a unanimous vote
of the board, decline to accept the
resignation and, not later than 30 days
after the date of the vote (or within
such shorter period as the Commission
may establish), make public, together
with a discussion of the analysis used
in reaching the conclusion, the
specific reasons that--
``(aa) the board chose not
to accept the resignation; and
``(bb) the decision was in
the best interests of the
issuer and the shareholders of
the issuer.''.
SEC. 972. PROXY ACCESS.
(a) Proxy Access.--Section 14(a) of the Securities Exchange Act of
1934 (15 U.S.C. 78n(a)) is amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end the following:
``(2) The rules and regulations prescribed by the Commission under
paragraph (1) may include--
``(A) a requirement that a solicitation of proxy, consent,
or authorization by (or on behalf of) an issuer include a
nominee submitted by a shareholder to serve on the board of
directors of the issuer; and
``(B) a requirement that an issuer follow a certain
procedure in relation to a solicitation described in
subparagraph (A).''.
(b) Regulations.--The Commission may issue rules permitting the use
by shareholders of proxy solicitation materials supplied by an issuer
of securities for the purpose of nominating individuals to membership
on the board of directors of the issuer, under such terms and
conditions as the Commission determines are in the interests of
shareholders and for the protection of investors.
SEC. 973. DISCLOSURES REGARDING CHAIRMAN AND CEO STRUCTURES.
Section 14B of the Securities Exchange Act of 1934, as added by
section 971, is amended by adding at the end the following:
``(b) Disclosures Regarding Chairman and CEO Structures.--Not later
than 180 days after the date of enactment of this subsection, the
Commission shall issue rules that require an issuer to disclose in the
annual proxy sent to investors the reasons why the issuer has chosen--
``(1) the same person to serve as chairman of the board of
directors and chief executive officer (or in equivalent
positions); or
``(2) different individuals to serve as chairman of the
board of directors and chief executive officer (or in
equivalent positions of the issuer).''.
Subtitle H--Municipal Securities
SEC. 975. REGULATION OF MUNICIPAL SECURITIES AND CHANGES TO THE BOARD
OF THE MSRB.
(a) Registration of Municipal Securities Dealers and Municipal
Advisors.--Section 15B(a) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-4(a)) is amended--
(1) in paragraph (1)--
(A) by inserting ``(A)'' after ``(1)''; and
(B) by adding at the end the following:
``(B) It shall be unlawful for a municipal advisor
to provide advice to or on behalf of a municipal entity
or obligated person with respect to municipal financial
products or the issuance of municipal securities, or to
undertake a solicitation of a municipal entity or
obligated person, unless the municipal advisor is
registered in accordance with this subsection.'';
(2) in paragraph (2), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(3) in paragraph (3), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(4) in paragraph (4), by striking ``dealer, or municipal
securities dealer or class of brokers, dealers, or municipal
securities dealers'' and inserting ``dealer, municipal
securities dealer, or municipal advisor, or class of brokers,
dealers, municipal securities dealers, or municipal advisors'';
and
(5) by adding at the end the following:
``(5) No municipal advisor shall make use of the mails or
any means or instrumentality of interstate commerce to provide
advice to or on behalf of a municipal entity or obligated
person with respect to municipal financial products, the
issuance of municipal securities, or participation in the
issuance of municipal securities, or to undertake a
solicitation of a municipal entity or obligated person, in
connection with which such municipal advisor engages in any
fraudulent, deceptive, or manipulative act or practice.''.
(b) Municipal Securities Rulemaking Board.--Section 15B(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4(b)) is amended--
(1) in paragraph (1)--
(A) in the first sentence, by striking ``Not later
than'' and all that follows through ``appointed by the
Commission'' and inserting ``The Municipal Securities
Rulemaking Board shall be composed of 15 members, or
such other number of members as specified by rules of
the Board pursuant to paragraph (2)(B),'';
(B) by striking the second sentence and inserting
the following: ``The members of the Board shall serve
as members for a term of 3 years or for such other
terms as specified by rules of the Board pursuant to
paragraph (2)(B), and shall consist of (A) 8
individuals who are not associated with any broker,
dealer, municipal securities dealer, or municipal
advisor (other than by reason of being under common
control with, or indirectly controlling, any broker or
dealer which is not a municipal securities broker or
municipal securities dealer), at least 1 of whom shall
be representative of institutional or retail investors
in municipal securities, at least 1 of whom shall be
representative of municipal entities, and at least 1 of
whom shall be a member of the public with knowledge of
or experience in the municipal industry (which members
are hereinafter referred to as `public
representatives'); and (B) 7 individuals who are
associated with a broker, dealer, municipal securities
dealer, or municipal advisor, including at least 1
individual who is associated with and representative of
brokers, dealers, or municipal securities dealers that
are not banks or subsidiaries or departments or
divisions of banks (which members are hereinafter
referred to as `broker-dealer representatives'), at
least 1 individual who is associated with and
representative of municipal securities dealers which
are banks or subsidiaries or departments or divisions
of banks (which members are hereinafter referred to as
`bank representatives'), and at least 1 individual who
is associated with a municipal advisor (which member is
hereinafter referred to as the `advisor
representative').''; and
(C) in the third sentence, by striking ``initial'';
(2) in paragraph (2)--
(A) in the matter preceding subparagraph (A)--
(i) by inserting before the period at the
end of the first sentence the following: ``and
advice provided to or on behalf of municipal
entities or obligated persons by brokers,
dealers, municipal securities dealers, and
municipal advisors with respect to municipal
financial products, the issuance of municipal
securities, or participation in the issuance of
municipal securities, and solicitations of
municipal entities or obligated persons
undertaken by brokers, dealers, municipal
securities dealers, and municipal advisors'';
and
(ii) by striking the second sentence;
(B) in subparagraph (A)--
(i) in the matter preceding clause (i)--
(I) by inserting ``, and no broker,
dealer, municipal securities dealer, or
municipal advisor shall provide advice
to or on behalf of a municipal entity
or obligated person with respect to
municipal financial products, the
issuance of municipal securities, or
participation in the issuance of
municipal securities'' after ``sale of,
any municipal security''; and
(II) by inserting ``and municipal
entities or obligated persons'' after
``protection of investors'';
(ii) in clause (i), by striking ``municipal
securities brokers and municipal securities
dealers'' each place that term appears and
inserting ``municipal securities brokers,
municipal securities dealers, and municipal
advisors'';
(iii) in clause (ii), by adding ``and'' at
the end;
(iv) in clause (iii), by striking ``; and''
and inserting a period; and
(v) by striking clause (iv);
(C) in subparagraph (B), by striking ``nominations
and elections'' and all that follows through
``specify'' and inserting ``nominations and elections
of public representatives, broker-dealer
representatives, bank representatives, and advisor
representatives. Such rules shall provide that the
membership of the Board shall at all times be as evenly
divided in number as possible between entities or
individuals who are subject to regulation by the Board
and entities or individuals not subject to regulation
by the Board, provided, however, that a majority of the
members of the Board shall at all times be public
representatives. Such rules shall also specify'';
(D) in subparagraph (C)--
(i) by inserting ``and municipal financial
products'' after ``municipal securities'' the
first two times that term appears;
(ii) by inserting ``, municipal entities,
obligated persons,'' before ``and the public
interest'';
(iii) by striking ``between'' and inserting
``among'';
(iv) by striking ``issuers, municipal
securities brokers, or municipal securities
dealers, to fix'' and inserting ``municipal
entities, obligated persons, municipal
securities brokers, municipal securities
dealers, or municipal advisors, to fix''; and
(v) by striking ``brokers or municipal
securities dealers, to regulate'' and inserting
``brokers, municipal securities dealers, or
municipal advisors, to regulate'';
(E) in subparagraph (D)--
(i) by inserting ``and advice concerning
municipal financial products'' after
``transactions in municipal securities'';
(ii) by striking ``That no'' and inserting
``that no'';
(iii) by inserting ``municipal advisor,''
before ``or person associated''; and
(iv) by striking ``a municipal securities
broker or municipal securities dealer may be
compelled'' and inserting ``a municipal
securities broker, municipal securities dealer,
or municipal advisor may be compelled'';
(F) in subparagraph (E)--
(i) by striking ``municipal securities
brokers and municipal securities dealers'' and
inserting ``municipal securities brokers,
municipal securities dealers, and municipal
advisors''; and
(ii) by striking ``municipal securities
broker or municipal securities dealer'' and
inserting ``municipal securities broker,
municipal securities dealer, or municipal
advisor'';
(G) in subparagraph (G), by striking ``municipal
securities brokers and municipal securities dealers''
and inserting ``municipal securities brokers, municipal
securities dealers, and municipal advisors'';
(H) in subparagraph (J)--
(i) by striking ``municipal securities
broker and each municipal securities dealer''
and inserting ``municipal securities broker,
municipal securities dealer, and municipal
advisor''; and
(ii) by striking the period at the end of
the second sentence and inserting ``, which may
include charges for failure to submit to the
Board required information or documents to any
information system operated by the Board in a
full, accurate, or timely manner, or any other
failure to comply with the rules of the
Board.'';
(I) in subparagraph (K)--
(i) by inserting ``broker, dealer, or''
before ``municipal securities dealer'' each
place that term appears; and
(ii) by striking ``municipal securities
investment portfolio'' and inserting ``related
account of a broker, dealer, or municipal
securities dealer''; and
(J) by adding at the end the following:
``(L) provide continuing education requirements for
municipal advisors.
``(M) provide professional standards.
``(N) not impose a regulatory burden on small
municipal advisors that is not necessary or appropriate
in the public interest and for the protection of
investors, municipal entities, and obligated
persons.'';
(3) by redesignating paragraph (3) as paragraph (7); and
(4) by inserting after paragraph (2) the following:
``(3) The Board, in conjunction with or on behalf of any
Federal financial regulator or self-regulatory organization,
may--
``(A) establish information systems; and
``(B) assess such reasonable fees and charges for
the submission of information to, or the receipt of
information from, such systems from any persons which
systems may be developed for the purposes of serving as
a repository of information from municipal market
participants or otherwise in furtherance of the
purposes of the Board, a Federal financial regulator,
or a self-regulatory organization.
``(4) The Board shall provide guidance and assistance in
the enforcement of, and examination for, compliance with the
rules of the Board to the Commission, a registered securities
association under section 15A, or any other appropriate
regulatory agency, as applicable.''.
(c) Discipline of Dealers and Municipal Advisors and Other
Matters.--Section 15B(c) of the Securities Exchange Act of 1934 (15
U.S.C. 78o-4(c)) is amended--
(1) in paragraph (1), by inserting ``, and no broker,
dealer, municipal securities dealer, or municipal advisor shall
make use of the mails or any means or instrumentality of
interstate commerce to provide advice to or on behalf of a
municipal entity or obligated person with respect to municipal
financial products, the issuance of municipal securities, or
participation in the issuance of municipal securities, or to
undertake a solicitation of a municipal entity or obligated
person,'' after ``any municipal security'';
(2) in paragraph (2), by inserting ``or municipal advisor''
after ``municipal securities dealer'' each place that term
appears;
(3) in paragraph (3)--
(A) by inserting ``or municipal entities or
obligated person'' after ``protection of investors''
each place that term appears; and
(B) by inserting ``or municipal advisor'' after
``municipal securities dealer'' each place that term
appears;
(4) in paragraph (4), by inserting ``or municipal advisor''
after ``municipal securities dealer or obligated person'' each
place that term appears;
(5) in paragraph (6)(B), by inserting ``or municipal
entities'' after ``protection of investors'';
(6) in paragraph (7)--
(A) in subparagraph (A)--
(i) in clause (i), by striking ``; and''
and inserting a semicolon;
(ii) in clause (ii), by striking the period
and inserting ``; and''; and
(iii) by adding at the end the following:
``(iii) the Commission, or its designee, in
the case of municipal advisors.''.
(B) in subparagraph (B), by inserting ``or
municipal entities or obligated person'' after
``protection of investors''; and
(7) by adding at the end the following:
``(9)(A) Fines collected by the Commission for violations
of the rules of the Board shall be equally divided between the
Commission and the Board.
``(B) Fines collected by a registered securities
association under section 15A(7) with respect to violations of
the rules of the Board shall be accounted for by such
registered securities association separately from other fines
collected under section 15A(7) and shall be allocated between
such registered securities association and the Board at the
direction of the Commission.''.
(d) Issuance of Municipal Securities.--Section 15B(d)(2) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-4(d)) is amended--
(1) by striking ``through a municipal securities broker or
municipal securities dealer or otherwise'' and inserting
``through a municipal securities broker, municipal securities
dealer, municipal advisor, or otherwise''; and
(2) by inserting ``or municipal advisors'' before ``to
furnish''.
(e) Definitions.--Section 15B of the Securities Exchange Act of
1934 (15 U.S.C. 78o-4) is amended by adding at the end the following:
``(e) Definitions.--For purposes of this section--
``(1) the term `Board' means the Municipal Securities
Rulemaking Board established under subsection (b)(1);
``(2) the term `guaranteed investment contract' includes
any investment that has specified withdrawal or reinvestment
provisions and a specifically negotiated or bid interest rate,
and also includes any agreement to supply investments on 2 or
more future dates, such as a forward supply contract;
``(3) the term `investment strategies' includes plans or
programs for the investment of the proceeds of municipal
securities that are not municipal derivatives, guaranteed
investment contracts, and the recommendation of and brokerage
of municipal escrow investments;
``(4) the term `municipal advisor'--
``(A) means a person (who is not a municipal entity
or an employee of a municipal entity) that--
``(i) provides advice to or on behalf of a
municipal entity or obligated person with
respect to municipal financial products or the
issuance of municipal securities, including
advice with respect to the structure, timing,
terms, and other similar matters concerning
such financial products or issues;
``(ii) participates in the issuance of
municipal securities; or
``(iii) undertakes a solicitation of a
municipal entity;
``(B) includes financial advisors, guaranteed
investment contract brokers, third-party marketers,
placement agents, solicitors, finders, and swap
advisors, if such persons are described in any of
clauses (i) through (iii) of subparagraph (A); and
``(C) does not include a broker, dealer, or
municipal securities dealer serving as an underwriter
(as defined in section 2(a)(11) of the Securities Act
of 1933) (15 U.S.C. 77b(a)(11)), any investment adviser
registered under the Investment Advisers Act of 1940,
or persons associated with such investment advisers who
are providing investment advice, attorneys offering
legal advice or providing services that are of a
traditional legal nature, or engineers providing
engineering advice;
``(5) the term `municipal derivative' means any financial
instrument or contract designed to hedge a risk (including
interest rate swaps, basis swaps, credit default swaps, caps,
floors, and collars);
``(6) the term `municipal financial product' means
municipal derivatives, guaranteed investment contracts, and
investment strategies;
``(7) the term `rules of the Board' means the rules
proposed and adopted by the Board under subsection (b)(2);
``(8) the term `person associated with a municipal advisor'
or `associated person of an advisor' means--
``(A) any partner, officer, director, or branch
manager of such municipal advisor (or any person
occupying a similar status or performing similar
functions);
``(B) any other employee of such municipal advisor
who is engaged in the management, direction,
supervision, or performance of any activities relating
to the provision of advice to or on behalf of a
municipal entity or obligated person with respect to
municipal financial products, the issuance of municipal
securities, or participation in the issuance of
municipal securities; and
``(C) any person directly or indirectly
controlling, controlled by, or under common control
with such municipal advisor;
``(9) the term `municipal entity' means any State,
political subdivision of a State, or municipal corporate
instrumentality of a State, including--
``(A) any agency, authority, or instrumentality of
the State, political subdivision, or municipal
corporate instrumentality;
``(B) any plan, program, or pool of assets
sponsored or established by the State, political
subdivision, or municipal corporate instrumentality or
any agency, authority, or instrumentality thereof; and
``(C) any other issuer of municipal securities;
``(10) the term `solicitation of a municipal entity or
obligated person' means a direct or indirect communication with
a municipal entity or obligated person made by a person, for
direct or indirect compensation, on behalf of a broker, dealer,
municipal securities dealer, municipal advisor, or investment
adviser (as defined in section 202 of the Investment Advisers
Act of 1940) that does not control, is not controlled by, or is
not under common control with the person undertaking such
solicitation for the purpose of obtaining or retaining an
engagement by a municipal entity or obligated person of a
broker, dealer, municipal securities dealer, or municipal
advisor for or in connection with municipal financial products,
the issuance of municipal securities, or participation in the
issuance of municipal securities, or of an investment adviser
to provide investment advisory services to or on behalf of a
municipal entity; and
``(11) the term `obligated person' means any person,
including an issuer of municipal securities, who is either
generally or through an enterprise, fund, or account of such
person, committed by contract or other arrangement to support
the payment of all or part of the obligations on the municipal
securities to be sold in an offering of municipal
securities.''.
(f) Registered Securities Association.--Section 15A(b) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-3(b)) is amended by
adding at the end the following:
``(15) The rules of the association provide that the
association shall--
``(A) request guidance from the Municipal
Securities Rulemaking Board in interpretation of the
rules of the Municipal Securities Rulemaking Board; and
``(B) provide information to the Municipal
Securities Rulemaking Board about the enforcement
actions and examinations of the association under
section 15B(b)(2)(E), so that the Municipal Securities
Rulemaking Board may--
``(i) assist in such enforcement actions
and examinations; and
``(ii) evaluate the ongoing effectiveness
of the rules of the Board.''.
(g) Registration and Regulation of Brokers and Dealers.--Section 15
of the Securities Exchange Act of 1934 is amended--
(1) in subsection (b)(4), by inserting ``municipal
advisor,'' after ``municipal securities dealer'' each place
that term appears; and
(2) in subsection (c), by inserting ``broker, dealer, or''
before ``municipal securities dealer'' each place that term
appears.
(h) Accounts and Records, Reports, Examinations of Exchanges,
Members, and Others.--Section 17(a)(1) of the Securities Exchange Act
of 1934 is amended by inserting ``municipal advisor,'' after
``municipal securities dealer''.
(i) Savings Clause.--Notwithstanding any provision of the Over-the-
Counter Derivatives Markets Act of 2010, or any amendment made pursuant
to such Act, the provisions of this section, and the amendments made
pursuant to this section, shall apply to any municipal derivative.
(j) Effective Date.--This section, and the amendments made by this
section, shall take effect on October 1, 2010.
SEC. 976. GOVERNMENT ACCOUNTABILITY OFFICE STUDY OF INCREASED
DISCLOSURE TO INVESTORS.
(a) Study.--The Comptroller General of the United States shall
conduct a study and review of the disclosure required to be made by
issuers of municipal securities.
(b) Subjects for Evaluation.--In conducting the study under
subsection (a), the Comptroller General of the United States shall--
(1) broadly describe--
(A) the size of the municipal securities markets
and the issuers and investors; and
(B) the disclosures provided by issuers to
investors;
(2) compare the amount, frequency, and quality of
disclosures that issuers of municipal securities are required
by law to provide for the benefit of municipal securities
holders, including the amount of and frequency of disclosures
actually provided by issuers of municipal securities, with the
amount of and frequency of disclosures that issuers of
corporate securities provide for the benefit of corporate
securities holders, taking into account the differences between
issuers of municipal securities and issuers of corporate
securities;
(3) evaluate the costs and benefits to various types of
issuers of municipal securities of requiring issuers of
municipal bonds to provide additional financial disclosures for
the benefit of investors;
(4) evaluate the potential benefit to investors from
additional financial disclosures by issuers of municipal bonds;
and
(5) make recommendations relating to disclosure
requirements for municipal issuers, including the advisability
of the repeal or retention of section 15B(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78o-4(d)) (commonly known as
the ``Tower Amendment'').
(c) Report.--Not later than 1 year after the date of enactment of
this Act, the Comptroller General of the United States shall submit a
report to Congress on the results of the study conducted under
subsection (a), including recommendations for how to improve disclosure
by issuers of municipal securities.
SEC. 977. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON THE MUNICIPAL
SECURITIES MARKETS.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the municipal securities markets.
(b) Report.--Not later than 180 days after the date of enactment of
this Act, the Comptroller General of the United States shall submit a
report to the Committee on Banking, Housing, and Urban Affairs of the
Senate, and the Committee on Financial Services of the House of
Representatives, with copies to the Special Committee on Aging of the
Senate and the Commission, on the results of the study conducted under
subsection (a), including--
(1) an analysis of the mechanisms for trading, quality of
trade executions, market transparency, trade reporting, price
discovery, settlement clearing, and credit enhancements;
(2) the needs of the markets and investors and the impact
of recent innovations;
(3) recommendations for how to improve the transparency,
efficiency, fairness, and liquidity of trading in the municipal
securities markets, including with reference to items listed in
paragraph (1); and
(4) potential uses of derivatives in the municipal
securities markets.
(c) Responses.--Not later than 180 days after receipt of the report
required under subsection (b), the Commission shall submit a response
to the Committee on Banking, Housing, and Urban Affairs of the Senate,
and the Committee on Financial Services of the House of
Representatives, with a copy to the Special Committee on Aging of the
Senate, stating the actions the Commission has taken in response to the
recommendations contained in such report.
SEC. 978. STUDY OF FUNDING FOR GOVERNMENT ACCOUNTING STANDARDS BOARD.
(a) Study.--The Commission shall conduct a study that evaluates--
(1) the role and importance of the Government Accounting
Standards Board in the municipal securities markets;
(2) the manner in which the Government Accounting Standards
Board is funded, and how such manner of funding affects the
financial information available to securities investors;
(3) the advisability of changes to the manner in which the
Government Accounting Standards Board is funded; and
(4) whether legislative changes to the manner in which the
Government Accounting Standards Board is funded are necessary
for the benefit of investors and in the public interest.
(b) Consultation.--In conducting the study required under
subsection (a), the Commission shall consult with State and local
government financial officers.
(c) Report.--Not later than 270 days after the date of enactment of
this Act, the Commission shall submit to the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on Financial
Services of the House of Representatives a report on the study required
under subsection (a).
SEC. 979. COMMISSION OFFICE OF MUNICIPAL SECURITIES.
(a) In General.--There shall be in the Commission an Office of
Municipal Securities, which shall--
(1) administer the rules of the Commission with respect to
the practices of municipal securities brokers and dealers,
municipal securities advisors, municipal securities investors,
and municipal securities issuers; and
(2) coordinate with the Municipal Securities Rulemaking
Board for rulemaking and enforcement actions as required by
law.
(b) Director of the Office.--The head of the Office of Municipal
Securities shall be the Director, who shall report to the Chairman.
(c) Staffing.--
(1) In general.--The Office of Municipal Securities shall
be staffed sufficiently to carry out the requirements of this
section.
(2) Requirement.--The staff of the Office of Municipal
Securities shall include individuals with knowledge of and
expertise in municipal finance.
Subtitle I--Public Company Accounting Oversight Board, Portfolio
Margining, and Other Matters
SEC. 981. AUTHORITY TO SHARE CERTAIN INFORMATION WITH FOREIGN
AUTHORITIES.
(a) Definition.--Section 2(a) of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7201(a)) is amended by adding at the end the following:
``(17) Foreign auditor oversight authority.--The term
`foreign auditor oversight authority' means any governmental
body or other entity empowered by a foreign government to
conduct inspections of public accounting firms or otherwise to
administer or enforce laws related to the regulation of public
accounting firms.''.
(b) Availability To Share Information.--Section 105(b)(5) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7215(b)(5)) is amended by adding
at the end the following:
``(C) Availability to foreign oversight
authorities.--Without the loss of its status as
confidential and privileged in the hands of the Board,
all information referred to in subparagraph (A) that
relates to a public accounting firm that a foreign
government has empowered a foreign auditor oversight
authority to inspect or otherwise enforce laws with
respect to, may, at the discretion of the Board, be
made available to the foreign auditor oversight
authority, if--
``(i) the Board finds that it is necessary
to accomplish the purposes of this Act or to
protect investors;
``(ii) the foreign auditor oversight
authority provides--
``(I) such assurances of
confidentiality as the Board may
request;
``(II) a description of the
applicable information systems and
controls of the foreign auditor
oversight authority; and
``(III) a description of the laws
and regulations of the foreign
government of the foreign auditor
oversight authority that are relevant
to information access; and
``(iii) the Board determines that it is
appropriate to share such information.''.
(c) Conforming Amendment.--Section 105(b)(5)(A) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7215(b)(5)(A)) is amended by striking
``subparagraph (B)'' and inserting ``subparagraphs (B) and (C)''.
SEC. 982. OVERSIGHT OF BROKERS AND DEALERS.
(a) Definitions.--
(1) Definitions amended.--Title I of the Sarbanes-Oxley Act
of 2002 (15 U.S.C. 7201 et seq.) is amended by adding at the
end the following new section:
``SEC. 110. DEFINITIONS.
``For the purposes of this title, the following definitions shall
apply:
``(1) Audit.--The term `audit' means an examination of the
financial statements, reports, documents, procedures, controls,
or notices of any issuer, broker, or dealer by an independent
public accounting firm in accordance with the rules of the
Board or the Commission, for the purpose of expressing an
opinion on the financial statements or providing an audit
report.
``(2) Audit report.--The term `audit report' means a
document, report, notice, or other record--
``(A) prepared following an audit performed for
purposes of compliance by an issuer, broker, or dealer
with the requirements of the securities laws; and
``(B) in which a public accounting firm either--
``(i) sets forth the opinion of that firm
regarding a financial statement, report,
notice, or other document, procedures, or
controls; or
``(ii) asserts that no such opinion can be
expressed.
``(3) Broker.--The term `broker' means a broker (as such
term is defined in section 3(a)(4) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(4))) that is required to file a
balance sheet, income statement, or other financial statement
under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)),
where such balance sheet, income statement, or financial
statement is required to be certified by a registered public
accounting firm.
``(4) Dealer.--The term `dealer' means a dealer (as such
term is defined in section 3(a)(5) of the Securities Exchange
Act of 1934 (15 U.S.C. 78c(a)(5))) that is required to file a
balance sheet, income statement, or other financial statement
under section 17(e)(1)(A) of such Act (15 U.S.C. 78q(e)(1)(A)),
where such balance sheet, income statement, or financial
statement is required to be certified by a registered public
accounting firm.
``(5) Professional standards.--The term `professional
standards' means--
``(A) accounting principles that are--
``(i) established by the standard setting
body described in section 19(b) of the
Securities Act of 1933, as amended by this Act,
or prescribed by the Commission under section
19(a) of that Act (15 U.S.C. 17a(s)) or section
13(b) of the Securities Exchange Act of 1934
(15 U.S.C. 78a(m)); and
``(ii) relevant to audit reports for
particular issuers, brokers, or dealers, or
dealt with in the quality control system of a
particular registered public accounting firm;
and
``(B) auditing standards, standards for attestation
engagements, quality control policies and procedures,
ethical and competency standards, and independence
standards (including rules implementing title II) that
the Board or the Commission determines--
``(i) relate to the preparation or issuance
of audit reports for issuers, brokers, or
dealers; and
``(ii) are established or adopted by the
Board under section 103(a), or are promulgated
as rules of the Commission.
``(6) Self-regulatory organization.--The term `self-
regulatory organization' has the same meaning as in section
3(a) of the Securities Exchange Act of 1934 (15 U.S.C.
78c(a)).''.
(2) Conforming amendment.--Section 2(a) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7201(a)) is amended in the matter
preceding paragraph (1), by striking ``In this'' and inserting
``Except as otherwise specifically provided in this Act, in
this''.
(b) Establishment and Administration of the Public Company
Accounting Oversight Board.--Section 101 of the Sarbanes-Oxley Act of
2002 (15 U.S.C. 7211) is amended--
(1) by striking ``issuers'' each place that term appears
and inserting ``issuers, brokers, and dealers''; and
(2) in subsection (a)--
(A) by striking ``public companies'' and inserting
``companies''; and
(B) by striking ``for companies the securities of
which are sold to, and held by and for, public
investors''.
(c) Registration With the Board.--Section 102 of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7212) is amended--
(1) in subsection (a)--
(A) by striking ``Beginning 180'' and all that
follows through ``101(d), it'' and inserting ``It'';
and
(B) by striking ``issuer'' and inserting ``issuer,
broker, or dealer'';
(2) in subsection (b)--
(A) in paragraph (2)(A), by striking ``issuers''
and inserting ``issuers, brokers, and dealers''; and
(B) by striking ``issuer'' each place that term
appears and inserting ``issuer, broker, or dealer''.
(d) Auditing and Independence.--Section 103(a) of the Sarbanes-
Oxley Act of 2002 (15 U.S.C. 7213(a)) is amended--
(1) in paragraph (1), by striking ``and such ethics
standards'' and inserting ``such ethics standards, and such
independence standards'';
(2) in paragraph (2)(A)(iii), by striking ``describe in
each audit report'' and inserting ``in each audit report for an
issuer, describe''; and
(3) in paragraph (2)(B)(i), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''.
(e) Inspections of Registered Public Accounting Firms.--Section 104
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214) is amended--
(1) in subsection (a), by striking ``issuers'' and
inserting ``issuers, brokers, and dealers''; and
(2) in subsection (b)(1)--
(A) by striking ``audit reports for'' each place
that term appears and inserting ``audit reports on
annual financial statements for'';
(B) in subparagraph (A), by striking ``and'' at the
end;
(C) in subparagraph (B), by striking the period at
the end and inserting ``; and''; and
(D) by adding at the end the following:
``(C) with respect to each registered public
accounting firm that regularly provides audit reports
and that is not described in subparagraph (A) or (B),
on a basis determined by the Board, by rule, that is
consistent with the public interest and protection of
investors.''.
(f) Investigations and Disciplinary Proceedings.--Section
105(c)(7)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(c)(7)(B)) is amended--
(1) in the subparagraph heading, by inserting ``, broker,
or dealer'' after ``issuer'';
(2) by striking ``any issuer'' each place that term appears
and inserting ``any issuer, broker, or dealer''; and
(3) by striking ``an issuer under this subsection'' and
inserting ``a registered public accounting firm under this
subsection''.
(g) Foreign Public Accounting Firms.--Section 106(a) of the
Sarbanes-Oxley Act of 2002 (15 U.S.C. 7216(a)) is amended--
(1) in paragraph (1), by striking ``issuer'' and inserting
``issuer, broker, or dealer''; and
(2) in paragraph (2), by striking ``issuers'' and inserting
``issuers, brokers, or dealers''.
(h) Funding.--Section 109 of the Sarbanes-Oxley Act of 2002 (15
U.S.C. 7219) is amended--
(1) in subsection (c)(2), by striking ``subsection (i)''
and inserting ``subsection (j)'';
(2) in subsection (d)--
(A) in paragraph (2), by striking ``allowing for
differentiation among classes of issuers, as
appropriate'' and inserting ``and among brokers and
dealers, in accordance with subsection (h), and
allowing for differentiation among classes of issuers,
brokers and dealers, as appropriate''; and
(B) by adding at the end the following:
``(3) Brokers and dealers.--The Board shall begin the
allocation, assessment, and collection of fees under paragraph
(2) with respect to brokers and dealers with the payment of
support fees to fund the first full fiscal year beginning after
the effective date of this paragraph.'';
(3) by redesignating subsections (h), (i), and (j) as
subsections (i), (j), and (k), respectively; and
(4) by inserting after subsection (g) the following:
``(h) Allocation of Accounting Support Fees Among Brokers and
Dealers.--
``(1) Obligation to pay.--Each broker or dealer shall pay
to the Board the annual accounting support fee allocated to
such broker or dealer under this section.
``(2) Allocation.--Any amount due from a broker or dealer
(or from a particular class of brokers and dealers) under this
section shall be allocated among brokers and dealers and
payable by the broker or dealer (or the brokers and dealers in
the particular class, as applicable).
``(3) Proportionality.--The amount due from a broker or
dealer shall be in proportion to the net capital of the broker
or dealer, compared to the total net capital of all brokers and
dealers, in accordance with rules issued by the Board.''.
(i) Referral of Investigations to a Self-regulatory Organization.--
Section 105(b)(4)(B) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(b)(4)(B)) is amended--
(1) by redesignating clauses (ii) and (iii) as clauses
(iii) and (iv), respectively; and
(2) by inserting after clause (i) the following:
``(ii) to a self-regulatory organization,
in the case of an investigation that concerns
an audit report for a broker or dealer that is
under the jurisdiction of such self-regulatory
organization;''.
(j) Use of Documents Related to an Inspection or Investigation.--
Section 105(b)(5)(B)(ii) of the Sarbanes-Oxley Act of 2002 (15 U.S.C.
7215(b)(5)(B)(ii)) is amended--
(1) in subclause (III), by striking ``and'' at the end;
(2) in subclause (IV), by striking the comma and inserting
``; and''; and
(3) by inserting after subclause (IV) the following:
``(V) a self-regulatory
organization, with respect to an audit
report for a broker or dealer that is
under the jurisdiction of such self-
regulatory organization,''.
(k) Effective Date.--The amendments made by this section shall take
effect 180 days after the date of enactment of this Act.
SEC. 983. PORTFOLIO MARGINING.
(a) 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 commodity futures contracts'' after ``claim
for securities''.
(b) Definitions.--Section 16 of the Securities Investor Protection
Act of 1970 (15 U.S.C. 78lll) is amended--
(1) by striking paragraph (2) and inserting the following:
``(2) Customer.--
``(A) In general.--The term `customer' of a debtor
means any person (including any person with whom the
debtor deals as principal or agent) who has a claim on
account of securities received, acquired, or held by
the debtor in the ordinary course of its business as a
broker or dealer from or for the securities accounts of
such person for safekeeping, with a view to sale, to
cover consummated sales, pursuant to purchases, as
collateral, security, or for purposes of effecting
transfer.
``(B) Included persons.--The term `customer'
includes--
``(i) any person who has deposited cash
with the debtor for the purpose of purchasing
securities;
``(ii) any person who has a claim against
the debtor for cash, securities, futures
contracts, or options on futures contracts
received, acquired, or held in a portfolio
margining account carried as a securities
account pursuant to a portfolio margining
program approved by the Commission; and
``(iii) any person who has a claim against
the debtor arising out of sales or conversions
of such securities.
``(C) Excluded persons.--The term `customer' does
not include any person, to the extent that--
``(i) the claim of such person arises out
of transactions with a foreign subsidiary of a
member of SIPC; or
``(ii) such person has a claim for cash or
securities which by contract, agreement, or
understanding, or by operation of law, is part
of the capital of the debtor, or is
subordinated to the claims of any or all
creditors of the debtor, notwithstanding that
some ground exists for declaring such contract,
agreement, or understanding void or voidable in
a suit between the claimant and the debtor.'';
(2) in paragraph (4)--
(A) in subparagraph (C), by striking ``and'' at the
end;
(B) by redesignating subparagraph (D) as
subparagraph (E); and
(C) by inserting after subparagraph (C) the
following:
``(D) in the case of a portfolio margining account
of a customer that is carried as a securities account
pursuant to a portfolio margining program approved by
the Commission, a futures contract or an option on a
futures contract received, acquired, or held by or for
the account of a debtor from or for such portfolio
margining account, and the proceeds thereof; and'';
(3) in paragraph (9), in the matter following subparagraph
(L), by inserting after ``Such term'' the following: ``includes
revenues earned by a broker or dealer in connection with a
transaction in the portfolio margining account of a customer
carried as securities accounts pursuant to a portfolio
margining program approved by the Commission. Such term''; and
(4) in paragraph (11)--
(A) in subparagraph (A)--
(i) by striking ``filing date, all'' and
all that follows through the end of the
subparagraph and inserting the following:
``filing date--
``(i) all securities positions of such
customer (other than customer name securities
reclaimed by such customer); and
``(ii) all positions in futures contracts
and options on futures contracts held in a
portfolio margining account carried as a
securities account pursuant to a portfolio
margining program approved by the Commission,
including all property collateralizing such
positions, to the extent that such property is
not otherwise included herein; minus''; and
(B) in the matter following subparagraph (C), by
striking ``In determining'' and inserting the
following: ``A claim for a commodity futures contract
received, acquired, or held in a portfolio margining
account pursuant to a portfolio margining program
approved by the Commission or a claim for a security
futures contract, shall be deemed to be a claim with
respect to such contract as of the filing date, and
such claim shall be treated as a claim for cash. In
determining''.
SEC. 984. LOAN OR BORROWING OF SECURITIES.
(a) Rulemaking Authority.--Section 10 of the Securities Exchange
Act of 1934 (15 U.S.C. 78j) is amended by adding at the end the
following:
``(c)(1) To effect, accept, or facilitate a transaction
involving the loan or borrowing of securities in contravention
of such rules and regulations as the Commission may prescribe
as necessary or appropriate in the public interest or for the
protection of investors.
``(2) Nothing in paragraph (1) may be construed to limit
the authority of the appropriate Federal banking agency (as
defined in section 3(q) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(q))), the National Credit Union Administration,
or any other Federal department or agency having a
responsibility under Federal law to prescribe rules or
regulations restricting transactions involving the loan or
borrowing of securities in order to protect the safety and
soundness of a financial institution or to protect the
financial system from systemic risk.''.
(b) Rulemaking Required.--Not later than 2 years after the date of
enactment of this Act, the Commission shall promulgate rules that are
designed to increase the transparency of information available to
brokers, dealers, and investors, with respect to the loan or borrowing
of securities.
SEC. 985. TECHNICAL CORRECTIONS TO FEDERAL SECURITIES LAWS.
(a) Securities Act of 1933.--The Securities Act of 1933 (15 U.S.C.
77a et seq.) is amended--
(1) in section 3(a)(4) (15 U.S.C. 77c(a)(4)), by striking
``individual;'' and inserting ``individual,'';
(2) in section 18 (15 U.S.C. 77r)--
(A) in subsection (b)(1)(C), by striking ``is a
security'' and inserting ``a security''; and
(B) in subsection (c)(2)(B)(i), by striking
``State, or'' and inserting ``State or'';
(3) in section 19(d)(6)(A) (15 U.S.C. 77s(d)(6)(A)), by
striking ``in paragraph (1) of (3)'' and inserting ``in
paragraph (1) or (3)''; and
(4) in section 27A(c)(1)(B)(ii) (15 U.S.C. 77z-
2(c)(1)(B)(ii)), by striking ``business entity;'' and inserting
``business entity,''.
(b) Securities Exchange Act of 1934.--The Securities Exchange Act
of 1934 (15 U.S.C. 78a et seq.) is amended--
(1) in section 2 (15 U.S.C. 78b), by striking ``affected''
and inserting ``effected'';
(2) in section 3 (15 U.S.C. 78c)--
(A) in subsection (a)(55)(A), by striking ``section
3(a)(12) of the Securities Exchange Act of 1934'' and
inserting ``section 3(a)(12) of this title''; and
(B) in subsection (g), by striking ``company,
account person, or entity'' and inserting ``company,
account, person, or entity'';
(3) in section 10A(i)(1)(B) (15 U.S.C. 78j-1(i)(1)(B))--
(A) in the subparagraph heading, by striking
``minimus'' and inserting ``minimis''; and
(B) in clause (i), by striking ``nonaudit'' and
inserting ``non-audit'';
(4) in section 13(b)(1) (15 U.S.C. 78m(b)(1)), by striking
``earning statement'' and inserting ``earnings statement'';
(5) in section 15 (15 U.S.C. 78o)--
(A) in subsection (b)(1)--
(i) in subparagraph (B), by striking ``The
order granting'' and all that follows through
``from such membership.''; and
(ii) in the undesignated matter immediately
following subparagraph (B), by inserting after
the first sentence the following: ``The order
granting registration shall not be effective
until such broker or dealer has become a member
of a registered securities association, or
until such broker or dealer has become a member
of a national securities exchange, if such
broker or dealer effects transactions solely on
that exchange, unless the Commission has
exempted such broker or dealer, by rule or
order, from such membership.'';
(6) in section 15C(a)(2) (15 U.S.C. 78o-5(a)(2))--
(A) by redesignating clauses (i) and (ii) as
subparagraphs (A) and (B), respectively, and adjusting
the subparagraph margins accordingly;
(B) in subparagraph (B), as so redesignated, by
striking ``The order granting'' and all that follows
through ``from such membership.''; and
(C) in the matter following subparagraph (B), as so
redesignated, by inserting after the first sentence the
following: ``The order granting registration shall not
be effective until such government securities broker or
government securities dealer has become a member of a
national securities exchange registered under section 6
of this title, or a securities association registered
under section 15A of this title, unless the Commission
has exempted such government securities broker or
government securities dealer, by rule or order, from
such membership.'';
(7) in section 17(b)(1)(B) (15 U.S.C. 78q(b)(1)(B)), by
striking ``15A(k) gives'' and inserting ``15A(k), give''; and
(8) in section 21C(c)(2) (15 U.S.C. 78u-3(c)(2)), by
striking ``paragraph (1) subsection'' and inserting ``Paragraph
(1)''.
(c) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.) is amended--
(1) in section 304(b) (15 U.S.C. 77ddd(b)), by striking
``section 2 of such Act'' and inserting ``section 2(a) of such
Act''; and
(2) in section 317(a)(1) (15 U.S.C. 77qqq(a)(1)), by
striking ``, in the'' and inserting ``in the''.
(d) Investment Company Act of 1940.--The Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(19) (15 U.S.C. 80a-2(a)(19)), in the
matter following subparagraph (B)(vii)--
(A) by striking ``clause (vi)'' each place that
term appears and inserting ``clause (vii)''; and
(B) in each of subparagraphs (A)(vi) and (B)(vi),
by adding ``and'' at the end of subclause (III);
(2) in section 9(b)(4)(B) (15 U.S.C. 80a-9(b)(4)(B)), by
adding ``or'' after the semicolon at the end;
(3) in section 12(d)(1)(J) (15 U.S.C. 80a-12(d)(1)(J)), by
striking ``any provision of this subsection'' and inserting
``any provision of this paragraph'';
(4) in section 17(f) (15 U.S.C. 80a-17(f))--
(A) in paragraph (4), by striking ``No such
member'' and inserting ``No member of a national
securities exchange''; and
(B) in paragraph (6), by striking ``company may
serve'' and inserting ``company, may serve''; and
(5) in section 61(a)(3)(B)(iii) (15 U.S.C. 80a-
60(a)(3)(B)(iii))--
(A) by striking ``paragraph (1) of section 205''
and inserting ``section 205(a)(1)''; and
(B) by striking ``clause (A) or (B) of that
section'' and inserting ``paragraph (1) or (2) of
section 205(b)''.
(e) Investment Advisers Act of 1940.--The Investment Advisers Act
of 1940 (15 U.S.C. 80b-1 et seq.) is amended--
(1) in section 203 (15 U.S.C. 80b-3)--
(A) in subsection (c)(1)(A), by striking
``principal business office and'' and inserting
``principal office, principal place of business, and'';
and
(B) in subsection (k)(4)(B), in the matter
following clause (ii), by striking ``principal place of
business'' and inserting ``principal office or place of
business'';
(2) in section 206(3) (15 U.S.C. 80b-6(3)), by adding
``or'' after the semicolon at the end;
(3) in section 213(a) (15 U.S.C. 80b-13(a)), by striking
``principal place of business'' and inserting ``principal
office or place of business''; and
(4) in section 222 (15 U.S.C. 80b-18a), by striking
``principal place of business'' each place that term appears
and inserting ``principal office and place of business''.
SEC. 986. CONFORMING AMENDMENTS RELATING TO REPEAL OF THE PUBLIC
UTILITY HOLDING COMPANY ACT OF 1935.
(a) Securities Exchange Act of 1934.--The Securities Exchange Act
of 1934 (15 U.S.C. 78 et seq.) is amended--
(1) in section 3(a)(47) (15 U.S.C. 78c(a)(47)), by striking
``the Public Utility Holding Company Act of 1935 (15 U.S.C. 79a
et seq.),'';
(2) in section 12(k) (15 U.S.C. 78l(k)), by amending
paragraph (7) to read as follows:
``(7) Definition.--For purposes of this subsection, the
term `emergency' means--
``(A) a major market disturbance characterized by
or constituting--
``(i) sudden and excessive fluctuations of
securities prices generally, or a substantial
threat thereof, that threaten fair and orderly
markets; or
``(ii) a substantial disruption of the safe
or efficient operation of the national system
for clearance and settlement of transactions in
securities, or a substantial threat thereof; or
``(B) a major disturbance that substantially
disrupts, or threatens to substantially disrupt--
``(i) the functioning of securities
markets, investment companies, or any other
significant portion or segment of the
securities markets; or
``(ii) the transmission or processing of
securities transactions.''; and
(3) in section 21(h)(2) (15 U.S.C. 78u(h)(2)), by striking
``section 18(c) of the Public Utility Holding Company Act of
1935,''.
(b) Trust Indenture Act of 1939.--The Trust Indenture Act of 1939
(15 U.S.C. 77aaa et seq.) is amended--
(1) in section 303 (15 U.S.C. 77ccc), by striking paragraph
(17) and inserting the following:
``(17) The terms `Securities Act of 1933' and `Securities
Exchange Act of 1934' shall be deemed to refer, respectively,
to such Acts, as amended, whether amended prior to or after the
enactment of this title.'';
(2) in section 308 (15 U.S.C. 77hhh), by striking
``Securities Act of 1933, the Securities Exchange Act of 1934,
or the Public Utility Holding Company Act of 1935'' each place
that term appears and inserting ``Securities Act of 1933 or the
Securities Exchange Act of 1934'';
(3) in section 310 (15 U.S.C. 77jjj), by striking
subsection (c);
(4) in section 311 (15 U.S.C. 77kkk), by striking
subsection (c);
(5) in section 323(b) (15 U.S.C. 77www(b)), by striking
``Securities Act of 1933, or the Securities Exchange Act of
1934, or the Public Utility Holding Company Act of 1935'' and
inserting ``Securities Act of 1933 or the Securities Exchange
Act of 1934''; and
(6) in section 326 (15 U.S.C. 77zzz), by striking
``Securities Act of 1933, or the Securities Exchange Act of
1934, or the Public Utility Holding Company Act of 1935,'' and
inserting ``Securities Act of 1933 or the Securities Exchange
Act of 1934''.
(c) Investment Company Act of 1940.--The Investment Company Act of
1940 (15 U.S.C. 80a-1 et seq.) is amended--
(1) in section 2(a)(44) (15 U.S.C. 80a-2(a)(44)), by
striking ```Public Utility Holding Company Act of 1935','';
(2) in section 3(c) (15 U.S.C. 80a-3(c)), by striking
paragraph (8) and inserting the following:
``(8) [Repealed]'';
(3) in section 38(b) (15 U.S.C. 80a-37(b)), by striking
``the Public Utility Holding Company Act of 1935,''; and
(4) in section 50 (15 U.S.C. 80a-49), by striking ``the
Public Utility Holding Company Act of 1935,''.
(d) Investment Advisers Act of 1940.--Section 202(a)(21) of the
Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(21)) is amended by
striking ```Public Utility Holding Company Act of 1935',''.
SEC. 987. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL
LOSSES TO THE DEPOSIT INSURANCE FUND FOR PURPOSES OF
INSPECTOR GENERAL REVIEWS.
(a) In General.--Section 38(k) of the Federal Deposit Insurance Act
(U.S.C. 1831o(k)) is amended--
(1) in paragraph (2), by striking subparagraph (B) and
inserting the following:
``(B) Material loss defined.--The term `material
loss' means any estimated loss in excess of--
``(i) $100,000,000, if the loss occurs
during the period beginning on September 30,
2009, and ending on December 31, 2010;
``(ii) $75,000,000, if the loss occurs
during the period beginning on January 1, 2011,
and ending on December 31, 2011; and
``(iii) $50,000,000, if the loss occurs on
or after January 1, 2012.'';
(2) in paragraph (4)(A) by striking ``the report'' and
inserting ``any report on losses required under this
subsection,'';
(3) by striking paragraph (6);
(4) by redesignating paragraph (5) as paragraph (6); and
(5) by inserting after paragraph (4) the following:
``(5) Losses that are not material.--
``(A) Semiannual report.--For the 6-month period
ending on March 31, 2010, and each 6-month period
thereafter, the Inspector General of each Federal
banking agency shall--
``(i) identify losses that the Inspector
General estimates have been incurred by the
Deposit Insurance Fund during that 6-month
period, with respect to the insured depository
institutions supervised by the Federal banking
agency;
``(ii) for each loss incurred by the
Deposit Insurance Fund that is not a material
loss, determine--
``(I) the grounds identified by the
Federal banking agency or State bank
supervisor for appointing the
Corporation as receiver under section
11(c)(5); and
``(II) whether any unusual
circumstances exist that might warrant
an in-depth review of the loss; and
``(iii) prepare and submit a written report
to the appropriate Federal banking agency and
to Congress on the results of any determination
by the Inspector General, including--
``(I) an identification of any loss
that warrants an in-depth review,
together with the reasons why such
review is warranted, or, if the
Inspector General determines that no
review is warranted, an explanation of
such determination; and
``(II) for each loss identified
under subclause (I) that warrants an
in-depth review, the date by which such
review, and a report on such review
prepared in a manner consistent with
reports under paragraph (1)(A), will be
completed and submitted to the Federal
banking agency and Congress.
``(B) Deadline for semiannual report.--The
Inspector General of each Federal banking agency
shall--
``(i) submit each report required under
paragraph (A) expeditiously, and not later than
90 days after the end of the 6-month period
covered by the report; and
``(ii) provide a copy of the report
required under paragraph (A) to any Member of
Congress, upon request.''.
(b) Technical and Conforming Amendment.--The heading for subsection
(k) of section 38 of the Federal Deposit Insurance Act (U.S.C.
1831o(k)) is amended to read as follows:
``(k) Reviews Required When Deposit Insurance Fund Incurs Losses.--
''.
SEC. 988. AMENDMENT TO DEFINITION OF MATERIAL LOSS AND NONMATERIAL
LOSSES TO THE NATIONAL CREDIT UNION SHARE INSURANCE FUND
FOR PURPOSES OF INSPECTOR GENERAL REVIEWS.
(a) In General.--Section 216(j) of the Federal Credit Union Act (12
U.S.C. 1790d(j)) is amended to read as follows:
``(j) Reviews Required When Share Insurance Fund Experiences
Losses.--
``(1) In general.--If the Fund incurs a material loss with
respect to an insured credit union, the Inspector General of
the Board shall--
``(A) submit to the Board a written report
reviewing the supervision of the credit union by the
Administration (including the implementation of this
section by the Administration), which shall include--
``(i) a description of the reasons why the
problems of the credit union resulted in a
material loss to the Fund; and
``(ii) recommendations for preventing any
such loss in the future; and
``(B) submit a copy of the report under
subparagraph (A) to--
``(i) the Comptroller General of the United
States;
``(ii) the Corporation;
``(iii) in the case of a report relating to
a State credit union, the appropriate State
supervisor; and
``(iv) to any Member of Congress, upon
request.
``(2) Material loss defined.--For purposes of determining
whether the Fund has incurred a material loss with respect to
an insured credit union, a loss is material if it exceeds the
sum of--
``(A) $25,000,000; and
``(B) an amount equal to 10 percent of the total
assets of the credit union on the date on which the
Board initiated assistance under section 208 or was
appointed liquidating agent.
``(3) Public disclosure required.--
``(A) In general.--The Board shall disclose a
report under this subsection, upon request under
section 552 of title 5, United States Code, without
excising--
``(i) any portion under section 552(b)(5)
of title 5, United States Code; or
``(ii) any information about the insured
credit union (other than trade secrets) under
section 552(b)(8) of title 5, United States
Code.
``(B) Rule of construction.--Subparagraph (A) may
not be construed as requiring the agency to disclose
the name of any customer of the insured credit union
(other than an institution-affiliated party), or
information from which the identity of such customer
could reasonably be ascertained.
``(4) Losses that are not material.--
``(A) Semiannual report.--For the 6-month period
ending on March 31, 2010, and each 6-month period
thereafter, the Inspector General of the Board shall--
``(i) identify any losses that the
Inspector General estimates were incurred by
the Fund during such 6-month period, with
respect to insured credit unions;
``(ii) for each loss to the Fund that is
not a material loss, determine--
``(I) the grounds identified by the
Board or the State official having
jurisdiction over a State credit union
for appointing the Board as the
liquidating agent for any Federal or
State credit union; and
``(II) whether any unusual
circumstances exist that might warrant
an in-depth review of the loss; and
``(iii) prepare and submit a written report
to the Board and to Congress on the results of
the determinations of the Inspector General
that includes--
``(I) an identification of any loss
that warrants an in-depth review, and
the reasons such review is warranted,
or if the Inspector General determines
that no review is warranted, an
explanation of such determination; and
``(II) for each loss identified in
subclause (I) that warrants an in-depth
review, the date by which such review,
and a report on the review prepared in
a manner consistent with reports under
paragraph (1)(A), will be completed.
``(B) Deadline for semiannual report.--The
Inspector General of the Board shall--
``(i) submit each report required under
subparagraph (A) expeditiously, and not later
than 90 days after the end of the 6-month
period covered by the report; and
``(ii) provide a copy of the report
required under subparagraph (A) to any Member
of Congress, upon request.
``(5) GAO review.--The Comptroller General of the United
States shall, under such conditions as the Comptroller General
determines to be appropriate--
``(A) review each report made under paragraph (1),
including the extent to which the Inspector General of
the Board complied with the requirements under section
8L of the Inspector General Act of 1978 (5 U.S.C. App.)
with respect to each such report; and
``(B) recommend improvements to the supervision of
insured credit unions (including improvements relating
to the implementation of this section).''.
SEC. 989. GOVERNMENT ACCOUNTABILITY OFFICE STUDY ON PROPRIETARY
TRADING.
(a) Definitions.--In this section--
(1) the term ``covered entity'' means--
(A) an insured depository institution, an affiliate
of an insured depository institution, a bank holding
company, a financial holding company, or a subsidiary
of a bank holding company or a financial holding
company, as those terms are defined in the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et seq.); and
(B) any other entity, as the Comptroller General of
the United States may determine; and
(2) the term ``proprietary trading'' means the act of a
covered entity investing as a principal in securities,
commodities, derivatives, hedge funds, private equity firms, or
such other financial products or entities as the Comptroller
General may determine.
(b) Study.--
(1) In general.--The Comptroller General of the United
States shall conduct a study regarding the risks and conflicts
associated with proprietary trading by and within covered
entities, including an evaluation of--
(A) whether proprietary trading presents a material
systemic risk to the stability of the United States
financial system, and if so, the costs and benefits of
options for mitigating such systemic risk;
(B) whether proprietary trading presents material
risks to the safety and soundness of the covered
entities that engage in such activities, and if so, the
costs and benefits of options for mitigating such
risks;
(C) whether proprietary trading presents material
conflicts of interest between covered entities that
engage in proprietary trading and the clients of the
institutions who use the firm to execute trades or who
rely on the firm to manage assets, and if so, the costs
and benefits of options for mitigating such conflicts
of interest;
(D) whether adequate disclosure regarding the risks
and conflicts of proprietary trading is provided to the
depositors, trading and asset management clients, and
investors of covered entities that engage in
proprietary trading, and if not, the costs and benefits
of options for the improvement of such disclosure; and
(E) whether the banking, securities, and
commodities regulators of institutions that engage in
proprietary trading have in place adequate systems and
controls to monitor and contain any risks and conflicts
of interest related to proprietary trading, and if not,
the costs and benefits of options for the improvement
of such systems and controls.
(2) Considerations.--In carrying out the study required
under paragraph (1), the Comptroller General shall consider--
(A) current practice relating to proprietary
trading;
(B) the advisability of a complete ban on
proprietary trading;
(C) limitations on the scope of activities that
covered entities may engage in with respect to
proprietary trading;
(D) the advisability of additional capital
requirements for covered entities that engage in
proprietary trading;
(E) enhanced restrictions on transactions between
affiliates related to proprietary trading;
(F) enhanced accounting disclosures relating to
proprietary trading;
(G) enhanced public disclosure relating to
proprietary trading; and
(H) any other options the Comptroller General deems
appropriate.
(c) Report to Congress.--Not later than 15 months after the date of
enactment of this Act, the Comptroller General shall submit a report to
Congress on the results of the study conducted under subsection (b).
(d) Access by Comptroller General.--For purposes of conducting the
study required under subsection (b), the Comptroller General shall have
access, upon request, to any information, data, schedules, books,
accounts, financial records, reports, files, electronic communications,
or other papers, things, or property belonging to or in use by a
covered entity that engages in proprietary trading, and to the
officers, directors, employees, independent public accountants,
financial advisors, staff, and agents and representatives of a covered
entity (as related to the activities of the agent or representative on
behalf of the covered entity), at such reasonable times as the
Comptroller General may request. The Comptroller General may make and
retain copies of books, records, accounts, and other records, as the
Comptroller General deems appropriate.
(e) Confidentiality of Reports.--
(1) In general.--Except as provided in paragraph (2), the
Comptroller General may not disclose information regarding--
(A) any proprietary trading activity of a covered
entity, unless such information is disclosed at a level
of generality that does not reveal the investment or
trading position or strategy of the covered entity for
any specific security, commodity, derivative, or other
investment or financial product; or
(B) any individual interviewed by the Comptroller
General for purposes of the study under subsection (b),
unless such information is disclosed at a level of
generality that does not reveal--
(i) the name of or identifying details
relating to such individual; or
(ii) in the case of an individual who is an
employee of a third party that provides
professional services to a covered entity
believed to be engaged in proprietary trading,
the name of or any identifying details relating
to such third party.
(2) Exceptions.--The Comptroller General may disclose the
information described in paragraph (1)--
(A) to a department, agency, or official of the
Federal Government, for official use, upon request;
(B) to a committee of Congress, upon request; and
(C) to a court, upon an order of such court.
SEC. 989A. SENIOR INVESTOR PROTECTIONS.
(a) Definitions.--As used in this section--
(1) the term ``eligible entity'' means--
(A) a securities commission (or any agency or
office performing like functions) of a State that the
Office determines has adopted rules on the appropriate
use of designations in the offer or sale of securities
or investment advice that meet or exceed the minimum
requirements of the NASAA Model Rule on the Use of
Senior-Specific Certifications and Professional
Designations (or any successor thereto);
(B) the insurance commission (or any agency or
office performing like functions) of any State that the
Office determines has--
(i) adopted rules on the appropriate use of
designations in the sale of insurance products
that, to the extent practicable, conform to the
minimum requirements of the National
Association of Insurance Commissioners Model
Regulation on the Use of Senior-Specific
Certifications and Professional Designations in
the Sale of Life Insurance and Annuities (or
any successor thereto); and
(ii) adopted rules with respect to
fiduciary or suitability requirements in the
sale of annuities that meet or exceed the
minimum requirements established by the
Suitability in Annuity Transactions Model
Regulation of the National Association of
Insurance Commissioners (or any successor
thereto); or
(C) a consumer protection agency of any State, if--
(i) the securities commission (or any
agency or office performing like functions) of
the State is eligible under subparagraph (A);
or
(ii) the insurance commission (or any
agency or office performing like functions) of
the State is eligible under subparagraph (B);
(2) the term ``financial product'' means a security, an
insurance product (including an insurance product that pays a
return, whether fixed or variable), a bank product, and a loan
product;
(3) the term ``misleading designation''--
(A) means a certification, professional
designation, or other purported credential that
indicates or implies that a salesperson or adviser has
special certification or training in advising or
servicing seniors; and
(B) does not include a certification, professional
designation, license, or other credential that--
(i) was issued by or obtained from an
academic institution having regional
accreditation;
(ii) meets the standards for
certifications, licenses, and professional
designations outlined by the NASAA Model Rule
on the Use of Senior-Specific Certifications
and Professional Designations in the Sale of
Life Insurance and Annuities, adopted by the
National Association of Insurance Commissioners
(or any successor thereto); or
(iii) was issued by or obtained from a
State;
(4) the term ``misleading or fraudulent marketing'' means
the use of a misleading designation by a person that sells to
or advises a senior in connection with the sale of a financial
product;
(5) the term ``NASAA'' means the North American Securities
Administrators Association;
(6) the term ``Office'' means the Office of Financial
Literacy of the Bureau; and
(7) the term ``senior'' means any individual who has
attained the age of 62 years or older.
(b) Grants to States for Enhanced Protection of Seniors From Being
Misled by False Designations.--The Office shall establish a program
under which the Office may make grants to States or eligible entities--
(1) to hire staff to identify, investigate, and prosecute
(through civil, administrative, or criminal enforcement
actions) cases involving misleading or fraudulent marketing;
(2) to fund technology, equipment, and training for
regulators, prosecutors, and law enforcement officers, in order
to identify salespersons and advisers who target seniors
through the use of misleading designations;
(3) to fund technology, equipment, and training for
prosecutors to increase the successful prosecution of
salespersons and advisers who target seniors with the use of
misleading designations;
(4) to provide educational materials and training to
regulators on the appropriateness of the use of designations by
salespersons and advisers in connection with the sale and
marketing of financial products;
(5) to provide educational materials and training to
seniors to increase awareness and understanding of misleading
or fraudulent marketing;
(6) to develop comprehensive plans to combat misleading or
fraudulent marketing of financial products to seniors; and
(7) to enhance provisions of State law to provide
protection for seniors against misleading or fraudulent
marketing.
(c) Applications.--A State or eligible entity desiring a grant
under this section shall submit an application to the Office, in such
form and in such a manner as the Office may determine, that includes--
(1) a proposal for activities to protect seniors from
misleading or fraudulent marketing that are proposed to be
funded using a grant under this section, including--
(A) an identification of the scope of the problem
of misleading or fraudulent marketing in the State;
(B) a description of how the proposed activities
would--
(i) protect seniors from misleading or
fraudulent marketing in the sale of financial
products, including by proactively identifying
victims of misleading and fraudulent marketing
who are seniors;
(ii) assist in the investigation and
prosecution of those using misleading or
fraudulent marketing; and
(iii) discourage and reduce cases of
misleading or fraudulent marketing; and
(C) a description of how the proposed activities
would be coordinated with other State efforts; and
(2) any other information, as the Office determines is
appropriate.
(d) Performance Objectives and Reporting Requirements.--The Office
may establish such performance objectives and reporting requirements
for States and eligible entities receiving a grant under this section
as the Office determines are necessary to carry out and assess the
effectiveness of the program under this section.
(e) Maximum Amount.--The amount of a grant under this section may
not exceed--
(1) $500,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that
has adopted rules--
(A) on the appropriate use of designations in the
offer or sale of securities or investment advice that
meet or exceed the minimum requirements of the NASAA
Model Rule on the Use of Senior-Specific Certifications
and Professional Designations (or any successor
thereto);
(B) on the appropriate use of designations in the
sale of insurance products that, to the extent
practicable, conform to the minimum requirements of the
National Association of Insurance Commissioners Model
Regulation on the Use of Senior-Specific Certifications
and Professional Designations in the Sale of Life
Insurance and Annuities (or any successor thereto); and
(C) with respect to fiduciary or suitability
requirements in the sale of annuities that meet or
exceed the minimum requirements established by the
Suitability in Annuity Transactions Model Regulation of
the National Association of Insurance Commissioners (or
any successor thereto); and
(2) $100,000 for each of 3 consecutive fiscal years, if the
recipient is a State, or an eligible entity of a State, that
has adopted--
(A) rules on the appropriate use of designations in
the offer or sale of securities or investment advice
that meet or exceed the minimum requirements of the
NASAA Model Rule on the Use of Senior-Specific
Certifications and Professional Designations (or any
successor thereto); or
(B) rules--
(i) on the appropriate use of designations
in the sale of insurance products that, to the
extent practicable, conform to the minimum
requirements of the National Association of
Insurance Commissioners Model Regulation on the
Use of Senior-Specific Certifications and
Professional Designations in the Sale of Life
Insurance and Annuities (or any successor
thereto); and
(ii) with respect to fiduciary or
suitability requirements in the sale of
annuities that meet or exceed the minimum
requirements established by the Suitability in
Annuity Transactions Model Regulation of the
National Association of Insurance Commissioners
(or any successor thereto).
(f) Subgrants.--A State or eligible entity that receives a grant
under this section may make a subgrant, as the State or eligible entity
determines is necessary to carry out the activities funded using a
grant under this section.
(g) Reapplication.--A State or eligible entity that receives a
grant under this section may reapply for a grant under this section,
notwithstanding the limitations on grant amounts under subsection (e).
(h) Authorization of Appropriations.--There are authorized to be
appropriated to carry out this section, $8,000,000 for each of fiscal
years 2011 through 2015.
SEC. 989B. CHANGES IN APPOINTMENT OF CERTAIN INSPECTORS GENERAL.
(a) Elevation of Certain Inspectors General to Appointment Pursuant
to Section 3 of the Inspector General Act of 1978.--
(1) Inclusion in certain definitions.--Section 12 of the
Inspector General Act of 1978 (5 U.S.C. App.) is amended--
(A) 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 Chairman of the Board of Directors of the Pension
Benefit Guaranty Corporation; the Chairman of the
Securities and Exchange Commission; or the Director of
the Bureau of Consumer Financial Protection;''; and
(B) 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 Bureau of Consumer Financial Protection,''.
(2) 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--
(A) by striking ``the Board of Governors of the
Federal Reserve System,'';
(B) by striking ``the Commodity Futures Trading
Commission,'';
(C) by striking ``the National Credit Union
Administration,''; and
(D) by striking ``the Pension Benefit Guaranty
Corporation, the Securities and Exchange Commission,''.
(b) Continuation of Provisions Relating to Personnel.--
(1) 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; 122 Stat. 4304) shall
apply in the same manner as if such covered establishment were
a designated Federal entity under section 8G of this Act. An
Inspector General who is subject to the preceding sentence
shall not be subject to section 3(e) of this Act.
``(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 the covered 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 the covered 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.''.
(2) Conforming amendment.--Paragraph (3) of section 8G(g)
of the Inspector General Act of 1978 (5 U.S.C. App.) is
repealed.
(c) Corrective Responses by Heads of Certain Establishments to
Deficiencies Identified by Inspectors General.--The Chairman of the
Board of Governors, the Chairman of the Commodity Futures Trading
Commission, the Chairman of the National Credit Union Administration,
the Chairman of the Board of Directors of the Pension Benefit Guaranty
Corporation, and the Chairman of the 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 the Senate and the House of Representatives
that no action is necessary or appropriate in connection with a
deficiency described in paragraph (1).
(d) Effective Date; Transition Rule.--
(1) Effective date.--This section and the amendments made
by this section shall take effect 30 days after the date of
enactment of this Act.
(2) Transition rule.--An individual serving as Inspector
General of the Board of Governors, the Commodity Futures
Trading Commission, the National Credit Union Administration,
the Pension Benefit Guaranty Corporation, or the Commission on
the effective date of this section pursuant to an appointment
made under section 8G of the Inspector General Act of 1978 (5
U.S.C. App.)--
(A) may continue so serving until the President
makes an appointment under section 3(a) of such Act
with respect to the Board of Governors, the Commodity
Futures Trading Commission, the National Credit Union
Administration, the Pension Benefit Guaranty
Corporation, or the Commission, as the case may be,
consistent with the amendments made by subsection (a);
and
(B) shall, while serving under subparagraph (A)--
(i) remain subject to the provisions of
section 8G of such Act that applied with
respect to the Inspector General of the Board
of Governors, the Commodity Futures Trading
Commission, the National Credit Union
Administration, the Pension Benefit Guaranty
Corporation, or the Commission, as the case may
be, on the day before the effective date of
this section; and
(ii) suffer no reduction in pay.
Subtitle J--Self-funding of the Securities and Exchange Commission
SEC. 991. SECURITIES AND EXCHANGE COMMISSION SELF-FUNDING.
(a) Self-funding Authority.--Section 4 of the Securities Exchange
Act of 1934 (15 U.S.C. 78d) is amended--
(1) in subsection (c), in the second sentence, by striking
``credited to the appropriated funds of the Commission'' and
inserting ``deposited in the account described in subsection
(i)(4)'';
(2) in subsection (f), in the second sentence, by striking
``considered a reimbursement to the appropriated funds of the
Commission'' and inserting ``deposited in the account described
in subsection (i)(4)''; and
(3) by adding at the end the following:
``(i) Funding of the Commission.--
``(1) Budget.--For each fiscal year, the Chairman of the
Commission shall prepare and submit to Congress a budget to
Congress. Such budget shall be submitted at the same time the
President submits a budget of the United States to Congress for
such fiscal year. The budget submitted by the Chairman of the
Commission pursuant to this paragraph shall not be considered a
request for appropriations.
``(2) Treasury payment.--
``(A) On the first day of each fiscal year, the
Treasury shall pay into the account described in
paragraph (4) an amount equal to the budget submitted
by the Chairman of the Commission pursuant to paragraph
(1) for such fiscal year.
``(B) At or prior to the end of each fiscal year,
the Commission shall pay to the Treasury from fees and
assessments deposited in the account described in
paragraph (4) an amount equal to the amount paid by the
Treasury pursuant to subparagraph (A) for such fiscal
year, unless there are not sufficient fees and
assessments deposited in such account at or prior to
the end of the fiscal year to make such payment, in
which case the Commission shall make such payment in a
subsequent fiscal year.
``(3) Obligations and expenses.--
``(A) In general.--The Commission shall determine
and prescribe the manner in which--
``(i) the obligations of the Commission
shall be incurred; and
``(ii) the disbursements and expenses of
the Commission allowed and paid.
``(B) Insufficient funds.--If, in the course of any
fiscal year, the Chairman of the Commission determines
that, due to unforeseen circumstances, the obligations
of the Commission will exceed those provided for in the
budget submitted under paragraph (1), the Chairman of
the Commission may notify Congress of the amount and
expected uses of the additional obligations.
``(C) Authority to incur excess obligations.--The
Commission may incur obligations in excess of the
budget submitted under paragraph (1) from amounts
available in the account described in paragraph (4).
``(D) Rule of construction.--Any notification to
Congress under this paragraph shall not be considered a
request for appropriations.
``(4) Account.--
``(A) Establishment.--Fees and assessments
collected under this title, section 6(b) of the
Securities Act of 1933 (15 U.S.C. 77f(b)), and section
24(f) of the Investment Company Act of 1940 (15 U.S.C.
80a-24(f)) and payments made by the Treasury pursuant
to paragraph (2)(A) for any fiscal year shall be
deposited into an account established at any regular
Government depositary or any State or national bank.
``(B) Rule of construction.--Any amounts deposited
into the account established under subparagraph (A)
shall not be construed to be Government funds or
appropriated monies.
``(C) No apportionment.--Any amounts deposited into
the account established under subparagraph (A) shall
not be subject to apportionment for the purpose of
chapter 15 of title 31, United States Code, or under
any other authority.
``(5) Use of account funds.--
``(A) Permissible uses.--Amounts available in the
account described in paragraph (4) may be withdrawn by
the Commission and used for the purposes described in
paragraphs (2) and (3).
``(B) Impermissible use.--Except as provided in
paragraph (6), no amounts available in the account
described in paragraph (4) shall be deposited and
credited as general revenue of the Treasury.
``(6) Excess funds.--If, at the end of any fiscal year and
after all payments have been made to the Treasury pursuant to
paragraph (2)(B) for such fiscal year and all prior fiscal
years, the balance of the account described in paragraph (4)
exceeds 25 percent of the budget of the Commission for the
following fiscal year, the amount by which the balance exceeds
25 percent of such budget shall be credited as general revenue
of the Treasury.''.
(b) Conforming Amendments to Transaction Fee Provisions.--Section
31 of the Securities Exchange Act of 1934 (15 U.S.C. 78ee) is amended--
(1) by amending subsection (a) to read as follows:
``(a) Recovery of Costs and Expenses.--
``(1) In general.--The Commission shall, in accordance with
this section, collect transaction fees and assessments that are
designed--
``(A) to recover the reasonable costs and expenses
of the Commission, as set forth in the annual budget of
the Commission; and
``(B) to provide funds necessary to maintain a
reserve.
``(2) Overpayments.--The authority to collect transaction
fees and assessments in accordance with this section shall
include the authority to offset from such collection any
overpayment of transaction fees or assessments, regardless of
the fiscal year in which such overpayment is made.'';
(2) in subsection (e)(2), by striking ``September 30'' and
inserting ``September 25'';
(3) in subsection (g), by striking ``April 30'' and
inserting ``August 31'';
(4) by amending subsection (i) to read as follows:
``(i) Fee Collections.--Fees and assessments collected pursuant to
this section shall be deposited and credited in accordance with section
4(g) of this title.'';
(5) by amending subsection (j) to read as follows:
``(j) Adjustments to Transaction Fee Rates.--
``(1) Annual adjustment.--For each fiscal year, the
Commission shall by order adjust each of the rates applicable
under subsections (b) and (c) for such fiscal year to a uniform
adjusted rate that, when applied to the baseline estimate of
the aggregate dollar amount of sales for such fiscal year, is
reasonably likely to produce aggregate fee collections under
this section (including assessments collected under subsection
(d)) that are equal to the budget of the Commission for such
fiscal year, plus amounts necessary to maintain a reserve.
``(2) Mid-year adjustment.--For each fiscal year, the
Commission shall determine, by March 1 of such fiscal year,
whether, based on the actual aggregate dollar volume of sales
during the first 4 months of such fiscal year, the baseline
estimate of the aggregate dollar volume of sales used under
paragraph (1) for such fiscal year is reasonably likely to be
10 percent (or more) greater or less than the actual aggregate
dollar volume of sales for such fiscal year. If the Commission
so determines, the Commission shall by order, not later than
March 1, adjust each of the rates applicable under subsections
(b) and (c) for such fiscal year to a uniform adjusted rate
that, when applied to the revised estimate of the aggregate
dollar amount of sales for the remainder of such fiscal year,
is reasonably likely to produce aggregate fee collections under
this section (including fees estimated to be collected under
subsections (b) and (c) during such fiscal year prior to the
effective date of the new uniform adjusted rate and assessments
collected under subsection (d)) that are equal to the budget of
the Commission for such fiscal year, plus amounts necessary to
maintain a reserve. In making such revised estimate, the
Commission shall, after consultation with the Congressional
Budget Office and the Office of Management and Budget, use the
same methodology required by paragraph (4).
``(3) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5 United States Code. An adjusted rate prescribed under
paragraph (1) or (2) and published under subsection (g) shall
not be subject to judicial review. An adjusted rate prescribed
under paragraph (1) shall take effect on the first day of the
fiscal year to which such rate applies. An adjusted rate
prescribed under paragraph (2) shall take effect on April 1 of
the fiscal year to which such rate applies.
``(4) Baseline estimate of the aggregate dollar amount of
sales.--For purposes of this subsection, the baseline estimate
of the aggregate dollar amount of sales for any fiscal year is
the baseline estimate of the aggregate dollar amount of sales
of securities (other than bonds, debentures, other evidences of
indebtedness, security futures products, and options on
securities indexes excluding a narrow-based security index) to
be transacted on each national securities exchange and by or
through any member of each national securities association
(otherwise than on a national securities exchange) during such
fiscal year as determined by the Commission, after consultation
with the Congressional Budget Office and the Office of
Management and Budget, using the methodology required for
making projections pursuant to section 907 of title 2.''; and
(6) by striking subsections (k) and (l).
(c) Conforming Amendments to Registration Fee Provisions.--
(1) Section 6(b) of the securities act of 1933.--Section
6(b) of the Securities Act of 1933 (15 U.S.C. 77f(b)) is
amended--
(A) by striking ``offsetting'' each place that term
appears and inserting ``fee'';
(B) in paragraph (3), in the paragraph heading, by
striking ``Offsetting'' and inserting ``Fee'';
(C) in paragraph (11)(A), in the subparagraph
heading, by striking ``offsetting'' and inserting
``fee'';
(D) by striking paragraphs (1), (3), (4), (6), (8),
and (9);
(E) by redesignating paragraph (2) as paragraph
(1);
(F) in paragraph (1), as so redesignated, by
striking ``(5) or (6)'' and inserting ``(3)'';
(G) by inserting after paragraph (1), as so
redesignated, the following:
``(2) Fee collections.--Fees collected pursuant to this
subsection shall be deposited and credited in accordance with
section 4(i) of the Securities Exchange Act of 1934.'';
(H) by redesignating paragraph (5) as paragraph
(3);
(I) in paragraph (3), as redesignated--
(i) by striking ``of the fiscal years 2003
through 2011'' and inserting ``fiscal year'';
and
(ii) by striking ``paragraph (2)'' and
inserting ``paragraph (1)'';
(J) by redesignating paragraph (7) as paragraph
(4);
(K) by inserting after paragraph (4), as so
redesignated, the following:
``(5) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5, United States Code. An adjusted rate prescribed under
paragraph (3) and published under paragraph (6) shall not be
subject to judicial review. An adjusted rate prescribed under
paragraph (3) shall take effect on the first day of the fiscal
year to which such rate applies.'';
(L) by redesignating paragraphs (10) and (11), as
paragraphs (6) and (7);
(M) in paragraph (6), as redesignated, by striking
``April 30'' and inserting ``August 31''; and
(N) in paragraph (7), as redesignated--
(i) by striking ``of the fiscal years 2002
through 2011'' and inserting ``fiscal year'';
and
(ii) by inserting at the end of the table
in subparagraph (A) the following:
----------------------------------------------------------------------------------------------------------------
2012 and each succeeding fiscal year An amount that is equal to the target
fee collection amount for the prior
fiscal year adjusted by the rate of
inflation.
----------------------------------------------------------------------------------------------------------------
(2) Section 13(e) of the securities exchange act of 1934.--
Section 13(e) of the Securities Exchange Act of 1934 (15 U.S.C.
78m(e)) is amended--
(A) by striking ``offsetting'' each place that term
appears and inserting ``fee'';
(B) in paragraph (3) by striking ``paragraphs (5)
and (6)'' and inserting ``paragraph (5)'';
(C) by amending paragraph (4) to read as follows:
``(4) Fee collections.--Fees collected pursuant to this
subsection shall be deposited and credited in accordance with
section 4(g) of this title.'';
(D) in paragraph (5), by striking ``of the fiscal
years 2003 through 2011'' and inserting ``fiscal
year'';
(E) by striking paragraphs (6), (7), and (8);
(F) by redesignating paragraph (7) as paragraph
(6);
(G) by inserting after paragraph (6), as so
redesignated, the following:
``(7) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5. An adjusted rate prescribed under paragraph (5) and
published under paragraph (8) shall not be subject to judicial
review. An adjusted rate prescribed under paragraph (5) shall
take effect on the first day of the fiscal year to which such
rate applies.'';
(H) by striking paragraph (9);
(I) by redesignating paragraph (10) as paragraph
(8); and
(J) in paragraph (8), as so redesignated, by
striking ``6(b)(10)'' and inserting ``6(b)(6)''.
(3) Section 14 of the securities exchange act of 1934.--
Section 14(g) of the Securities Exchange Act of 1934 (15 U.S.C.
78n(g)) is amended--
(A) by striking the word ``offsetting'' each time
that it appears and inserting in its place the word
``fee'';
(B) in paragraph (1)(A), by striking ``paragraphs
(5) and (6)'' each time it appears and inserting
``paragraph (5)'';
(C) in paragraph (3), by striking ``paragraphs (5)
and (6)'' and inserting ``paragraph (5)'';
(D) by amending paragraph (4) to read as follows:
``(4) Fee collections.--Fees collected pursuant to this
subsection shall be deposited and credited in accordance with
section 4(g) of this title.'';
(E) in paragraph (5), by striking ``of the fiscal
years 2003 through 2011'' and inserting ``fiscal
year'';
(F) by striking paragraphs (6), (8), and (9);
(G) by redesignating paragraph (7) as paragraph
(6);
(H) by inserting after paragraph (6), as so
redesignated, the following:
``(7) Review and effective date.--In exercising its
authority under this subsection, the Commission shall not be
required to comply with the provisions of section 553 of title
5. An adjusted rate prescribed under paragraph (5) and
published under paragraph (8) shall not be subject to judicial
review. An adjusted rate prescribed under paragraph (5) shall
take effect on the first day of the fiscal year to which such
rate applies.'';
(I) by redesignating paragraphs (10) and (11) as
paragraphs (8) and (9), respectively; and
(J) in paragraph (9), as so redesignated, by
striking ``6(b)(10)'' and inserting ``6(b)(7)''.
(d) Repeal of Authorization of Appropriations.--Section 35 of the
Securities Exchange Act of 1934 (15 U.S.C. 78kk) is repealed.
(e) Effective Date and Transition Provisions.--
(1) In general.--Except as provided in paragraphs (2) and
(3), the amendments made by this section shall be effective on
the first day of the fiscal year following the fiscal year in
which this Act is enacted.
(2) Transition period.--For the fiscal year following the
fiscal year in which this Act is enacted, the budget of the
Commission shall be deemed to be the budget submitted by the
Chairman of the Commission to the President for such fiscal
year in accordance with the provisions of section 1108 of title
31, United States Code.
(3) Other provisions.--The amendments made by this section
to subsections (g) and (j)(1) of section 31 of the Securities
Exchange Act of 1934 (15 U.S.C. 78ee) shall be effective on the
date of enactment of this Act, and shall require the Commission
to make and publish an annual adjustment to the fee rates
applicable under subsections (b) and (c) of section 31 of the
Securities Exchange Act of 1934 (15 U.S.C. 78ee) for the fiscal
year following the fiscal year in which this Act is enacted.
The adjusted rate described in the preceding sentence shall
supersede any previously published adjusted rate applicable
under subsections (b) and (c) of section 31 of the Securities
Exchange Act of 1934 for the fiscal year following the fiscal
year in which this Act is enacted and shall take effect on the
first day of the fiscal year following the fiscal year in which
this Act is enacted, except that, if this Act is enacted on or
after August 31 and on or prior to September 30, the adjusted
rate described in the first sentence shall be published not
later than 15 days after the date of enactment of this Act and
take effect 30 days thereafter, and the Commission shall
continue to collect fees under subsections (b) and (c) of
section 31 of the Securities Exchange Act of 1934 at the rate
in effect during the preceding fiscal year until the adjusted
rate is effective.
TITLE X--BUREAU OF CONSUMER FINANCIAL PROTECTION
SEC. 1001. SHORT TITLE.
This title may be cited as the ``Consumer Financial Protection Act
of 2010''.
SEC. 1002. DEFINITIONS.
Except as otherwise provided in this title, for purposes of this
title, the following definitions shall apply:
(1) Affiliate.--The term ``affiliate'' means any person
that controls, is controlled by, or is under common control
with another person.
(2) Bureau.--The term ``Bureau'' means the Bureau of
Consumer Financial Protection.
(3) Business of insurance.--The term ``business of
insurance'' means the writing of insurance or the reinsuring of
risks by an insurer, including all acts necessary to such
writing or reinsuring and the activities relating to the
writing of insurance or the reinsuring of risks conducted by
persons who act as, or are, officers, directors, agents, or
employees of insurers or who are other persons authorized to
act on behalf of such persons.
(4) Consumer.--The term ``consumer'' means an individual or
an agent, trustee, or representative acting on behalf of an
individual.
(5) Consumer financial product or service.--The term
``consumer financial product or service'' means any financial
product or service that is described in one or more categories
under--
(A) paragraph (13) and is offered or provided for
use by consumers primarily for personal, family, or
household purposes; or
(B) clause (i), (iii), (ix), or (x) of paragraph
(13)(A), and is delivered, offered, or provided in
connection with a consumer financial product or service
referred to in subparagraph (A).
(6) Covered person.--The term ``covered person'' means--
(A) any person that engages in offering or
providing a consumer financial product or service; and
(B) any affiliate of a person described in
subparagraph (A) if such affiliate acts as a service
provider to such person.
(7) Credit.--The term ``credit'' means the right granted by
a person to a consumer to defer payment of a debt, incur debt
and defer its payment, or purchase property or services and
defer payment for such purchase.
(8) Deposit-taking activity.--The term ``deposit-taking
activity'' means--
(A) the acceptance of deposits, maintenance of
deposit accounts, or the provision of services related
to the acceptance of deposits or the maintenance of
deposit accounts;
(B) the acceptance of funds, the provision of other
services related to the acceptance of funds, or the
maintenance of member share accounts by a credit union;
or
(C) the receipt of funds or the equivalent thereof,
as the Bureau may determine by rule or order, received
or held by a covered person (or an agent for a covered
person) for the purpose of facilitating a payment or
transferring funds or value of funds between a consumer
and a third party.
(9) Designated transfer date.--The term ``designated
transfer date'' means the date established under section 1062.
(10) Director.--The term ``Director'' means the Director of
the Bureau.
(11) Enumerated consumer laws.--The term ``enumerated
consumer laws'' means--
(A) the Alternative Mortgage Transaction Parity Act
of 1982 (12 U.S.C. 3801 et seq.);
(B) the Consumer Leasing Act of 1976 (15 U.S.C.
1667 et seq.);
(C) the Electronic Fund Transfer Act (15 U.S.C.
1693 et seq.);
(D) the Equal Credit Opportunity Act (15 U.S.C.
1691 et seq.);
(E) the Fair Credit Billing Act (15 U.S.C. 1666 et
seq.);
(F) the Fair Credit Reporting Act (15 U.S.C. 1681
et seq.), except with respect to sections 615(e) and
628 of that Act (15 U.S.C. 1681m(e), 1681w);
(G) the Home Owners Protection Act of 1998 (12
U.S.C. 4901 et seq.);
(H) the Fair Debt Collection Practices Act (15
U.S.C. 1692 et seq.);
(I) subsections (c) through (f) of section 43 of
the Federal Deposit Insurance Act (12 U.S.C. 1831t(c)-
(f));
(J) sections 502 through 509 of the Gramm-Leach-
Bliley Act (15 U.S.C. 6802-6809);
(K) the Home Mortgage Disclosure Act of 1975 (12
U.S.C. 2801 et seq.);
(L) the Home Ownership and Equity Protection Act of
1994 (15 U.S.C. 1601 note);
(M) the Real Estate Settlement Procedures Act of
1974 (12 U.S.C. 2601 et seq.);
(N) the S.A.F.E. Mortgage Licensing Act of 2008 (12
U.S.C. 5101 et seq.);
(O) the Truth in Lending Act (15 U.S.C. 1601 et
seq.); and
(P) the Truth in Savings Act (12 U.S.C. 4301 et
seq.).
(12) Federal consumer financial law.--The term ``Federal
consumer financial law'' means the provisions of this title,
the enumerated consumer laws, the laws for which authorities
are transferred under subtitles F and H, and any rule or order
prescribed by the Bureau under this title, an enumerated
consumer law, or pursuant to the authorities transferred under
subtitles F and H.
(13) Financial product or service.--The term ``financial
product or service''--
(A) means--
(i) extending credit and servicing loans,
including acquiring, purchasing, selling,
brokering, or other extensions of credit (other
than solely extending commercial credit to a
person who originates consumer credit
transactions);
(ii) extending or brokering leases of
personal or real property that are the
functional equivalent of purchase finance
arrangements, if--
(I) the lease is on a non-operating
basis;
(II) the initial term of the lease
is at least 90 days; and
(III) in the case of a lease
involving real property, at the
inception of the initial lease, the
transaction is intended to result in
ownership of the leased property to be
transferred to the lessee, subject to
standards prescribed by the Bureau;
(iii) providing real estate settlement
services or performing appraisals of real
estate or personal property;
(iv) engaging in deposit-taking activities,
transmitting or exchanging funds, or otherwise
acting as a custodian of funds or any financial
instrument for use by or on behalf of a
consumer;
(v) selling, providing, or issuing stored
value or payment instruments, except that, in
the case of a sale of, or transaction to
reload, stored value, only if the seller
exercises substantial control over the terms or
conditions of the stored value provided to the
consumer where, for purposes of this clause--
(I) a seller shall not be found to
exercise substantial control over the
terms or conditions of the stored value
if the seller is not a party to the
contract with the consumer for the
stored value product, and another
person is principally responsible for
establishing the terms or conditions of
the stored value; and
(II) advertising the nonfinancial
goods or services of the seller on the
stored value card or device is not in
itself an exercise of substantial
control over the terms or conditions;
(vi) providing check cashing, check
collection, or check guaranty services;
(vii) providing payments or other financial
data processing products or services to a
consumer by any technological means, including
processing or storing financial or banking data
for any payment instrument, or through any
payments systems or network used for processing
payments data, including payments made through
an online banking system or mobile
telecommunications network, except that a
person shall not be deemed to be a covered
person with respect to financial data
processing solely because the person--
(I) unknowingly or incidentally
processes, stores, or transmits over
the Internet, telephone line, mobile
network, or any other mode of
transmission, as part of a stream of
other types of data, financial data in
a manner that such data is
undifferentiated from other types of
data of the same form that the person
processes, stores, or transmits;
(II) is a merchant, retailer, or
seller of any nonfinancial good or
service who engages in financial data
processing by transmitting or storing
payments data about a consumer
exclusively for purpose of initiating
payments instructions by the consumer
to pay such person for the purchase of,
or to complete a commercial transaction
for, such nonfinancial good or service
sold directly by such person to the
consumer; or
(III) provides access to a host
server to a person for purposes of
enabling that person to establish and
maintain a website;
(viii) providing financial advisory
services to consumers on individual financial
matters or relating to proprietary financial
products or services (other than by publishing
any bona fide newspaper, news magazine, or
business or financial publication of general
and regular circulation, including publishing
market data, news, or data analytics or
investment information or recommendations that
are not tailored to the individual needs of a
particular consumer), including--
(I) providing credit counseling to
any consumer; and
(II) providing services to assist a
consumer with debt management or debt
settlement, modifying the terms of any
extension of credit, or avoiding
foreclosure;
(ix) collecting, analyzing, maintaining, or
providing consumer report information or other
account information, including information
relating to the credit history of consumers,
used or expected to be used in connection with
any decision regarding the offering or
provision of a consumer financial product or
service, except to the extent that--
(I) a person--
(aa) collects, analyzes, or
maintains information that
relates solely to the
transactions between a consumer
and such person; or
(bb) provides the
information described in item
(aa) to an affiliate of such
person; and
(II) the information described in
subclause (I)(aa) is not used by such
person or affiliate in connection with
any decision regarding the offering or
provision of a consumer financial
product or service to the consumer,
other than credit described in section
1027(a)(2)(A);
(x) collecting debt related to any consumer
financial product or service; and
(xi) such other financial product or
service as may be defined by the Bureau, by
regulation, for purposes of this title, if the
Bureau finds that such financial product or
service is--
(I) entered into or conducted as a
subterfuge or with a purpose to evade
any Federal consumer financial law; or
(II) permissible for a bank or for
a financial holding company to offer or
to provide under any provision of a
Federal law or regulation applicable to
a bank or a financial holding company,
and has, or likely will have, a
material impact on consumers; and
(B) does not include the business of insurance.
(14) 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.
(15) Insured credit union.--The term ``insured credit
union'' has the same meaning as in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752).
(16) Payment instrument.--The term ``payment instrument''
means a check, draft, warrant, money order, traveler's check,
electronic instrument, or other instrument, payment of funds,
or monetary value (other than currency).
(17) Person.--The term ``person'' means an individual,
partnership, company, corporation, association (incorporated or
unincorporated), trust, estate, cooperative organization, or
other entity.
(18) Person regulated by the commodity futures trading
commission.--The term ``person regulated by the Commodity
Futures Trading Commission'' means any person that is
registered, or required by statute or regulation to be
registered, with the Commodity Futures Trading Commission, but
only to the extent that the activities of such person are
subject to the jurisdiction of the Commodity Futures Trading
Commission under the Commodity Exchange Act.
(19) Person regulated by the commission.--The term ``person
regulated by the Commission'' means a person who is--
(A) a broker or dealer that is required to be
registered under the Securities Exchange Act of 1934;
(B) an investment adviser that is registered under
the Investment Advisers Act of 1940;
(C) an investment company that is required to be
registered under the Investment Company Act of 1940,
and any company that has elected to be regulated as a
business development company under that Act;
(D) a national securities exchange that is required
to be registered under the Securities Exchange Act of
1934;
(E) a transfer agent that is required to be
registered under the Securities Exchange Act of 1934;
(F) a clearing corporation that is required to be
registered under the Securities Exchange Act of 1934;
(G) any self-regulatory organization that is
required to be registered with the Commission;
(H) any nationally recognized statistical rating
organization that is required to be registered with the
Commission;
(I) any securities information processor that is
required to be registered with the Commission;
(J) any municipal securities dealer that is
required to be registered with the Commission;
(K) any other person that is required to be
registered with the Commission under the Securities
Exchange Act of 1934; and
(L) any employee, agent, or contractor acting on
behalf of, registered with, or providing services to,
any person described in any of subparagraphs (A)
through (K), but only to the extent that any person
described in any of subparagraphs (A) through (K), or
the employee, agent, or contractor of such person, acts
in a regulated capacity.
(20) Person regulated by a state insurance regulator.--The
term ``person regulated by a State insurance regulator'' means
any person that is engaged in the business of insurance and
subject to regulation by any State insurance regulator, but
only to the extent that such person acts in such capacity.
(21) Person that performs income tax preparation activities
for consumers.--The term ``person that performs income tax
preparation activities for consumers'' means--
(A) any tax return preparer (as defined in section
7701(a)(36) of the Internal Revenue Code of 1986),
regardless of whether compensated, but only to the
extent that the person acts in such capacity;
(B) any person regulated by the Secretary under
section 330 of title 31, United States Code, but only
to the extent that the person acts in such capacity;
and
(C) any authorized IRS e-file Providers (as defined
for purposes of section 7216 of the Internal Revenue
Code of 1986), but only to the extent that the person
acts in such capacity.
(22) Prudential regulator.--The term ``prudential
regulator'' means--
(A) in the case of an insured depository
institution, the appropriate Federal banking agency, as
that term is defined in section 3 of the Federal
Deposit Insurance Act; and
(B) in the case of an insured credit union, the
National Credit Union Administration.
(23) Related person.--The term ``related person''--
(A) shall apply only with respect to a covered
person that is not a bank holding company (as that term
is defined in section 2 of the Bank Holding Company Act
of 1956), credit union, or depository institution;
(B) shall be deemed to mean a covered person for
all purposes of any provision of Federal consumer
financial law; and
(C) means--
(i) any director, officer, or employee
charged with managerial responsibility for, or
controlling shareholder of, or agent for, such
covered person;
(ii) any shareholder, consultant, joint
venture partner, or other person, as determined
by the Bureau (by rule or on a case-by-case
basis) who materially participates in the
conduct of the affairs of such covered person;
and
(iii) any independent contractor (including
any attorney, appraiser, or accountant) who
knowingly or recklessly participates in any--
(I) violation of any provision of
law or regulation; or
(II) breach of a fiduciary duty.
(24) Service provider.--
(A) In general.--The term ``service provider''
means any person that provides a material service to a
covered person in connection with the offering or
provision by such covered person of a consumer
financial product or service, including a person that--
(i) participates in designing, operating,
or maintaining the consumer financial product
or service; or
(ii) processes transactions relating to the
consumer financial product or service (other
than unknowingly or incidentally transmitting
or processing financial data in a manner that
such data is undifferentiated from other types
of data of the same form as the person
transmits or processes).
(B) Exceptions.--The term ``service provider'' does
not include a person solely by virtue of such person
offering or providing to a covered person--
(i) a support service of a type provided to
businesses generally or a similar ministerial
service; or
(ii) time or space for an advertisement for
a consumer financial product or service through
print, newspaper, or electronic media.
(C) Rule of construction.--A person that is a
service provider shall be deemed to be a covered person
to the extent that such person engages in the offering
or provision of its own consumer financial product or
service.
(25) State.--The term ``State'' means any State, territory,
or possession of the United States, the District of Columbia,
the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, Guam, American Samoa, or the United
States Virgin Islands or any federally recognized Indian tribe,
as defined by the Secretary of the Interior under section
104(a) of the Federally Recognized Indian Tribe List Act of
1994 (25 U.S.C. 479a-1(a)).
(26) Stored value.--The term ``stored value'' means funds
or monetary value represented in any electronic format, whether
or not specially encrypted, and stored or capable of storage on
electronic media in such a way as to be retrievable and
transferred electronically, and includes a prepaid debit card
or product, or any other similar product, regardless of whether
the amount of the funds or monetary value may be increased or
reloaded.
(27) Transmitting or exchanging funds.--The term
``transmitting or exchanging funds'' means receiving currency,
monetary value, or payment instruments from a consumer for the
purpose of exchanging or transmitting the same by any means,
including transmission by wire, facsimile, electronic transfer,
courier, the Internet, or through bill payment services or
through other businesses that facilitate third-party transfers
within the United States or to or from the United States.
Subtitle A--Bureau of Consumer Financial Protection
SEC. 1011. ESTABLISHMENT OF THE BUREAU.
(a) Bureau Established.--There is established in the Federal
Reserve System the Bureau of Consumer Financial Protection, which shall
regulate the offering and provision of consumer financial products or
services under the Federal consumer financial laws.
(b) Director and Deputy Director.--
(1) In general.--There is established the position of the
Director, who shall serve as the head of the Bureau.
(2) Appointment.--Subject to paragraph (3), the Director
shall be appointed by the President, by and with the advice and
consent of the Senate.
(3) Qualification.--The President shall nominate the
Director from among individuals who are citizens of the United
States.
(4) Compensation.--The Director shall be compensated at the
rate prescribed for level II of the Executive Schedule under
section 5313 of title 5, United States Code.
(5) Deputy director.--There is established the position of
Deputy Director, who shall--
(A) be appointed by the Director; and
(B) serve as acting Director in the absence or
unavailability of the Director.
(c) Term.--
(1) In general.--The Director shall serve for a term of 5
years.
(2) Expiration of term.--An individual may serve as
Director after the expiration of the term for which appointed,
until a successor has been appointed and qualified.
(3) Removal for cause.--The President may remove the
Director for inefficiency, neglect of duty, or malfeasance in
office.
(d) Service Restriction.--No Director or Deputy Director may hold
any office, position, or employment in any Federal reserve bank,
Federal home loan bank, covered person, or service provider during the
period of service of such person as Director or Deputy Director.
(e) Offices.--The principal office of the Bureau shall be in the
District of Columbia. The Director may establish regional offices of
the Bureau, including in cities in which the Federal reserve banks, or
branches of such banks, are located, in order to carry out the
responsibilities assigned to the Bureau under the Federal consumer
financial laws.
SEC. 1012. EXECUTIVE AND ADMINISTRATIVE POWERS.
(a) Powers of the Bureau.--The Bureau is authorized to establish
the general policies of the Bureau with respect to all executive and
administrative functions, including--
(1) the establishment of rules for conducting the general
business of the Bureau, in a manner not inconsistent with this
title;
(2) to bind the Bureau and enter into contracts;
(3) directing the establishment and maintenance of
divisions or other offices within the Bureau, in order to carry
out the responsibilities under the Federal consumer financial
laws, and to satisfy the requirements of other applicable law;
(4) to coordinate and oversee the operation of all
administrative, enforcement, and research activities of the
Bureau;
(5) to adopt and use a seal;
(6) to determine the character of and the necessity for the
obligations and expenditures of the Bureau;
(7) the appointment and supervision of personnel employed
by the Bureau;
(8) the distribution of business among personnel appointed
and supervised by the Director and among administrative units
of the Bureau;
(9) the use and expenditure of funds;
(10) implementing the Federal consumer financial laws
through rules, orders, guidance, interpretations, statements of
policy, examinations, and enforcement actions; and
(11) performing such other functions as may be authorized
or required by law.
(b) Delegation of Authority.--The Director of the Bureau may
delegate to any duly authorized employee, representative, or agent any
power vested in the Bureau by law.
(c) Autonomy of the Bureau.--
(1) Coordination with the board of governors.--
Notwithstanding section 18 of the Federal Trade Commission Act
(15 U.S.C. 57a) and any other provision of law applicable to
the supervision or examination of persons with respect to
Federal consumer financial laws, the Board of Governors may
delegate to the Bureau the authorities to examine persons
subject to the jurisdiction of the Board of Governors for
compliance with the Federal consumer financial laws.
(2) Autonomy.--Notwithstanding the authorities granted to
the Board of Governors under the Federal Reserve Act, the Board
of Governors may not--
(A) intervene in any matter or proceeding before
the Director, including examinations or enforcement
actions, unless otherwise specifically provided by law;
(B) appoint, direct, or remove any officer or
employee of the Bureau; or
(C) merge or consolidate the Bureau, or any of the
functions or responsibilities of the Bureau, with any
division or office of the Board of Governors or the
Federal reserve banks.
(3) Rules and orders.--No rule or order of the Bureau shall
be subject to approval or review by the Board of Governors. The
Board of Governors may not delay or prevent the issuance of any
rule or order of the Bureau.
(4) Recommendations and testimony.--No officer or agency of
the United States shall have any authority to require the
Director or any other officer of the Bureau to submit
legislative recommendations, or testimony or comments on
legislation, to any officer or agency of the United States for
approval, comments, or review prior to the submission of such
recommendations, testimony, or comments to the Congress, if
such recommendations, testimony, or comments to the Congress
include a statement indicating that the views expressed therein
are those of the Director or such officer, and do not
necessarily reflect the views of the Board of Governors or the
President.
SEC. 1013. ADMINISTRATION.
(a) Personnel.--
(1) Appointment.--
(A) In general.--The Director may fix the number
of, and appoint and direct, all employees of the
Bureau.
(B) Employees of the bureau.--The Director is
authorized to employ attorneys, compliance examiners,
compliance supervision analysts, economists,
statisticians, and other employees as may be deemed
necessary to conduct the business of the Bureau.
Notwithstanding any other provision of law, all such
employees shall be appointed and compensated on terms
and conditions that are consistent with the terms and
conditions set forth in section 11(l) of the Federal
Reserve Act (12 U.S.C. 248(l)).
(2) Compensation.--The Director shall at all times provide
compensation and benefits to each class of employees that, at a
minimum, are equivalent to the compensation and benefits then
being provided by the Board of Governors for the corresponding
class of employees.
(b) Specific Functional Units.--
(1) Research.--The Director shall establish a unit whose
functions shall include researching, analyzing, and reporting
on--
(A) developments in markets for consumer financial
products or services, including market areas of
alternative consumer financial products or services
with high growth rates and areas of risk to consumers;
(B) access to fair and affordable credit for
traditionally underserved communities;
(C) consumer awareness, understanding, and use of
disclosures and communications regarding consumer
financial products or services;
(D) consumer awareness and understanding of costs,
risks, and benefits of consumer financial products or
services; and
(E) consumer behavior with respect to consumer
financial products or services.
(2) Community affairs.--The Director shall establish a unit
whose functions shall include providing information, guidance,
and technical assistance regarding the offering and provision
of consumer financial products or services to traditionally
underserved consumers and communities.
(3) Collecting and tracking complaints.--
(A) In general.--The Director shall establish a
unit whose functions shall include establishing a
single, toll-free telephone number, a website, and a
database to facilitate the centralized collection of,
monitoring of, and response to consumer complaints
regarding consumer financial products or services. The
Director shall coordinate with other Federal agencies
to route complaints to other Federal regulators, where
appropriate.
(B) Routing calls to states.--To the extent
practicable, State agencies may receive appropriate
complaints from the systems established under
subparagraph (A), if--
(i) the State agency system has the
functional capacity to receive calls or
electronic reports routed by the Bureau
systems; and
(ii) the State agency has satisfied any
conditions of participation in the system that
the Bureau may establish, including treatment
of personally identifiable information and
sharing of information on complaint resolution
or related compliance procedures and resources.
(C) Reports to the congress.--The Director shall
present an annual report to Congress not later than
March 31 of each year on the complaints received by the
Bureau in the prior year regarding consumer financial
products and services. Such report shall include
information and analysis about complaint numbers,
complaint types, and, where applicable, information
about resolution of complaints.
(D) Data sharing required.--To facilitate
preparation of the reports required under subparagraph
(C), supervision and enforcement activities, and
monitoring of the market for consumer financial
products and services, the Bureau shall share consumer
complaint information with prudential regulators, other
Federal agencies, and State agencies, consistent with
Federal law applicable to personally identifiable
information. The prudential regulators and other
Federal agencies shall share data relating to consumer
complaints regarding consumer financial products and
services with the Bureau, consistent with Federal law
applicable to personally identifiable information.
(c) Office of Fair Lending and Equal Opportunity.--
(1) Establishment.--The Director shall establish within the
Bureau the Office of Fair Lending and Equal Opportunity.
(2) Functions.--The Office of Fair Lending and Equal
Opportunity shall have such powers and duties as the Director
may delegate to the Office, including--
(A) providing oversight and enforcement of Federal
laws intended to ensure the fair, equitable, and
nondiscriminatory access to credit for both individuals
and communities that are enforced by the Bureau,
including the Equal Credit Opportunity Act and the Home
Mortgage Disclosure Act;
(B) coordinating fair lending and fair housing
efforts of the Bureau with other Federal agencies and
State regulators, as appropriate, to promote
consistent, efficient, and effective enforcement of
Federal fair lending laws;
(C) working with private industry, fair lending,
civil rights, consumer and community advocates on the
promotion of fair lending compliance and education; and
(D) providing annual reports to Congress on the
efforts of the Bureau to fulfill its fair lending
mandate.
(3) Administration of office.--There is established the
position of Assistant Director of the Bureau for Fair Lending
and Equal Opportunity, who--
(A) shall be appointed by the Director; and
(B) shall carry out such duties as the Director may
delegate to such Assistant Director.
(d) Office of Financial Literacy.--
(1) Establishment.--The Director shall establish an Office
of Financial Literacy, which shall be responsible for
developing and implementing initiatives intended to educate and
empower consumers to make better informed financial decisions.
(2) Other duties.--The Office of Financial Literacy shall
develop and implement a strategy to improve the financial
literacy of consumers that includes measurable goals and
objectives, in consultation with the Financial Literacy and
Education Commission, consistent with the National Strategy for
Financial Education, through activities including providing
opportunities for consumers to access--
(A) financial counseling;
(B) information to assist with the evaluation of
credit products and the understanding of credit
histories and scores;
(C) savings, borrowing, and other services found at
mainstream financial institutions;
(D) activities intended to--
(i) prepare the consumer for educational
expenses and the submission of financial aid
applications, and other major purchases;
(ii) reduce debt; and
(iii) improve the financial situation of
the consumer;
(E) assistance in developing long-term savings
strategies; and
(F) wealth building and financial services during
the preparation process to claim earned income tax
credits and Federal benefits.
(3) Coordination.--The Office of Financial Literacy shall
coordinate with other units within the Bureau in carrying out
its functions, including--
(A) working with the Community Affairs Office to
implement the strategy to improve financial literacy of
consumers; and
(B) working with the research unit established by
the Director to conduct research related to consumer
financial education and counseling.
(4) Report.--Not later than 24 months after the designated
transfer date, and annually thereafter, the Director shall
submit a report on its financial literacy activities and
strategy to improve financial literacy of consumers to--
(A) the Committee on Banking, Housing, and Urban
Affairs of the Senate; and
(B) the Committee on Financial Services of the
House of Representatives.
(5) Membership in financial literacy and education
commission.--Section 513(c)(1) of the Financial Literacy and
Education Improvement Act (20 U.S.C. 9702(c)(1)) is amended--
(A) in subparagraph (B), by striking ``and'' at the
end;
(B) by redesignating subparagraph (C) as
subparagraph (D); and
(C) by inserting after subparagraph (B) the
following new subparagraph:
``(C) the Director of the Bureau of Consumer
Financial Protection; and''.
(6) Conforming amendment.--Section 513(d) of the Financial
Literacy and Education Improvement Act (20 U.S.C. 9702(d)) is
amended by adding at the end the following: ``The Director of
the Bureau of Consumer Financial Protection shall serve as the
Vice Chairman.''.
SEC. 1014. CONSUMER ADVISORY BOARD.
(a) Establishment Required.--The Director shall establish a
Consumer Advisory Board to advise and consult with the Bureau in the
exercise of its functions under the Federal consumer financial laws,
and to provide information on emerging practices in the consumer
financial products or services industry, including regional trends,
concerns, and other relevant information.
(b) Membership.--In appointing the members of the Consumer Advisory
Board, the Director shall seek to assemble experts in consumer
protection, financial services, community development, fair lending,
and consumer financial products or services and seek representation of
the interests of covered persons and consumers, without regard to party
affiliation. Not fewer than 6 members shall be appointed upon the
recommendation of the regional Federal Reserve Bank Presidents, on a
rotating basis.
(c) Meetings.--The Consumer Advisory Board shall meet from time to
time at the call of the Director, but, at a minimum, shall meet at
least twice in each year.
(d) Compensation and Travel Expenses.--Members of the Consumer
Advisory Board who are not full-time employees of the United States
shall--
(1) be entitled to receive compensation at a rate fixed by
the Director while attending meetings of the Consumer Advisory
Board, including travel time; and
(2) be allowed travel expenses, including transportation
and subsistence, while away from their homes or regular places
of business.
SEC. 1015. COORDINATION.
The Bureau shall coordinate with the Commission, the Commodity
Futures Trading Commission, and other Federal agencies and State
regulators, as appropriate, to promote consistent regulatory treatment
of consumer financial and investment products and services.
SEC. 1016. APPEARANCES BEFORE AND REPORTS TO CONGRESS.
(a) Appearances Before Congress.--The Director of the Bureau shall
appear before the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House of
Representatives at semi-annual hearings regarding the reports required
under subsection (b).
(b) Reports Required.--The Bureau shall, concurrent with each semi-
annual hearing referred to in subsection (a), prepare and submit to the
President and to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the House of
Representatives, a report, beginning with the session following the
designated transfer date.
(c) Contents.--The reports required by subsection (b) shall
include--
(1) a discussion of the significant problems faced by
consumers in shopping for or obtaining consumer financial
products or services;
(2) a justification of the budget request of the previous
year;
(3) a list of the significant rules and orders adopted by
the Bureau, as well as other significant initiatives conducted
by the Bureau, during the preceding year and the plan of the
Bureau for rules, orders, or other initiatives to be undertaken
during the upcoming period;
(4) an analysis of complaints about consumer financial
products or services that the Bureau has received and collected
in its central database on complaints during the preceding
year;
(5) a list, with a brief statement of the issues, of the
public supervisory and enforcement actions to which the Bureau
was a party during the preceding year;
(6) the actions taken regarding rules, orders, and
supervisory actions with respect to covered persons which are
not credit unions or depository institutions;
(7) an assessment of significant actions by State attorneys
general or State regulators relating to Federal consumer
financial law; and
(8) an analysis of the efforts of the Bureau to fulfill the
fair lending mission of the Bureau.
SEC. 1017. FUNDING; PENALTIES AND FINES.
(a) Transfer of Funds From Board Of Governors.--
(1) In general.--Each year (or quarter of such year),
beginning on the designated transfer date, and each quarter
thereafter, the Board of Governors shall transfer to the Bureau
from the combined earnings of the Federal Reserve System, the
amount determined by the Director to be reasonably necessary to
carry out the authorities of the Bureau under Federal consumer
financial law, taking into account such other sums made
available to the Bureau from the preceding year (or quarter of
such year).
(2) Funding cap.--
(A) In general.--Notwithstanding paragraph (1), and
in accordance with this paragraph, the amount that
shall be transferred to the Bureau in each fiscal year
shall not exceed a fixed percentage of the total
operating expenses of the Federal Reserve System, as
reported in the Annual Report, 2009, of the Board of
Governors, equal to--
(i) 10 percent of such expenses in fiscal
year 2011;
(ii) 11 percent of such expenses in fiscal
year 2012; and
(iii) 12 percent of such expenses in fiscal
year 2013, and in each year thereafter.
(B) Amount adjusted for inflation.--The dollar
amount referred to in subparagraph (A)(iii) shall be
adjusted annually, using the percent by which the
average urban consumer price index for the quarter
preceding the date of the payment differs from the
average of that index for the same quarter in the prior
year.
(3) Transition period.--Beginning on the date of enactment
of this Act and until the designated transfer date, the Board
of Governors shall transfer to the Bureau the amount estimated
by the Secretary needed to carry out the authorities granted to
the Bureau under Federal consumer financial law, from the date
of enactment of this Act until the designated transfer date.
(4) Budget and financial management.--
(A) Financial operating plans and forecasts.--The
Director shall provide to the Director of the Office of
Management and Budget copies of the financial operating
plans and forecasts of the Director, as prepared by the
Director in the ordinary course of the operations of
the Bureau, and copies of the quarterly reports of the
financial condition and results of operations of the
Bureau, as prepared by the Director in the ordinary
course of the operations of the Bureau.
(B) Financial statements.--The Bureau shall prepare
annually a statement of--
(i) assets and liabilities and surplus or
deficit;
(ii) income and expenses; and
(iii) sources and application of funds.
(C) Financial management systems.--The Bureau shall
implement and maintain financial management systems
that comply substantially with Federal financial
management systems requirements and applicable Federal
accounting standards.
(D) Assertion of internal controls.--The Director
shall provide to the Comptroller General of the United
States an assertion as to the effectiveness of the
internal controls that apply to financial reporting by
the Bureau, using the standards established in section
3512(c) of title 31, United States Code.
(E) Rule of construction.--This subsection may not
be construed as implying any obligation on the part of
the Director to consult with or obtain the consent or
approval of the Director of the Office of Management
and Budget with respect to any report, plan, forecast,
or other information referred to in subparagraph (A) or
any jurisdiction or oversight over the affairs or
operations of the Bureau.
(5) Audit of the bureau.--
(A) In general.--The Comptroller General shall
annually audit the financial transactions of the Bureau
in accordance with the United States generally accepted
government auditing standards, as may be prescribed by
the Comptroller General of the United States. The audit
shall be conducted at the place or places where
accounts of the Bureau are normally kept. The
representatives of the Government Accountability Office
shall have access to the personnel and to all books,
accounts, documents, papers, records (including
electronic records), reports, files, and all other
papers, automated data, things, or property belonging
to or under the control of or used or employed by the
Bureau pertaining to its financial transactions and
necessary to facilitate the audit, and such
representatives shall be afforded full facilities for
verifying transactions with the balances or securities
held by depositories, fiscal agents, and custodians.
All such books, accounts, documents, records, reports,
files, papers, and property of the Bureau shall remain
in possession and custody of the Bureau. The
Comptroller General may obtain and duplicate any such
books, accounts, documents, records, working papers,
automated data and files, or other information relevant
to such audit without cost to the Comptroller General,
and the right of access of the Comptroller General to
such information shall be enforceable pursuant to
section 716(c) of title 31, United States Code.
(B) Report.--The Comptroller General shall submit
to the Congress a report of each annual audit conducted
under this subsection. The report to the Congress shall
set forth the scope of the audit and shall include the
statement of assets and liabilities and surplus or
deficit, the statement of income and expenses, the
statement of sources and application of funds, and such
comments and information as may be deemed necessary to
inform Congress of the financial operations and
condition of the Bureau, together with such
recommendations with respect thereto as the Comptroller
General may deem advisable. A copy of each report shall
be furnished to the President and to the Bureau at the
time submitted to the Congress.
(C) Assistance and costs.--For the purpose of
conducting an audit under this subsection, the
Comptroller General may, in the discretion of the
Comptroller General, employ by contract, without regard
to section 3709 of the Revised Statutes of the United
States (41 U.S.C. 5), professional services of firms
and organizations of certified public accountants for
temporary periods or for special purposes. Upon the
request of the Comptroller General, the Director of the
Bureau shall transfer to the Government Accountability
Office from funds available, the amount requested by
the Comptroller General to cover the full costs of any
audit and report conducted by the Comptroller General.
The Comptroller General shall credit funds transferred
to the account established for salaries and expenses of
the Government Accountability Office, and such amount
shall be available upon receipt and without fiscal year
limitation to cover the full costs of the audit and
report.
(b) Consumer Financial Protection Fund.--
(1) Separate fund in federal reserve board established.--
There is established in the Federal Reserve Board a separate
fund, to be known as the ``Consumer Financial Protection Fund''
(referred to in this section as the ``Bureau Fund'').
(2) Fund receipts.--All amounts transferred to the Bureau
under subsection (a) shall be deposited into the Bureau Fund.
(3) Investment authority.--
(A) Amounts in bureau fund may be invested.--The
Bureau may request the Board of Governors to invest the
portion of the Bureau Fund that is not, in the judgment
of the Bureau, required to meet the current needs of
the Bureau.
(B) Eligible investments.--Investments authorized
by this paragraph shall be made by the Board of
Governors in obligations of the United States or
obligations that are guaranteed as to principal and
interest by the United States, with maturities suitable
to the needs of the Bureau Fund, as determined by the
Bureau.
(C) Interest and proceeds credited.--The interest
on, and the proceeds from the sale or redemption of,
any obligations held in the Bureau Fund shall be
credited to the Bureau Fund.
(c) Use of Funds.--
(1) In general.--Funds obtained by, transferred to, or
credited to the Bureau Fund shall be immediately available to
the Bureau and under the control of the Director, and shall
remain available until expended, to pay the expenses of the
Bureau in carrying out its duties and responsibilities. The
compensation of the Director and other employees of the Bureau
and all other expenses thereof may be paid from, obtained by,
transferred to, or credited to the Bureau Fund under this
section.
(2) Funds that are not government funds.--Funds obtained by
or transferred to the Bureau Fund shall not be construed to be
Government funds or appropriated monies.
(3) Amounts not subject to apportionment.--Notwithstanding
any other provision of law, amounts in the Bureau Fund and in
the Civil Penalty Fund established under subsection (d) shall
not be subject to apportionment for purposes of chapter 15 of
title 31, United States Code, or under any other authority.
(d) Penalties and Fines.--
(1) Establishment of victims relief fund.--There is
established in the Federal Reserve Board a fund to be known as
the ``Consumer Financial Protection Civil Penalty Fund''
(referred to in this subsection as the ``Civil Penalty Fund'').
If the Bureau obtains a civil penalty against any person in any
judicial or administrative action under Federal consumer
financial laws, the Bureau shall deposit into the Civil Penalty
Fund, the amount of the penalty collected.
(2) Payment to victims.--Amounts in the Civil Penalty Fund
shall be available to the Bureau, without fiscal year
limitation, for payments to the victims of activities for which
civil penalties have been imposed under the Federal consumer
financial laws. To the extent such victims cannot be located or
such payments are otherwise not practicable, the Bureau may use
such funds for the purpose of consumer education and financial
literacy programs.
SEC. 1018. EFFECTIVE DATE.
This subtitle shall become effective on the date of enactment of
this Act.
Subtitle B--General Powers of the Bureau
SEC. 1021. PURPOSE, OBJECTIVES, AND FUNCTIONS.
(a) Purpose.--The Bureau shall seek to implement and, where
applicable, enforce Federal consumer financial law consistently for the
purpose of ensuring that markets for consumer financial products and
services are fair, transparent, and competitive.
(b) Objectives.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law for the purposes of
ensuring that, with respect to consumer financial products and
services--
(1) consumers are provided with timely and understandable
information to make responsible decisions about financial
transactions;
(2) consumers are protected from unfair, deceptive, or
abusive acts and practices and from discrimination;
(3) outdated, unnecessary, or unduly burdensome regulations
are regularly identified and addressed in order to reduce
unwarranted regulatory burdens;
(4) Federal consumer financial law is enforced
consistently, without regard to the status of a person as a
depository institution, in order to promote fair competition;
and
(5) markets for consumer financial products and services
operate transparently and efficiently to facilitate access and
innovation.
(c) Functions.--The primary functions of the Bureau are--
(1) conducting financial education programs;
(2) collecting, investigating, and responding to consumer
complaints;
(3) collecting, researching, monitoring, and publishing
information relevant to the functioning of markets for consumer
financial products and services to identify risks to consumers
and the proper functioning of such markets;
(4) subject to sections 1024 through 1026, supervising
covered persons for compliance with Federal consumer financial
law, and taking appropriate enforcement action to address
violations of Federal consumer financial law;
(5) issuing rules, orders, and guidance implementing
Federal consumer financial law; and
(6) performing such support activities as may be necessary
or useful to facilitate the other functions of the Bureau.
SEC. 1022. RULEMAKING AUTHORITY.
(a) In General.--The Bureau is authorized to exercise its
authorities under Federal consumer financial law to administer,
enforce, and otherwise implement the provisions of Federal consumer
financial law.
(b) Rulemaking, Orders, and Guidance.--
(1) General authority.--The Director may prescribe rules
and issue orders and guidance, as may be necessary or
appropriate to enable the Bureau to administer and carry out
the purposes and objectives of the Federal consumer financial
laws, and to prevent evasions thereof.
(2) Standards for rulemaking.--In prescribing a rule under
the Federal consumer financial laws--
(A) the Bureau shall consider the potential
benefits and costs to consumers and covered persons,
including the potential reduction of access by
consumers to consumer financial products or services
resulting from such rule;
(B) the Bureau shall consult with the appropriate
prudential regulators or other Federal agencies prior
to proposing a rule and during the comment process
regarding consistency with prudential, market, or
systemic objectives administered by such agencies; and
(C) if, during the consultation process described
in subparagraph (B), a prudential regulator provides
the Bureau with a written objection to the proposed
rule of the Bureau or a portion thereof, the Bureau
shall include in the adopting release a description of
the objection and the basis for the Bureau decision, if
any, regarding such objection, except that nothing in
this clause shall be construed as altering or limiting
the procedures under section 1023 that may apply to any
rule prescribed by the Bureau.
(3) Exemptions.--
(A) In general.--The Bureau, by rule, may
conditionally or unconditionally exempt any class of
covered persons, service providers, or consumer
financial products or services, from any provision of
this title, or from any rule issued under this title,
as the Bureau determines necessary or appropriate to
carry out the purposes and objectives of this title,
taking into consideration the factors in subparagraph
(B).
(B) Factors.--In issuing an exemption, as permitted
under subparagraph (A), the Bureau shall, as
appropriate, take into consideration--
(i) the total assets of the class of
covered persons;
(ii) the volume of transactions involving
consumer financial products or services in
which the class of covered persons engages; and
(iii) existing provisions of law which are
applicable to the consumer financial product or
service and the extent to which such provisions
provide consumers with adequate protections.
(4) Exclusive rulemaking authority.--Notwithstanding any
other provisions of Federal law, to the extent that a provision
of Federal consumer financial law authorizes the Bureau and
another Federal agency to issue regulations under that
provision of law for purposes of assuring compliance with
Federal consumer financial law and any regulations thereunder,
the Bureau shall have the exclusive authority to prescribe
rules subject to those provisions of law.
(c) Monitoring.--
(1) In general.--In order to support its rulemaking and
other functions, the Bureau shall monitor for risks to
consumers in the offering or provision of consumer financial
products or services, including developments in markets for
such products or services.
(2) Considerations.--In allocating its resources to perform
the monitoring required by this section, the Bureau may
consider, among other factors--
(A) likely risks and costs to consumers associated
with buying or using a type of consumer financial
product or service;
(B) understanding by consumers of the risks of a
type of consumer financial product or service;
(C) the legal protections applicable to the
offering or provision of a consumer financial product
or service, including the extent to which the law is
likely to adequately protect consumers;
(D) rates of growth in the offering or provision of
a consumer financial product or service;
(E) the extent, if any, to which the risks of a
consumer financial product or service may
disproportionately affect traditionally underserved
consumers; or
(F) the types, number, and other pertinent
characteristics of covered persons that offer or
provide the consumer financial product or service.
(3) Reports.--The Bureau shall publish not fewer than 1
report of significant findings of its monitoring required by
this subsection in each calendar year, beginning with the first
calendar year that begins at least 1 year after the designated
transfer date.
(4) Collection of information.--In conducting research on
the offering and provision of consumer financial products or
services, the Bureau shall have the authority to gather
information from time to time regarding the organization,
business conduct, markets, and activities of persons operating
in consumer financial services markets. In order to gather such
information, the Bureau may--
(A) gather and compile information from examination
reports concerning covered persons or service
providers, assessment of consumer complaints, surveys,
and interviews of covered persons and consumers, and
review of available databases;
(B) require persons to file with the Bureau, under
oath or otherwise, in such form and within such
reasonable period of time as the Bureau may prescribe,
by rule or order, annual or special reports, or answers
in writing to specific questions, furnishing such
information as the Bureau may require; and
(C) make public such information obtained by the
Bureau under this section, as is in the public interest
in reports or otherwise in the manner best suited for
public information and use.
(5) Confidentiality rules.--The Bureau shall prescribe
rules regarding the confidential treatment of information
obtained from persons in connection with the exercise of its
authorities under Federal consumer financial law.
(A) Access by the bureau to reports of other
regulators.--
(i) Examination and financial condition
reports.--Upon providing reasonable assurances
of confidentiality, the Bureau shall have
access to any report of examination or
financial condition made by a prudential
regulator or other Federal agency having
jurisdiction over a covered person or service
provider, and to all revisions made to any such
report.
(ii) Provision of other reports to the
bureau.--In addition to the reports described
in clause (i), a prudential regulator or other
Federal agency having jurisdiction over a
covered person or service provider may, in its
discretion, furnish to the Bureau any other
report or other confidential supervisory
information concerning any insured depository
institution, credit union, or other entity
examined by such agency under authority of any
provision of Federal law.
(B) Access by other regulators to reports of the
bureau.--
(i) Examination reports.--Upon providing
reasonable assurances of confidentiality, a
prudential regulator, a State regulator, or any
other Federal agency having jurisdiction over a
covered person or service provider shall have
access to any report of examination made by the
Bureau with respect to such person, and to all
revisions made to any such report.
(ii) Provision of other reports to other
regulators.--In addition to the reports
described in clause (i), the Bureau may, in its
discretion, furnish to a prudential regulator
or other agency having jurisdiction over a
covered person or service provider any other
report or other confidential supervisory
information concerning such person examined by
the Bureau under the authority of any other
provision of Federal law.
(6) Privacy considerations.--In collecting information from
any person, publicly releasing information held by the Bureau,
or requiring covered persons to publicly report information,
the Bureau shall take steps to ensure that proprietary,
personal, or confidential consumer information that is
protected from public disclosure under section 552(b) or 552a
of title 5, United States Code, or any other provision of law,
is not made public under this title.
(d) Assessment of Significant Rules.--
(1) In general.--The Bureau shall conduct an assessment of
each significant rule or order adopted by the Bureau under
Federal consumer financial law. The assessment shall address,
among other relevant factors, the effectiveness of the rule or
order in meeting the purposes and objectives of this title and
the specific goals stated by the Bureau. The assessment shall
reflect available evidence and any data that the Bureau
reasonably may collect.
(2) Reports.--The Bureau shall publish a report of its
assessment under this subsection not later than 5 years after
the effective date of the subject rule or order.
(3) Public comment required.--Before publishing a report of
its assessment, the Bureau shall invite public comment on
recommendations for modifying, expanding, or eliminating the
newly adopted significant rule or order.
(e) Information Gathering.--In conducting any monitoring or
assessment required by this section, the Bureau may gather information
through a variety of methods, including by conducting surveys or
interviews of consumers.
SEC. 1023. REVIEW OF BUREAU REGULATIONS.
SEC. 1024. .
(a) Review of Bureau Regulations.--On the petition of a member
agency of the Council, the Council may set aside a final regulation
prescribed by the Bureau, or any provision thereof, if the Council
decides, in accordance with subsection (c), that the regulation or
provision would put the safety and soundness of the United States
banking system or the stability of the financial system of the United
States at risk.
(b) Petition.--
(1) Procedure.--An agency represented by a member of the
Council may petition the Council, in writing, and in accordance
with rules prescribed pursuant to subsection (f), to stay the
effectiveness of, or set aside, a regulation if the member
agency filing the petition--
(A) has in good faith attempted to work with the
Bureau to resolve concerns regarding the effect of the
rule on the safety and soundness of the United States
banking system or the stability of the financial system
of the United States; and
(B) files the petition with the Council not later
than 10 days after the date on which the regulation has
be
(C) en published in the Federal Register.
(2) Publication.--Any petition filed with the Council under
this section shall be published in the Federal Register and
transmitted contemporaneously with filing to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the
Committee on Financial Services of the House of
Representatives.
(c) Stays and Set Asides.--
(1) Stay.--
(A) In general.--Upon the request of any member
agency, the Chairperson of the Council may stay the
effectiveness of a regulation for the purpose of
allowing appropriate consideration of the petition by
the Council.
(B) Expiration.--A stay issued under this paragraph
shall expire on the earlier of--
(i) 90 days after the date of filing of the
petition under subsection (b); or
(ii) the date on which the Council makes a
decision under paragraph (3).
(2) No adverse inference.--After the expiration of any stay
imposed under this section, no inference shall be drawn
regarding the validity or enforceability of a regulation which
was the subject of the petition.
(3) Vote.--
(A) In general.--The decision to issue a stay of,
or set aside, any regulation under this section shall
be made only with the affirmative vote in accordance
with subparagraph (B) of \2/3\ of the members of the
Council then serving.
(B) Authorization to vote.--A member of the Council
may vote to stay the effectiveness of, or set aside, a
final regulation prescribed by the Bureau only if the
agency or department represented by that member has--
(i) considered any relevant information
provided by the agency submitting the petition
and by the Bureau; and
(ii) made an official determination, at a
public meeting where applicable, that the
regulation which is the subject of the petition
would put the safety and soundness of the
United States banking system or the stability
of the financial system of the United States at
risk.
(4) Decisions to set aside.--
(A) Effect of decision.--A decision by the Council
to set aside a regulation prescribed by the Bureau, or
provision thereof, shall render such regulation, or
provision thereof, unenforceable.
(B) Timely action required.--The Council may not
issue a decision to set aside a regulation, or
provision thereof, which is the subject of a petition
under this section after the expiration of the later
of--
(i) 45 days following the date of filing of
the petition, unless a stay is issued under
paragraph (1); or
(ii) the expiration of a stay issued by the
Council under this section.
(C) Separate authority.--The issuance of a stay
under this section does not affect the authority of the
Council to set aside a regulation.
(5) Dismissal due to inaction.--A petition under this
section shall be deemed dismissed if the Council has not issued
a decision to set aside a regulation, or provision thereof,
within the period for timely action under paragraph (4)(B).
(6) Publication of decision.--Any decision under this
subsection to issue a stay of, or set aside, a regulation or
provision thereof shall be published by the Council in the
Federal Register as soon as practicable after the decision is
made, with an explanation of the reasons for the decision.
(7) Rulemaking procedures inapplicable.--The notice and
comment procedures under section 553 of title 5, United States
Code, shall not apply to any decision under this section of the
Council to issue a stay of, or set aside, a regulation.
(8) Judicial review of decisions by the council.--A
decision by the Council to set aside a regulation prescribed by
the Bureau, or provision thereof, shall be subject to review
under chapter 7 of title 5, United States Code.
(d) Application of Other Law.--Nothing in this section shall be
construed as altering, limiting, or restricting the application of any
other provision of law, except as otherwise specifically provided in
this section, including chapter 5 and chapter 7 of title 5, United
States Code, to a regulation which is the subject of a petition filed
under this section.
(e) Savings Clause.--Nothing in this section shall be construed as
limiting or restricting the Bureau from engaging in a rulemaking in
accordance with applicable law.
(f) Implementing Rules.--The Council shall prescribe procedural
rules to implement this section.
SEC. 1024. SUPERVISION OF NONDEPOSITORY COVERED PERSONS.
(a) Scope of Coverage.--
(1) Applicability.--Notwithstanding any other provision of
this title, and except as provided in paragraph (3), this
section shall apply to any covered person who--
(A) offers or provides origination, brokerage, or
servicing of loans secured by real estate for use by
consumers primarily for personal, family, or household
purposes, or loan modification or foreclosure relief
services in connection with such loans; or
(B) is a larger participant of a market for other
consumer financial products or services, as defined by
rule in accordance with paragraph (2).
(2) Rulemaking to define covered persons subject to this
section.--The Bureau shall consult with the Federal Trade
Commission prior to issuing a rule to define covered persons
subject to this section, in accordance with paragraph (1)(B).
The Bureau shall issue its initial rule within 1 year of the
designated transfer date.
(3) Rules of construction.--
(A) Certain persons excluded.--This section shall
not apply to persons described in section 1025(a) or
1026(a).
(B) Activity levels.--For purposes of computing
activity levels under paragraph (1) or rules issued
thereunder, activities of affiliated companies (other
than insured depository institutions or insured credit
unions) shall be aggregated.
(b) Supervision.--
(1) In general.--The Bureau shall require reports and
conduct examinations on a periodic basis of persons described
in subsection (a) for purposes of--
(A) assessing compliance with the requirements of
Federal consumer financial law;
(B) obtaining information about the activities and
compliance systems or procedures of such person; and
(C) detecting and assessing risks to consumers and
to markets for consumer financial products and
services.
(2) Risk-based supervision program.--The Bureau shall
exercise its authority under paragraph (1) in a manner designed
to ensure that such exercise, with respect to persons described
in subsection (a), is based on the assessment by the Bureau of
the risks posed to consumers in the relevant product markets
and geographic markets, and taking into consideration, as
applicable--
(A) the asset size of the covered person;
(B) the volume of transactions involving consumer
financial products or services in which the covered
person engages;
(C) the risks to consumers created by the provision
of such consumer financial products or services;
(D) the extent to which such institutions are
subject to oversight by State authorities for consumer
protection; and
(E) any other factors that the Bureau determines to
be relevant to a class of covered persons.
(3) Coordination.--To minimize regulatory burden, the
Bureau shall coordinate its supervisory activities with the
supervisory activities conducted by prudential regulators and
the State bank regulatory authorities, including establishing
their respective schedules for examining persons described in
subsection (a) and requirements regarding reports to be
submitted by such persons.
(4) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to persons described in
subsection (a) that have been provided or required to
have been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(5) Preservation of authority.--Nothing in this title may
be construed as limiting the authority of the Director to
require reports from persons described in subsection (a), as
permitted under paragraph (1), regarding information owned or
under the control of such person, regardless of whether such
information is maintained, stored, or processed by another
person.
(6) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report of
examination or related information identifying possible tax law
noncompliance.
(7) Registration, recordkeeping, and other requirements for
certain persons.--
(A) In general.--The Bureau shall prescribe rules
to facilitate supervision of persons described in
subsection (a) and assessment and detection of risks to
consumers.
(B) Registration.--
(i) In general.--The Bureau shall prescribe
rules regarding registration requirements for
persons described in subsection (a).
(ii) Exception for related persons.--The
Bureau may not impose requirements under this
section regarding the registration of a related
person.
(iii) Registration information.--Subject to
rules prescribed by the Bureau, the Bureau
shall publicly disclose the registration
information about persons described in
subsection (a) to facilitate the ability of
consumers to identify persons described in
subsection (a) registered with the Bureau.
(C) Recordkeeping.--The Bureau may require a person
described in subsection (a), to generate, provide, or
retain records for the purposes of facilitating
supervision of such persons and assessing and detecting
risks to consumers.
(D) Requirements concerning obligations.--The
Bureau may prescribe rules regarding a person described
in subsection (a), to ensure that such persons are
legitimate entities and are able to perform their
obligations to consumers. Such requirements may include
background checks for principals, officers, directors,
or key personnel and bonding or other appropriate
financial requirements.
(E) Consultation with state agencies.--In
developing and implementing requirements under this
paragraph, the Bureau shall consult with State agencies
regarding requirements or systems (including
coordinated or combined systems for registration),
where appropriate.
(c) Exclusive Enforcement Authority.--
(1) The bureau to have exclusive enforcement authority.--To
the extent that Federal law authorizes the Bureau and another
Federal agency to enforce Federal consumer financial law, the
Bureau shall have exclusive authority to enforce that Federal
consumer financial law with respect to any person described in
subsection (a)(1)(B).
(2) Referral.--Any Federal agency authorized to enforce a
Federal consumer financial law described in paragraph (1) may
recommend in writing to the Bureau that the Bureau initiate an
enforcement proceeding, as the Bureau is authorized by that
Federal law or by this title.
(3) Coordination with the federal trade commission.--
(A) In general.--The Bureau and the Federal Trade
Commission shall coordinate enforcement actions for
violations of Federal law regarding the offering or
provision of consumer financial products or services by
any covered person that is described in subsection
(a)(1)(A), or service providers thereto. In carrying
out this subparagraph, the agencies shall negotiate an
agreement to establish procedures for such
coordination, including procedures for notice to the
other agency, where feasible, prior to initiating a
civil action to enforce a Federal law regarding the
offering or provision of consumer financial products or
services.
(B) Civil actions.--Whenever a civil action has
been filed by, or on behalf of, the Bureau or the
Federal Trade Commission for any violation of any
provision of Federal law described in subparagraph (A),
or any regulation prescribed under such provision of
law--
(i) the other agency may not, during the
pendency of that action, institute a civil
action under such provision of law against any
defendant named in the complaint in such
pending action for any violation alleged in the
complaint; and
(ii) the Bureau or the Federal Trade
Commission may intervene as a party in any such
action brought by the other agency, and, upon
intervening--
(I) be heard on all matters arising
in such enforcement action; and
(II) file petitions for appeal in
such actions.
(C) Agreement terms.--The terms of any agreement
negotiated under subparagraph (A) may modify or
supersede the provisions of subparagraph (B).
(D) Deadline.--The agencies shall reach the
agreement required under subparagraph (A) not later
than 6 months after the designated transfer date.
(d) Exclusive Rulemaking and Examination Authority.--
Notwithstanding any other provision of Federal law, to the extent that
Federal law authorizes the Bureau and another Federal agency to issue
regulations or guidance, conduct examinations, or require reports from
a person described in subsection (a) under such law for purposes of
assuring compliance with Federal consumer financial law and any
regulations thereunder, the Bureau shall have the exclusive authority
to prescribe rules, issue guidance, conduct examinations, require
reports, or issue exemptions with regard to a person described in
subsection (a), subject to those provisions of law.
(e) Service Providers.--A service provider to a person described in
subsection (a) shall be subject to the authority of the Bureau under
this section, to the same extent as if such service provider were
engaged in a service relationship with a bank, and the Bureau were an
appropriate Federal banking agency under section 7(c) of the Bank
Service Company Act (12 U.S.C. 1867(c)). In conducting any examination
or requiring any report from a service provider subject to this
subsection, the Bureau shall coordinate with the appropriate prudential
regulator, as applicable.
(f) Preservation of Farm Credit Administration Authority.--No
provision of this title may be construed as modifying, limiting, or
otherwise affecting the authority of the Farm Credit Administration.
SEC. 1025. SUPERVISION OF VERY LARGE BANKS, SAVINGS ASSOCIATIONS, AND
CREDIT UNIONS.
(a) Scope of Coverage.--
(1) Applicability.--This section shall apply to any covered
person that is--
(A) an insured depository institution with total
assets of more than $10,000,000,000 and any affiliate
thereof; or
(B) an insured credit union with total assets of
more than $10,000,000,000 and any affiliate thereof.
(2) Rule of construction.--For purposes of determining
total assets under this section and section 1026, the Bureau
shall rely on the same regulations and interim methodologies
specified in section 312(e).
(b) Supervision.--
(1) In general.--The Bureau shall require reports and
conduct examinations on a periodic basis of persons described
in subsection (a) for purposes of--
(A) assessing compliance with the requirements of
Federal consumer financial laws;
(B) obtaining information about the activities and
compliance systems or procedures of such persons; and
(C) detecting and assessing risks to consumers and
to markets for consumer financial products and
services.
(2) Coordination.--To minimize regulatory burden, the
Bureau shall coordinate its supervisory activities with the
supervisory activities conducted by prudential regulators and
the State bank regulatory authorities, including establishing
their respective schedules for examining such persons described
in subsection (a) and requirements regarding reports to be
submitted by such persons.
(3) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to a person described in
subsection (a) that have been provided or required to
have been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(4) Preservation of authority.--Nothing in this title may
be construed as limiting the authority of the Director to
require reports from a person described in subsection (a), as
permitted under paragraph (1), regarding information owned or
under the control of such person, regardless of whether such
information is maintained, stored, or processed by another
person.
(5) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report of
examination or related information identifying possible tax law
noncompliance.
(c) Primary Enforcement Authority.--
(1) The bureau to have primary enforcement authority.--To
the extent that the Bureau and another Federal agency are
authorized to enforce a Federal consumer financial law, the
Bureau shall have primary authority to enforce that Federal
consumer financial law with respect to any person described in
subsection (a).
(2) Referral.--Any Federal agency, other than the Federal
Trade Commission, that is authorized to enforce a Federal
consumer financial law may recommend, in writing, to the Bureau
that the Bureau initiate an enforcement proceeding with respect
to a person described in subsection (a), as the Bureau is
authorized to do by that Federal consumer financial law.
(3) Backup enforcement authority of other federal agency.--
If the Bureau does not, before the end of the 120-day period
beginning on the date on which the Bureau receives a
recommendation under paragraph (2), initiate an enforcement
proceeding, the other agency referred to in paragraph (2) may
initiate an enforcement proceeding, as permitted by the subject
provision of Federal law.
(d) Service Providers.--A service provider to a person described in
subsection (a) shall be subject to the authority of the Bureau under
this section, to the same extent as if the Bureau were an appropriate
Federal banking agency under section 7(c) of the Bank Service Company
Act 12 U.S.C. 1867(c). In conducting any examination or requiring any
report from a service provider subject to this subsection, the Bureau
shall coordinate with the appropriate prudential regulator.
(e) Simultaneous and Coordinated Supervisory Action.--
(1) Examinations.--A prudential regulator and the Bureau
shall, with respect to each insured depository institution,
insured credit union, or other covered person described in
subsection (a) that is supervised by the prudential regulator
and the Bureau, respectively--
(A) coordinate the scheduling of examinations of
the insured depository institution, insured credit
union, or other covered person described in subsection
(a);
(B) conduct simultaneous examinations of each
insured depository institution, insured credit union,
or other covered person described in subsection (a),
unless such institution requests examinations to be
conducted separately;
(C) share each draft report of examination with the
other agency and permit the receiving agency a
reasonable opportunity (which shall not be less than a
period of 30 days after the date of receipt) to comment
on the draft report before such report is made final;
and
(D) prior to issuing a final report of examination
or taking supervisory action, take into consideration
concerns, if any, raised in the comments made by the
other agency.
(2) Coordination with state bank supervisors.--The Bureau
shall pursue arrangements and agreements with State bank
supervisors to coordinate examinations, consistent with
paragraph (1).
(3) Avoidance of conflict in supervision.--
(A) Request.--If the proposed supervisory
determinations of the Bureau and a prudential regulator
(in this section referred to collectively as the
``agencies'') are conflicting, an insured depository
institution, insured credit union, or other covered
person described in subsection (a) may request the
agencies to coordinate and present a joint statement of
coordinated supervisory action.
(B) Joint statement.--The agencies shall provide a
joint statement under subparagraph (A), not later than
30 days after the date of receipt of the request of the
insured depository institution, credit union, or
covered person described in subsection (a).
(4) Appeals to governing panel.--
(A) In general.--If the agencies do not resolve the
conflict or issue a joint statement required by
subparagraph (B), or if either of the agencies takes or
attempts to take any supervisory action relating to the
request for the joint statement without the consent of
the other agency, an insured depository institution,
insured credit union, or other covered person described
in subsection (a) may institute an appeal to a
governing panel, as provided in this subsection, not
later than 30 days after the expiration of the period
during which a joint statement is required to be filed
under paragraph (3)(B).
(B) Composition of governing panel.--The governing
panel for an appeal under this paragraph shall be
composed of--
(i) a representative from the Bureau and a
representative of the prudential regulator,
both of whom--
(I) have not participated in the
material supervisory determinations
under appeal; and
(II) do not directly or indirectly
report to the person who participated
materially in the supervisory
determinations under appeal; and
(ii) one individual representative, to be
determined on a rotating basis, from among the
Board of Governors, the Corporation, the
National Credit Union Administration, and the
Office of the Comptroller of the Currency,
other than any agency involved in the subject
dispute.
(C) Conduct of appeal.--In an appeal under this
paragraph--
(i) the insured depository institution,
insured credit union, or other covered person
described in subsection (a)--
(I) shall include in its appeal all
the facts and legal arguments
pertaining to the matter; and
(II) may, through counsel,
employees, or representatives, appear
before the governing panel in person or
by telephone; and
(ii) the governing panel--
(I) may request the insured
depository institution, insured credit
union, or other covered person
described in subsection (a), the
Bureau, or the prudential regulator to
produce additional information relevant
to the appeal; and
(II) by a majority vote of its
members, shall provide a final
determination, in writing, not later
than 30 days after the date of filing
of an informationally complete appeal,
or such longer period as the panel and
the insured depository institution,
insured credit union, or other covered
person described in subsection (a) may
jointly agree.
(D) Public availability of determinations.--A
governing panel shall publish all information contained
in a determination by the governing panel, with
appropriate redactions of information that would be
subject to an exemption from disclosure under section
552 of title 5, United States Code.
(E) Prohibition against retaliation.--The Bureau
and the prudential regulators shall prescribe rules to
provide safeguards from retaliation against the insured
depository institution, insured credit union, or other
covered person described in subsection (a) instituting
an appeal under this paragraph, as well as their
officers and employees.
(F) Limitation.--The process provided in this
paragraph shall not apply to a determination by a
prudential regulator to appoint a conservator or
receiver for an insured depository institution or a
liquidating agent for an insured credit union, as the
case may be, or a decision to take action pursuant to
section 38 of the Federal Deposit Insurance Act (12
U.S.C. 1831o) or section 212 of the Federal Credit
Union Act (112 U.S.C. 1790a), as applicable.
(G) Effect on other authority.--Nothing in this
section shall modify or limit the authority of the
Bureau to interpret, or take enforcement action under,
any Federal consumer financial law.
SEC. 1026. OTHER BANKS, SAVINGS ASSOCIATIONS, AND CREDIT UNIONS.
(a) Scope of Coverage.--This section shall apply to any covered
person that is--
(1) an insured depository institution with total assets of
$10,000,000,000 or less; or
(2) an insured credit union with total assets of
$10,000,000,000 or less.
(b) Reports.--The Director may require reports from a person
described in subsection (a), as necessary to support the role of the
Bureau in implementing Federal consumer financial law, to support its
examination activities under subsection (c), and to assess and detect
risks to consumers and consumer financial markets.
(1) Use of existing reports.--The Bureau shall, to the
fullest extent possible, use--
(A) reports pertaining to a person described in
subsection (a) that have been provided or required to
have been provided to a Federal or State agency; and
(B) information that has been reported publicly.
(2) Preservation of authority.--Nothing in this subsection
may be construed as limiting the authority of the Director from
requiring from a person described in subsection (a), as
permitted under paragraph (1), information owned or under the
control of such person, regardless of whether such information
is maintained, stored, or processed by another person.
(3) Reports of tax law noncompliance.--The Bureau shall
provide the Commissioner of Internal Revenue with any report of
examination or related information identifying possible tax law
noncompliance.
(c) Examinations.--
(1) In general.--The Bureau may, at its discretion, include
examiners on a sampling basis of the examinations performed by
the prudential regulator of persons described in subsection
(a).
(2) Agency coordination.--The prudential regulator shall--
(A) provide all reports, records, and documentation
related to the examination process for any institution
included in the sample referred to in paragraph (1) to
the Bureau on a timely and continual basis;
(B) involve such Bureau examiner in the entire
examination process for such person; and
(C) consider input of the Bureau concerning the
scope of an examination, conduct of the examination,
the contents of the examination report, the designation
of matters requiring attention, and examination
ratings.
(d) Enforcement.--
(1) In general.--Except for requiring reports under
subsection (b), the prudential regulator shall have exclusive
authority to enforce compliance with respect to a person
described in subsection (a).
(2) Coordination with prudential regulator.--
(A) Referral.--When the Bureau has reason to
believe that a person described in subsection (a) has
engaged in a material violation of a Federal consumer
financial law, the Bureau shall notify the prudential
regulator in writing and recommend appropriate action
to respond.
(B) Response.--Upon receiving a recommendation
under subparagraph (A), the prudential regulator shall
provide a written response to the Bureau not later than
60 days thereafter.
(e) Service Providers.--A service provider to a substantial number
of persons described in subsection (a) shall be subject to the
authority of the Bureau under section 1025 to the same extent as if the
Bureau were an appropriate Federal bank agency under section 7(c) of
the Bank Service Company Act (12 U.S.C. 1867(c)). When conducting any
examination or requiring any report from a service provider subject to
this subsection, the Bureau shall coordinate with the appropriate
prudential regulator.
SEC. 1027. LIMITATIONS ON AUTHORITIES OF THE BUREAU; PRESERVATION OF
AUTHORITIES.
(a) Exclusion for Merchants, Retailers, and Other Sellers of
Nonfinancial Goods or Services.--
(1) Sale or brokerage of nonfinancial good or service.--The
Bureau may not exercise any rulemaking, supervisory,
enforcement or other authority under this title with respect to
a person who is a merchant, retailer, or seller of any
nonfinancial good or service and is engaged in the sale or
brokerage of such nonfinancial good or service, except to the
extent that such person is engaged in offering or providing any
consumer financial product or service, or is otherwise subject
to any enumerated consumer law or any law for which authorities
are transferred under subtitle F or H.
(2) Offering or provision of certain consumer financial
products or services in connection with the sale or brokerage
of nonfinancial good or service.--
(A) In general.--Except as provided in subparagraph
(B), and subject to subparagraph (C), the Bureau may
not exercise any rulemaking, supervisory, enforcement,
or other authority under this title with respect to a
merchant, retailer, or seller of nonfinancial goods or
services who--
(i) extends credit directly to a consumer,
in a case in which the good or service being
provided is not itself a consumer financial
product or service (other than credit described
in this subparagraph), exclusively for the
purpose of enabling that consumer to purchase
such nonfinancial good or service directly from
the merchant, retailer, or seller;
(ii) directly, or through an agreement with
another person, collects debt arising from
credit extended as described in clause (i); or
(iii) sells or conveys debt described in
clause (i) that is delinquent or otherwise in
default.
(B) Applicability.--Subparagraph (A) does not apply
to any credit transaction or collection of debt, other
than as described in subparagraph (C), arising from a
transaction described in subparagraph (A)--
(i) in which the merchant, retailer, or
seller of nonfinancial goods or services
assigns, sells or otherwise conveys to another
person such debt owed by the consumer (except
for a sale of debt that is delinquent or
otherwise in default, as described in
subparagraph (A)(iii));
(ii) in which the credit extended exceeds
the market value of the nonfinancial good or
service provided, or the Bureau otherwise finds
that the sale of the nonfinancial good or
service is done as a subterfuge, so as to evade
or circumvent the provisions of this title; or
(iii) in which the merchant, retailer, or
seller of nonfinancial goods or services
regularly extends credit and the credit is--
(I) subject to a finance charge; or
(II) payable by written agreement
in more than 4 installments.
(C) Limitation.--Notwithstanding subparagraph (B),
the Bureau may not exercise any rulemaking,
supervisory, enforcement, or other authority under this
title with respect to a merchant, retailer, or seller
of nonfinancial goods or services that is not engaged
significantly in offering or providing consumer
financial products or services.
(D) Rule of construction.--No provision of this
title may be construed as modifying, limiting, or
superseding the supervisory or enforcement authority of
the Federal Trade Commission or any other agency (other
than the Bureau) with respect to credit extended, or
the collection of debt arising from such extension,
directly by a merchant or retailer to a consumer
exclusively for the purpose of enabling that consumer
to purchase nonfinancial goods or services directly
from the merchant or retailer.
(b) Exclusion for Real Estate Brokerage Activities.--
(1) Real estate brokerage activities excluded.--Without
limiting subsection (a), and except as permitted in paragraph
(2), the Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority under this title with respect
to a person that is licensed or registered as a real estate
broker or real estate agent, in accordance with State law, to
the extent that such person--
(A) acts as a real estate agent or broker for a
buyer, seller, lessor, or lessee of real property;
(B) brings together parties interested in the sale,
purchase, lease, rental, or exchange of real property;
(C) negotiates, on behalf of any party, any portion
of a contract relating to the sale, purchase, lease,
rental, or exchange of real property (other than in
connection with the provision of financing with respect
to any such transaction); or
(D) offers to engage in any activity, or act in any
capacity, described in subparagraph (A), (B), or (C).
(2) Description of activities.--Paragraph (1) shall not
apply to any person to the extent that such person is engaged
in the offering or provision of any consumer financial product
or service or is otherwise subject to any enumerated consumer
law or any law for which authorities are transferred under
subtitle F or H.
(c) Exclusion for Manufactured Home Retailers and Modular Home
Retailers.--
(1) In general.--The Director may not exercise any
rulemaking, supervisory, enforcement, or other authority over a
person to the extent that--
(A) such person is not described in paragraph (2);
and
(B) such person--
(i) acts as an agent or broker for a buyer
or seller of a manufactured home or a modular
home;
(ii) facilitates the purchase by a consumer
of a manufactured home or modular home, by
negotiating the purchase price or terms of the
sales contract (other than providing financing
with respect to such transaction); or
(iii) offers to engage in any activity
described in clause (i) or (ii).
(2) Description of activities.--A person is described in
this paragraph to the extent that such person is engaged in the
offering or provision of any consumer financial product or
service or is otherwise subject to any enumerated consumer law
or any law for which authorities are transferred under subtitle
F or H.
(3) Definitions.--For purposes of this subsection, the
following definitions shall apply:
(A) Manufactured home.--The term ``manufactured
home'' has the same meaning as in section 603 of the
National Manufactured Housing Construction and Safety
Standards Act of 1974 (42 U.S.C. 5402).
(B) Modular home.--The term ``modular home'' means
a house built in a factory in 2 or more modules that
meet the State or local building codes where the house
will be located, and where such modules are transported
to the building site, installed on foundations, and
completed.
(d) Exclusion for Accountants and Tax Preparers.--
(1) In general.--Except as permitted in paragraph (2), the
Bureau may not exercise any rulemaking, supervisory,
enforcement, or other authority over--
(A) any person that is a certified public
accountant, permitted to practice as a certified public
accounting firm, or certified or licensed for such
purpose by a State, or any individual who is employed
by or holds an ownership interest with respect to a
person described in this subparagraph, when such person
is performing or offering to perform--
(i) customary and usual accounting
activities, including the provision of
accounting, tax, advisory, or other services
that are subject to the regulatory authority of
a State board of accountancy or a Federal
authority; or
(ii) other services that are incidental to
such customary and usual accounting activities,
to the extent that such incidental services are
not offered or provided--
(I) by the person separate and
apart from such customary and usual
accounting activities; or
(II) to consumers who are not
receiving such customary and usual
accounting activities; or
(B) any person, other than a person described in
subparagraph (A) that performs income tax preparation
activities for consumers.
(2) Description of activities.--
(A) In general.--Paragraph (1) shall not apply to
any person described in paragraph (1)(A) or (1)(B) to
the extent that such person is engaged in any activity
which is not a customary and usual accounting activity
described in paragraph (1)(A) or incidental thereto but
which is the offering or provision of any consumer
financial product or service, except to the extent that
a person described in paragraph (1)(A) is engaged in an
activity which is a customary and usual accounting
activity described in paragraph (1)(A), or incidental
thereto.
(B) Not a customary and usual accounting
activity.--For purposes of this subsection, extending
or brokering credit is not a customary and usual
accounting activity, or incidental thereto.
(C) Rule of construction.--For purposes of
subparagraphs (A) and (B), a person described in
paragraph (1)(A) shall not be deemed to be extending
credit, if such person is only extending credit
directly to a consumer, exclusively for the purpose of
enabling such consumer to purchase services described
in clause (i) or (ii) of paragraph (1)(A) directly from
such person, and such credit is--
(i) not subject to a finance charge; and
(ii) not payable by written agreement in
more than 4 installments.
(D) Other limitations.--Paragraph (1) does not
apply to any person described in paragraph (1)(A) or
(1)(B) that is otherwise subject to any enumerated
consumer law or any law for which authorities are
transferred under subtitle F or H.
(e) Exclusion for Attorneys.--
(1) In general.--The Bureau may not exercise any authority
to conduct examinations of an attorney licensed by a State, to
the extent that the attorney is engaged in the practice of law
under the laws of such State.
(2) Exception for enumerated consumer laws and transferred
authorities.--Paragraph (1) shall not apply to an attorney who
is engaged in the offering or provision of any consumer
financial product or service, or is otherwise subject to any
enumerated consumer law or any law for which authorities are
transferred under subtitle F or H.
(f) Exclusion for Persons Regulated by a State Insurance
Regulator.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
any State insurance regulator to adopt rules, initiate
enforcement proceedings, or take any other action with respect
to a person regulated by a State insurance regulator. Except as
provided in paragraph (2), the Bureau shall have no authority
to exercise any power to enforce this title with respect to a
person regulated by a State insurance regulator.
(2) Description of activities.--Paragraph (1) does not
apply to any person described in such paragraph to the extent
that such person is engaged in the offering or provision of any
consumer financial product or service or is otherwise subject
to any enumerated consumer law or any law for which authorities
are transferred under subtitle F or H.
(g) Exclusion for Employee Benefit and Compensation Plans and
Certain Other Arrangements Under the Internal Revenue Code of 1986.--
(1) Preservation of authority of other agencies.--No
provision of this title shall be construed as altering,
amending, or affecting the authority of the Secretary of the
Treasury, the Secretary of Labor, or the Commissioner of
Internal Revenue to adopt regulations, initiate enforcement
proceedings, or take any actions with respect to any specified
plan or arrangement.
(2) Activities not constituting the offering or provision
of any consumer financial product or service.--For purposes of
this title, a person shall not be treated as having engaged in
the offering or provision of any consumer financial product or
service solely because such person is a 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) Limitation on bureau authority.--
(A) In general.--Except as provided under
subparagraphs (B) and (C), the Bureau may not exercise
any rulemaking or enforcement authority with respect to
products or services that relate to any specified plan
or arrangement.
(B) Bureau action only pursuant to agency
request.--The Secretary and the Secretary of Labor may
jointly issue a written request to the Bureau regarding
implementation of appropriate consumer protection
standards under this title with respect to the
provision of services relating to any specified plan or
arrangement. Subject to a request made under this
subparagraph, the Bureau may exercise rulemaking
authority, and may act to enforce a rule prescribed
pursuant to such request, in accordance with the
provisions of this title. A request made by the
Secretary and the Secretary of Labor under this
subparagraph shall describe the basis for, and scope
of, appropriate consumer protection standards to be
implemented under this title with respect to the
provision of services relating to any specified plan or
arrangement.
(C) Description of products or services.--To the
extent that a person engaged in providing products or
services relating to any specified plan or arrangement
is subject to any enumerated consumer law or any law
for which authorities are transferred under subtitle F
or H, subparagraph (A) shall not apply with respect to
that law.
(4) Specified plan or arrangement.--For purposes of this
subsection, the term ``specified plan or arrangement'' means
any plan, account, or arrangement described in section 220,
223, 401(a), 403(a), 403(b), 408, 408A, 529, or 530 of the
Internal Revenue Code of 1986, or any employee benefit or
compensation plan or arrangement, including a plan that is
subject to title I of the Employee Retirement Income Security
Act of 1974.
(h) Persons Regulated by a State Securities Commission.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
any securities commission (or any agency or office performing
like functions) of any State to adopt rules, initiate
enforcement proceedings, or take any other action with respect
to a person regulated by any securities commission (or any
agency or office performing like functions) of any State.
Except as permitted in paragraph (2) and subsection (f), the
Bureau shall have no authority to exercise any power to enforce
this title with respect to a person regulated by any securities
commission (or any agency or office performing like functions)
of any State, but only to the extent that the person acts in
such regulated capacity.
(2) Description of activities.--Paragraph (1) shall not
apply to any person to the extent such person is engaged in the
offering or provision of any consumer financial product or
service, or is otherwise subject to any enumerated consumer law
or any law for which authorities are transferred under subtitle
F or H.
(i) Exclusion for Persons Regulated by the Commission.--
(1) In general.--No provision of this title may be
construed as altering, amending, or affecting the authority of
the Commission to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by the Commission. The Bureau shall have no authority
to exercise any power to enforce this title with respect to a
person regulated by the Commission.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Commission shall consult and coordinate,
where feasible, with the Bureau with respect to any rule
(including any advance notice of proposed rulemaking) regarding
an investment product or service that is the same type of
product as, or that competes directly with, a consumer
financial product or service that is subject to the
jurisdiction of the Bureau under this title or under any other
law. In carrying out this paragraph, the agencies shall
negotiate an agreement to establish procedures for such
coordination, including procedures for providing advance notice
to the Bureau when the Commission is initiating a rulemaking.
(j) Exclusion for Persons Regulated by the Commodity Futures
Trading Commission.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
the Commodity Futures Trading Commission to adopt rules,
initiate enforcement proceedings, or take any other action with
respect to a person regulated by the Commodity Futures Trading
Commission. The Bureau shall have no authority to exercise any
power to enforce this title with respect to a person regulated
by the Commodity Futures Trading Commission.
(2) Consultation and coordination.--Notwithstanding
paragraph (1), the Commodity Futures Trading Commission shall
consult and coordinate with the Bureau with respect to any rule
(including any advance notice of proposed rulemaking) regarding
a product or service that is the same type of product as, or
that competes directly with, a consumer financial product or
service that is subject to the jurisdiction of the Bureau under
this title or under any other law.
(k) Exclusion for Persons Regulated by the Farm Credit
Administration.--
(1) In general.--No provision of this title shall be
construed as altering, amending, or affecting the authority of
the Farm Credit Administration to adopt rules, initiate
enforcement proceedings, or take any other action with respect
to a person regulated by the Farm Credit Administration. The
Bureau shall have no authority to exercise any power to enforce
this title with respect to a person regulated by the Farm
Credit Administration.
(2) Definition.--For purposes of this subsection, the term
``person regulated by the Farm Credit Administration'' means
any Farm Credit System institution that is chartered and
subject to the provisions of the Farm Credit Act of 1971 (12
U.S.C. 2001 et seq.).
(l) Exclusion for Activities Relating to Charitable
Contributions.--
(1) In general.--The Director and the Bureau may not
exercise any rulemaking, supervisory, enforcement, or other
authority, including authority to order penalties, over any
activities related to the solicitation or making of voluntary
contributions to a tax-exempt organization as recognized by the
Internal Revenue Service, by any agent, volunteer, or
representative of such organizations to the extent the
organization, agent, volunteer, or representative thereof is
soliciting or providing advice, information, education, or
instruction to any donor or potential donor relating to a
contribution to the organization.
(2) Limitation.--The exclusion in paragraph (1) does not
apply to other activities not described in paragraph (1) that
are the offering or provision of any consumer financial product
or service, or are otherwise subject to any enumerated consumer
law or any law for which authorities are transferred under
subtitle F or H.
(m) Insurance.--The Bureau may not define as a financial product or
service, by regulation or otherwise, engaging in the business of
insurance.
(n) Limited Authority of the Bureau.--Notwithstanding subsections
(a) through (h) and (l), a person subject to or described in one or
more of such subsections--
(1) may be a service provider; and
(2) may be subject to requests from, or requirements
imposed by, the Bureau regarding information in order to carry
out the responsibilities and functions of the Bureau and in
accordance with section 1022, 1052, or 1053.
(o) No Authority To Impose Usury Limit.--No provision of this title
shall be construed as conferring authority on the Bureau to establish a
usury limit applicable to an extension of credit offered or made by a
covered person to a consumer, unless explicitly authorized by law.
(p) Attorney General.--No provision of this title, including
section 1024(c)(1), shall affect the authorities of the Attorney
General under otherwise applicable provisions of law.
(q) Secretary of the Treasury.--No provision of this title shall
affect the authorities of the Secretary, including with respect to
prescribing rules, initiating enforcement proceedings, or taking other
actions with respect to a person that performs income tax preparation
activities for consumers.
(r) Deposit Insurance and Share Insurance.--Nothing in this title
shall affect the authority of the Corporation under the Federal Deposit
Insurance Act or the National Credit Union Administration Board under
the Federal Credit Union Act as to matters related to deposit insurance
and share insurance, respectively.
SEC. 1028. AUTHORITY TO RESTRICT MANDATORY PRE-DISPUTE ARBITRATION.
(a) Study and Report.--The Bureau shall conduct a study of, and
shall provide a report to Congress concerning, the use of agreements
providing for arbitration of any future dispute between covered persons
and consumers in connection with the offering or providing of consumer
financial products or services.
(b) Further Authority.--The Bureau, by regulation, may prohibit or
impose conditions or limitations on the use of an agreement between a
covered person and a consumer for a consumer financial product or
service providing for arbitration of any future dispute between the
parties, if the Bureau finds that such a prohibition or imposition of
conditions or limitations is in the public interest and for the
protection of consumers. The findings in such rule shall be consistent
with the study conducted under subsection (a).
(c) Limitation.--The authority described in subsection (b) may not
be construed to prohibit or restrict a consumer from entering into a
voluntary arbitration agreement with a covered person after a dispute
has arisen.
(d) Effective Date.--Notwithstanding any other provision of law,
any regulation prescribed by the Bureau under subsection (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 Bureau.
SEC. 1029. EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date.
Subtitle C--Specific Bureau Authorities
SEC. 1031. PROHIBITING UNFAIR, DECEPTIVE, OR ABUSIVE ACTS OR PRACTICES.
(a) In General.--The Bureau may take any action authorized under
subtitle E to prevent a covered person or service provider from
committing or engaging in an unfair, deceptive, or abusive act or
practice under Federal law in connection with any transaction with a
consumer for a consumer financial product or service, or the offering
of a consumer financial product or service.
(b) Rulemaking.--The Bureau may prescribe rules applicable to a
covered person or service provider identifying as unlawful unfair,
deceptive, or abusive acts or practices in connection with any
transaction with a consumer for a consumer financial product or
service, or the offering of a consumer financial product or service.
Rules under this section may include requirements for the purpose of
preventing such acts or practices.
(c) Unfairness.--
(1) In general.--The Bureau shall have no authority under
this section to declare an act or practice in connection with a
transaction with a consumer for a consumer financial product or
service, or the offering of a consumer financial product or
service, to be unlawful on the grounds that such act or
practice is unfair, unless the Bureau has a reasonable basis to
conclude that--
(A) the act or practice causes or is likely to
cause substantial injury to consumers which is not
reasonably avoidable by consumers; and
(B) such substantial injury is not outweighed by
countervailing benefits to consumers or to competition.
(2) Consideration of public policies.--In determining
whether an act or practice is unfair, the Bureau may consider
established public policies as evidence to be considered with
all other evidence. Such public policy considerations may not
serve as a primary basis for such determination.
(d) Abusive.--The Bureau shall have no authority under this section
to declare an act or practice abusive in connection with the provision
of a consumer financial product or service, unless the act or
practice--
(1) materially interferes with the ability of a consumer to
understand a term or condition of a consumer financial product
or service; or
(2) takes unreasonable advantage of--
(A) a lack of understanding on the part of the
consumer of the material risks, costs, or conditions of
the product or service;
(B) the inability of the consumer to protect the
interests of the consumer in selecting or using a
consumer financial product or service; or
(C) the reasonable reliance by the consumer on a
covered person to act in the interests of the consumer.
(e) Consultation.--In prescribing rules under this section, the
Bureau shall consult with the Federal banking agencies, or other
Federal agencies, as appropriate, concerning the consistency of the
proposed rule with prudential, market, or systemic objectives
administered by such agencies.
SEC. 1032. DISCLOSURES.
(a) In General.--The Bureau may prescribe rules to ensure that the
features of any consumer financial product or service, both initially
and over the term of the product or service, are fully, accurately, and
effectively disclosed to consumers in a manner that permits consumers
to understand the costs, benefits, and risks associated with the
product or service, in light of the facts and circumstances.
(b) Model Disclosures.--
(1) In general.--Any final rule prescribed by the Bureau
under this section requiring disclosures may include a model
form that may be used at the option of the covered person for
provision of the required disclosures.
(2) Format.--A model form issued pursuant to paragraph (1)
shall contain a clear and conspicuous disclosure that, at a
minimum--
(A) uses plain language comprehensible to
consumers;
(B) contains a clear format and design, such as an
easily readable type font; and
(C) succinctly explains the information that must
be communicated to the consumer.
(3) Consumer testing.--Any model form issued pursuant to
this subsection shall be validated through consumer testing.
(c) Basis for Rulemaking.--In prescribing rules under this section,
the Bureau shall consider available evidence about consumer awareness,
understanding of, and responses to disclosures or communications about
the risks, costs, and benefits of consumer financial products or
services.
(d) Safe Harbor.--Any covered person that uses a model form
included with a rule issued under this section shall be deemed to be in
compliance with the disclosure requirements of this section with
respect to such model form.
(e) Trial Disclosure Programs.--
(1) In general.--The Bureau may permit a covered person to
conduct a trial program that is limited in time and scope,
subject to specified standards and procedures, for the purpose
of providing trial disclosures to consumers that are designed
to improve upon any model form issued pursuant to subsection
(b)(1), or any other model form issued to implement an
enumerated statute, as applicable.
(2) Safe harbor.--The standards and procedures issued by
the Bureau shall be designed to encourage covered persons to
conduct trial disclosure programs. For the purposes of
administering this subsection, the Bureau may establish a
limited period during which a covered person conducting a trial
disclosure program shall be deemed to be in compliance with, or
may be exempted from, a requirement of a rule or an enumerated
consumer law.
(3) Public disclosure.--The rules of the Bureau shall
provide for public disclosure of trial disclosure programs,
which public disclosure may be limited, to the extent necessary
to encourage covered persons to conduct effective trials.
(f) Combined Mortgage Loan Disclosure.--Not later than 1 year after
the designated transfer date, the Bureau shall propose for public
comment rules and model disclosures that combine the disclosures
required under the Truth in Lending Act and the Real Estate Settlement
Procedures Act of 1974, into a single, integrated disclosure for
mortgage loan transactions covered by those laws, unless the Bureau
determines that any proposal issued by the Board of Governors and the
Secretary of Housing and Urban Development carries out the same
purpose.
SEC. 1033. CONSUMER RIGHTS TO ACCESS INFORMATION.
(a) In General.--Subject to rules prescribed by the Bureau, a
covered person shall make available to a consumer, upon request,
information in the control or possession of the covered person
concerning the consumer financial product or service that the consumer
obtained from such covered person, including information relating to
any transaction, series of transactions, or to the account including
costs, charges and usage data. The information shall be made available
in an electronic form usable by consumers.
(b) Exceptions.--A covered person may not be required by this
section to make available to the consumer--
(1) any confidential commercial information, including an
algorithm used to derive credit scores or other risk scores or
predictors;
(2) any information collected by the covered person for the
purpose of preventing fraud or money laundering, or detecting,
or making any report regarding other unlawful or potentially
unlawful conduct;
(3) any information required to be kept confidential by any
other provision of law; or
(4) any information that the covered person cannot retrieve
in the ordinary course of its business with respect to that
information.
(c) No Duty To Maintain Records.--Nothing in this section shall be
construed to impose any duty on a covered person to maintain or keep
any information about a consumer.
(d) Standardized Formats for Data.--The Bureau, by rule, shall
prescribe standards applicable to covered persons to promote the
development and use of standardized formats for information, including
through the use of machine readable files, to be made available to
consumers under this section.
(e) Consultation.--The Bureau shall, when prescribing any rule
under this section, consult with the Federal banking agencies and the
Federal Trade Commission to ensure that the rules--
(1) impose substantively similar requirements on covered
persons;
(2) take into account conditions under which covered
persons do business both in the United States and in other
countries; and
(3) do not require or promote the use of any particular
technology in order to develop systems for compliance.
SEC. 1034. RESPONSE TO CONSUMER COMPLAINTS AND INQUIRIES.
(a) Timely Regulator Response to Consumers.--The Bureau shall
establish, in consultation with the appropriate Federal regulatory
agencies, reasonable procedures to provide a timely response to
consumers, in writing where appropriate, to complaints against, or
inquiries concerning, a covered person, including--
(1) all steps that have been taken by the regulator in
response to the complaint or inquiry of the consumer;
(2) any responses received by the regulator from the
covered person; and
(3) any follow-up actions or planned follow-up actions by
the regulator in response to the complaint or inquiry of the
consumer.
(b) Timely Response to Regulator by Covered Person.--A covered
person subject to supervision and primary enforcement by the Bureau
pursuant to section 1025 shall provide a timely response, in writing
where appropriate, to the Bureau, the prudential regulators, and any
other agency having jurisdiction over such covered person concerning a
consumer complaint or inquiry, including--
(1) steps that have been taken by the covered person to
respond to the complaint or inquiry of the consumer;
(2) responses received by the covered person from the
consumer; and
(3) follow-up actions or planned follow-up actions by the
covered person to respond to the complaint or inquiry of the
consumer.
(c) Provision of Information to Consumers.--
(1) In general.--A covered person subject to supervision
and primary enforcement by the Bureau pursuant to section 1025
shall, in a timely manner, comply with a consumer request for
information in the control or possession of such covered person
concerning the consumer financial product or service that the
consumer obtained from such covered person, including
supporting written documentation, concerning the account of the
consumer.
(2) Exceptions.--A covered person subject to supervision
and primary enforcement by the Bureau pursuant to section 1025,
a prudential regulator, and any other agency having
jurisdiction over a covered person subject to supervision and
primary enforcement by the Bureau pursuant to section 1025 may
not be required by this section to make available to the
consumer--
(A) any confidential commercial information,
including an algorithm used to derive credit scores or
other risk scores or predictors;
(B) any information collected by the covered person
for the purpose of preventing fraud or money
laundering, or detecting or making any report regarding
other unlawful or potentially unlawful conduct;
(C) any information required to be kept
confidential by any other provision of law; or
(D) any nonpublic or confidential information,
including confidential supervisory information.
(d) Agreements With Other Agencies.--The Bureau shall enter into a
memorandum of understanding with any affected Federal regulatory agency
to establish procedures by which any covered person, and the prudential
regulators, and any other agency having jurisdiction over a covered
person, including the Secretary of the Department of Housing and Urban
Development and the Secretary of Education, shall comply with this
section.
SEC. 1035. PRIVATE EDUCATION LOAN OMBUDSMAN.
(a) Establishment.--The Secretary, in consultation with the
Director, shall designate a Private Education Loan Ombudsman (in this
section referred to as the ``Ombudsman'') within the Bureau, to provide
timely assistance to borrowers of private education loans.
(b) Public Information.--The Secretary and the Director shall
disseminate information about the availability and functions of the
Ombudsman to borrowers and potential borrowers, as well as institutions
of higher education, lenders, guaranty agencies, loan servicers, and
other participants in private education student loan programs.
(c) Functions of Ombudsman.--The Ombudsman designated under this
subsection shall--
(1) in accordance with regulations of the Director,
receive, review, and attempt to resolve informally complaints
from borrowers of loans described in subsection (a), including,
as appropriate, attempts to resolve such complaints in
collaboration with the Department of Education and with
institutions of higher education, lenders, guaranty agencies,
loan servicers, and other participants in private education
loan programs;
(2) not later than 90 days after the designated transfer
date, establish a memorandum of understanding with the student
loan ombudsman established under section 141(f) of the Higher
Education Act of 1965 (20 U.S.C. 1018(f)), to ensure
coordination in providing assistance to and serving borrowers
seeking to resolve complaints related to their private
education or Federal student loans;
(3) compile and analyze data on borrower complaints
regarding private education loans; and
(4) make appropriate recommendations to the Director, the
Secretary, the Secretary of Education, the Committee on
Banking, Housing, and Urban Affairs and the Committee on
Health, Education, Labor, and Pensions of the Senate and the
Committee on Financial Services and the Committee on Education
and Labor of the House of Representatives.
(d) Annual Reports.--
(1) In general.--The Ombudsman shall prepare an annual
report that describes the activities, and evaluates the
effectiveness of the Ombudsman during the preceding year.
(2) Submission.--The report required by paragraph (1) shall
be submitted on the same date annually to the Secretary, the
Secretary of Education, the Committee on Banking, Housing, and
Urban Affairs and the Committee on Health, Education, Labor,
and Pensions of the Senate and the Committee on Financial
Services and the Committee on Education and Labor of the House
of Representatives.
(e) Definitions.--For purposes of this section, the terms ``private
education loan'' and ``institution of higher education'' have the same
meanings as in section 140 of the Truth in Lending Act (15 U.S.C.
1650).
SEC. 1036. PROHIBITED ACTS.
It shall be unlawful for any person--
(1) to--
(A) advertise, market, offer, or sell a consumer
financial product or service not in conformity with
this title or applicable rules or orders issued by the
Bureau;
(B) enforce, or attempt to enforce, any agreement
with a consumer (including any term or change in terms
in respect of such agreement), or impose, or attempt to
impose, any fee or charge on a consumer in connection
with a consumer financial product or service that is
not in conformity with this title or applicable rules
or orders issued by the Bureau; or
(C) engage in any unfair, deceptive, or abusive act
or practice,
except that no person shall be held to have violated
this paragraph solely by virtue of providing or selling
time or space to a person placing an advertisement;
(2) to fail or refuse, as required by Federal consumer
financial law, or any rule or order issued by the Bureau
thereunder--
(A) to permit access to or copying of records;
(B) to establish or maintain records; or
(C) to make reports or provide information to the
Bureau; or
(3) knowingly or recklessly to provide substantial
assistance to another person in violation of the provisions of
section 1031, or any rule or order issued thereunder, and
notwithstanding any provision of this title, the provider of
such substantial assistance shall be deemed to be in violation
of that section to the same extent as the person to whom such
assistance is provided.
SEC. 1037. EFFECTIVE DATE.
This subtitle shall take effect on the designated transfer date.
Subtitle D--Preservation of State Law
SEC. 1041. RELATION TO STATE LAW.
(a) In General.--
(1) Rule of construction.--This title, other than sections
1044 through 1048, may not be construed as annulling, altering,
or affecting, or exempting any person subject to the provisions
of this title from complying with, the statutes, regulations,
orders, or interpretations in effect in any State, except to
the extent that any such provision of law is inconsistent with
the provisions of this title, and then only to the extent of
the inconsistency.
(2) Greater protection under state law.--For purposes of
this subsection, a statute, regulation, order, or
interpretation in effect in any State is not inconsistent with
the provisions of this title if the protection that such
statute, regulation, order, or interpretation affords to
consumers is greater than the protection provided under this
title. A determination regarding whether a statute, regulation,
order, or interpretation in effect in any State is inconsistent
with the provisions of this title may be made by the Bureau on
its own motion or in response to a nonfrivolous petition
initiated by any interested person.
(b) Relation to Other Provisions of Enumerated Consumer Laws That
Relate to State Law.--No provision of this title, except as provided in
section 1083, shall be construed as modifying, limiting, or superseding
the operation of any provision of an enumerated consumer law that
relates to the application of a law in effect in any State with respect
to such Federal law.
(c) Additional Consumer Protection Regulations in Response to State
Action.--
(1) Notice of proposed rule required.--The Bureau shall
issue a notice of proposed rulemaking whenever a majority of
the States has enacted a resolution in support of the
establishment or modification of a consumer protection
regulation by the Bureau.
(2) Bureau considerations required for issuance of final
regulation.--Before prescribing a final regulation based upon a
notice issued pursuant to paragraph (1), the Bureau shall take
into account whether--
(A) the proposed regulation would afford greater
protection to consumers than any existing regulation;
(B) the intended benefits of the proposed
regulation for consumers would outweigh any increased
costs or inconveniences for consumers, and would not
discriminate unfairly against any category or class of
consumers; and
(C) a Federal banking agency has advised that the
proposed regulation is likely to present an
unacceptable safety and soundness risk to insured
depository institutions.
(3) Explanation of considerations.--The Bureau--
(A) shall include a discussion of the
considerations required in paragraph (2) in the Federal
Register notice of a final regulation prescribed
pursuant to this subsection; and
(B) whenever the Bureau determines not to prescribe
a final regulation, shall publish an explanation of
such determination in the Federal Register, and provide
a copy of such explanation to each State that enacted a
resolution in support of the proposed regulation, the
Committee on 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
subsection shall be construed as limiting or restricting the
authority of the Bureau to enhance consumer protection
standards established pursuant to this title in response to its
own motion or in response to a request by any other interested
person.
(5) Rule of construction.--No provision of this subsection
shall be construed as exempting the Bureau from complying with
subchapter II of chapter 5 of title 5, United States Code.
(6) Definition.--For purposes of this subsection, the term
``consumer protection regulation'' means a regulation that the
Bureau is authorized to prescribe under the Federal consumer
financial laws.
SEC. 1042. PRESERVATION OF ENFORCEMENT POWERS OF STATES.
(a) In General.--
(1) Action by state.--The attorney general (or the
equivalent thereof) of any State 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 in that State or in State court having
jurisdiction over the defendant, to enforce provisions of this
title or regulations issued thereunder and to secure remedies
under provisions of this title or remedies otherwise provided
under other law. A State regulator may bring a civil action or
other appropriate proceeding to enforce the provisions of this
title or regulations issued thereunder with respect to any
entity that is State-chartered, incorporated, licensed, or
otherwise authorized to do business under State law, and to
secure remedies under provisions of this title or remedies
otherwise provided under other provisions of law with respect
to a State-chartered entity.
(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 Bureau and
the prudential regulator, if any, or the designee
thereof.
(B) Emergency action.--If prior notice is not
practicable, the State attorney general or State
regulator shall provide a copy of the complete
complaint and the notice to the Bureau and the
prudential regulator, if any, immediately upon
instituting the action or proceeding.
(C) Contents of notice.--The notification required
under this paragraph shall, at a minimum, describe--
(i) the identity of the parties;
(ii) the alleged facts underlying the
proceeding; and
(iii) whether there may be a need to
coordinate the prosecution of the proceeding so
as not to interfere with any action, including
any rulemaking, undertaken by the Director, a
prudential regulator, or another Federal
agency.
(2) Bureau response.--In any action described in paragraph
(1), the Bureau may--
(A) intervene in the action as a party;
(B) upon intervening--
(i) remove the action to the appropriate
United States district court, if the action was
not originally brought there; and
(ii) be heard on all matters arising in the
action; and
(C) appeal any order or judgment, to the same
extent as any other party in the proceeding may.
(c) Regulations.--The 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 altering, limiting, or affecting the authority of
a State attorney general or any other regulatory or enforcement
agency or authority to bring an action or other regulatory
proceeding arising solely under the law in effect in that
State.
(2) State securities regulators.--No provision of this
title shall be construed as altering, limiting, or affecting
the authority of a State securities commission (or any agency
or office performing like functions) under State law to adopt
rules, initiate enforcement proceedings, or take any other
action with respect to a person regulated by such commission or
authority.
(3) State insurance regulators.--No provision of this title
shall be construed as altering, limiting, or affecting the
authority of a State insurance commission or State insurance
regulator under State law to adopt rules, initiate enforcement
proceedings, or take any other action with respect to a person
regulated by such commission or regulator.
SEC. 1043. PRESERVATION OF EXISTING CONTRACTS.
This title, and regulations, orders, guidance, and interpretations
prescribed, issued, or established by the Bureau, shall not be
construed to alter or affect the applicability of any regulation,
order, guidance, or interpretation prescribed, issued, and established
by the Comptroller of the Currency or the Director of the Office of
Thrift Supervision regarding the applicability of State law under
Federal banking law to any contract entered into on or before the date
of 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. 1044. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND
SUBSIDIARIES CLARIFIED.
(a) In General.--Chapter one of title LXII of the Revised Statutes
of the United States (12 U.S.C. 21 et seq.) is amended by inserting
after section 5136B the following new section:
``SEC. 5136C. STATE LAW PREEMPTION STANDARDS FOR NATIONAL BANKS AND
SUBSIDIARIES CLARIFIED.
``(a) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) National bank.--The term `national bank' includes--
``(A) any bank organized under the laws of the
United States; and
``(B) any Federal branch established in accordance
with the International Banking Act of 1978.
``(2) State consumer financial laws.--The term `State
consumer financial law' means a State law that does not
directly or indirectly discriminate against national banks and
that directly and specifically regulates the manner, content,
or terms and conditions of any financial transaction (as may be
authorized for national banks to engage in), or any account
related thereto, with respect to a consumer.
``(3) Other definitions.--The terms `affiliate',
`subsidiary', `includes', and `including' have the same
meanings as in section 3 of the Federal Deposit Insurance Act.
``(b) Preemption Standard.--
``(1) In general.--State consumer financial laws are
preempted, only if--
``(A) application of a State consumer financial law
would have a discriminatory effect on national banks,
in comparison with the effect of the law on a bank
chartered by that State;
``(B) the preemption of the State consumer
financial law is in accordance with the legal standard
of the decision of the Supreme Court of the United
States in Barnett Bank of Marion County, N.A. v.
Nelson, Florida Insurance Commissioner, et al, 517 U.S.
25 (1996), and a 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, and any
such determination by a court shall comply with the
standards set forth in subsection (d), with the court
making the finding under subsection (d), de novo; or
``(C) the State consumer financial law is preempted
by a provision of Federal law other than this title.
``(2) Savings clause.--This title does not preempt, annul,
or affect the applicability of any State law to any subsidiary
or affiliate of a national bank (other than a subsidiary or
affiliate that is chartered as a national bank).
``(3) Case-by-case basis.--
``(A) Definition.--As used in this section the term
`case-by-case basis' refers to a determination pursuant
to this section made by the Comptroller concerning the
impact of a particular State consumer financial law on
any national bank that is subject to that law, or the
law of any other State with substantively equivalent
terms.
``(B) Consultation.--When making a determination on
a case-by-case basis that a State consumer financial
law of another State has substantively equivalent terms
as one that the Comptroller is preempting, the
Comptroller shall first consult with the Bureau of
Consumer Financial Protection and shall take the views
of the Bureau into account when making the
determination.
``(4) Rule of construction.--This title does not occupy the
field in any area of State law.
``(5) Standards of review.--
``(A) Preemption.--A court reviewing any
determinations made by the Comptroller regarding
preemption of a State law by this title shall assess
the validity of such determinations, depending upon the
thoroughness evident in the consideration of the
agency, the validity of the reasoning of the agency,
the consistency with other valid determinations made by
the agency, and other factors which the court finds
persuasive and relevant to its decision.
``(B) Savings clause.--Except as provided in
subparagraph (A), nothing in this section shall affect
the deference that a court may afford to the
Comptroller in making determinations regarding the
meaning or interpretation of title LXII of the Revised
Statutes of the United States or other Federal laws.
``(6) Comptroller determination not delegable.--Any
regulation, order, or determination made by the Comptroller of
the Currency under paragraph (1)(B) shall be made by the
Comptroller, and shall not be delegable to another officer or
employee of the Comptroller of the Currency.
``(c) Substantial Evidence.--No regulation or order of the
Comptroller of the Currency prescribed under subsection (b)(1)(B),
shall be interpreted or applied so as to invalidate, or otherwise
declare inapplicable to a national bank, the provision of the State
consumer financial law, unless substantial evidence, made on the record
of the proceeding, supports the specific finding regarding the
preemption of such provision in accordance with the legal standard of
the decision of the Supreme Court of the United States in Barnett Bank
of Marion County, N.A. v. Nelson, Florida Insurance Commissioner, et
al., 517 U.S. 25 (1996).
``(d) 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 Director of the Bureau of
Consumer Financial Protection, 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.--
``(1) In general.--The Comptroller of the Currency shall
periodically conduct a review, through notice and public
comment, of each determination that a provision of Federal law
preempts a State consumer financial law. The agency shall
conduct such review within the 5-year period after prescribing
or otherwise issuing such determination, and at least once
during each 5-year period thereafter. After conducting the
review of, and inspecting the comments made on, the
determination, the agency shall publish a notice in the Federal
Register announcing the decision to continue or rescind the
determination or a proposal to amend the determination. Any
such notice of a proposal to amend a determination and the
subsequent resolution of such proposal shall comply with the
procedures set forth in subsections (a) and (b) of section 5244
of the Revised Statutes of the United States (12 U.S.C. 43 (a),
(b)).
``(2) Reports to congress.--At the time of issuing a review
conducted under paragraph (1), the Comptroller of the Currency
shall submit a report regarding such review to the Committee on
Financial Services of the House of Representatives and the
Committee on Banking, Housing, and Urban Affairs of the Senate.
The report submitted to the respective committees shall address
whether the agency intends to continue, rescind, or propose to
amend any determination that a provision of Federal law
preempts a State consumer financial law, and the reasons
therefor.
``(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 (other than a subsidiary or affiliate that is chartered
as a national bank) to the same extent that the State consumer
financial law applies to any person, corporation, or other entity
subject to such State law.
``(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:
``Sec. 5136C. State law preemption standards for national banks and
subsidiaries clarified.''.
SEC. 1045. CLARIFICATION OF LAW APPLICABLE TO NONDEPOSITORY INSTITUTION
SUBSIDIARIES.
Section 5136C of the Revised Statutes of the United States (as
added by this subtitle) is amended by adding at the end the following:
``(i) Clarification of Law Applicable to Nondepository Institution
Subsidiaries and Affiliates of National Banks.--
``(1) Definitions.--For purposes of this subsection, the
terms `depository institution', `subsidiary', and `affiliate'
have the same meanings as in section 3 of the Federal Deposit
Insurance Act.
``(2) Rule of construction.--No provision of this title
shall be construed as preempting, annulling, or affecting the
applicability of State law to any subsidiary, affiliate, or
agent of a national bank (other than a subsidiary, affiliate,
or agent that is chartered as a national bank).''.
SEC. 1046. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS AND SUBSIDIARIES CLARIFIED.
(a) In General.--The Home Owners' Loan Act (12 U.S.C. 1461 et seq.)
is amended by inserting after section 5 the following new section:
``SEC. 6. STATE LAW PREEMPTION STANDARDS FOR FEDERAL SAVINGS
ASSOCIATIONS CLARIFIED.
``(a) In General.--Any determination by a court or by the Director
or any successor officer or agency regarding the relation of State law
to a provision of this Act or any regulation or order prescribed under
this Act shall be made in accordance with the laws and legal standards
applicable to national banks regarding the preemption of State law.
``(b) Principles of Conflict Preemption Applicable.--
Notwithstanding the authorities granted under sections 4 and 5, this
Act does not occupy the field in any area of State law.''.
(b) Clerical Amendment.--The table of sections for the Home Owners'
Loan Act (12 U.S.C. 1461 et seq.) is amended by striking the item
relating to section 6 and inserting the following new item:
``Sec. 6.. State law preemption standards for Federal savings
associations and subsidiaries clarified.''.
SEC. 1047. VISITORIAL STANDARDS FOR NATIONAL BANKS AND SAVINGS
ASSOCIATIONS.
(a) National Banks.--Section 5136C of the Revised Statutes of the
United States (as added by this subtitle) is amended by adding at the
end the following:
``(j) Visitorial Powers.--
``(1) In general.--No provision of this title which relates
to visitorial powers 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, as authorized under section 5240(a)--
``(A) to enforce any applicable provision of
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 for such
residents from any violation of any such law by any
national bank.
``(2) Prior consultation with occ required.--The attorney
general (or other chief law enforcement officer) of any State
shall consult with the Comptroller of the Currency before
acting under paragraph (1).
``(k) Enforcement Actions.--The ability of the Comptroller of the
Currency to bring an enforcement action under this title or section 5
of the Federal Trade Commission Act does not preclude any private party
from enforcing rights granted under Federal or State law in the
courts.''.
(b) Savings Associations.--Section 6 of the Home Owners' Loan Act
(as added by this title) is amended by adding at the end the following:
``(c) Visitorial Powers.--
``(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 provision of
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 Federal savings
association, as authorized by such law, or to seek
relief for such residents from any violation of any
such law by any Federal savings association.
``(2) Prior consultation with occ required.--The attorney
general (or other chief law enforcement officer) of any State
shall consult with the Comptroller of the Currency before
acting under paragraph (1).
``(d) Enforcement Actions.--The ability of the Comptroller of the
Currency to bring an enforcement action under this Act or section 5 of
the Federal Trade Commission Act does not preclude any private party
from enforcing rights granted under Federal or State law in the
courts.''.
SEC. 1048. EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date.
Subtitle E--Enforcement Powers
SEC. 1051. DEFINITIONS.
For purposes of this subtitle, the following definitions shall
apply:
(1) Bureau investigation.--The term ``Bureau
investigation'' means any inquiry conducted by a Bureau
investigator for the purpose of ascertaining whether any person
is or has been engaged in any conduct that is a violation, as
defined in this section.
(2) Bureau investigator.--The term ``Bureau investigator''
means any attorney or investigator employed by the Bureau who
is charged with the duty of enforcing or carrying into effect
any Federal consumer financial law.
(3) Civil investigative demand and demand.--The terms
``civil investigative demand'' and ``demand'' mean any demand
issued by the Bureau.
(4) Custodian.--The term ``custodian'' means the custodian
or any deputy custodian designated by the Bureau.
(5) Documentary material.--The term ``documentary
material'' includes the original or any copy of any book,
document, record, report, memorandum, paper, communication,
tabulation, chart, logs, electronic files, or other data or
data compilations stored in any medium.
(6) Violation.--The term ``violation'' means any act or
omission that, if proved, would constitute a violation of any
provision of Federal consumer financial law.
SEC. 1052. INVESTIGATIONS AND ADMINISTRATIVE DISCOVERY.
(a) Joint Investigations.--
(1) In general.--The Bureau or, where appropriate, a Bureau
investigator, may engage in joint investigations and requests
for information, as authorized under this title.
(2) Fair lending.--The authority under paragraph (1)
includes matters relating to fair lending, and where
appropriate, joint investigations with, and requests for
information from, the Secretary of Housing and Urban
Development, the Attorney General of the United States, or
both.
(b) Subpoenas.--
(1) In general.--The Bureau or a Bureau investigator may
issue subpoenas for the attendance and testimony of witnesses
and the production of relevant papers, books, documents, or
other material in connection with hearings under this title.
(2) Failure to obey.--In the case of contumacy or refusal
to obey a subpoena issued pursuant to this paragraph and served
upon any person, the district court of the United States for
any district in which such person is found, resides, or
transacts business, upon application by the Bureau or a Bureau
investigator and after notice to such person, may issue an
order requiring such person to appear and give testimony or to
appear and produce documents or other material.
(3) Contempt.--Any failure to obey an order of the court
under this subsection may be punished by the court as a
contempt thereof.
(c) Demands.--
(1) In general.--Whenever the Bureau has reason to believe
that any person may be in possession, custody, or control of
any documentary material or tangible things, or may have any
information, relevant to a violation, the Bureau may, before
the institution of any proceedings under the Federal consumer
financial law, issue in writing, and cause to be served upon
such person, a civil investigative demand requiring such person
to--
(A) produce such documentary material for
inspection and copying or reproduction in the form or
medium requested by the Bureau;
(B) submit such tangible things;
(C) file written reports or answers to questions;
(D) give oral testimony concerning documentary
material, tangible things, or other information; or
(E) furnish any combination of such material,
answers, or testimony.
(2) Requirements.--Each civil investigative demand shall
state the nature of the conduct constituting the alleged
violation which is under investigation and the provision of law
applicable to such violation.
(3) Production of documents.--Each civil investigative
demand for the production of documentary material shall--
(A) describe each class of documentary material to
be produced under the demand with such definiteness and
certainty as to permit such material to be fairly
identified;
(B) prescribe a return date or dates which will
provide a reasonable period of time within which the
material so demanded may be assembled and made
available for inspection and copying or reproduction;
and
(C) identify the custodian to whom such material
shall be made available.
(4) Production of things.--Each civil investigative demand
for the submission of tangible things shall--
(A) describe each class of tangible things to be
submitted under the demand with such definiteness and
certainty as to permit such things to be fairly
identified;
(B) prescribe a return date or dates which will
provide a reasonable period of time within which the
things so demanded may be assembled and submitted; and
(C) identify the custodian to whom such things
shall be submitted.
(5) Demand for written reports or answers.--Each civil
investigative demand for written reports or answers to
questions shall--
(A) propound with definiteness and certainty the
reports to be produced or the questions to be answered;
(B) prescribe a date or dates at which time written
reports or answers to questions shall be submitted; and
(C) identify the custodian to whom such reports or
answers shall be submitted.
(6) Oral testimony.--Each civil investigative demand for
the giving of oral testimony shall--
(A) prescribe a date, time, and place at which oral
testimony shall be commenced; and
(B) identify a Bureau investigator who shall
conduct the investigation and the custodian to whom the
transcript of such investigation shall be submitted.
(7) Service.--Any civil investigative demand and any
enforcement petition filed under this section may be served--
(A) by any Bureau investigator at any place within
the territorial jurisdiction of any court of the United
States; and
(B) upon any person who is not found within the
territorial jurisdiction of any court of the United
States--
(i) in such manner as the Federal Rules of
Civil Procedure prescribe for service in a
foreign nation; and
(ii) to the extent that the courts of the
United States have authority to assert
jurisdiction over such person, consistent with
due process, the United States District Court
for the District of Columbia shall have the
same jurisdiction to take any action respecting
compliance with this section by such person
that such district court would have if such
person were personally within the jurisdiction
of such district court.
(8) Method of service.--Service of any civil investigative
demand or any enforcement petition filed under this section may
be made upon a person, including any legal entity, by--
(A) delivering a duly executed copy of such demand
or petition to the individual or to any partner,
executive officer, managing agent, or general agent of
such person, or to any agent of such person authorized
by appointment or by law to receive service of process
on behalf of such person;
(B) delivering a duly executed copy of such demand
or petition to the principal office or place of
business of the person to be served; or
(C) depositing a duly executed copy in the United
States mails, by registered or certified mail, return
receipt requested, duly addressed to such person at the
principal office or place of business of such person.
(9) Proof of service.--
(A) In general.--A verified return by the
individual serving any civil investigative demand or
any enforcement petition filed under this section
setting forth the manner of such service shall be proof
of such service.
(B) Return receipts.--In the case of service by
registered or certified mail, such return shall be
accompanied by the return post office receipt of
delivery of such demand or enforcement petition.
(10) Production of documentary material.--The production of
documentary material in response to a civil investigative
demand shall be made under a sworn certificate, in such form as
the demand designates, by the person, if a natural person, to
whom the demand is directed or, if not a natural person, by any
person having knowledge of the facts and circumstances relating
to such production, to the effect that all of the documentary
material required by the demand and in the possession, custody,
or control of the person to whom the demand is directed has
been produced and made available to the custodian.
(11) Submission of tangible things.--The submission of
tangible things in response to a civil investigative demand
shall be made under a sworn certificate, in such form as the
demand designates, by the person to whom the demand is directed
or, if not a natural person, by any person having knowledge of
the facts and circumstances relating to such production, to the
effect that all of the tangible things required by the demand
and in the possession, custody, or control of the person to
whom the demand is directed have been submitted to the
custodian.
(12) Separate answers.--Each reporting requirement or
question in a civil investigative demand shall be answered
separately and fully in writing under oath, unless it is
objected to, in which event the reasons for the objection shall
be stated in lieu of an answer, and it shall be submitted under
a sworn certificate, in such form as the demand designates, by
the person, if a natural person, to whom the demand is directed
or, if not a natural person, by any person responsible for
answering each reporting requirement or question, to the effect
that all information required by the demand and in the
possession, custody, control, or knowledge of the person to
whom the demand is directed has been submitted.
(13) Testimony.--
(A) In general.--
(i) Oath or affirmation.--Any Bureau
investigator before whom oral testimony is to
be taken shall put the witness under oath or
affirmation, and shall personally, or by any
individual acting under the direction of and in
the presence of the Bureau investigator, record
the testimony of the witness.
(ii) Transcription.--The testimony shall be
taken stenographically and transcribed.
(iii) Transmission to custodian.--After the
testimony is fully transcribed, the Bureau
investigator before whom the testimony is taken
shall promptly transmit a copy of the
transcript of the testimony to the custodian.
(B) Parties present.--Any Bureau investigator
before whom oral testimony is to be taken shall exclude
from the place where the testimony is to be taken all
other persons, except the person giving the testimony,
the attorney of that person, the officer before whom
the testimony is to be taken, and any stenographer
taking such testimony.
(C) Location.--The oral testimony of any person
taken pursuant to a civil investigative demand shall be
taken in the judicial district of the United States in
which such person resides, is found, or transacts
business, or in such other place as may be agreed upon
by the Bureau investigator before whom the oral
testimony of such person is to be taken and such
person.
(D) Attorney representation.--
(i) In general.--Any person compelled to
appear under a civil investigative demand for
oral testimony pursuant to this section may be
accompanied, represented, and advised by an
attorney.
(ii) Authority.--The attorney may advise a
person described in clause (i), in confidence,
either upon the request of such person or upon
the initiative of the attorney, with respect to
any question asked of such person.
(iii) Objections.--A person described in
clause (i), or the attorney for that person,
may object on the record to any question, in
whole or in part, and such person shall briefly
state for the record the reason for the
objection. An objection may properly be made,
received, and entered upon the record when it
is claimed that such person is entitled to
refuse to answer the question on grounds of any
constitutional or other legal right or
privilege, including the privilege against
self-incrimination, but such person shall not
otherwise object to or refuse to answer any
question, and such person or attorney shall not
otherwise interrupt the oral examination.
(iv) Refusal to answer.--If a person
described in clause (i) refuses to answer any
question--
(I) the Bureau may petition the
district court of the United States
pursuant to this section for an order
compelling such person to answer such
question; and
(II) on grounds of the privilege
against self-incrimination, the
testimony of such person may be
compelled in accordance with the
provisions of section 6004 of title 18,
United States Code.
(E) Transcripts.--For purposes of this subsection--
(i) after the testimony of any witness is
fully transcribed, the Bureau investigator
shall afford the witness (who may be
accompanied by an attorney) a reasonable
opportunity to examine the transcript;
(ii) the transcript shall be read to or by
the witness, unless such examination and
reading are waived by the witness;
(iii) any changes in form or substance
which the witness desires to make shall be
entered and identified upon the transcript by
the Bureau investigator, with a statement of
the reasons given by the witness for making
such changes;
(iv) the transcript shall be signed by the
witness, unless the witness in writing waives
the signing, is ill, cannot be found, or
refuses to sign; and
(v) if the transcript is not signed by the
witness during the 30-day period following the
date on which the witness is first afforded a
reasonable opportunity to examine the
transcript, the Bureau investigator shall sign
the transcript and state on the record the fact
of the waiver, illness, absence of the witness,
or the refusal to sign, together with any
reasons given for the failure to sign.
(F) Certification by investigator.--The Bureau
investigator shall certify on the transcript that the
witness was duly sworn by him or her and that the
transcript is a true record of the testimony given by
the witness, and the Bureau investigator shall promptly
deliver the transcript or send it by registered or
certified mail to the custodian.
(G) Copy of transcript.--The Bureau investigator
shall furnish a copy of the transcript (upon payment of
reasonable charges for the transcript) to the witness
only, except that the Bureau may for good cause limit
such witness to inspection of the official transcript
of his testimony.
(H) Witness fees.--Any witness appearing for the
taking of oral testimony pursuant to a civil
investigative demand shall be entitled to the same fees
and mileage which are paid to witnesses in the district
courts of the United States.
(d) Confidential Treatment of Demand Material.--
(1) In general.--Documentary materials and tangible things
received as a result of a civil investigative demand shall be
subject to requirements and procedures regarding
confidentiality, in accordance with rules established by the
Bureau.
(2) Disclosure to congress.--No rule established by the
Bureau regarding the confidentiality of materials submitted to,
or otherwise obtained by, the Bureau shall be intended to
prevent disclosure to either House of Congress or to an
appropriate committee of the Congress, except that the Bureau
is permitted to adopt rules allowing prior notice to any party
that owns or otherwise provided the material to the Bureau and
had designated such material as confidential.
(e) Petition for Enforcement.--
(1) In general.--Whenever any person fails to comply with
any civil investigative demand duly served upon him under this
section, or whenever satisfactory copying or reproduction of
material requested pursuant to the demand cannot be
accomplished and such person refuses to surrender such
material, the Bureau, through such officers or attorneys as it
may designate, may file, in the district court of the United
States for any judicial district in which such person resides,
is found, or transacts business, and serve upon such person, a
petition for an order of such court for the enforcement of this
section.
(2) Service of process.--All process of any court to which
application may be made as provided in this subsection may be
served in any judicial district.
(f) Petition for Order Modifying or Setting Aside Demand.--
(1) In general.--Not later than 20 days after the service
of any civil investigative demand upon any person under
subsection (b), or at any time before the return date specified
in the demand, whichever period is shorter, or within such
period exceeding 20 days after service or in excess of such
return date as may be prescribed in writing, subsequent to
service, by any Bureau investigator named in the demand, such
person may file with the Bureau a petition for an order by the
Bureau modifying or setting aside the demand.
(2) Compliance during pendency.--The time permitted for
compliance with the demand in whole or in part, as determined
proper and ordered by the Bureau, shall not run during the
pendency of a petition under paragraph (1) at the Bureau,
except that such person shall comply with any portions of the
demand not sought to be modified or set aside.
(3) Specific grounds.--A petition under paragraph (1) shall
specify each ground upon which the petitioner relies in seeking
relief, and may be based upon any failure of the demand to
comply with the provisions of this section, or upon any
constitutional or other legal right or privilege of such
person.
(g) Custodial Control.--At any time during which any custodian is
in custody or control of any documentary material, tangible things,
reports, answers to questions, or transcripts of oral testimony given
by any person in compliance with any civil investigative demand, such
person may file, in the district court of the United States for the
judicial district within which the office of such custodian is
situated, and serve upon such custodian, a petition for an order of
such court requiring the performance by such custodian of any duty
imposed upon him by this section or rule promulgated by the Bureau.
(h) Jurisdiction of Court.--
(1) In general.--Whenever any petition is filed in any
district court of the United States under this section, such
court shall have jurisdiction to hear and determine the matter
so presented, and to enter such order or orders as may be
required to carry out the provisions of this section.
(2) Appeal.--Any final order entered as described in
paragraph (1) shall be subject to appeal pursuant to section
1291 of title 28, United States Code.
SEC. 1053. HEARINGS AND ADJUDICATION PROCEEDINGS.
(a) In General.--The Bureau is authorized to conduct hearings and
adjudication proceedings with respect to any person in the manner
prescribed by chapter 5 of title 5, United States Code in order to
ensure or enforce compliance with--
(1) the provisions of this title, including any rules
prescribed by the Bureau under this title; and
(2) any other Federal law that the Bureau is authorized to
enforce, including an enumerated consumer law, and any
regulations or order prescribed thereunder, unless such Federal
law specifically limits the Bureau from conducting a hearing or
adjudication proceeding and only to the extent of such
limitation.
(b) Special Rules for Cease-and-desist Proceedings.--
(1) Orders authorized.--
(A) In general.--If, in the opinion of the Bureau,
any covered person or service provider is engaging or
has engaged in an activity that violates a law, rule,
or any condition imposed in writing on the person by
the Bureau, the Bureau may, subject to sections 1024,
1025, and 1026, issue and serve upon the covered person
or service provider a notice of charges in respect
thereof.
(B) Content of notice.--The notice under
subparagraph (A) shall contain a statement of the facts
constituting the alleged violation or violations, and
shall fix a time and place at which a hearing will be
held to determine whether an order to cease and desist
should issue against the covered person or service
provider, such hearing to be held not earlier than 30
days nor later than 60 days after the date of service
of such notice, unless an earlier or a later date is
set by the Bureau, at the request of any party so
served.
(C) Consent.--Unless the party or parties served
under subparagraph (B) appear at the hearing personally
or by a duly authorized representative, such person
shall be deemed to have consented to the issuance of
the cease-and-desist order.
(D) Procedure.--In the event of consent under
subparagraph (C), or if, upon the record, made at any
such hearing, the Bureau finds that any violation
specified in the notice of charges has been
established, the Bureau may issue and serve upon the
covered person or service provider an order to cease
and desist from the violation or practice. Such order
may, by provisions which may be mandatory or otherwise,
require the covered person or service provider to cease
and desist from the subject activity, and to take
affirmative action to correct the conditions resulting
from any such violation.
(2) Effectiveness of order.--A cease-and-desist order shall
become effective at the expiration of 30 days after the date of
service of an order under paragraph (1) upon the covered person
or service provider concerned (except in the case of a cease-
and-desist order issued upon consent, which shall become
effective at the time specified therein), and shall remain
effective and enforceable as provided therein, except to such
extent as the order is stayed, modified, terminated, or set
aside by action of the Bureau or a reviewing court.
(3) Decision and appeal.--Any hearing provided for in this
subsection shall be held in the Federal judicial district or in
the territory in which the residence or principal office or
place of business of the person is located unless the person
consents to another place, and shall be conducted in accordance
with the provisions of chapter 5 of title 5 of the United
States Code. After such hearing, and within 90 days after the
Bureau has notified the parties that the case has been
submitted to the Bureau for final decision, the Bureau shall
render its decision (which shall include findings of fact upon
which its decision is predicated) and shall issue and serve
upon each party to the proceeding an order or orders consistent
with the provisions of this section. Judicial review of any
such order shall be exclusively as provided in this subsection.
Unless a petition for review is timely filed in a court of
appeals of the United States, as provided in paragraph (4), and
thereafter until the record in the proceeding has been filed as
provided in paragraph (4), the Bureau may at any time, upon
such notice and in such manner as the Bureau shall determine
proper, modify, terminate, or set aside any such order. Upon
filing of the record as provided, the Bureau may modify,
terminate, or set aside any such order with permission of the
court.
(4) Appeal to court of appeals.--Any party to any
proceeding under this subsection may obtain a review of any
order served pursuant to this subsection (other than an order
issued with the consent of the person concerned) by the filing
in the court of appeals of the United States for the circuit in
which the principal office of the covered person is located, or
in the United States Court of Appeals for the District of
Columbia Circuit, within 30 days after the date of service of
such order, a written petition praying that the order of the
Bureau be modified, terminated, or set aside. A copy of such
petition shall be forthwith transmitted by the clerk of the
court to the Bureau, and thereupon the Bureau shall file in the
court the record in the proceeding, as provided in section 2112
of title 28 of the United States Code. Upon the filing of such
petition, such court shall have jurisdiction, which upon the
filing of the record shall except as provided in the last
sentence of paragraph (3) be exclusive, to affirm, modify,
terminate, or set aside, in whole or in part, the order of the
Bureau. Review of such proceedings shall be had as provided in
chapter 7 of title 5 of the United States Code. The judgment
and decree of the court shall be final, except that the same
shall be subject to review by the Supreme Court of the United
States, upon certiorari, as provided in section 1254 of title
28 of the United States Code.
(5) No stay.--The commencement of proceedings for judicial
review under paragraph (4) shall not, unless specifically
ordered by the court, operate as a stay of any order issued by
the Bureau.
(c) Special Rules for Temporary Cease-and-desist Proceedings.--
(1) In general.--Whenever the Bureau determines that the
violation specified in the notice of charges served upon a
person, including a service provider, pursuant to subsection
(b), or the continuation thereof, is likely to cause the person
to be insolvent or otherwise prejudice the interests of
consumers before the completion of the proceedings conducted
pursuant to subsection (b), the Bureau may issue a temporary
order requiring the person to cease and desist from any such
violation or practice and to take affirmative action to prevent
or remedy such insolvency or other condition pending completion
of such proceedings. Such order may include any requirement
authorized under this subtitle. Such order shall become
effective upon service upon the person and, unless set aside,
limited, or suspended by a court in proceedings authorized by
paragraph (2), shall remain effective and enforceable pending
the completion of the administrative proceedings pursuant to
such notice and until such time as the Bureau shall dismiss the
charges specified in such notice, or if a cease-and-desist
order is issued against the person, until the effective date of
such order.
(2) Appeal.--Not later than 10 days after the covered
person or service provider concerned has been served with a
temporary cease-and-desist order, the person may apply to the
United States district court for the judicial district in which
the residence or principal office or place of business of the
person is located, or the United States District Court for the
District of Columbia, for an injunction setting aside,
limiting, or suspending the enforcement, operation, or
effectiveness of such order pending the completion of the
administrative proceedings pursuant to the notice of charges
served upon the person under subsection (b), and such court
shall have jurisdiction to issue such injunction.
(3) Incomplete or inaccurate records.--
(A) Temporary order.--If a notice of charges served
under subsection (b) specifies, on the basis of
particular facts and circumstances, that the books and
records of a covered person or service provider are so
incomplete or inaccurate that the Bureau is unable to
determine the financial condition of that person or the
details or purpose of any transaction or transactions
that may have a material effect on the financial
condition of that person, the Bureau may issue a
temporary order requiring--
(i) the cessation of any activity or
practice which gave rise, whether in whole or
in part, to the incomplete or inaccurate state
of the books or records; or
(ii) affirmative action to restore such
books or records to a complete and accurate
state, until the completion of the proceedings
under subsection (b)(1).
(B) Effective period.--Any temporary order issued
under subparagraph (A)--
(i) shall become effective upon service;
and
(ii) unless set aside, limited, or
suspended by a court in proceedings under
paragraph (2), shall remain in effect and
enforceable until the earlier of--
(I) the completion of the
proceeding initiated under subsection
(b) in connection with the notice of
charges; or
(II) the date the Bureau
determines, by examination or
otherwise, that the books and records
of the covered person or service
provider are accurate and reflect the
financial condition thereof.
(d) Special Rules for Enforcement of Orders.--
(1) In general.--The Bureau may in its discretion apply to
the United States district court within the jurisdiction of
which the principal office or place of business of the person
is located, for the enforcement of any effective and
outstanding notice or order issued under this section, and such
court shall have jurisdiction and power to order and require
compliance herewith.
(2) Exception.--Except as otherwise provided in this
subsection, no court shall have jurisdiction to affect by
injunction or otherwise the issuance or enforcement of any
notice or order or to review, modify, suspend, terminate, or
set aside any such notice or order.
(e) Rules.--The Bureau shall prescribe rules establishing such
procedures as may be necessary to carry out this section.
SEC. 1054. LITIGATION AUTHORITY.
(a) In General.--If any person violates a Federal consumer
financial law, the Bureau may, subject to sections 1024, 1025, and
1026, commence a civil action against such person to impose a civil
penalty or to seek all appropriate legal and equitable relief including
a permanent or temporary injunction as permitted by law.
(b) Representation.--The Bureau may act in its own name and through
its own attorneys in enforcing any provision of this title, rules
thereunder, or any other law or regulation, or in any action, suit, or
proceeding to which the Bureau is a party.
(c) Compromise of Actions.--The Bureau may compromise or settle any
action if such compromise is approved by the court.
(d) Notice to the Attorney General.--When commencing a civil action
under Federal consumer financial law, or any rule thereunder, the
Bureau shall notify the Attorney General and, with respect to a civil
action against an insured depository institution or insured credit
union, the appropriate prudential regulator.
(e) Appearance Before the Supreme Court.--The Bureau may represent
itself in its own name before the Supreme Court of the United States,
provided that the Bureau makes a written request to the Attorney
General within the 10-day period which begins on the date of entry of
the judgment which would permit any party to file a petition for writ
of certiorari, and the Attorney General concurs with such request or
fails to take action within 60 days of the request of the Bureau.
(f) Forum.--Any civil action brought under this title may be
brought in a United States district court or in any court of competent
jurisdiction of a state in a district in which the defendant is located
or resides or is doing business, and such court shall have jurisdiction
to enjoin such person and to require compliance with any Federal
consumer financial law.
(g) Time for Bringing Action.--
(1) In general.--Except as otherwise permitted by law or
equity, no action may be brought under this title more than 3
years after the date of discovery of the violation to which an
action relates.
(2) Limitations under other federal laws.--
(A) In general.--For purposes of this subsection,
an action arising under this title does not include
claims arising solely under enumerated consumer laws.
(B) Bureau authority.--In any action arising solely
under an enumerated consumer law, the Bureau may
commence, defend, or intervene in the action in
accordance with the requirements of that provision of
law, as applicable.
(C) Transferred authority.--In any action arising
solely under laws for which authorities were
transferred under subtitles F and H, the Bureau may
commence, defend, or intervene in the action in
accordance with the requirements of that provision of
law, as applicable.
SEC. 1055. RELIEF AVAILABLE.
(a) Administrative Proceedings or Court Actions.--
(1) Jurisdiction.--The court (or the Bureau, as the case
may be) in an action or adjudication proceeding brought under
Federal consumer financial law, shall have jurisdiction to
grant any appropriate legal or equitable relief with respect to
a violation of Federal consumer financial law, including a
violation of a rule or order prescribed under a Federal
consumer financial law.
(2) Relief.--Relief under this section may include, without
limitation--
(A) rescission or reformation of contracts;
(B) refund of moneys or return of real property;
(C) restitution;
(D) disgorgement or compensation for unjust
enrichment;
(E) payment of damages or other monetary relief;
(F) public notification regarding the violation,
including the costs of notification;
(G) limits on the activities or functions of the
person; and
(H) civil money penalties, as set forth more fully
in subsection (c).
(3) No exemplary or punitive damages.--Nothing in this
subsection shall be construed as authorizing the imposition of
exemplary or punitive damages.
(b) Recovery of Costs.--In any action brought by the Bureau, a
State attorney general, or any State regulator to enforce any Federal
consumer financial law, the Bureau, the State attorney general, or the
State regulator may recover its costs in connection with prosecuting
such action if the Bureau, the State attorney general, or the State
regulator is the prevailing party in the action.
(c) Civil Money Penalty in Court and Administrative Actions.--
(1) In general.--Any person that violates, through any act
or omission, any provision of Federal consumer financial law
shall forfeit and pay a civil penalty pursuant to this
subsection.
(2) Penalty amounts.--
(A) First tier.--For any violation of a law, rule,
or final order or condition imposed in writing by the
Bureau, a civil penalty may not exceed $5,000 for each
day during which such violation or failure to pay
continues.
(B) Second tier.--Notwithstanding paragraph (A),
for any person that recklessly engages in a violation
of a Federal consumer financial law, a civil penalty
may not exceed $25,000 for each day during which such
violation continues.
(C) Third tier.--Notwithstanding subparagraphs (A)
and (B), for any person that knowingly violates a
Federal consumer financial law, a civil penalty may not
exceed $1,000,000 for each day during which such
violation continues.
(3) Mitigating factors.--In determining the amount of any
penalty assessed under paragraph (2), the Bureau or the court
shall take into account the appropriateness of the penalty with
respect to--
(A) the size of financial resources and good faith
of the person charged;
(B) the gravity of the violation or failure to pay;
(C) the severity of the risks to or losses of the
consumer, which may take into account the number of
products or services sold or provided;
(D) the history of previous violations; and
(E) such other matters as justice may require.
(4) Authority to modify or remit penalty.--The Bureau may
compromise, modify, or remit any penalty which may be assessed
or had already been assessed under paragraph (2). The amount of
such penalty, when finally determined, shall be exclusive of
any sums owed by the person to the United States in connection
with the costs of the proceeding, and may be deducted from any
sums owing by the United States to the person charged.
(5) Notice and hearing.--No civil penalty may be assessed
under this subsection with respect to a violation of any
Federal consumer financial law, unless--
(A) the Bureau gives notice and an opportunity for
a hearing to the person accused of the violation; or
(B) the appropriate court has ordered such
assessment and entered judgment in favor of the Bureau.
SEC. 1056. REFERRALS FOR CRIMINAL PROCEEDINGS.
If the Bureau obtains evidence that any person, domestic or
foreign, has engaged in conduct that may constitute a violation of
Federal criminal law, the Bureau shall have the power to transmit such
evidence to the Attorney General of the United States, who may
institute criminal proceedings under appropriate law. Nothing in this
section affects any other authority of the Bureau to disclose
information.
SEC. 1057. EMPLOYEE PROTECTION.
(a) In General.--No covered person or service provider shall
terminate or in any other way discriminate against, or cause to be
terminated or discriminated against, any covered employee or any
authorized representative of covered employees by reason of the fact
that such employee or representative, whether at the initiative of the
employee or in the ordinary course of the duties of the employee (or
any person acting pursuant to a request of the employee), has--
(1) provided, caused to be provided, or is about to provide
or cause to be provided, information to the employer, the
Bureau, or any other State, local, or Federal, government
authority or law enforcement agency relating to any violation
of, or any act or omission that the employee reasonably
believes to be a violation of, any provision of this title or
any other provision of law that is subject to the jurisdiction
of the Bureau, or any rule, order, standard, or prohibition
prescribed by the Bureau;
(2) testified or will testify in any proceeding resulting
from the administration or enforcement of any provision of this
title or any other provision of law that is subject to the
jurisdiction of the Bureau, or any rule, order, standard, or
prohibition prescribed by the Bureau;
(3) filed, instituted, or caused to be filed or instituted
any proceeding under any Federal consumer financial law; or
(4) objected to, or refused to participate in, any
activity, policy, practice, or assigned task that the employee
(or other such person) reasonably believed to be in violation
of any law, rule, order, standard, or prohibition, subject to
the jurisdiction of, or enforceable by, the Bureau.
(b) Definition of Covered Employee.--For the purposes of this
section, the term ``covered employee'' means any individual performing
tasks related to the offering or provision of a consumer financial
product or service.
(c) Procedures and Timetables.--
(1) Complaint.--
(A) In general.--A person who believes that he or
she has been discharged or otherwise discriminated
against by any person in violation of subsection (a)
may, not later than 180 days after the date on which
such alleged violation occurs, file (or have any person
file on his or her behalf) a complaint with the
Secretary of Labor alleging such discharge or
discrimination and identifying the person responsible
for such act.
(B) Actions of secretary of labor.--Upon receipt of
such a complaint, the Secretary of Labor shall notify,
in writing, the person named in the complaint who is
alleged to have committed the violation, of --
(i) the filing of the complaint;
(ii) the allegations contained in the
complaint;
(iii) the substance of evidence supporting
the complaint; and
(iv) opportunities that will be afforded to
such person under paragraph (2).
(2) Investigation by secretary of labor.--
(A) In general.--Not later than 60 days after the
date of receipt of a complaint filed under paragraph
(1), and after affording the complainant and the person
named in the complaint who is alleged to have committed
the violation that is the basis for the complaint an
opportunity to submit to the Secretary of Labor a
written response to the complaint and an opportunity to
meet with a representative of the Secretary of Labor to
present statements from witnesses, the Secretary of
Labor shall--
(i) initiate an investigation and determine
whether there is reasonable cause to believe
that the complaint has merit; and
(ii) notify the complainant and the person
alleged to have committed the violation of
subsection (a), in writing, of such
determination.
(B) Notice of relief available.--If the Secretary
of Labor concludes that there is reasonable cause to
believe that a violation of subsection (a) has
occurred, the Secretary of Labor shall, together with
the notice under subparagraph (A)(ii), issue a
preliminary order providing the relief prescribed by
paragraph (4)(B).
(C) Request for hearing.--Not later than 30 days
after the date of receipt of notification of a
determination of the Secretary of Labor under this
paragraph, either the person alleged to have committed
the violation or the complainant may file objections to
the findings or preliminary order, or both, and request
a hearing on the record. The filing of such objections
shall not operate to stay any reinstatement remedy
contained in the preliminary order. Any such hearing
shall be conducted expeditiously, and if a hearing is
not requested in such 30-day period, the preliminary
order shall be deemed a final order that is not subject
to judicial review.
(3) Grounds for determination of complaints.--
(A) In general.--The Secretary of Labor shall
dismiss a complaint filed under this subsection, and
shall not conduct an investigation otherwise required
under paragraph (2), unless the complainant makes a
prima facie showing that any behavior described in
paragraphs (1) through (4) of subsection (a) was a
contributing factor in the unfavorable personnel action
alleged in the complaint.
(B) Rebuttal evidence.--Notwithstanding a finding
by the Secretary of Labor that the complainant has made
the showing required under subparagraph (A), no
investigation otherwise required under paragraph (2)
shall be conducted, if the employer demonstrates, by
clear and convincing evidence, that the employer would
have taken the same unfavorable personnel action in the
absence of that behavior.
(C) Evidentiary standards.--The Secretary of Labor
may determine that a violation of subsection (a) has
occurred only if the complainant demonstrates that any
behavior described in paragraphs (1) through (4) of
subsection (a) was a contributing factor in the
unfavorable personnel action alleged in the complaint.
Relief may not be ordered under subparagraph (A) if the
employer demonstrates by clear and convincing evidence
that the employer would have taken the same unfavorable
personnel action in the absence of that behavior.
(4) Issuance of final orders; review procedures.--
(A) Timing.--Not later than 120 days after the date
of conclusion of any hearing under paragraph (2), the
Secretary of Labor shall issue a final order providing
the relief prescribed by this paragraph or denying the
complaint. At any time before issuance of a final
order, a proceeding under this subsection may be
terminated on the basis of a settlement agreement
entered into by the Secretary of Labor, the
complainant, and the person alleged to have committed
the violation.
(B) Penalties.--
(i) Order of secretary of labor.--If, in
response to a complaint filed under paragraph
(1), the Secretary of Labor determines that a
violation of subsection (a) has occurred, the
Secretary of Labor shall order the person who
committed such violation--
(I) to take affirmative action to
abate the violation;
(II) to reinstate the complainant
to his or her former position, together
with compensation (including back pay)
and restore the terms, conditions, and
privileges associated with his or her
employment; and
(III) to provide compensatory
damages to the complainant.
(ii) Penalty.--If an order is issued under
clause (i), the Secretary of Labor, at the
request of the complainant, shall assess
against the person against whom the order is
issued, a sum equal to the aggregate amount of
all costs and expenses (including attorney fees
and expert witness fees) reasonably incurred,
as determined by the Secretary of Labor, by the
complainant for, or in connection with, the
bringing of the complaint upon which the order
was issued.
(C) Penalty for frivolous claims.--If the Secretary
of Labor finds that a complaint under paragraph (1) is
frivolous or has been brought in bad faith, the
Secretary of Labor may award to the prevailing employer
a reasonable attorney fee, not exceeding $1,000, to be
paid by the complainant.
(D) De novo review.--
(i) Failure of the secretary to act.--If
the Secretary of Labor has not issued a final
order within 210 days after the date of filing
of a complaint under this subsection, or within
90 days after the date of receipt of a written
determination, the complainant may bring an
action at law or equity for de novo review in
the appropriate district court of the United
States having jurisdiction, which shall have
jurisdiction over such an action without regard
to the amount in controversy, and which action
shall, at the request of either party to such
action, be tried by the court with a jury.
(ii) Procedures.--A proceeding under clause
(i) shall be governed by the same legal burdens
of proof specified in paragraph (3). The court
shall have jurisdiction to grant all relief
necessary to make the employee whole, including
injunctive relief and compensatory damages,
including--
(I) reinstatement with the same
seniority status that the employee
would have had, but for the discharge
or discrimination;
(II) the amount of back pay, with
interest; and
(III) compensation for any special
damages sustained as a result of the
discharge or discrimination, including
litigation costs, expert witness fees,
and reasonable attorney fees.
(E) Other appeals.--Unless the complainant brings
an action under subparagraph (D), any person adversely
affected or aggrieved by a final order issued under
subparagraph (A) may file a petition for review of the
order in the United States Court of Appeals for the
circuit in which the violation with respect to which
the order was issued, allegedly occurred or the circuit
in which the complainant resided on the date of such
violation, not later than 60 days after the date of the
issuance of the final order of the Secretary of Labor
under subparagraph (A). Review shall conform to chapter
7 of title 5, United States Code. The commencement of
proceedings under this subparagraph shall not, unless
ordered by the court, operate as a stay of the order.
An order of the Secretary of Labor with respect to
which review could have been obtained under this
subparagraph shall not be subject to judicial review in
any criminal or other civil proceeding.
(5) Failure to comply with order.--
(A) Actions by the secretary.--If any person has
failed to comply with a final order issued under
paragraph (4), the Secretary of Labor may file a civil
action in the United States district court for the
district in which the violation was found to have
occurred, or in the United States district court for
the District of Columbia, to enforce such order. In
actions brought under this paragraph, the district
courts shall have jurisdiction to grant all appropriate
relief including injunctive relief and compensatory
damages.
(B) Civil actions to compel compliance.--A person
on whose behalf an order was issued under paragraph (4)
may commence a civil action against the person to whom
such order was issued to require compliance with such
order. The appropriate United States district court
shall have jurisdiction, without regard to the amount
in controversy or the citizenship of the parties, to
enforce such order.
(C) Award of costs authorized.--The court, in
issuing any final order under this paragraph, may award
costs of litigation (including reasonable attorney and
expert witness fees) to any party, whenever the court
determines such award is appropriate.
(D) Mandamus proceedings.--Any nondiscretionary
duty imposed by this section shall be enforceable in a
mandamus proceeding brought under section 1361 of title
28, United States Code.
(d) Unenforceability of Certain Agreements.--
(1) No waiver of rights and remedies.--Except as provided
under paragraph (3), and notwithstanding any other provision of
law, the rights and remedies provided for in this section may
not be waived by any agreement, policy, form, or condition of
employment, including by any predispute arbitration agreement.
(2) No predispute arbitration agreements.--Except as
provided under paragraph (3), and notwithstanding any other
provision of law, no predispute arbitration agreement shall be
valid or enforceable to the extent that it requires arbitration
of a dispute arising under this section.
(3) Exception.--Notwithstanding paragraphs (1) and (2), an
arbitration provision in a collective bargaining agreement
shall be enforceable as to disputes arising under subsection
(a)(4), unless the Bureau determines, by rule, that such
provision is inconsistent with the purposes of this title.
SEC. 1058. EFFECTIVE DATE.
This subtitle shall become effective on the designated transfer
date.
Subtitle F--Transfer of Functions and Personnel; Transitional
Provisions
SEC. 1061. TRANSFER OF CONSUMER FINANCIAL PROTECTION FUNCTIONS.
(a) Defined Terms.--For purposes of this subtitle--
(1) the term ``consumer financial protection functions''
means research, rulemaking, issuance of orders or guidance,
supervision, examination, and enforcement activities, powers,
and duties relating to the offering or provision of consumer
financial products or services; and
(2) the terms ``transferor agency'' and ``transferor
agencies'' mean, respectively--
(A) the Board of Governors (and any Federal reserve
bank, as the context requires), the Federal Deposit
Insurance Corporation, the Federal Trade Commission,
the National Credit Union Administration, the Office of
the Comptroller of the Currency, the Office of Thrift
Supervision, and the Department of Housing and Urban
Development, and the heads of those agencies; and
(B) the agencies listed in subparagraph (A),
collectively.
(b) In General.--Except as provided in subsection (c), consumer
financial protection functions are transferred as follows:
(1) Board of governors.--
(A) Transfer of functions.--All consumer financial
protection functions of the Board of Governors are
transferred to the Bureau.
(B) Board of governors authority.--The Bureau shall
have all powers and duties that were vested in the
Board of Governors, relating to consumer financial
protection functions, on the day before the designated
transfer date.
(2) Comptroller of the currency.--
(A) Transfer of functions.--All consumer financial
protection functions of the Comptroller of the Currency
are transferred to the Bureau.
(B) Comptroller authority.--The Bureau shall have
all powers and duties that were vested in the
Comptroller of the Currency, relating to consumer
financial protection functions, on the day before the
designated transfer date.
(3) Director of the office of thrift supervision.--
(A) Transfer of functions.--All consumer financial
protection functions of the Director of the Office of
Thrift Supervision are transferred to the Bureau.
(B) Director authority.--The Bureau shall have all
powers and duties that were vested in the Director of
the Office of Thrift Supervision, relating to consumer
financial protection functions, on the day before the
designated transfer date.
(4) Federal deposit insurance corporation.--
(A) Transfer of functions.--All consumer financial
protection functions of the Federal Deposit Insurance
Corporation are transferred to the Bureau.
(B) Corporation authority.--The Bureau shall have
all powers and duties that were vested in the Federal
Deposit Insurance Corporation, relating to consumer
financial protection functions, on the day before the
designated transfer date.
(5) Federal trade commission.--
(A) Transfer of functions.--Except as provided in
subparagraph (C), all consumer financial protection
functions of the Federal Trade Commission are
transferred to the Bureau.
(B) Commission authority.--Except as provided in
subparagraph (C), the Bureau shall have all powers and
duties that were vested in the Federal Trade Commission
relating to consumer financial protection functions on
the day before the designated transfer date.
(C) Continuation of certain commission
authorities.--Notwithstanding subparagraphs (A) and
(B), the Federal Trade Commission shall continue to
have authority to enforce, and issue rules with respect
to--
(i) the Credit Repair Organizations Act (15
U.S.C. 1679 et seq.);
(ii) section 5 of the Federal Trade
Commission Act (15 U.S.C. 45); and
(iii) the Telemarketing and Consumer Fraud
and Abuse Prevention Act (15 U.S.C. 6101 et
seq.).
(6) National credit union administration.--
(A) Transfer of functions.--All consumer financial
protection functions of the National Credit Union
Administration are transferred to the Bureau.
(B) National credit union administration
authority.--The Bureau shall have all powers and duties
that were vested in the National Credit Union
Administration, relating to consumer financial
protection functions, on the day before the designated
transfer date.
(7) Department of housing and urban development.--
(A) Transfer of functions.--All consumer protection
functions of the Secretary of the Department of Housing
and Urban Development relating to the Real Estate
Settlement Procedures Act of 1974 (12 U.S.C. 2601 et
seq.) and the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008 (12 U.S.C. 5102 et seq.) are
transferred to the Bureau.
(B) Authority of the department of housing and
urban development.--The Bureau shall have all powers
and duties that were vested in the Secretary of the
Department of Housing and Urban Development relating to
the Real Estate Settlement Procedures Act of 1974 (12
U.S.C. 2601 et seq.), and the Secure and Fair
Enforcement for Mortgage Licensing Act of 2008 (12
U.S.C. 5101 et seq.), on the day before the designated
transfer date.
(c) Transfers of Functions Subject to Examination and Enforcement
Authority Remaining With Transferor Agencies.--The transfers of
functions in subsection (b) do not affect the authority of the agencies
identified in subsection (b) from conducting examinations or initiating
and maintaining enforcement proceedings, including performing
appropriate supervisory and support functions relating thereto, in
accordance with sections 1024, 1025, and 1026.
(d) Effective Date.--Subsections (b) and (c) shall become effective
on the designated transfer date.
SEC. 1062. DESIGNATED TRANSFER DATE.
(a) In General.--Not later than 60 days after the date of enactment
of this Act, the Secretary shall--
(1) in consultation with the Chairman of the Board of
Governors, the Chairperson of the Corporation, the Chairman of
the Federal Trade Commission, the Chairman of the National
Credit Union Administration Board, the Comptroller of the
Currency, the Director of the Office of Thrift Supervision, the
Secretary of the Department of Housing and Urban Development,
and the Director of the Office of Management and Budget,
designate a single calendar date for the transfer of functions
to the Bureau under section 1061; and
(2) publish notice of that designated date in the Federal
Register.
(b) Changing Designation.--The Secretary--
(1) may, in consultation with the Chairman of the Board of
Governors, the Chairperson of the Federal Deposit Insurance
Corporation, the Chairman of the Federal Trade Commission, the
Chairman of the National Credit Union Administration Board, the
Comptroller of the Currency, the Director of the Office of
Thrift Supervision, the Secretary of the Department of Housing
and Urban Development, and the Director of the Office of
Management and Budget, change the date designated under
subsection (a); and
(2) shall publish notice of any changed designated date in
the Federal Register.
(c) Permissible Dates.--
(1) In general.--Except as provided in paragraph (2), any
date designated under this section shall be not earlier than
180 days, nor later than 18 months, after the date of enactment
of this Act.
(2) Extension of time.--The Secretary may designate a date
that is later than 18 months after the date of enactment of
this Act if the Secretary transmits to appropriate committees
of Congress--
(A) a written determination that orderly
implementation of this title is not feasible before the
date that is 18 months after the date of enactment of
this Act;
(B) an explanation of why an extension is necessary
for the orderly implementation of this title; and
(C) a description of the steps that will be taken
to effect an orderly and timely implementation of this
title within the extended time period.
(3) Extension limited.--In no case may any date designated
under this section be later than 24 months after the date of
enactment of this Act.
SEC. 1063. SAVINGS PROVISIONS.
(a) Board of Governors.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(1) does not affect the validity of
any right, duty, or obligation of the United States, the Board
of Governors (or any Federal reserve bank), or any other person
that--
(A) arises under any provision of law relating to
any consumer financial protection function of the Board
of Governors transferred to the Bureau by this title;
and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Board of
Governors (or any Federal reserve bank) before the designated
transfer date with respect to any consumer financial protection
function of the Board of Governors (or any Federal reserve
bank) transferred to the Bureau by this title, except that the
Bureau, subject to sections 1024, 1025, and 1026, shall be
substituted for the Board of Governors (or Federal reserve
bank) as a party to any such proceeding as of the designated
transfer date.
(b) Federal Deposit Insurance Corporation.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(4) does not affect the validity of
any right, duty, or obligation of the United States, the
Federal Deposit Insurance Corporation, the Board of Directors
of that Corporation, or any other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
Federal Deposit Insurance Corporation transferred to
the Bureau by this title; and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Federal
Deposit Insurance Corporation (or the Board of Directors of
that Corporation) before the designated transfer date with
respect to any consumer financial protection function of the
Federal Deposit Insurance Corporation transferred to the Bureau
by this title, except that the Bureau, subject to sections
1024, 1025, and 1026, shall be substituted for the Federal
Deposit Insurance Corporation (or Board of Directors) as a
party to any such proceeding as of the designated transfer
date.
(c) Federal Trade Commission.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(5) does not affect the validity of
any right, duty, or obligation of the United States, the
Federal Trade Commission, or any other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
Federal Trade Commission transferred to the Bureau by
this title; and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Federal Trade
Commission before the designated transfer date with respect to
any consumer financial protection function of the Federal Trade
Commission transferred to the Bureau by this title, except that
the Bureau, subject to sections 1024, 1025, and 1026, shall be
substituted for the Federal Trade Commission as a party to any
such proceeding as of the designated transfer date.
(d) National Credit Union Administration.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(6) does not affect the validity of
any right, duty, or obligation of the United States, the
National Credit Union Administration, the National Credit Union
Administration Board, or any other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
National Credit Union Administration transferred to the
Bureau by this title; and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the National
Credit Union Administration (or the National Credit Union
Administration Board) before the designated transfer date with
respect to any consumer financial protection function of the
National Credit Union Administration transferred to the Bureau
by this title, except that the Bureau, subject to sections
1024, 1025, and 1026, shall be substituted for the National
Credit Union Administration (or National Credit Union
Administration Board) as a party to any such proceeding as of
the designated transfer date.
(e) Office of the Comptroller of the Currency.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(2) does not affect the validity of
any right, duty, or obligation of the United States, the
Comptroller of the Currency, the Office of the Comptroller of
the Currency, or any other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
Comptroller of the Currency transferred to the Bureau
by this title; and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Comptroller of
the Currency (or the Office of the Comptroller of the Currency)
with respect to any consumer financial protection function of
the Comptroller of the Currency transferred to the Bureau by
this title before the designated transfer date, except that the
Bureau, subject to sections 1024, 1025, and 1026, shall be
substituted for the Comptroller of the Currency (or the Office
of the Comptroller of the Currency) as a party to any such
proceeding as of the designated transfer date.
(f) Office of Thrift Supervision.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(3) does not affect the validity of
any right, duty, or obligation of the United States, the
Director of the Office of Thrift Supervision, the Office of
Thrift Supervision, or any other person, that--
(A) arises under any provision of law relating to
any consumer financial protection function of the
Director of the Office of Thrift Supervision
transferred to the Bureau by this title; and
(B) that existed on the day before the designated
transfer date.
(2) Continuation of suits.--No provision of this Act shall
abate any proceeding commenced by or against the Director of
the Office of Thrift Supervision (or the Office of Thrift
Supervision) with respect to any consumer financial protection
function of the Director of the Office of Thrift Supervision
transferred to the Bureau by this title before the designated
transfer date, except that the Bureau, subject to sections
1024, 1025, and 1026, shall be substituted for the Director (or
the Office of Thrift Supervision) as a party to any such
proceeding as of the designated transfer date.
(g) Department of Housing and Urban Development.--
(1) Existing rights, duties, and obligations not
affected.--Section 1061(b)(7) shall not affect the validity of
any right, duty, or obligation of the United States, the
Secretary of the Department of Housing and Urban Development
(or the Department of Housing and Urban Development), or any
other person, that--
(A) arises under any provision of law relating to
any function of the Secretary of the Department of
Housing and Urban Development with respect to the Real
Estate Settlement Procedures Act of 1974 (12 U.S.C.
2601 et seq.) or the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008 (12 U.S.C. 5102 et seq.)
transferred to the Bureau by this title; and
(B) existed on the day before the designated
transfer date.
(2) Continuation of suits.--This title shall not abate any
proceeding commenced by or against the Secretary of the
Department of Housing and Urban Development (or the Department
of Housing and Urban Development) with respect to any consumer
financial protection function of the Secretary of the
Department of Housing and Urban Development transferred to the
Bureau by this title before the designated transfer date,
except that the Bureau, subject to sections 1024, 1025, and
1026, shall be substituted for the Secretary of the Department
of Housing and Urban Development (or the Department of Housing
and Urban Development) as a party to any such proceeding as of
the designated transfer date.
(h) Continuation of Existing Orders, Rules, Determinations,
Agreements, and Resolutions.--All orders, resolutions, determinations,
agreements, and rules that have been issued, made, prescribed, or
allowed to become effective by any transferor agency or by a court of
competent jurisdiction, in the performance of consumer financial
protection functions that are transferred by this title and that are in
effect on the day before the designated transfer date, shall continue
in effect according to the terms of those orders, resolutions,
determinations, agreements, and rules, and shall not be enforceable by
or against the Bureau.
(i) Identification of Rules Continued.--Not later than the
designated transfer date, the Bureau--
(1) shall, after consultation with the head of each
transferor agency, identify the rules continued under
subsection (h) that will be enforced by the Bureau; and
(2) shall publish a list of such rules in the Federal
Register.
(j) Status of Rules Proposed or Not Yet Effective.--
(1) Proposed rules.--Any proposed rule of a transferor
agency which that agency, in performing consumer financial
protection functions transferred by this title, has proposed
before the designated transfer date, but has not been published
as a final rule before that date, shall be deemed to be a
proposed rule of the Bureau.
(2) Rules not yet effective.--Any interim or final rule of
a transferor agency which that agency, in performing consumer
financial protection functions transferred by this title, has
published before the designated transfer date, but which has
not become effective before that date, shall become effective
as a rule of the Bureau according to its terms.
SEC. 1064. TRANSFER OF CERTAIN PERSONNEL.
(a) In General.--
(1) Certain federal reserve system employees transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Board of Governors shall--
(i) jointly determine the number of
employees of the Board of Governors necessary
to perform or support the consumer financial
protection functions of the Board of Governors
that are transferred to the Bureau by this
title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Board of Governors for transfer to the
Bureau, in a manner that the Bureau and the
Board of Governors, in their sole discretion,
determine equitable.
(B) Identified employees transferred.--All
employees of the Board of Governors identified under
subparagraph (A)(ii) shall be transferred to the Bureau
for employment.
(C) Federal reserve bank employees.--Employees of
any Federal reserve bank who, 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 Bureau
and the Board of Directors of the Federal Deposit
Insurance Corporation shall--
(i) jointly determine the number of
employees of that Corporation necessary to
perform or support the consumer financial
protection functions of the Corporation that
are transferred to the Bureau by this title;
and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Corporation for transfer to the Bureau, in
a manner that the Bureau and the Board of
Directors of the Corporation, in their sole
discretion, determine equitable.
(B) Identified employees transferred.--All
employees of the Corporation identified under
subparagraph (A)(ii) shall be transferred to the Bureau
for employment.
(3) Certain ncua employees transferred.--
(A) Identifying employees for transfer.--The Bureau
and the National Credit Union Administration Board
shall--
(i) jointly determine the number of
employees of the National Credit Union
Administration necessary to perform or support
the consumer financial protection functions of
the National Credit Union Administration that
are transferred to the Bureau by this title;
and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the National Credit Union Administration for
transfer to the Bureau, in a manner that the
Bureau and the National Credit Union
Administration Board, in their sole discretion,
determine equitable.
(B) Identified employees transferred.--All
employees of the National Credit Union Administration
identified under subparagraph (A)(ii) shall be
transferred to the Bureau for employment.
(4) Certain office of the comptroller of the currency
employees transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Comptroller of the Currency shall--
(i) jointly determine the number of
employees of the Office of the Comptroller of
the Currency necessary to perform or support
the consumer financial protection functions of
the Office of the Comptroller of the Currency
that are transferred to the Bureau by this
title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Office of the Comptroller of the Currency
for transfer to the Bureau, in a manner that
the Bureau and the Office of the Comptroller of
the Currency, in their sole discretion,
determine equitable.
(B) Identified employees transferred.--All
employees of the Office of the Comptroller of the
Currency identified under subparagraph (A)(ii) shall be
transferred to the Bureau for employment.
(5) Certain office of thrift supervision employees
transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Director of the Office of Thrift Supervision
shall--
(i) jointly determine the number of
employees of the Office of Thrift Supervision
necessary to perform or support the consumer
financial protection functions of the Office of
Thrift Supervision that are transferred to the
Bureau by this title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Office of Thrift Supervision for transfer
to the Bureau, in a manner that the Bureau and
the Office of Thrift Supervision, in their sole
discretion, determine equitable.
(B) Identified employees transferred.--All
employees of the Office of Thrift Supervision
identified under subparagraph (A)(ii) shall be
transferred to the Bureau for employment.
(6) Certain employees of department of housing and urban
development transferred.--
(A) Identifying employees for transfer.--The Bureau
and the Secretary of the Department of Housing and
Urban Development shall--
(i) jointly determine the number of
employees of the Department of Housing and
Urban Development necessary to perform or
support the consumer protection functions of
the Department that are transferred to the
Bureau by this title; and
(ii) consistent with the number determined
under clause (i), jointly identify employees of
the Department of Housing and Urban Development
for transfer to the Bureau in a manner that the
Bureau and the Secretary of the Department of
Housing and Urban Development, in their sole
discretion, deem equitable.
(B) Identified employees transferred.--All
employees of the Department of Housing and Urban
Development identified under subparagraph (A)(ii) shall
be transferred to the Bureau for employment.
(7) Appointment authority for excepted service and senior
executive service transferred.--
(A) In general.--In the case of an employee
occupying a position in the excepted service or the
Senior Executive Service, any appointment authority
established pursuant to law or regulations of the
Office of Personnel Management for filling such
positions shall be transferred, subject to subparagraph
(B).
(B) Declining transfers allowed.--An agency or
entity may decline to make a transfer of authority
under subparagraph (A) (and the employees appointed
pursuant thereto) to the extent that such authority
relates to positions excepted from the competitive
service because of their confidential, policy-making,
policy-determining, or policy-advocating character, and
non-career positions in the Senior Executive Service
(within the meaning of section 3132(a)(7) of title 5,
United States Code).
(b) Timing of Transfers and Position Assignments.--Each employee to
be transferred under this section shall--
(1) be transferred not later than 90 days after the
designated transfer date; and
(2) receive notice of a position assignment not later than
120 days after the effective date of his or her transfer.
(c) Transfer of Function.--
(1) In general.--Notwithstanding any other provision of
law, the transfer of employees shall be deemed a transfer of
functions for the purpose of section 3503 of title 5, United
States Code.
(2) Priority of this title.--If any provisions of this
title conflict with any protection provided to transferred
employees under section 3503 of title 5, United States Code,
the provisions of this title shall control.
(d) Equal Status and Tenure Positions.--
(1) Employees transferred from fdic, ftc, hud, ncua, occ,
and ots.--Each employee transferred from the Federal Deposit
Insurance Corporation, the Federal Trade Commission, the
National Credit Union Administration, the Office of the
Comptroller of the Currency, the Office of Thrift Supervision,
or the Department of Housing and Urban Development shall be
placed in a position at the Bureau with the same status and
tenure as that employee held on the day before the designated
transfer date.
(2) Employees transferred from the federal reserve
system.--
(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 an employee transferring to the
Bureau 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 Bureau are not subject to any additional
certification requirements before being placed in a comparable examiner
position at the Bureau examining the same types of institutions as they
examined before they were transferred.
(f) Personnel Actions Limited.--
(1) 2-year protection.--Except as provided in paragraph
(2), each transferred employee holding a permanent position on
the day before the designated transfer date may not, during the
2-year period beginning on the designated transfer date, be
involuntarily separated, or involuntarily reassigned outside
his or her locality pay area, as defined by the Office of
Personnel Management.
(2) Exceptions.--Paragraph (1) does not limit the right of
the Bureau--
(A) to separate an employee for cause or for
unacceptable performance;
(B) to terminate an appointment to a position
excepted from the competitive service because of its
confidential policy-making, policy-determining, or
policy-advocating character; or
(C) to reassign a supervisory employee outside his
or her locality pay area, as defined by the Office of
Personnel Management, when the Bureau determines that
the reassignment is necessary for the efficient
operation of the Bureau.
(g) Pay.--
(1) 2-year protection.--Except as provided in paragraph
(2), each transferred employee shall, during the 2-year period
beginning on the designated transfer date, receive pay at a
rate equal to not less than the basic rate of pay (including
any geographic differential) that the employee received during
the pay period immediately preceding the date of transfer.
(2) Exceptions.--Paragraph (1) does not limit the right of
the Bureau to reduce the rate of basic pay of a transferred
employee--
(A) for cause;
(B) for unacceptable performance; or
(C) with the consent of the employee.
(3) Protection only while employed.--Paragraph (1) applies
to a transferred employee only while that employee remains
employed by the Bureau.
(4) Pay increases permitted.--Paragraph (1) does not limit
the authority of the Bureau to increase the pay of a
transferred employee.
(h) Reorganization.--
(1) Between 1st and 3rd year.--
(A) In general.--If the Bureau determines, during
the 2-year period beginning 1 year after the designated
transfer date, that a reorganization of the staff of
the Bureau is required--
(i) that reorganization shall be deemed a
``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 Office of Personnel Management
shall be placed in a uniform position
classification system; and
(iii) any resulting reduction in force
shall be governed by the provisions of chapter
35 of title 5, United States Code, except that
the Bureau shall--
(I) establish competitive areas (as
that term is defined in regulations
issued by the Office of Personnel
Management) to include at a minimum all
employees in the same locality pay area
as defined by the Office of Personnel
Management;
(II) establish competitive levels
(as that term is defined in regulations
issued by the Office of Personnel
Management) without regard to whether
the particular employees have been
appointed to positions in the
competitive service or the excepted
service; and
(III) afford employees appointed to
positions in the excepted service
(other than to a position excepted from
the competitive service because of its
confidential policy-making, policy-
determining, or policy-advocating
character) the same assignment rights
to positions within the Bureau as
employees appointed to positions in the
competitive service.
(B) Service credit for reductions in force.--For
purposes of this paragraph, periods of service with a
Federal home loan bank, a joint office of the Federal
home loan banks, the Board of Governors, a Federal
reserve bank, the Federal Deposit Insurance
Corporation, or the National Credit Union
Administration shall be credited as periods of service
with a Federal agency.
(2) After 3rd year.--
(A) In general.--If the Bureau determines, at any
time after the 3-year period beginning on the
designated transfer date, that a reorganization of the
staff of the Bureau is required, any resulting
reduction in force shall be governed by the provisions
of chapter 35 of title 5, United States Code, except
that the Bureau shall establish competitive levels (as
that term is defined in regulations issued by the
Office of Personnel Management) without regard to types
of appointment held by particular employees transferred
under this section.
(B) Service credit for reductions in force.--For
purposes of this paragraph, periods of service with a
Federal home loan bank, a joint office of the Federal
home loan banks, the Board of Governors, a Federal
reserve bank, the Federal Deposit Insurance
Corporation, or the National Credit Union
Administration shall be credited as periods of service
with a Federal agency.
(i) Benefits.--
(1) Retirement benefits for transferred employees.--
(A) In general.--
(i) Continuation of existing retirement
plan.--Except as provided in subparagraph (B),
each transferred employee shall remain enrolled
in his or her existing retirement plan, through
any period of continuous employment with the
Bureau.
(ii) Employer contribution.--The Bureau
shall pay any employer contributions to the
existing retirement plan of each transferred
employee, as required under that plan.
(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 his or her
transfer to the Bureau may, during the 1-year
period beginning 6 months after the designated
transfer date, elect to be subject to the
Federal employee retirement program.
(ii) Effective date of coverage.--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) Bureau participation in federal reserve system
retirement plan.--
(i) Separate account in federal reserve
system retirement plan established.--
Notwithstanding any other provision of law, and
subject to the terms and conditions of this
section, a separate account in the Federal
Reserve System retirement plan shall be
established for Bureau 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 Bureau shall deposit into the account
established under clause (i) the employer
contributions that the Bureau makes on behalf
of employees who do not make the election under
subparagraph (B).
(iv) Account administration.--The Bureau
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--
(i) 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,
in which the employee was enrolled on the day
before the designated transfer date; and
(ii) the term ``Federal employee retirement
program'' means the retirement program for
Federal employees established by chapter 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 contribution.--The Bureau
shall reimburse the agency or bank from which
an employee was transferred for any cost
incurred by that agency or bank in continuing
to extend coverage in the benefit program to
the employee, as required under that program or
negotiated agreements.
(B) Dental, vision, or life insurance after 1st
year.--If, after the 1-year period beginning on the
designated transfer date, the Bureau decides not to
continue participation in any dental, vision, or life
insurance program of an agency or bank from which an
employee transferred, a transferred employee who is a
member of such a program may, before the decision of
the Bureau 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; or
(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 Bureau decides not to continue
participation in any long term care insurance program
of an agency or bank from which an employee
transferred, a transferred employee who is a member of
such a program may, before the decision of the Bureau
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 contribution.--An individual enrolled
in the Federal Employees Health Benefits program shall
pay any employee contribution required by the plan.
(E) Additional funding.--The Bureau shall transfer
to the Federal Employees Health Benefits Fund
established under section 8909 of title 5, United
States Code, an amount determined by the Director of
the Office of Personnel Management, after consultation
with the Bureau and the Office of Management and
Budget, to be necessary to reimburse the Fund for the
cost to the Fund of providing benefits under this
paragraph.
(F) Credit for time enrolled in other plans.--For
employees transferred under this title, enrollment in a
health benefits plan administered by a transferor
agency or a Federal reserve bank, as the case may be,
immediately before enrollment in a health benefits plan
under chapter 89 of title 5, United States Code, shall
be considered as enrollment in a health benefits plan
under that chapter for purposes of section
8905(b)(1)(A) of title 5, United States Code.
(G) Special provisions to ensure continuation of
life insurance benefits.--
(i) In general.--An annuitant (as defined
in section 8901(3) of title 5, United States
Code) who is enrolled in a life insurance plan
administered by a transferor agency on the day
before the designated transfer date shall be
eligible for coverage by a life insurance plan
under sections 8706(b), 8714a, 8714b, and 8714c
of title 5, United States Code, or in a life
insurance plan established by the Bureau,
without regard to any regularly scheduled open
season and requirement of insurability.
(ii) Employee contribution.--An individual
enrolled in a life insurance plan under this
subparagraph shall pay any employee
contribution required by the plan.
(iii) Additional funding.--The Bureau shall
transfer to the Employees' Life Insurance Fund
established under section 8714 of title 5,
United States Code, an amount determined by the
Director of the Office of Personnel Management,
after consultation with the Bureau and the
Office of Management and Budget, to be
necessary to reimburse the Fund for the cost to
the Fund of providing benefits under this
subparagraph not otherwise paid for by the
employee under clause (ii).
(iv) Credit for time enrolled in other
plans.--For employees transferred under this
title, enrollment in a life insurance plan
administered by a transferor agency immediately
before enrollment in a life insurance plan
under chapter 87 of title 5, United States
Code, shall be considered as enrollment in a
life insurance plan under that chapter for
purposes of section 8706(b)(1)(A) of title 5,
United States Code.
(3) OPM rules.--The Office of Personnel Management shall
issue such rules as are necessary to carry out this subsection.
(j) Implementation of Uniform Pay and Classification System.--Not
later than 2 years after the designated transfer date, the Bureau shall
implement a uniform pay and classification system for all employees
transferred under this title.
(k) Equitable Treatment.--In administering the provisions of this
section, the Bureau--
(1) shall take no action that would unfairly disadvantage
transferred employees relative to each other based on their
prior employment by the Board of Governors, the Federal Deposit
Insurance Corporation, the Federal Trade Commission, the
National Credit Union Administration, the Office of the
Comptroller of the Currency, the Office of Thrift Supervision,
a Federal reserve bank, a Federal home loan bank, or a joint
office of the Federal home loan banks; and
(2) may take such action as is appropriate in individual
cases so that employees transferred under this section receive
equitable treatment, with respect to the status, tenure, pay,
benefits (other than benefits under programs administered by
the Office of Personnel Management), and accrued leave or
vacation time of those employees, for prior periods of service
with any Federal agency, including the Board of Governors, the
Corporation, the Federal Trade Commission, the National Credit
Union Administration, the Office of the Comptroller of the
Currency, the Office of Thrift Supervision, a Federal reserve
bank, a Federal home loan bank, or a joint office of the
Federal home loan banks.
(l) Implementation.--In implementing the provisions of this
section, the Bureau shall coordinate with the Office of Personnel
Management and other entities having expertise in matters related to
employment to ensure a fair and orderly transition for affected
employees.
SEC. 1065. INCIDENTAL TRANSFERS.
(a) Incidental Transfers Authorized.--The Director of the Office of
Management and Budget, in consultation with the Secretary, shall make
such additional incidental transfers and dispositions of assets and
liabilities held, used, arising from, available, or to be made
available, in connection with the functions transferred by this title,
as the Director may determine necessary to accomplish the purposes of
this title.
(b) Sunset.--The authority provided in this section shall terminate
5 years after the date of enactment of this Act.
SEC. 1066. INTERIM AUTHORITY OF THE SECRETARY.
(a) In General.--The Secretary is authorized to perform the
functions of the Bureau under this subtitle until the Director of the
Bureau is confirmed by the Senate in accordance with section 1011.
(b) Interim Administrative Services by the Department of the
Treasury.--The Department of the Treasury may provide administrative
services necessary to support the Bureau before the designated transfer
date.
SEC. 1067. TRANSITION OVERSIGHT.
(a) Purpose.--The purpose of this section is to ensure that the
Bureau--
(1) has an orderly and organized startup;
(2) attracts and retains a qualified workforce; and
(3) establishes comprehensive employee training and
benefits programs.
(b) Reporting Requirement.--
(1) In general.--The Bureau shall submit an annual report
to the Committee on Banking, Housing, and Urban Affairs of the
Senate and the Committee on Financial Services of the House of
Representatives that includes the plans described in paragraph
(2).
(2) Plans.--The plans described in this paragraph are as
follows:
(A) Training and workforce development plan.--The
Bureau shall submit a training and workforce
development plan that includes, to the extent
practicable--
(i) identification of skill and technical
expertise needs and actions taken to meet those
requirements;
(ii) steps taken to foster innovation and
creativity;
(iii) leadership development and succession
planning; and
(iv) effective use of technology by
employees.
(B) Workplace flexibilities plan.--The Bureau shall
submit a workforce flexibility plan that includes, to
the extent practicable--
(i) telework;
(ii) flexible work schedules;
(iii) phased retirement;
(iv) reemployed annuitants;
(v) part-time work;
(vi) job sharing;
(vii) parental leave benefits and childcare
assistance;
(viii) domestic partner benefits;
(ix) other workplace flexibilities; or
(x) any combination of the items described
in clauses (i) through (ix).
(C) Recruitment and retention plan.--The Bureau
shall submit a recruitment and retention plan that
includes, to the extent practicable, provisions
relating to--
(i) the steps necessary to target highly
qualified applicant pools with diverse
backgrounds;
(ii) streamlined employment application
processes;
(iii) the provision of timely notification
of the status of employment applications to
applicants; and
(iv) the collection of information to
measure indicators of hiring effectiveness.
(c) Expiration.--The reporting requirement under subsection (b)
shall terminate 5 years after the date of enactment of this Act.
(d) Rule of Construction.--Nothing in this section may be construed
to affect--
(1) a collective bargaining agreement, as that term is
defined in section 7103(a)(8) of title 5, United States Code,
that is in effect on the date of enactment of this Act; or
(2) the rights of employees under chapter 71 of title 5,
United States Code.
Subtitle G--Regulatory Improvements
SEC. 1071. 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 a record
of the number and dollar amounts of the deposit accounts of
customers.
(2) Geo-coded addresses of depositors.--Customer addresses
shall be geo-coded for the collection of data regarding the
census tracts of the residences or business locations of
customers.
(3) Identification of depositor type.--In maintaining
records on any deposit account under this section, the
financial institution shall record whether the deposit account
is for a residential or commercial customer.
(4) Public availability.--
(A) In general.--Each financial institution shall
make publicly available on an annual basis, from
information collected under this section--
(i) the address and census tract of each
branch, automated teller machine at which
deposits are accepted, and other deposit taking
service facility with respect to the financial
institution;
(ii) the type of deposit account, including
whether the account was a checking or savings
account; and
(iii) data on the number and dollar amount
of the accounts, presented by census tract
location of the residential and commercial
customer.
(B) Protection of identity.--In making data
publicly available, 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 Bureau, or to a
Federal banking agency, in accordance with rules prescribed by
the Bureau.
(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 rules prescribed by the Bureau.
(d) Bureau Use.--The Bureau--
(1) shall use the data on branches and deposit accounts
acquired under this section as part of the examination of a
covered person as part of an examination under this title;
(2) shall assess the distribution of residential and
commercial accounts at such financial institution across income
and minority level of census tracts; and
(3) may use the data for any other purpose as permitted by
law.
(e) Rules and Guidance.--The Bureau shall prescribe such rules and
issue guidance as may be necessary to carry out, enforce, and compile
data pursuant to this section. The Bureau shall prescribe rules
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 this section and the requirements of rules
prescribed thereunder.
(f) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Deposit account.--The term ``deposit account'' includes
any checking account, savings account, credit union share
account, and other types of accounts, as defined by the Bureau.
(2) 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 become effective on the
designated transfer date.
SEC. 1072. SMALL BUSINESS DATA COLLECTION.
(a) In General.--The Equal Credit Opportunity Act (15 U.S.C. 1691
et seq.) is amended by inserting after section 704A the following:
``SEC. 740B. SMALL BUSINESS LOAN DATA COLLECTION.
``(a) Purpose.--The purpose of this section is to facilitate
enforcement of fair lending laws and enable communities, governmental
entities, and creditors to identify business and community development
needs and opportunities of women-owned and minority-owned small
businesses.
``(b) Information Gathering.--Subject to the requirements of this
section, in the case of any application to a financial institution for
credit for a small business, the financial institution shall--
``(1) inquire whether the small business is a women- or
minority-owned small business, without regard to whether such
application is received in person, by mail, by telephone, by
electronic mail or other form of electronic transmission, or by
any other means, and whether or not such application is in
response to a solicitation by the financial institution; and
``(2) maintain a record of the responses to such inquiry,
separate from the application and accompanying information.
``(c) Right To Refuse.--Any applicant for credit may refuse to
provide any information requested pursuant to subsection (b) in
connection with any application for credit.
``(d) No Access by Underwriters.--
``(1) Limitation.--Where feasible, no loan underwriter or
other officer or employee of a financial institution, or any
affiliate of a financial institution, involved in making any
determination concerning an application for credit shall have
access to any information provided by the applicant pursuant to
a request under subsection (b) in connection with such
application.
``(2) Limited access.--If a financial institution
determines that a loan underwriter or other officer or employee
of a financial institution, or any affiliate of a financial
institution, involved in making any determination concerning an
application for credit should have access to any information
provided by the applicant pursuant to a request under
subsection (b), the financial institution shall provide notice
to the applicant of the access of the underwriter to such
information, along with notice that the financial institution
may not discriminate on the basis of such information.
``(e) Form and Manner of Information.--
``(1) In general.--Each financial institution shall compile
and maintain, in accordance with regulations of the Bureau, a
record of the information provided by any loan applicant
pursuant to a request under subsection (b).
``(2) Itemization.--Information compiled and maintained
under paragraph (1) shall be itemized in order to clearly and
conspicuously disclose--
``(A) the number of the application and the date on
which the application was received;
``(B) the type and purpose of the loan or other
credit being applied for;
``(C) the amount of the credit or credit limit
applied for, and the amount of the credit transaction
or the credit limit approved for such applicant;
``(D) the type of action taken with respect to such
application, and the date of such action;
``(E) the census tract in which is located the
principal place of business of the 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 and ethnicity of the principal
owners of the business; and
``(H) any additional data that the Bureau
determines would aid in fulfilling the purposes of this
section.
``(3) No personally identifiable information.--In compiling
and maintaining any record of information under this section, a
financial institution may not include in such record the name,
specific address (other than the census tract required under
paragraph (1)(E)), telephone number, electronic mail address,
or any other personally identifiable information concerning any
individual who is, or is connected with, the small business
loan applicant.
``(4) Discretion to delete or modify publicly available
data.--The Bureau may, at its discretion, delete or modify data
collected under this section which is or will be available to
the public, if the Bureau determines that the deletion or
modification of the data would advance a compelling privacy
interest.
``(f) Availability of Information.--
``(1) Submission to bureau.--The data required to be
compiled and maintained under this section by any financial
institution shall be submitted annually to the Bureau.
``(2) Availability of information.--Information compiled
and maintained under this section shall be--
``(A) retained for not less than 3 years after the
date of preparation;
``(B) made available to any member of the public,
upon request, in the form required under regulations
prescribed by the Bureau;
``(C) annually made available to the public
generally by the Bureau, in such form and in such
manner as is determined appropriate by the Bureau.
``(3) Compilation of aggregate data.--The Bureau may, at
its discretion--
``(A) compile and aggregate data collected under
this section for its own use; and
``(B) make public such compilations of aggregate
data.
``(g) Bureau Action.--
``(1) In general.--The Bureau shall prescribe such rules
and issue such guidance as may be necessary to carry out,
enforce, and compile data pursuant to this section.
``(2) Exceptions.--The Bureau, by rule or order, may adopt
exceptions to any requirement of this section and may,
conditionally or unconditionally, exempt any financial
institution or class of financial institutions from the
requirements of this section, as the Bureau deems necessary or
appropriate to carry out the purposes of this section.
``(3) Guidance.--The Bureau shall issue guidance designed
to facilitate compliance with the requirements of this section,
including assisting financial institutions in working with
applicants to determine whether the applicants are women- or
minority-owned for purposes of this section.
``(h) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) Financial institution.--The term `financial
institution' means any partnership, company, corporation,
association (incorporated or unincorporated), trust, estate,
cooperative organization, or other entity that engages in any
financial activity.
``(2) Minority.--The term `minority' has the same meaning
as in section 1204(c)(3) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989.
``(3) Minority-owned small business.--The term `minority-
owned small business' means a small 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.
``(4) Small business loan.--The term `small business loan'
shall be defined by the Bureau, 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.
``(5) Women-owned small business.--The term `women-owned
small business' means a business--
``(A) more than 50 percent of the ownership or
control of which is held by 1 or more women; and
``(B) more than 50 percent of the net profit or
loss of which accrues to 1 or more women.''.
(b) Technical and Conforming Amendments.--Section 701(b) of the
Equal Credit Opportunity Act (15 U.S.C. 1691(b)) is amended--
(1) in paragraph (3), by striking ``or'' at the end;
(2) in paragraph (4), by striking the period at the end and
inserting ``; or''; and
(3) by inserting after paragraph (4), the following:
``(5) to make an inquiry under section 704B, in accordance
with the requirements of that section.''.
(c) Clerical Amendment.--The table of sections for title VII of the
Consumer Credit Protection Act is amended by inserting after the item
relating to section 704A the following new item:
``704B. Small business loan data collection.''.
(d) Effective Date.--This section shall become effective on the
designated transfer date.
SEC. 1073. GAO STUDY ON THE EFFECTIVENESS AND IMPACT OF VARIOUS
APPRAISAL METHODS.
(a) In General.--The Government Accountability Office shall conduct
a study on the effectiveness and impact of various appraisal methods,
including the cost approach, the comparative sales approach, the income
approach, and others that may be available.
(b) Study.--Not later than--
(1) 1 year after the date of enactment of this Act, the
Government Accountability Office shall submit a study to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives;
(2) 90 days after the date of enactment of this Act, the
Government Accountability Office shall provide a report on the
status of the study and any preliminary findings to the
Committee on Banking, Housing, and Urban Affairs of the Senate
and the Committee on Financial Services of the House of
Representatives.
(c) Content of Study.--The study required by this section shall
include an examination of--
(1) the prevalence, alone or in combination, of these
approaches in purchase-money and refinance mortgage
transactions;
(2) the accuracy of the various approaches in assessing the
property as collateral;
(3) whether and how the approaches contributed to price
speculation in the previous cycle;
(4) the costs to consumers of these approaches;
(5) the disclosure of fees to consumers in the appraisal
process;
(6) to what extent such approaches may be influenced by a
conflict of interest between the mortgage lender and the
appraiser and the mechanism by which the lender selects and
compensates the appraiser; and
(7) the suitability of appraisal approaches in rural versus
urban areas.
SEC. 1074. PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.
(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 (15 U.S.C.
1639a) the following new section:
``SEC. 129B. PROHIBITION ON CERTAIN PREPAYMENT PENALTIES.
``(a) Prohibited on Certain Loans.--A residential mortgage loan
that is not a qualified mortgage may not contain terms under which a
consumer is required to pay a prepayment penalty for paying all or part
of the principal after the loan is consummated.
``(b) Phased-out Penalties on Qualified Mortgages.--
``(1) In general.--A qualified mortgage may not contain
terms under which a consumer is required to pay a prepayment
penalty for paying all or part of the principal after the loan
is consummated in excess of--
``(A) during the 1-year period beginning on the
date on which the loan is consummated, an amount equal
to 3 percent of the outstanding balance on the loan;
``(B) during the 1-year period beginning
immediately after the end of the period described in
subparagraph (A), an amount equal to 2 percent of the
outstanding balance on the loan; and
``(C) during the 1-year period beginning
immediately after the end of the 1-year period
described in subparagraph (B), an amount equal to 1
percent of the outstanding balance on the loan.
``(2) Prohibition.--After the end of the 3-year period
beginning on the date on which the loan is consummated, no
prepayment penalty may be imposed on a qualified mortgage.
``(c) 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 to the
consumer a residential mortgage loan product that does not have a
prepayment penalty as a term of the loan.
``(d) Prohibitions on Evasions, Structuring of Transactions, and
Reciprocal Arrangements.--A creditor may not take any action in
connection with a residential mortgage loan--
``(1) to structure a loan transaction as an open end
consumer credit plan or another form of loan for the purpose
and with the intent of evading the provisions of this section;
or
``(2) to divide any loan transaction into separate parts
for the purpose and with the intent of evading provisions of
this section.
``(e) Publication of Average Prime Offer Rate and APR Thresholds.--
The Board--
``(1) shall publish, and update at least weekly, average
prime offer rates;
``(2) may publish multiple rates based on varying types of
mortgage transactions; and
``(3) shall adjust the thresholds of 1.50 percentage points
in subsection (g)(3)(A)(v)(I), 2.50 percentage points in
subsection (g)(3)(A)(v)(II), and 3.50 percentage points in
subsection (g)(3)(A)(v)(III), as necessary to reflect
significant changes in market conditions and to effectuate the
purposes of this section.
``(f) Regulations.--
``(1) In general.--The Bureau shall prescribe regulations
to carry out this section.
``(2) Revision of safe harbor criteria.--The Bureau may
prescribe regulations that revise, add to, or subtract from the
criteria that define a qualified mortgage, upon a finding that
such regulations are necessary or appropriate--
``(A) to ensure that responsible, affordable
mortgage credit remains available to consumers in a
manner consistent with the purposes of this section;
``(B) to effectuate the purposes of this section;
``(C) to prevent circumvention or evasion thereof;
or
``(D) to facilitate compliance with this section.
``(3) Interagency harmonization.--
``(A) Determination of qualifying mortgage
treatment.--The agencies and officials described in
subparagraph (B) shall, in consultation with the
Bureau, prescribe rules defining the types of loans
they insure, guarantee, or administer, as the case may
be, that are qualified mortgages for purposes of this
section, upon a finding that such rules are consistent
with the purposes of this section or are appropriate to
prevent circumvention or evasion thereof or to
facilitate compliance with this section.
``(B) Agencies and officials.--The agencies and
officials described in this subparagraph are--
``(i) the Secretary of 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 to loans guaranteed by the Secretary of
Agriculture pursuant to section 502 of the
Housing Act of 1949 (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
Association or the Federal Home Loan Mortgage
Corporation; and
``(v) the Rural Housing Service, with
regard to loans insured by the Rural Housing
Service.
``(4) Implementation.--Regulations required or authorized
to be prescribed under this subsection--
``(A) shall be prescribed in final form before the
end of the 12-month period beginning on the date of
enactment of this section; and
``(B) shall take effect not later than 18 months
after the date of enactment of this section.
``(g) Definitions.--For purposes of this section, the following
definitions shall apply:
``(1) 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.
``(2) Prepayment penalty.--The term `prepayment penalty'
means any penalty for paying all or part of the principal on an
extension of credit before the date on which the principal is
due, including a computation of a refund of unearned interest
by a method that is less favorable to the consumer than the
actuarial method, as defined in section 933(d) of the Housing
and Community Development Act of 1992 (15 U.S.C. 1615(d)).
``(3) Qualified mortgage.--The term `qualified mortgage'
means--
``(A) any residential mortgage loan--
``(i) that does not have an adjustable
rate;
``(ii) 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 Bureau;
``(iii) that does not provide for a
repayment schedule that results in negative
amortization at any time;
``(iv) 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;
``(v) which has an annual percentage rate
that does not exceed the average prime offer
rate for a comparable transaction, as of the
date on which the interest rate is set--
``(I) by 1.5 or more percentage
points, in the case of a first lien
residential mortgage loan having an
original principal obligation amount
that is equal to or less than the
amount of the maximum limitation on the
original principal obligation of a
mortgage in effect for a residence of
the applicable size, as of the date on
which such interest rate is set,
pursuant to the sixth sentence of
section 305(a)(2) of 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 an
original principal obligation amount
that is more than the amount of the
maximum limitation on the original
principal obligation of a mortgage in
effect for a residence of the
applicable size, as of the date on
which such interest rate is set,
pursuant to the sixth sentence of
section 305(a)(2) of the Federal Home
Loan Mortgage Corporation Act (12
U.S.C. 1454(a)(2)); or
``(III) by 3.5 or more percentage
points, in the case of a subordinate
lien residential mortgage loan;
``(vi) for which the income and financial
resources relied upon to qualify the obligors
on the loan are verified and documented;
``(vii) 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;
``(viii) that does not cause the total
monthly debts of the consumer, including
amounts under the loan, to exceed a percentage
established by regulation of the monthly gross
income of the consumer, or such other maximum
percentage of such income, as may be prescribed
by regulation under subsection (g), which rules
shall take into consideration the income of the
consumer 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 the term `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 subsection (g); and
``(B) any reverse mortgage that is insured by the
Federal Housing Administration or complies with the
condition established in subparagraph (A)(v).
``(4) 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 an
extension of credit relating to a plan described in section
101(53D) of title 11, United States Code.''.
(b) Conforming Amendments.--Section 129(c) of the Truth in Lending
Act (15 U.S.C. 1639(c)) is amended--
(1) by striking paragraph (2);
(2) by striking ``(1) In general.--''; and
(3) by redesignating subparagraphs (A) and (B) as
paragraphs (1) and (2), respectively.
SEC. 1075. ASSISTANCE FOR ECONOMICALLY VULNERABLE INDIVIDUALS AND
FAMILIES.
(a) HERA Amendments.--Section 1132 of the Housing and Economic
Recovery Act of 2008 (12 U.S.C. 1701x note) is amended--
(1) in subsection (a), by inserting in each of paragraphs
(1), (2), (3), and (4) ``or economically vulnerable individuals
and families'' after ``homebuyers'' each place that term
appears;
(2) in subsection (b)(1), by inserting ``or economically
vulnerable individuals and families'' after ``homebuyers'';
(3) in subsection (c)(1)--
(A) in subparagraph (A), by striking ``or'' at the
end;
(B) in subparagraph (B), by striking the period at
the end and inserting ``; or''; and
(C) by adding at the end the following:
``(C) a nonprofit corporation that--
``(i) is exempt from taxation under section
501(c)(3) of the Internal Revenue Code of 1986;
and
``(ii) specializes or has expertise in
working with economically vulnerable
individuals and families, but whose primary
purpose is not provision of credit counseling
services.''; and
(4) in subsection (d)(1), by striking ``not more than 5''.
(b) Applicability.--Amendments made by subsection (a) shall not
apply to programs authorized by section 1132 of the Housing and
Economic Recovery Act of 2008 (12 U.S.C. 1701x note) that are funded
with appropriations prior to fiscal year 2011.
SEC. 1076. REMITTANCE TRANSFERS.
(a) Treatment of Remittance Transfers.--The Electronic Fund
Transfer Act (15 U.S.C. 1693 et seq.) is amended--
(1) in section 902(b) (15 U.S.C. 1693(b)), by inserting
``and remittance'' after ``electronic fund'';
(2) by redesignating sections 919, 920, 921, and 922 as
sections 920, 921, 922, and 923, respectively; and
(3) by inserting after section 918 the following:
``SEC. 919. REMITTANCE TRANSFERS.
``(a) Disclosures Required for Remittance Transfers.--
``(1) In general.--Each remittance transfer provider shall
make disclosures as required under this section and in
accordance with rules prescribed by the Board.
``(2) Storefront disclosures.--
``(A) In general.--At every physical storefront
location owned or controlled by a remittance transfer
provider (with respect to remittance transfer
activities), the remittance transfer provider shall
prominently post, and update daily, a notice describing
a model transfer for the amounts of $100 and $200 (in
United States dollars) showing the amount of currency
that will be received by the designated recipient,
using the values of the currency into which the funds
will be exchanged for the 3 currencies to which that
particular storefront sends the greatest number of
remittance transfer payments, measured irrespective of
the value of such payments. The values shall include
all fees charged by the remittance transfer provider,
taken out of the $100 and $200 amounts.
``(B) Electronic disclosure.--Subject to the rules
prescribed by the Board, a remittance transfer provider
shall prominently post, and update daily, a notice
describing a model transfer, as described in
subparagraph (A), on the Internet site owned or
controlled by the remittance transfer provider which
senders use to electronically conduct remittance
transfer transactions.
``(3) Specific disclosures.--In addition to any other
disclosures applicable under this title, and subject to
paragraph (4), a remittance transfer provider shall provide, in
writing and in a form that the sender may keep, to each sender
requesting a remittance transfer, as applicable to the
transaction--
``(A) at the time at which the sender requests a
remittance transfer to be initiated, and prior to the
sender making any payment in connection with the
remittance transfer, a disclosure describing the amount
of currency that will be sent to the designated
recipient, using the values of the currency into which
the funds will be exchanged; and
``(B) at the time at which the sender makes payment
in connection with the remittance transfer--
``(i) a receipt showing--
``(I) the information described in
subparagraph (A);
``(II) the promised date of
delivery to the designated recipient;
and
``(III) the name and either the
telephone number or the address of the
designated recipient; and
``(ii) a statement containing--
``(I) information about the rights
of the sender under this section
regarding the resolution of errors; and
``(II) appropriate contact
information for--
``(aa) the remittance
transfer provider; and
``(bb) each State or
Federal agency supervising the
remittance transfer provider,
including its State licensing
authority or Federal regulator,
as applicable.
``(4) Requirements relating to disclosures.--With respect
to each disclosure required to be provided under paragraph (3),
and subject to paragraph (5), a remittance transfer provider
shall--
``(A) provide an initial notice and receipt, as
required by subparagraphs (A) and (B) of paragraph (3),
and an error resolution statement, as required by
subsection (c), that clearly and conspicuously describe
the information required to be disclosed therein; and
``(B) with respect to any transaction that a sender
conducts electronically, comply with the Electronic
Signatures in Global and National Commerce Act (15
U.S.C. 7001 et seq.).
``(5) Exemption authority.--The Board may, by rule, permit
a remittance transfer provider to satisfy the requirements of--
``(A) paragraph (3)(A) orally, if the transaction
is conducted entirely by telephone;
``(B) paragraph (3)(B), by mailing the documents
required under such subparagraph to the sender, not
later than 1 business day after the date on which the
transaction is conducted, if the transaction is
conducted entirely by telephone;
``(C) subparagraphs (A) and (B) of paragraph (3)
together in one written disclosure, but only to the
extent that the information provided in accordance with
paragraph (3)(A) is accurate at the time at which
payment is made in connection with the subject
remittance transfer;
``(D) paragraph (3)(A), if a sender initiates a
transaction to one of those countries displayed, in the
exact amount of the transfers displayed pursuant to
paragraph (2), if the Board finds it to be appropriate;
and
``(E) paragraph (3)(A), without compliance with
section 101(c) of the Electronic Signatures in Global
Commerce Act, if a sender initiates the transaction
electronically and the information is displayed
electronically in a manner that the sender can keep.
``(b) Foreign Language Disclosures.--
``(1) In general.--The disclosures required under this
section shall be made in English and in each of the same
foreign languages principally used by the remittance transfer
provider, or any of its agents, to advertise, solicit, or
market, either orally or in writing, at that office.
``(2) Accounts.--In the case of a sender who holds a demand
deposit, savings deposit, or other asset account with the
remittance transfer provider (other than an occasional or
incidental credit balance under an open end credit plan, as
defined in section 103(i) of the Truth in Lending Act), the
disclosures required under this section shall be made in the
language or languages principally used by the remittance
transfer provider to communicate to the sender with respect to
the account.
``(c) Remittance Transfer Errors.--
``(1) Error resolution.--
``(A) In general.--If a remittance transfer
provider receives oral or written notice from the
sender within 180 days of the promised date of delivery
that an error occurred with respect to a remittance
transfer, including the amount of currency designated
in subsection (a)(3)(A) that was to be sent to the
designated recipient of the remittance transfer, using
the values of the currency into which the funds should
have been exchanged, but was not made available to the
designated recipient in the foreign country, the
remittance transfer provider shall resolve the error
pursuant to this subsection and investigate the reason
for the error.
``(B) Remedies.--Not later than 90 days after the
date of receipt of a notice from the sender pursuant to
subparagraph (A), the remittance transfer provider
shall, as applicable to the error and as designated by
the sender--
``(i) refund to the sender the total amount
of funds tendered by the sender in connection
with the remittance transfer which was not
properly transmitted;
``(ii) make available to the designated
recipient, without additional cost to the
designated recipient or to the sender, the
amount appropriate to resolve the error;
``(iii) provide such other remedy, as
determined appropriate by rule of the Board for
the protection of senders; or
``(iv) provide written notice to the sender
that there was no error with an explanation
responding to the specific complaint of the
sender.
``(2) Rules.--The Board shall establish, by rule issued not
later than 1 calendar year after the date of enactment of the
Restoring American Financial Stability Act of 2010, clear and
appropriate standards for remittance transfer providers with
respect to error resolution relating to remittance transfers,
to protect senders from such errors. Standards prescribed under
this paragraph shall include appropriate standards regarding
record keeping, as required, including documentation--
``(A) of the complaint of the sender;
``(B) that the sender provides the remittance
transfer provider with respect to the alleged error;
and
``(C) of the findings of the remittance transfer
provider regarding the investigation of the alleged
error that the sender brought to their attention.
``(d) Applicability of This Title.--
``(1) In general.--A remittance transfer that is not an
electronic fund transfer, as defined in section 903, shall not
be subject to any of the provisions of sections 905 through
913. A remittance transfer that is an electronic fund transfer,
as defined in section 903, shall be subject to all provisions
of this title, except for section 908, that are otherwise
applicable to electronic fund transfers under this title.
``(2) Rule of construction.--Nothing in this section shall
be construed--
``(A) to affect the application to any transaction,
to any remittance provider, or to any other person of
any of the provisions of subchapter II of chapter 53 of
title 31, United States Code, section 21 of the Federal
Deposit Insurance Act (12 U.S.C. 1829b), or chapter 2
of title I of Public Law 91-508 (12 U.S.C. 1951-1959),
or any regulations promulgated thereunder; or
``(B) to cause any fund transfer that would not
otherwise be treated as such under paragraph (1) to be
treated as an electronic fund transfer, or as otherwise
subject to this title, for the purposes of any of the
provisions referred to in subparagraph (A) or any
regulations promulgated thereunder.
``(e) Acts of Agents.--A remittance transfer provider shall be
liable for any violation of this section by any agent, authorized
delegate, or person affiliated with such provider, when such agent,
authorized delegate, or affiliate acts for that remittance transfer
provider.
``(f) Definitions.--As used in this section--
``(1) the term `designated recipient' means any person
located in a foreign country and identified by the sender as
the authorized recipient of a remittance transfer to be made by
a remittance transfer provider, except that a designated
recipient shall not be deemed to be a consumer for purposes of
this Act;
``(2) the term `remittance transfer' means the electronic
(as defined in section 106(2) of the Electronic Signatures in
Global and National Commerce Act (15 U.S.C. 7006(2))) transfer
of funds requested by a sender located in any State to a
designated recipient that is initiated by a remittance transfer
provider, whether or not the sender holds an account with the
remittance transfer provider or whether or not the remittance
transfer is also an electronic fund transfer, as defined in
section 903;
``(3) the term `remittance transfer provider' means any
person or financial institution that provides remittance
transfers for a consumer in the normal course of its business,
whether or not the consumer holds an account with such person
or financial institution; and
``(4) the term `sender' means a consumer who requests a
remittance provider to send a remittance transfer for the
consumer to a designated recipient.''.
(b) Automated Clearinghouse System.--
(1) Expansion of system.--The Board of Governors shall work
with the Federal reserve banks 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 number, volume, and size of such transfers;
(B) the significance of the volume of such
transfers relative to the external financial flows of
the receiving country, including--
(i) the total amount transferred; and
(ii) the total volume of payments made by
United States Government agencies to
beneficiaries and retirees living abroad;
(C) the feasibility of such an expansion; and
(D) the ability of the Federal Reserve System to
establish payment gateways in different geographic
regions and currency zones to receive remittance
transfers and route them through the payments systems
in the destination countries.
(2) Report to congress.--Not later than one calendar year
after the date of enactment of this Act, and on April 30
biennially thereafter during the 10-year period beginning on
that date of enactment, the Board of Governors shall submit a
report to the Committee on Banking, Housing, and Urban Affairs
of the Senate and the Committee on Financial Services of the
House of Representatives on the status of the automated
clearinghouse system and its progress in complying with the
requirements of this subsection. The report shall include an
analysis of adoption rates of International ACH Transactions
rules and formats, the efficacy of increasing adoption rates,
and potential recommendations to increase adoption.
(c) Expansion of Financial Institution Provision of Remittance
Transfers.--
(1) Provision of guidelines to institutions.--Each of the
Federal banking agencies and the National Credit Union
Administration shall provide guidelines to financial
institutions under the jurisdiction of the agency regarding the
offering of low-cost remittance transfers and no-cost or low-
cost basic consumer accounts, as well as agency services to
remittance transfer providers.
(2) Assistance to financial literacy commission.--As part
of its duties as members of the Financial Literacy and
Education Commission, the Bureau, the Federal banking agencies,
and the National Credit Union Administration shall assist the
Financial Literacy and Education Commission in executing the
Strategy for Assuring Financial Empowerment (or the ``SAFE
Strategy''), as it relates to remittances.
(d) Federal Credit Union Act Conforming Amendment.--Paragraph (12)
of section 107 of the Federal Credit Union Act (12 U.S.C. 1757) is
amended to read as follows:
``(12) in accordance with regulations prescribed by the
Board--
``(A) to sell, to persons in the field of
membership, negotiable checks (including travelers
checks), money orders, and other similar money transfer
instruments (including international and domestic
electronic fund transfers);
``(B) to provide remittance transfers, as defined
in section 919 of the Electronic Fund Transfer Act, to
persons in the field of membership; and
``(C) to cash checks and money orders for persons
in the field of membership for a fee;''.
Subtitle H--Conforming Amendments
SEC. 1081. AMENDMENTS TO THE INSPECTOR GENERAL ACT.
Effective on the date of enactment of this Act, the Inspector
General Act of 1978 (5 U.S.C. App. 3) is amended--
(1) in section 8G(a)(2), by inserting ``and the Bureau of
Consumer Financial Protection'' after ``Board of Governors of
the Federal Reserve System'';
(2) in section 8G(c), by adding at the end the following:
``For purposes of implementing this section, the Chairman of
the Board of Governors of the Federal Reserve System shall
appoint the Inspector General of the Board of Governors of the
Federal Reserve System and the Bureau of Consumer Financial
Protection. The Inspector General of the Board of Governors of
the Federal Reserve System and the Bureau of Consumer Financial
Protection shall have all of the authorities and
responsibilities provided by this Act with respect to the
Bureau of Consumer Financial Protection, as if the Bureau were
part of the Board of Governors of the Federal Reserve
System.''; and
(3) in section 8G(g)(3), by inserting ``and the Bureau of
Consumer Financial Protection'' after ``Board of Governors of
the Federal Reserve System'' the first place that term appears.
SEC. 1082. AMENDMENTS TO THE PRIVACY ACT OF 1974.
Effective on the date of enactment of this Act, section 552a of
title 5, United States Code, is amended by adding at the end the
following:
``(w) Applicability to Bureau of Consumer Financial Protection.--
Except as provided in the Consumer Financial Protection Act of 2010,
this section shall apply with respect to the Bureau of Consumer
Financial Protection.''.
SEC. 1083. AMENDMENTS TO THE ALTERNATIVE MORTGAGE TRANSACTION PARITY
ACT OF 1982.
(a) In General.--The Alternative Mortgage Transaction Parity Act of
1982 (12 U.S.C. 3801 et seq.) is amended--
(1) in section 803 (12 U.S.C. 3802(1)), by striking
``1974'' and all that follows through ``described and defined''
and inserting the following: ``1974), in which the interest
rate or finance charge may be adjusted or renegotiated,
described and defined''; and
(2) in section 804 (12 U.S.C. 3803)--
(A) in subsection (a)--
(i) in each of paragraphs (1), (2), and
(3), by inserting after ``transactions made''
each place that term appears ``on or before the
designated transfer date, as determined under
section 1062 of the Consumer Financial
Protection Act of 2010,'';
(ii) in paragraph (2), by striking ``and''
at the end;
(iii) in paragraph (3), by striking the
period at the end and inserting ``; and''; and
(iv) by adding at the end the following new
paragraph:
``(4) with respect to transactions made after the
designated transfer date, only in accordance with regulations
governing alternative mortgage transactions, as issued by the
Bureau of Consumer Financial Protection for federally chartered
housing creditors, in accordance with the rulemaking authority
granted to the Bureau of Consumer Financial Protection with
regard to federally chartered housing creditors under
provisions of law other than this section.'';
(B) by striking subsection (c) and inserting the
following:
``(c) Preemption of State Law.--An alternative mortgage transaction
may be made by a housing creditor in accordance with this section,
notwithstanding any State constitution, law, or regulation that
prohibits an alternative mortgage transaction. For purposes of this
subsection, a State constitution, law, or regulation that prohibits an
alternative mortgage transaction does not include any State
constitution, law, or regulation that regulates mortgage transactions
generally, including any restriction on prepayment penalties or late
charges.''; and
(C) by adding at the end the following:
``(d) Bureau Actions.--The Bureau of Consumer Financial Protection
shall--
``(1) review the regulations identified by the Comptroller
of the Currency and the National Credit Union Administration,
(as those rules exist on the designated transfer date), as
applicable under paragraphs (1) through (3) of subsection (a);
``(2) determine whether such regulations are fair and not
deceptive and otherwise meet the objectives of the Consumer
Financial Protection Act of 2010; and
``(3) promulgate regulations under subsection (a)(4) after
the designated transfer date.
``(e) Designated Transfer Date.--As used in this section, the term
`designated transfer date' means the date determined under section 1062
of the Consumer Financial Protection Act of 2010.''.
(b) Effective Date.--This section and the amendments made by this
section shall become effective on the designated transfer date.
(c) Rule of Construction.--The amendments made by subsection (a)
shall not affect any transaction covered by the Alternative Mortgage
Transaction Parity Act of l982 (12 U.S.C. 3801 et seq.) and entered
into on or before the designated transfer date.
SEC. 1084. AMENDMENTS TO THE ELECTRONIC FUND TRANSFER ACT.
The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) is
amended--
(1) by striking ``Board'' each place that term appears and
inserting ``Bureau'', except in section 918 (as so designated
by the Credit Card Act of 2009) (15 U.S.C. 1693o);
(2) in section 903 (15 U.S.C. 1693a), by striking paragraph
(3) and inserting the following:
``(3) the term `Bureau' means the Bureau of Consumer
Financial Protection;'';
(3) in section 916(d) (as so designated by section 401 of
the Credit CARD Act of 2009) (15 U.S.C. 1693m)--
(A) by striking ``Federal Reserve System'' and
inserting ``Bureau of Consumer Financial Protection'';
and
(B) by striking ``Federal Reserve System'' and
inserting ``Bureau of Consumer Financial Protection'';
and
(4) in section 918 (as so designated by the Credit CARD Act
of 2009) (15 U.S.C. 1693o)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and
inserting ``Except as otherwise provided by
subtitle B of the Consumer Financial Protection
Act of 2010, compliance''; and
(ii) by striking paragraph (2) and
inserting the following:
``(2) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau;''; and
(B) by striking subsection (c) and inserting the
following:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the requirements
imposed under this title is specifically committed to some other
Government agency under subsection (a), and subject to subtitle B of
the Consumer Financial Protection Act of 2010, 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 Federal Trade Commission to enforce compliance by any person
subject to the jurisdiction of the Federal Trade Commission with the
requirements imposed under this title, irrespective of whether that
person is engaged in commerce or meets any other jurisdictional tests
under the Federal Trade Commission Act.''.
SEC. 1085. AMENDMENTS TO THE EQUAL CREDIT OPPORTUNITY ACT.
The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) is
amended--
(1) by striking ``Board'' each place that term appears and
inserting ``Bureau'';
(2) in section 702 (15 U.S.C. 1691a), by striking
subsection (c) and inserting the following:
``(c) The term `Bureau' means the Bureau of Consumer Financial
Protection.'';
(3) in section 703 (15 U.S.C. 1691b)--
(A) by striking the section heading and inserting
the following:
``SEC. 703. PROMULGATION OF REGULATIONS BY THE BUREAU.'';
(B) by striking ``(a) Regulations.--'';
(C) by striking subsection (b);
(D) by redesignating paragraphs (1) through (5) as
subsections (a) through (e), respectively; and
(E) in subsection (c), as so redesignated, by
striking ``paragraph (2)'' and inserting ``subsection
(b)'';
(4) in section 704 (15 U.S.C. 1691c)--
(A) in subsection (a)--
(i) by striking ``Compliance'' and
inserting ``Except as otherwise provided by
subtitle B of the Consumer Protection Financial
Protection Act of 2010''; and
(ii) by striking paragraph (2) and
inserting the following:
``(2) Subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau.'';
(B) by striking subsection (c) and inserting the
following:
``(c) Overall Enforcement Authority of Federal Trade Commission.--
Except to the extent that enforcement of the requirements imposed under
this title is specifically committed to some other Government agency
under subsection (a), and subject to subtitle B of the Consumer
Financial Protection Act of 2010, 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 (15 U.S.C. 41 et seq.), a violation of any
requirement imposed under this subchapter shall be deemed a violation
of a requirement imposed under that Act. All of the functions and
powers of the Federal Trade Commission under the Federal Trade
Commission Act are available to the Federal Trade Commission to enforce
compliance by any person with the requirements imposed under this
title, irrespective of whether that person is engaged in commerce or
meets any other jurisdictional tests under the Federal Trade Commission
Act, including the power to enforce any rule prescribed by the Bureau
under this title in the same manner as if the violation had been a
violation of a Federal Trade Commission trade regulation rule.''; and
(C) in subsection (d), by striking ``Board'' and
inserting ``Bureau''; and
(5) in section 706(e) (15 U.S.C. 1691e(e))--
(A) in the subsection heading--
(i) by striking ``Board'' each place that
term appears and inserting ``Bureau''; and
(ii) by striking ``Federal Reserve System''
and inserting ``Bureau of Consumer Financial
Protection''; and
(B) by striking ``Federal Reserve System'' and
inserting ``Bureau of Consumer Financial Protection''.
SEC. 1086. AMENDMENTS TO THE EXPEDITED FUNDS AVAILABILITY ACT.
(a) Amendment to Section 603.--Section 603(d)(1) of the Expedited
Funds Availability Act (12 U.S.C. 4002) is amended by inserting after
``Board'' the following ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''.
(b) Amendments to Section 604.--Section 604 of the Expedited Funds
Availability Act (12 U.S.C. 4003) is amended--
(1) by inserting after ``Board'' each place that term
appears, other than in subsection (f), the following: ``,
jointly with the Director of the Bureau of Consumer Financial
Protection,''; and
(2) in subsection (f), by striking ``Board.'' each place
that term appears and inserting the following: ``Board, jointly
with the Director of the Bureau of Consumer Financial
Protection.''.
(c) Amendments to Section 605.--Section 605 of the Expedited Funds
Availability Act (12 U.S.C. 4004) is amended--
(1) by inserting after ``Board'' each place that term
appears, other than in the heading for section 605(f)(1), the
following: ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''; and
(2) in subsection (f)(1), in the paragraph heading, by
inserting ``and bureau'' after ``board''.
(d) Amendments to Section 609.--Section 609 of the Expedited Funds
Availability Act (12 U.S.C. 4008) is amended:
(1) in subsection (a), by inserting after ``Board'' the
following ``, jointly with the Director of the Bureau of
Consumer Financial Protection,''; and
(2) by striking subsection (e) and inserting the following:
``(e) Consultations.--In prescribing regulations under subsections
(a) and (b), the Board and the Director of the Bureau of Consumer
Financial Protection, in the case of subsection (a), and the Board, in
the case of subsection (b), shall consult with the Comptroller of the
Currency, the Board of Directors of the Federal Deposit Insurance
Corporation, and the National Credit Union Administration Board.''.
(e) Expedited Funds Availability Improvements.--Section 603 of the
Expedited Funds Availability Act (12 U.S.C. 4002) is amended--
(1) in subsection (a)(2)(D), by striking ``$100'' and
inserting ``$200''; and
(2) in subsection (b)(3)(C), in the subparagraph heading,
by striking ``$100'' and inserting ``$200''; and
(3) in subsection (c)(1)(B)(iii), in the clause heading, by
striking ``$100'' and inserting ``$200''.
(f) Regular Adjustments for Inflation.--Section 607 of the
Expedited Funds Availability Act (12 U.S.C. 4006) is amended by adding
at the end the following:
``(f) Adjustments to Dollar Amounts for Inflation.--The dollar
amounts under this title shall be adjusted every 5 years after December
31, 2011, by the annual percentage increase in the Consumer Price Index
for Urban Wage Earners and Clerical Workers, as published by the Bureau
of Labor Statistics, rounded to the nearest multiple of $25.''.
SEC. 1087. AMENDMENTS TO THE FAIR CREDIT BILLING ACT.
The Fair Credit Billing Act (15 U.S.C. 1666-1666j) is amended by
striking ``Board'' each place that term appears and inserting
``Bureau''.
SEC. 1088. AMENDMENTS TO THE FAIR CREDIT REPORTING ACT AND THE FAIR AND
ACCURATE CREDIT TRANSACTIONS ACT.
(a) Fair Credit Reporting Act.--The Fair Credit Reporting Act (15
U.S.C. 1681 et seq.) is amended--
(1) in section 603 (15 U.S.C. 1681a)--
(A) by redesignating subsections (w) and (x) as
subsections (x) and (y), respectively; and
(B) by inserting after subsection (v) the
following:
``(w) The term `Bureau' means the Bureau of Consumer Financial
Protection.''; and
(2) except as otherwise specifically provided in this
subsection--
(A) by striking ``Federal Trade Commission'' each
place that term appears and inserting ``Bureau'';
(B) by striking ``FTC'' each place that term
appears and inserting ``Bureau'';
(C) by striking ``the Commission'' each place that
term appears and inserting ``the Bureau''; and
(D) by striking ``The Federal banking agencies, the
National Credit Union Administration, and the
Commission shall jointly'' each place that term appears
and inserting ``The Bureau shall'';
(3) in section 603(k)(2) (15 U.S.C. 1681a(k)(2)), by
striking ``Board of Governors of the Federal Reserve System''
and inserting ``Bureau'';
(4) in section 604(g) (15 U.S.C. 1681b(g))--
(A) in paragraph (3), by striking subparagraph (C)
and inserting the following:
``(C) as otherwise determined to be necessary and
appropriate, by regulation or order, by the Bureau
(consistent with the enforcement authorities prescribed
under section 621(b)), or the applicable State
insurance authority (with respect to any person engaged
in providing insurance or annuities).'';
(B) by striking paragraph (5) and inserting the
following:
``(5) Regulations and effective date for paragraph (2).--
``(A) Regulations required.--The Bureau may, after
notice and opportunity for comment, prescribe
regulations that permit transactions under paragraph
(2) that are determined to be necessary and appropriate
to protect legitimate operational, transactional, risk,
consumer, and other needs (and which shall include
permitting actions necessary for administrative
verification purposes), consistent with the intent of
paragraph (2) to restrict the use of medical
information for inappropriate purposes.''; and
(C) by striking paragraph (6);
(5) in section 611(e)(2) (15 U.S.C. 1681i(e)), by striking
paragraph (2) and inserting the following:
``(2) Exclusion.--Complaints received or obtained by the
Bureau pursuant to its investigative authority under the
Consumer Financial Protection Act of 2010 shall not be subject
to paragraph (1).'';
(6) in section 615(h)(6) (15 U.S.C. 1681m(h)(6)), by
striking subparagraph (A) and inserting the following:
``(A) Rules required.--The Bureau shall prescribe
rules to carry out this subsection.'';
(7) in section 621 (15 U.S.C. 1681s)--
(A) by striking subsection (a) and inserting the
following:
``(a) Enforcement by Federal Trade Commission.--
``(1) In general.--Except as otherwise provided by subtitle
B of the Consumer Financial Protection Act of 2010, compliance
with the requirements imposed under this title shall be
enforced under the Federal Trade Commission Act (15 U.S.C. 41
et seq.) by the Federal Trade Commission, with respect to
consumer reporting agencies and all other persons subject
thereto, except to the extent that enforcement of the
requirements imposed under this title is specifically committed
to some other Government agency under subsection (b). For the
purpose of the exercise by the Federal Trade Commission of its
functions and powers under the Federal Trade Commission Act, a
violation of any requirement or prohibition imposed under this
title shall constitute an unfair or deceptive act or practice
in commerce, in violation of section 5(a) of the Federal Trade
Commission Act (15 U.S.C. 45(a)), and shall be subject to
enforcement by the Federal Trade Commission under section 5(b)
of that Act with respect to any consumer reporting agency or
person that is subject to enforcement by the Federal Trade
Commission pursuant to this subsection, irrespective of whether
that person is engaged in commerce or meets any other
jurisdictional tests under the Federal Trade Commission Act.
The Federal Trade Commission shall have such procedural,
investigative, and enforcement powers (except as otherwise
provided by subtitle B of the Consumer Financial Protection Act
of 2010), including the power to issue procedural rules in
enforcing compliance with the requirements imposed under this
title and to require the filing of reports, the production of
documents, and the appearance of witnesses, as though the
applicable terms and conditions of the Federal Trade Commission
Act were part of this title. Any person violating any of the
provisions of this title shall be subject to the penalties and
entitled to the privileges and immunities provided in the
Federal Trade Commission Act as though the applicable terms and
provisions of such Act are part of this title.
``(2) Penalties.--
``(A) Knowing violations.--Except as otherwise
provided by subtitle B of the Consumer Financial
Protection Act of 2010, in the event of a knowing
violation, which constitutes a pattern or practice of
violations of this title, the Federal Trade Commission
may commence a civil action to recover a civil penalty
in a district court of the United States against any
person that violates this title. In such action, such
person shall be liable for a civil penalty of not more
than $2,500 per violation.
``(B) Determining penalty amount.--In determining
the amount of a civil penalty under subparagraph (A),
the court shall take into account the degree of
culpability, any history of such prior conduct, ability
to pay, effect on ability to continue to do business,
and such other matters as justice may require.
``(C) Limitation.--Notwithstanding paragraph (2), a
court may not impose any civil penalty on a person for
a violation of section 623(a)(1), unless the person has
been enjoined from committing the violation, or ordered
not to commit the violation, in an action or proceeding
brought by or on behalf of the Federal Trade
Commission, and has violated the injunction or order,
and the court may not impose any civil penalty for any
violation occurring before the date of the violation of
the injunction or order.'';
(8) by striking subsection (b) and inserting the following:
``(b) Enforcement by Other Agencies.--
``(1) In general.--Except as otherwise provided by subtitle
B of the Consumer Financial Protection Act of 2010, compliance
with the requirements imposed under this title with respect to
consumer reporting agencies, persons who use consumer reports
from such agencies, persons who furnish information to such
agencies, and users of information that are subject to section
615(d) shall be enforced under--
``(A) section 8 of the Federal Deposit Insurance
Act (12 U.S.C. 1818), in the case of--
``(i) any national bank, and any Federal
branch or Federal agency of a foreign bank, by
the Office of the Comptroller of the Currency;
``(ii) any member bank of the Federal
Reserve System (other than a national bank), a
branch or agency of a foreign bank (other than
a Federal branch, Federal agency, or insured
State branch of a foreign bank), a commercial
lending company owned or controlled by a
foreign bank, and any organization operating
under section 25 or 25A of the Federal Reserve
Act, by the Board of Governors of the Federal
Reserve System; and
``(iii) any bank insured by the Federal
Deposit Insurance Corporation (other than a
member of the Federal Reserve System) and any
insured State branch of a foreign bank, by the
Board of Directors of the Federal Deposit
Insurance Corporation;
``(B) subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau;
``(C) the Federal Credit Union Act (12 U.S.C. 1751
et seq.), by the Administrator of the National Credit
Union Administration with respect to any Federal credit
union;
``(D) 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;
``(E) the Federal Aviation Act of 1958 (49 U.S.C.
App. 1301 et seq.), by the Secretary of Transportation,
with respect to any air carrier or foreign air carrier
subject to that Act;
``(F) the Packers and Stockyards Act, 1921 (7
U.S.C. 181 et seq.) (except as provided in section 406
of that Act), by the Secretary of Agriculture, with
respect to any activities subject to that Act;
``(G) the Commodity Exchange Act, with respect to a
person subject to the jurisdiction of the Commodity
Futures Trading Commission; and
``(H) the Federal securities laws, and any other
laws that are subject to the jurisdiction of the
Securities and Exchange Commission, with respect to a
person that is subject to the jurisdiction of the
Securities and Exchange Commission.
``(2) Incorporated definitions.--The terms used in
paragraph (1) that are not defined in this title or otherwise
defined in section 3(s) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(s)) have the same meanings as in section 1(b)
of the International Banking Act of 1978 (12 U.S.C. 3101).'';
(9) by striking subsection (e) and inserting the following:
``(e) Regulatory Authority.--The Bureau shall prescribe such
regulations as are necessary to carry out the purposes of this Act. The
regulations prescribed by the Bureau under this subsection shall apply
to any person that is subject to this Act, notwithstanding the
enforcement authorities granted to other agencies under this
section.''; and
(10) in section 623 (15 U.S.C. 1681s-2)--
(A) in subsection (a)(7), by striking subparagraph
(D) and inserting the following:
``(D) Model disclosure.--
``(i) Duty of bureau.--The Bureau shall
prescribe a brief model disclosure that a
financial institution may use to comply with
subparagraph (A), which shall not exceed 30
words.
``(ii) Use of model not required.--No
provision of this paragraph may be construed to
require a financial institution to use any such
model form prescribed by the Bureau.
``(iii) Compliance using model.--A
financial institution shall be deemed to be in
compliance with subparagraph (A) if the
financial institution uses any model form
prescribed by the Bureau under this
subparagraph, or the financial institution uses
any such model form and rearranges its
format.''; and
(B) by striking subsection (e) and inserting the
following:
``(e) Accuracy Guidelines and Regulations Required.--
``(1) Guidelines.--The Bureau shall, with respect to
persons or entities that are subject to the enforcement
authority of the Bureau under section 621--
``(A) establish and maintain guidelines for use by
each person that furnishes information to a consumer
reporting agency regarding the accuracy and integrity
of the information relating to consumers that such
entities furnish to consumer reporting agencies, and
update such guidelines as often as necessary; and
``(B) prescribe regulations requiring each person
that furnishes information to a consumer reporting
agency to establish reasonable policies and procedures
for implementing the guidelines established pursuant to
subparagraph (A).
``(2) Criteria.--In developing the guidelines required by
paragraph (1)(A), the Bureau shall--
``(A) identify patterns, practices, and specific
forms of activity that can compromise the accuracy and
integrity of information furnished to consumer
reporting agencies;
``(B) review the methods (including technological
means) used to furnish information relating to
consumers to consumer reporting agencies;
``(C) determine whether persons that furnish
information to consumer reporting agencies maintain and
enforce policies to ensure the accuracy and integrity
of information furnished to consumer reporting
agencies; and
``(D) examine the policies and processes that
persons that furnish information to consumer reporting
agencies employ to conduct reinvestigations and correct
inaccurate information relating to consumers that has
been furnished to consumer reporting agencies.''.
(b) Fair and Accurate Credit Transactions Act of 2003.--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 paragraph (1) and inserting
the following:
``(1) In general.--Regulations to carry out section 624 of
the Fair Credit Reporting Act (15 U.S.C. 1681s-3), shall be
prescribed, as described in paragraph (2), by--
``(A) the Commodity Futures Trading Commission,
with respect to entities subject to its enforcement
authorities;
``(B) the Securities and Exchange Commission, with
respect to entities subject to its enforcement
authorities; and
``(C) the Bureau, with respect to other entities
subject to this Act.''.
SEC. 1089. AMENDMENTS TO THE FAIR DEBT COLLECTION PRACTICES ACT.
The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.) is
amended--
(1) by striking ``Commission'' each place that term appears
and inserting ``Bureau'';
(2) in section 803 (15 U.S.C. 1692a)--
(A) by striking paragraph (1) and inserting the
following:
``(1) The term `Bureau' means the Bureau of Consumer
Financial Protection.'';
(3) in section 814 (15 U.S.C. 1692l)--
(A) by striking subsection (a) and inserting the
following:
``(a) Federal Trade Commission.--Except as otherwise provided by
subtitle B of the Consumer Financial Protection Act of 2010, compliance
with this title shall be enforced by the Federal Trade Commission,
except to the extent that enforcement of the requirements imposed under
this title is specifically committed to another Government agency under
subsection (b). For purpose of the exercise by the Federal Trade
Commission of its functions and powers under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.), a violation of this title shall
be deemed an unfair or deceptive act or practice in violation of that
Act. All of the functions and powers of the Federal Trade Commission
under the Federal Trade Commission Act are available to the Federal
Trade Commission to enforce compliance by any person with this title,
irrespective of whether that person is engaged in commerce or meets any
other jurisdictional tests under the Federal Trade Commission Act,
including the power to enforce the provisions of this title, in the
same manner as if the violation had been a violation of a Federal Trade
Commission trade regulation rule.''; and
(B) in subsection (b)--
(i) by striking ``Compliance'' and
inserting ``Except as otherwise provided by
subtitle B of the Consumer Financial Protection
Act of 2010, compliance''; and
(ii) by striking paragraph (2) and
inserting the following:
``(2) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau;''; and
(4) in subsection (d), by striking ``Neither the
Commission'' and all that follows through the end of the
subsection and inserting the following: ``The Bureau may
prescribe rules with respect to the collection of debts by debt
collectors, as defined in this Act.''.
SEC. 1090. AMENDMENTS TO THE FEDERAL DEPOSIT INSURANCE ACT.
The Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.) is
amended--
(1) in section 8(t) (12 U.S.C. 1818(t)), by adding at the
end the following:
``(6) Referral to bureau of consumer financial
protection.--Subject to subtitle B of the Consumer Financial
Protection Act of 2010, each appropriate Federal banking agency
shall make a referral to the Bureau of Consumer Financial
Protection when the Federal banking agency has a reasonable
belief that a violation of an enumerated consumer law, as
defined in the Consumer Financial Protection Act of 2010, has
been committed by any insured depository institution or
institution-affiliated party within the jurisdiction of that
appropriate Federal banking agency.''; and
(2) in section 43 (12 U.S.C. 1831t)--
(A) in subsection (c), by striking ``Federal Trade
Commission'' and inserting ``Bureau'';
(B) in subsection (d), by striking ``Federal Trade
Commission'' and inserting ``Bureau'';
(C) in subsection (e)--
(i) in paragraph (2), by striking ``Federal
Trade Commission'' and inserting ``Bureau'';
and
(ii) by adding at the end the following new
paragraph:
``(5) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.''; and
(D) in subsection (f)--
(i) by striking paragraph (1) and inserting
the following:
``(1) Limited enforcement authority.--Compliance with the
requirements of subsections (b), (c), and (e), and any
regulation prescribed or order issued under such subsection,
shall be enforced under the Consumer Financial Protection Act
of 2010, by the Bureau, subject to subtitle B of the Consumer
Financial Protection Act of 2010, and under the Federal Trade
Commission Act (15 U.S.C. 41 et seq.) by the Federal Trade
Commission.''; and
(ii) in paragraph (2), by striking
subparagraph (C) and inserting the following:
``(C) Limitation on state action while federal
action pending.--If the Bureau or Federal Trade
Commission has instituted an enforcement action for a
violation of this section, no appropriate State
supervisory agency may, during the pendency of such
action, bring an action under this section against any
defendant named in the complaint of the Bureau or
Federal Trade Commission for any violation of this
section that is alleged in that complaint.''.
SEC. 1091. AMENDMENTS TO THE GRAMM-LEACH-BLILEY ACT.
Title V of the Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.) is
amended--
(1) in section 504(a)(1) (15 U.S.C. 6804(a)(1))--
(A) by striking ``The Federal banking agencies, the
National Credit Union Administration, the Secretary of
the Treasury,'' and inserting ``The Bureau of Consumer
Financial Protection and''; and
(B) by striking ``, and the Federal Trade
Commission'';
(2) in section 505(a) (15 U.S.C. 6805(a))--
(A) by striking ``This subtitle'' and all that
follows through ``as follows:'' and inserting ``Except
as otherwise provided by subtitle B of the Consumer
Financial Protection Act of 2010, this subtitle and the
regulations prescribed thereunder shall be enforced by
the Bureau of Consumer Financial Protection, the
Federal functional regulators, the State insurance
authorities, and the Federal Trade Commission with
respect to financial institutions and other persons
subject to their jurisdiction under applicable law, as
follows:'';
(B) in paragraph (1)--
(i) in subparagraph (B), by inserting
``and'' after the semicolon;
(ii) in subparagraph (C), by striking ``;
and'' and inserting a period; and
(iii) by striking subparagraph (D); and
(C) by adding at the end the following:
``(8) Under the Consumer Financial Protection Act of 2010,
by the Bureau of Consumer Financial Protection, in the case of
any financial institution and other covered person or service
provider that is subject to the jurisdiction of the Bureau
under that Act, but not with respect to the standards under
section 501.''; and
(3) in section 505(b)(1) (15 U.S.C. 6805(b)(1)), by
inserting ``, other than the Bureau of Consumer Financial
Protection,'' after ``subsection (a)''.
SEC. 1092. AMENDMENTS TO THE HOME MORTGAGE DISCLOSURE ACT.
The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et seq.)
is amended--
(1) except as otherwise specifically provided in this
section, by striking ``Board'' each place that term appears and
inserting ``Bureau'';
(2) in section 303 (12 U.S.C. 2802)--
(A) by redesignating paragraphs (1) through (6) as
paragraphs (2) through (7), respectively; and
(B) by inserting before paragraph (2) the
following:
``(1) the term `Bureau' means the Bureau of Consumer
Financial Protection;'';
(3) in section 304 (12 U.S.C. 2803)--
(A) in subsection (b)--
(i) in paragraph (4), by inserting ``age,''
before ``and gender'';
(ii) in paragraph (3), by striking ``and''
at the end;
(iii) in paragraph (4), by striking the
period at the end and inserting a semicolon;
and
(iv) by adding at the end the following:
``(5) the number and dollar amount of mortgage loans
grouped according to measurements of--
``(A) the total points and fees payable at
origination in connection with the mortgage as
determined by the Bureau, taking into account 15 U.S.C.
1602(aa)(4);
``(B) the difference between the annual percentage
rate associated with the loan and a benchmark rate or
rates for all loans;
``(C) the term in months of any prepayment penalty
or other fee or charge payable on repayment of some
portion of principal or the entire principal in advance
of scheduled payments; and
``(D) such other information as the Bureau may
require; and
``(6) the number and dollar amount of mortgage loans and
completed applications grouped according to measurements of--
``(A) the value of the real property pledged or
proposed to be pledged as collateral;
``(B) the actual or proposed term in months of any
introductory period after which the rate of interest
may change;
``(C) the presence of contractual terms or proposed
contractual terms that would allow the mortgagor or
applicant to make payments other than fully amortizing
payments during any portion of the loan term;
``(D) the actual or proposed term in months of the
mortgage loan;
``(E) the channel through which application was
made, including retail, broker, and other relevant
categories;
``(F) as the Bureau may determine to be
appropriate, a unique identifier that identifies the
loan originator as set forth in section 1503 of the
S.A.F.E. Mortgage Licensing Act of 2008;
``(G) as the Bureau may determine to be
appropriate, a universal loan identifier;
``(H) as the Bureau may determine to be
appropriate, the parcel number that corresponds to the
real property pledged or proposed to be pledged as
collateral;
``(I) the credit score of mortgage applicants and
mortgagors, in such form as the Bureau may prescribe,
except that the Bureau 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 Bureau may
require.'';
(B) in subsection (i), by striking ``subsection
(b)(4)'' and inserting ``subsections (b)(4), (b)(5),
and (b)(6)'';
(C) in subsection (j)--
(i) in paragraph (1), by striking ``(as''
and inserting ``(containing loan-level and
application-level information relating to
disclosures required under subsections (a) and
(b) and as otherwise'';
(ii) by striking paragraph (3) and
inserting the following:
``(3) Change of form not required.--A depository
institution meets the disclosure requirement of paragraph (1)
if the institution provides the information required under such
paragraph in such formats as the Bureau may require''; and
(iii) in paragraph (2)(A), by striking ``in
the format in which such information is
maintained by the institution'' and inserting
``in such formats as the Bureau may require'';
(D) in subsection (m), by striking paragraph (2)
and inserting the following:
``(2) Form of information.--In complying with paragraph
(1), a depository institution shall provide the person
requesting the information with a copy of the information
requested in such formats as the Bureau may require'';
(E) by striking subsection (h) and inserting the
following:
``(h) Submission to Agencies.--
``(1) In general.--The data required to be disclosed under
subsection (b) shall be submitted to the Bureau or to the
appropriate agency for the institution reporting under this
title, in accordance with rules prescribed by the Bureau.
Notwithstanding the requirement of subsection (a)(2)(A) for
disclosure by census tract, the Bureau, in cooperation with
other appropriate regulators described in paragraph (2), shall
develop regulations that--
``(A) prescribe 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;
``(B) require the collection of data required to be
disclosed under subsection (b) with respect to loans
sold by each institution reporting under this title;
``(C) require disclosure of the class of the
purchaser of such loans; and
``(D) permit any reporting institution to submit in
writing to the Bureau or to the appropriate agency such
additional data or explanations as it deems relevant to
the decision to originate or purchase mortgage loans.
``(2) Other appropriate agencies.--The appropriate
regulators described in this paragraph are--
``(A) the Office of the Comptroller of the Currency
(hereafter referred to in this Act as `Comptroller')
for national banks and Federal branches, Federal
agencies of foreign banks, and savings associations;
``(B) the Federal Deposit Insurance Corporation for
banks insured by the Federal Deposit Insurance
Corporation (other than members of the Federal Reserve
System), mutual savings banks, insured State branches
of foreign banks, and any other depository institution
described in section 303(2)(A) which is not otherwise
referred to in this paragraph;
``(C) the National Credit Union Administration
Board for credit unions; and
``(D) the Secretary of Housing and Urban
Development for other lending institutions not
regulated by the agencies referred to in subparagraphs
(A) through (C).''; and
(F) by adding at the end the following:
``(n) Timing of Certain Disclosures.--The data required to be
disclosed under subsection (b) shall be submitted to the Bureau or to
the appropriate agency for any institution reporting under this title,
in accordance with regulations prescribed by the Bureau. Institutions
shall not be required to report new data under paragraph (5) or (6) of
subsection (b) before the first January 1 that occurs after the end of
the 9-month period beginning on the date on which regulations are
issued by the Bureau in final form with respect to such disclosures.'';
(4) in section 305 (12 U.S.C. 2804)--
(A) by striking subsection (b) and inserting the
following:
``(b) Powers of Certain Other Agencies.--
``(1) In general.--Except as otherwise provided by subtitle
B of the Consumer Financial Protection Act of 2010, compliance
with the requirements of this title shall be enforced--
``(A) under section 8 of the Federal Deposit
Insurance Act, in the case of--
``(i) any national bank, and any Federal
branch or Federal agency of a foreign bank, by
the Office of the Comptroller of the Currency;
``(ii) any member bank of the Federal
Reserve System (other than a national bank),
branch or agency of a foreign bank (other than
a Federal branch, Federal agency, and insured
State branch of a foreign bank), commercial
lending company owned or controlled by a
foreign bank, and any organization operating
under section 25 or 25(a) of the Federal
Reserve Act, by the Board; and
``(iii) any bank insured by the Federal
Deposit Insurance Corporation (other than a
member of the Federal Reserve System), any
mutual savings bank as, defined in section 3(f)
of the Federal Deposit Insurance Act (12 U.S.C.
1813(f)), any insured State branch of a foreign
bank, and any other depository institution not
referred to in this paragraph or subparagraph
(B) or (C), by the Federal Deposit Insurance
Corporation;
``(B) under subtitle E of the Consumer Financial
Protection Act of 2010, by the Bureau;
``(C) under the Federal Credit Union Act, by the
Administrator of the National Credit Union
Administration with respect to any insured credit
union; and
``(D) with respect to other lending institutions,
by the Secretary of Housing and Urban Development.
``(2) Incorporated definitions.--The terms used in
paragraph (1) that are not defined in this title or otherwise
defined in section 3(s) of the Federal Deposit Insurance Act
(12 U.S.C. 1813(s)) shall have the same meanings as in section
1(b) of the International Banking Act of 1978 (12 U.S.C.
3101).''; and
(B) by adding at the end the following:
``(d) Overall Enforcement Authority of the Bureau of Consumer
Financial Protection.--Subject to subtitle B of the Consumer Financial
Protection Act of 2010, enforcement of the requirements imposed under
this title is committed to each of the agencies under subsection (b).
The Bureau may exercise its authorities under the Consumer Financial
Protection Act of 2010 to exercise principal authority to examine and
enforce compliance by any person with the requirements of this
title.'';
(5) in section 306 (12 U.S.C. 2805(b)), by striking
subsection (b) and inserting the following:
``(b) Exemption Authority.--The Bureau may, by regulation, exempt
from the requirements of this title any State-chartered depository
institution within any State or subdivision thereof, if the agency
determines that, under the law of such State or subdivision, that
institution is subject to requirements that are substantially similar
to those imposed under this title, and that such law contains adequate
provisions for enforcement. Notwithstanding any other provision of this
subsection, compliance with the requirements imposed under this
subsection shall be enforced by the Office of the Comptroller of the
Currency under section 8 of the Federal Deposit Insurance Act, in the
case of national banks and savings associations, the deposits of which
are insured by the Federal Deposit Insurance Corporation.''; and
(6) by striking section 307 (12 U.S.C. 2806) and inserting
the following:
``SEC. 307. COMPLIANCE IMPROVEMENT METHODS.
``(a) In General.--
``(1) Consultation required.--The Director of the Bureau of
Consumer Financial Protection, with the assistance of the
Secretary, the Director of the Bureau of the Census, the Board
of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, and such other persons as the Bureau
deems appropriate, shall develop or assist in the improvement
of, methods of matching addresses and census tracts to
facilitate compliance by depository institutions in as
economical a manner as possible with the requirements of this
title.
``(2) Authorization of appropriations.--There are
authorized to be appropriated, such sums as may be necessary to
carry out this subsection.
``(3) Contracting authority.--The Director of the Bureau of
Consumer Financial Protection is authorized to utilize,
contract with, act through, or compensate any person or agency
in order to carry out this subsection.
``(b) Recommendations to Congress.--The Director of the Bureau of
Consumer Financial Protection shall recommend to the Committee on
Banking, Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives, such additional
legislation as the Director of the Bureau of Consumer Financial
Protection deems appropriate to carry out the purpose of this title.''.
SEC. 1093. AMENDMENTS TO THE HOMEOWNERS PROTECTION ACT OF 1998.
Section 10 of the Homeowners Protection Act of 1998 (12 U.S.C.
4909) is amended--
(1) in subsection (a)--
(A) by striking ``Compliance'' and inserting
``Except as otherwise provided by subtitle B of the
Consumer Financial Protection Act of 2010,
compliance'';
(B) in paragraph (2), by striking ``and'' at the
end;
(C) in paragraph (3), by striking the period at the
end and inserting ``; and''; and
(D) by adding at the end the following:
``(4) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau of Consumer Financial Protection.''; and
(2) in subsection (b)(2), by inserting before the period at
the end the following: ``, subject to subtitle B of the
Consumer Financial Protection Act of 2010''.
SEC. 1094. AMENDMENTS TO THE HOME OWNERSHIP AND EQUITY PROTECTION ACT
OF 1994.
The Home Ownership and Equity Protection Act of 1994 (15 U.S.C.
1601 note) is amended--
(1) in section 158(a), by striking ``Consumer Advisory
Council of the Board'' and inserting ``Advisory Board to the
Bureau''; and
(2) by striking ``Board'' each place that term appears and
inserting ``Bureau''.
SEC. 1095. AMENDMENTS TO THE OMNIBUS APPROPRIATIONS ACT, 2009.
Section 626 of the Omnibus Appropriations Act, 2009 (15 U.S.C. 1638
note) is amended--
(1) by striking subsection (a) and inserting the following:
``(a)(1) The Bureau of Consumer Financial Protection shall have
authority to prescribe rules with respect to mortgage loans in
accordance with section 553 of title 5, United States Code. Such
rulemaking shall relate to unfair or deceptive acts or practices
regarding mortgage loans, which may include unfair or deceptive acts or
practices involving loan modification and foreclosure rescue services.
Any violation of a rule prescribed under this paragraph shall be
treated as a violation of a rule prohibiting unfair, deceptive, or
abusive acts or practices under the Consumer Financial Protection Act
of 2010 and a violation of a rule under section 18 of the Federal Trade
Commission Act (15 U.S.C. 57a) regarding unfair or deceptive acts or
practices.
``(2) The Bureau of Consumer Financial Protection shall enforce the
rules issued under paragraph (1) in the same manner, by the same means,
and with the same jurisdiction, powers, and duties, as though all
applicable terms and provisions of the Consumer Financial Protection
Act of 2010 were incorporated into and made part of this subsection.'';
and
(2) in subsection (b)--
(A) by striking paragraph (1) and inserting the
following:
``(1) Except as provided in paragraph (6), in any case in
which the attorney general of a State has reason to believe
that an interest of the residents of the State has been or is
threatened or adversely affected by the engagement of any
person subject to a rule prescribed under subsection (a) in
practices that violate such rule, the State, as parens patriae,
may bring a civil action on behalf of its residents in an
appropriate district court of the United States or other court
of competent jurisdiction--
``(A) to enjoin that practice;
``(B) to enforce compliance with the rule;
``(C) to obtain damages, restitution, or other
compensation on behalf of the residents of the State;
or
``(D) to obtain penalties and relief provided under
the Consumer Financial Protection Act of 2010, the
Federal Trade Commission Act, and such other relief as
the court deems appropriate.'';
(B) in paragraphs (2) and (3), by striking ``the
primary Federal regulator'' each time the term appears
and inserting ``the Bureau of Consumer Financial
Protection or the Commission, as appropriate'';
(C) in paragraph (3), by inserting ``and subject to
subtitle B of the Consumer Financial Protection Act of
2010,'' after ``paragraph (2),''; and
(D) in paragraph (6), by striking ``the primary
Federal regulator'' each place that term appears and
inserting ``the Bureau of Consumer Financial Protection
or the Commission''.
SEC. 1096. AMENDMENTS TO THE REAL ESTATE SETTLEMENT PROCEDURES ACT.
The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601
et seq.) is amended--
(1) in section 3 (12 U.S.C. 2602)--
(A) in paragraph (7), by striking ``and'' at the
end;
(B) in paragraph (8), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(9) the term `Bureau' means the Bureau of Consumer
Financial Protection.'';
(2) in section 4 (12 U.S.C. 2603)--
(A) in subsection (a), by striking the first
sentence and inserting the following: ``The Bureau
shall publish a single, integrated disclosure for
mortgage loan transactions (including real estate
settlement cost statements) which includes the
disclosure requirements of this title, in conjunction
with the disclosure requirements of the Truth in
Lending Act that, taken together, may apply to a
transaction that is subject to both or either
provisions of law. The purpose of such model disclosure
shall be to facilitate compliance with the disclosure
requirements of this title and the Truth in Lending
Act, and to aid the borrower or lessee in understanding
the transaction by utilizing readily understandable
language to simplify the technical nature of the
disclosures.'';
(B) by striking ``Secretary'' each place that term
appears and inserting ``Bureau''; and
(C) by striking ``form'' each place that term
appears and inserting ``forms'';
(3) in section 5 (12 U.S.C. 2604)--
(A) by striking ``Secretary'' each place that term
appears and inserting ``Bureau''; and
(B) in subsection (a), by striking the first
sentence and inserting the following: ``The Bureau
shall prepare and distribute booklets jointly
addressing compliance with the requirements of the
Truth in Lending Act and the provisions of this title,
in order to help persons borrowing money to finance the
purchase of residential real estate better to
understand the nature and costs of real estate
settlement services.'';
(4) in section 6(j)(3) (12 U.S.C. 2605(j)(3))--
(A) by striking ``Secretary'' and inserting
``Bureau''; and
(B) by striking ``, by regulations that shall take
effect not later than April 20, 1991,'';
(5) in section 7(b) (12 U.S.C. 2606(b)) by striking
``Secretary'' and inserting ``Bureau'';
(6) in section 8(d) (12 U.S.C. 2607(d))--
(A) in the subsection heading, by inserting
``Bureau and'' before ``Secretary''; and
(B) by striking paragraph (4), and inserting the
following:
``(4) The Bureau, the Secretary, or the attorney general or
the insurance commissioner of any State may bring an action to
enjoin violations of this section. Except, to the extent that a
person is subject to the jurisdiction of the Bureau, the
Secretary, or the attorney general or the insurance
commissioner of any State, the Bureau shall have primary
authority to enforce or administer this section, subject to
subtitle B of the Consumer Financial Protection Act of 2010.''.
(7) in section 10(c) (12 U.S.C. 2609(c) and (d)), by
striking ``Secretary'' and inserting ``Bureau'';
(8) in section 16 (12 U.S.C. 2614), by inserting ``the
Bureau,'' before ``the Secretary'';
(9) in section 18 (12 U.S.C. 2616), by striking
``Secretary'' each place that term appears and inserting
``Bureau''; and
(10) in section 19 (12 U.S.C. 2617)--
(A) in the section heading by striking
``secretary'' and inserting ``bureau'';
(B) by striking ``Secretary'' each place that term
appears and inserting ``Bureau'';
(C) in subsection (b), by inserting ``the Bureau''
before ``the Secretary''; and
(D) in subsection (c), by inserting ``or the
Bureau'' after ``the Secretary'' each time that term
appears.
SEC. 1097. AMENDMENTS TO THE RIGHT TO FINANCIAL PRIVACY ACT OF 1978.
The Right to Financial Privacy Act of 1978 (12 U.S.C. 3401 et seq.)
is amended--
(1) in section 1101--
(A) in paragraph (6)--
(i) in subparagraph (A), by inserting
``and'' after the semicolon;
(ii) in subparagraph (B), by striking
``and'' at the end; and
(iii) by striking subparagraph (C); and
(B) in paragraph (7), by striking subparagraph (E),
and inserting the following:
``(E) the Bureau of Consumer Financial
Protection;'';
(2) in section 1112(e) (12 U.S.C. 3412(e)), by striking
``and the Commodity Futures Trading Commission is permitted''
and inserting ``the Commodity Futures Trading Commission, and
the Bureau of Consumer Financial Protection is permitted''; and
(3) in section 1113 (12 U.S.C. 3413), by adding at the end
the following new subsection:
``(r) Disclosure to the Bureau of Consumer Financial Protection.--
Nothing in this title shall apply to the examination by or disclosure
to the Bureau of Consumer Financial Protection of financial records or
information in the exercise of its authority with respect to a
financial institution.''.
SEC. 1098. AMENDMENTS TO THE SECURE AND FAIR ENFORCEMENT FOR MORTGAGE
LICENSING ACT OF 2008.
The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et
seq.) is amended--
(1) by striking ``a Federal banking agency'' each place
that term appears, other than in paragraphs (7) and (11) of
section 1503 and section 1507(a)(1), and inserting ``the
Bureau'';
(2) by striking ``Federal banking agencies'' each place
that term appears and inserting ``Bureau''; and
(3) by striking ``Secretary'' each place that term appears
and inserting ``Director'';
(4) in section 1503 (12 U.S.C. 5102)--
(A) by redesignating paragraphs (2) through (12) as
(3) through (13), respectively;
(B) by striking paragraph (1) and inserting the
following:
``(1) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.
``(2) Federal banking agency.--The term `Federal banking
agency' means the Board of Governors of the Federal Reserve
System, the Office of the Comptroller of the Currency, the
National Credit Union Administration, and the Federal Deposit
Insurance Corporation.''; and
(C) by striking paragraph (10), as so designated by
this section, and inserting the following:
``(10) Director.--The term `Director' means the Director of
the Bureau of Consumer Financial Protection.''; and
(5) in section 1507 (12 U.S.C. 5106)--
(A) in subsection (a)--
(i) by striking paragraph (1) and inserting
the following:
``(1) In general.--The Bureau shall develop and maintain a
system for registering employees of a depository institution,
employees of a subsidiary that is owned and controlled by a
depository institution and regulated by a Federal banking
agency, or employees of an institution regulated by the Farm
Credit Administration, as registered loan originators with the
Nationwide Mortgage Licensing System and Registry. The system
shall be implemented before the end of the 1-year period
beginning on the date of enactment of the Consumer Financial
Protection Act of 2010.''; and
(ii) in paragraph (2)--
(I) by striking ``appropriate
Federal banking agency and the Farm
Credit Administration'' and inserting
``Bureau''; and
(II) by striking ``employees's
identity'' and inserting ``identity of
the employee''; and
(B) in subsection (b), by striking ``through the
Financial Institutions Examination Council, and the
Farm Credit Administration'', and inserting ``and the
Bureau of Consumer Financial Protection'';
(6) in section 1508 (12 U.S.C. 5107)--
(A) by striking the section heading and inserting
the following: ``sec. 1508. bureau of consumer
financial protection backup authority to establish loan
originator licensing system.''; and
(B) by adding at the end the following:
``(f) Regulation Authority.--
``(1) In general.--The Bureau is authorized to promulgate
regulations setting minimum net worth or surety bond
requirements for residential mortgage loan originators and
minimum requirements for recovery funds paid into by loan
originators.
``(2) Considerations.--In issuing regulations under
paragraph (1), the Bureau shall take into account the need to
provide originators adequate incentives to originate affordable
and sustainable mortgage loans, as well as the need to ensure a
competitive origination market that maximizes consumer access
to affordable and sustainable mortgage loans.'';
(7) by striking section 1510 (12 U.S.C. 5109) and inserting
the following:
``SEC. 1510. FEES.
``The Bureau, the Farm Credit Administration, and the Nationwide
Mortgage Licensing System and Registry may charge reasonable fees to
cover the costs of maintaining and providing access to information from
the Nationwide Mortgage Licensing System and Registry, to the extent
that such fees are not charged to consumers for access to such system
and registry.'';
(8) by striking section 1513 (12 U.S.C. 5112) and inserting
the following:
``SEC. 1513. LIABILITY PROVISIONS.
``The Bureau, any State official or agency, or any organization
serving as the administrator of the Nationwide Mortgage Licensing
System and Registry or a system established by the Director under
section 1509, or any officer or employee of any such entity, shall not
be subject to any civil action or proceeding for monetary damages by
reason of the good faith action or omission of any officer or employee
of any such entity, while acting within the scope of office or
employment, relating to the collection, furnishing, or dissemination of
information concerning persons who are loan originators or are applying
for licensing or registration as loan originators.''; and
(9) in section 1514 (12 U.S.C. 5113) in the section
heading, by striking ``under hud backup licensing system'' and
inserting ``by the bureau''.
SEC. 1099. AMENDMENTS TO THE TRUTH IN LENDING ACT.
The Truth in Lending Act (15 U.S.C. 1601 et seq.) is amended--
(1) in section 103 (5 U.S.C. 1602)--
(A) by redesignating subsections (b) through (bb)
as subsections (c) through (cc), respectively; and
(B) by inserting after subsection (a) the
following:
``(b) Bureau.--The term `Bureau' means the Bureau of Consumer
Financial Protection.'';
(2) by striking ``Board'' each place that term appears,
other than in section 140(d) and section 108(a), as amended by
this section, and inserting ``Bureau'';
(3) by striking ``Federal Trade Commission'' each place
that term appears, other than in section 108(c) and section
129(m), as amended by this Act, and other than in the context
of a reference to the Federal Trade Commission Act, and
inserting ``Bureau'';
(4) in section 105(a) (15 U.S.C. 1604(a)), in the second
sentence--
(A) by striking ``Except in the case of a mortgage
referred to in section 103(aa), these regulations may
contain such'' and inserting ``Except with respect to
the provisions of section 129 that apply to a mortgage
referred to in section 103(aa), such regulations may
contain such additional requirements,''; and
(B) by inserting ``all or'' after ``exceptions
for'';
(5) in section 105(b) (15 U.S.C. 1604(b)), by striking the
first sentence and inserting the following: ``The Bureau shall
publish a single, integrated disclosure for mortgage loan
transactions (including real estate settlement cost statements)
which includes the disclosure requirements of this title in
conjunction with the disclosure requirements of the Real Estate
Settlement Procedures Act of 1974 that, taken together, may
apply to a transaction that is subject to both or either
provisions of law. The purpose of such model disclosure shall
be to facilitate compliance with the disclosure requirements of
this title and the Real Estate Settlement Procedures Act of
1974, and to aid the borrower or lessee in understanding the
transaction by utilizing readily understandable language to
simplify the technical nature of the disclosures.'';
(6) in section 105(f)(1) (15 U.S.C. 1604(f)(1)), by
inserting ``all or'' after ``from all or part of this title'';
(7) in section 108 (15 U.S.C. 1607)--
(A) by striking subsection (a) and inserting the
following:
``(a) Enforcing Agencies.--Except as otherwise provided in subtitle
B of the Consumer Financial Protection Act of 2010, compliance with the
requirements imposed under this title shall be enforced under--
``(1) section 8 of the Federal Deposit Insurance Act, in
the case of--
``(A) any national bank, and Federal branch or
Federal agency of a foreign bank, by the Office of the
Comptroller of the Currency;
``(B) any member bank of the Federal Reserve System
(other than a national bank), any branch or agency of a
foreign bank (other than a Federal branch, Federal
agency, or insured State branch of a foreign bank), any
commercial lending company owned or controlled by a
foreign bank, and organizations operating under section
25 or 25(a) of the Federal Reserve Act, by the Board;
and
``(C) any bank insured by the Federal Deposit
Insurance Corporation (other than a member of the
Federal Reserve System) and an insured State branch of
a foreign bank, by the Board of Directors of the
Federal Deposit Insurance Corporation;
``(2) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau;
``(3) the Federal Credit Union Act, by the Director of the
National Credit Union Administration, with respect to any
Federal credit union;
``(4) 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) 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; and
``(6) 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:
``(c) Overall Enforcement Authority of the Federal Trade
Commission.--Except to the extent that enforcement of the requirements
imposed under this title is specifically committed to some other
Government agency under subsection (a), and subject to subtitle B of
the Consumer Financial Protection Act of 2010, 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 Federal Trade Commission to enforce compliance by any person
with the requirements under this title, irrespective of whether that
person is engaged in commerce or meets any other jurisdictional tests
under the Federal Trade Commission Act.'';
(8) in section 129 (15 U.S.C. 1639), by striking subsection
(m) and inserting the following:
``(m) Civil Penalties in Federal Trade Commission Enforcement
Actions.--For purposes of enforcement by the Federal Trade Commission,
any violation of a regulation issued by the Bureau pursuant to
subsection (l)(2) shall be treated as a violation of a rule promulgated
under section 18 of the Federal Trade Commission Act (15 U.S.C. 57a)
regarding unfair or deceptive acts or practices.''; and
(9) in chapter 5 (15 U.S.C. 1667 et seq.)--
(A) by striking ``the Board'' each place that term
appears and inserting ``the Bureau''; and
(B) by striking ``The Board'' each place that term
appears and inserting ``The Bureau''.
SEC. 1100. AMENDMENTS TO THE TRUTH IN SAVINGS ACT.
The Truth in Savings Act (12 U.S.C. 4301 et seq.) is amended--
(1) by striking ``Board'' each place that term appears and
inserting ``Bureau'';
(2) in section 270(a) (12 U.S.C. 4309)--
(A) by striking ``Compliance'' and inserting
``Except as otherwise provided in subtitle B of the
Consumer Financial Protection Act of 2010,
compliance'';
(B) in paragraph (1)--
(i) in subparagraph (B), by striking
``and'' at the end; and
(ii) by striking subparagraph (C);
(C) in paragraph (2), by striking the period at the
end and inserting ``; and''; and
(D) by adding at the end the following:
``(3) subtitle E of the Consumer Financial Protection Act
of 2010, by the Bureau.'';
(3) in section 272(b) (12 U.S.C. 4311(b)), by striking
``regulation prescribed by the Board'' each place that term
appears and inserting ``regulation prescribed by the Bureau'';
and
(4) in section 274 (12 U.S.C. 4313), by striking paragraph
(4) and inserting the following:
``(4) Bureau.--The term `Bureau' means the Bureau of
Consumer Financial Protection.''.
SEC. 1101. AMENDMENTS TO THE TELEMARKETING AND CONSUMER FRAUD AND ABUSE
PREVENTION ACT.
(a) Amendments to Section 3.--Section 3 of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6102) is amended by
striking subsections (b) and (c) and inserting the following:
``(b) Rulemaking Authority.--The Commission shall have authority to
prescribe rules under subsection (a), in accordance with section 553 of
title 5, United States Code. In prescribing a rule under this section
that relates to the provision of a consumer financial product or
service that is subject to the Consumer Financial Protection Act of
2010, including any enumerated consumer law thereunder, the Commission
shall consult with the Bureau of Consumer Financial Protection
regarding the consistency of a proposed rule with standards, purposes,
or objectives administered by the Bureau of Consumer Financial
Protection.
``(c) Violations.--Any violation of any rule prescribed under
subsection (a)--
``(1) shall be treated as a violation of a rule under
section 18 of the Federal Trade Commission Act regarding unfair
or deceptive acts or practices; and
``(2) that is committed by a person subject to the Consumer
Financial Protection Act of 2010 shall be treated as a
violation of a rule under section 1031 of that Act regarding
unfair, deceptive, or abusive acts or practices.''.
(b) Amendments to Section 4.--Section 4(d) of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6103(d)) is amended
by inserting after ``Commission'' each place that term appears the
following: ``or the Bureau of Consumer Financial Protection''.
(c) Amendments to Section 5.--Section 5(c) of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6104(c)) is amended
by inserting after ``Commission'' each place that term appears the
following: ``or the Bureau of Consumer Financial Protection''.
(d) Amendment to Section 6.--Section 6 of the Telemarketing and
Consumer Fraud and Abuse Prevention Act (15 U.S.C. 6105) is amended by
adding at the end the following:
``(d) Enforcement by Bureau of Consumer Financial Protection.--
Except as otherwise provided in sections 3(d), 3(e), 4, and 5, and
subject to subtitle B of the Consumer Financial Protection Act of 2010,
this Act shall be enforced by the Bureau of Consumer Financial
Protection under subtitle E of the Consumer Financial Protection Act of
2010.''.
SEC. 1102. AMENDMENTS TO THE PAPERWORK REDUCTION ACT.
(a) Designation as an Independent Agency.--Section 2(5) of the
Paperwork Reduction Act (44 U.S.C. 3502(5)) is amended by inserting
``the Bureau of Consumer Financial Protection, the Office of Financial
Research,'' after ``the Securities and Exchange Commission,''.
(b) Comparable Treatment.--Section 3513 of title 44, United States
Code, is amended by adding at the end the following:
``(c) Comparable Treatment.--Notwithstanding any other provision of
law, the Director shall treat or review a rule or order prescribed or
proposed by the Director of the Bureau of Consumer Financial Protection
on the same terms and conditions as apply to any rule or order
prescribed or proposed by the Board of Governors of the Federal Reserve
System.''.
SEC. 1103. ADJUSTMENTS FOR INFLATION IN THE TRUTH IN LENDING ACT.
(a) Caps.--
(1) Credit transactions.--Section 104(3) of the Truth in
Lending Act (15 U.S.C. 1603(3)) is amended by striking
``$25,000'' and inserting ``$50,000''.
(2) Consumer leases.--Section 181(1) of the Truth in
Lending Act (15 U.S.C. 1667(1)) is amended by striking
``$25,000'' and inserting ``$50,000''.
(b) Adjustments for Inflation.--On and after December 31, 2011, the
Bureau may adjust annually the dollar amounts described in sections
104(3) and 181(1) of the Truth in Lending Act (as amended by this
section), by the annual percentage increase in the Consumer Price Index
for Urban Wage Earners and Clerical Workers, as published by the Bureau
of Labor Statistics, rounded to the nearest multiple of $100, or
$1,000, as applicable.
SEC. 1104. EFFECTIVE DATE.
Except as otherwise provided in this subtitle and the amendments
made by this subtitle, this subtitle and the amendments made by this
subtitle, other than sections 1081 and 1082, shall become effective on
the designated transfer date.
TITLE XI--FEDERAL RESERVE SYSTEM PROVISIONS
SEC. 1151. FEDERAL RESERVE ACT AMENDMENTS ON EMERGENCY LENDING
AUTHORITY.
The third undesignated paragraph of section 13 of the Federal
Reserve Act (12 U.S.C. 343) (relating to emergency lending authority)
is amended--
(1) by inserting ``(3)(A)'' before ``In unusual'';
(2) by striking ``individual, partnership, or corporation''
the first place that term appears and inserting the following:
``participant in any program or facility with broad-based
eligibility'';
(3) by striking ``exchange for an individual or a
partnership or corporation'' and inserting ``exchange,'';
(4) by striking ``such individual, partnership, or
corporation'' and inserting the following: ``such participant
in any program or facility with broad-based eligibility'';
(5) by striking ``for individuals, partnerships,
corporations'' and inserting ``for any participant in any
program or facility with broad-based eligibility'';
(6) by striking ``may prescribe.'' and inserting the
following: ``may prescribe.
``(B)(i) As soon as is practicable after the date
of enactment of this subparagraph, the Board shall
establish, by regulation, in consultation with the
Secretary of the Treasury, the policies and procedures
governing emergency lending under this paragraph. Such
policies and procedures shall be designed to ensure
that any emergency lending program or facility is for
the purpose of providing liquidity to the financial
system, and not to aid a failing financial company, and
that the collateral for emergency loans is of
sufficient quality to protect taxpayers from losses.
``(ii) The Board may not establish any program or
facility under this paragraph without the prior
approval of the Secretary of the Treasury.
``(C) The Board shall provide to the Committee on
Banking, Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the House of
Representatives--
``(i) not later than 7 days after providing
any loan or other financial assistance under
this paragraph, a report that includes--
``(I) the justification for the
exercise of authority to provide such
assistance;
``(II) the identity of the
recipients of such assistance, subject
to subparagraph (D);
``(III) the date and amount of the
assistance, and form in which the
assistance was provided; and
``(IV) the material terms of the
assistance, including--
``(aa) duration;
``(bb) collateral pledged
and the value thereof;
``(cc) all interest, fees,
and other revenue or items of
value to be received in
exchange for the assistance;
``(dd) any requirements
imposed on the recipient with
respect to employee
compensation, distribution of
dividends, or any other
corporate decision in exchange
for the assistance; and
``(ee) the expected costs
to the taxpayers of such
assistance; and
``(ii) once every 30 days, with respect to
any outstanding loan or other financial
assistance under this paragraph, written
updates on--
``(I) the value of collateral;
``(II) the amount of interest,
fees, and other revenue or items of
value received in exchange for the
assistance; and
``(III) the expected or final cost
to the taxpayers of such assistance.
``(D)(i) The Board shall disclose, not later than 1
year after the date on which assistance was first
received under the program or facility, unless the
Board determines that such disclosure likely would
reduce the effectiveness of the program or facility in
addressing or mitigating the financial market
disruptions, financial market conditions, or other
unusual and exigent circumstances sought to be
addressed or mitigated by the program or facility, or
would otherwise have a significant effect on economic
or financial market conditions--
``(I) the identity of the participants in
an emergency lending program or facility
commenced under this paragraph;
``(II) the amounts borrowed by each
participant in any such program or facility;
and
``(III) identifying details concerning the
assets or collateral held by, under, or in
connection with such a program or facility
within 1 year of the date on which assistance
was first received under the program or
facility.
``(ii) If the Board determines not to make the
disclosures required by clause (i) within 1 year of the
date on which a participant first received assistance
under a program or facility, the Board shall--
``(I) provide to the Committee on Banking,
Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the
House of Representatives a written report
explaining the reasons for delaying the
disclosures about such program or facility not
later than 30 days after making such
determination; and
``(II) provide to the Committee on Banking,
Housing, and Urban Affairs of the Senate and
the Committee on Financial Services of the
House of Representatives each year thereafter a
written report explaining the reasons for
continuing to delay disclosure, until the
disclosures are complete.
``(iii) The disclosures required by clause (i)
shall be made not later than 12 months after the
effective date of the termination of the facility by
the Board.
``(iv) If the Board determines not to make the
disclosures required by clause (i), the Comptroller
General of the United States shall issue a report to
the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of
the House of Representatives evaluating whether that
determination is reasonable.''.
SEC. 1152. REVIEWS OF SPECIAL FEDERAL RESERVE CREDIT FACILITIES.
(a) Reviews.--Section 714 of title 31, United States Code, is
amended by adding at the end the following:
``(f) Reviews of Credit Facilities of the Federal Reserve System.--
``(1) Definition.--In this subsection, the term `credit
facility' means a program or facility, including any special
purpose vehicle or other entity established by or on behalf of
the Board of Governors of the Federal Reserve System or a
Federal reserve bank, authorized by the Board of Governors
under the third undesignated paragraph of section 13 of the
Federal Reserve Act (12 U.S.C. 343), that is not subject to
audit under subsection (e), including--
``(A) the Asset-Backed Commercial Paper Money
Market Mutual Fund Liquidity Facility;
``(B) the Term Asset-Backed Securities Loan
Facility;
``(C) the Primary Dealer Credit Facility;
``(D) the Commercial Paper Funding Facility; and
``(E) the Term Securities Lending Facility.
``(2) Authority for reviews and examinations.--Subject to
paragraph (3), and notwithstanding any limitation in subsection
(b) on the auditing and oversight of certain functions of the
Board of Governors of the Federal Reserve System or any Federal
reserve bank, the Comptroller General of the United States may
conduct reviews, including onsite examinations, of the Board of
Governors, a Federal reserve bank, or a credit facility, if the
Comptroller General determines that such reviews are
appropriate, solely for the purposes of assessing, with respect
to a credit facility--
``(A) the operational integrity, accounting,
financial reporting, and internal controls of the
credit facility;
``(B) the effectiveness of the collateral policies
established for the facility in mitigating risk to the
relevant Federal reserve bank and taxpayers;
``(C) whether the credit facility inappropriately
favors one or more specific participants over other
institutions eligible to utilize the facility; and
``(D) the policies governing the use, selection, or
payment of third-party contractors by or for any credit
facility.
``(3) Reports and delayed disclosure.--
``(A) Reports required.--A report on each review
conducted under paragraph (2) shall be submitted by the
Comptroller General to the Congress before the end of
the 90-day period beginning on the date on which such
review is completed.
``(B) Contents.--The report under subparagraph (A)
shall include a detailed description of the findings
and conclusions of the Comptroller General with respect
to the matters described in paragraph (2) that were
reviewed and are the subject of the report, together
with such recommendations for legislative or
administrative action relating to such matters as the
Comptroller General may determine to be appropriate.
``(C) Delayed release of certain information.--
``(i) In general.--The Comptroller General
shall not disclose to any person or entity,
including to Congress, the names or identifying
details of specific participants in any credit
facility, the amounts borrowed by specific
participants in any credit facility, or
identifying details regarding assets or
collateral held by, under, or in connection
with any credit facility, and any report
provided under subparagraph (A) shall be
redacted to ensure that such names and details
are not disclosed.
``(ii) Delayed release.--The nondisclosure
obligation under clause (i) shall expire with
respect to any participant on the date on which
the Board of Governors, directly or through a
Federal reserve bank, publicly discloses the
identity of the subject participant or the
identifying details of the subject assets or
collateral.
``(iii) General release.--The Comptroller
General shall release a nonredacted version of
any report on a credit facility 1 year after
the effective date of the termination by the
Board of Governors of the authorization for the
credit facility. For purposes of this clause, a
credit facility shall be deemed to have
terminated 24 months after the date on which
the credit facility ceases to make extensions
of credit and loans, unless the credit facility
is otherwise terminated by the Board of
Governors.
``(iv) Exceptions.--The nondisclosure
obligation under clause (i) shall not apply to
the credit facilities Maiden Lane, Maiden Lane
II, and Maiden Lane III.''.
(b) Access to Records.--Section 714(d) of title 31, United States
Code, is amended--
(1) in paragraph (2), by inserting ``or any person or
entity described in paragraph (3)(A)'' after ``used by an
agency'';
(2) in paragraph (3), by inserting ``or (f)'' after
``subsection (e)'' each place that term appears; and
(3) in paragraph (3)(B), by adding at the end the
following: ``The Comptroller General may make and retain copies
of books, accounts, and other records provided under
subparagraph (A) as the Comptroller General deems appropriate.
The Comptroller General shall provide to any person or entity
described in subparagraph (A) a current list of officers and
employees to whom, with proper identification, records and
property may be made available, and who may make notes or
copies necessary to carry out a review or examination under
this subsection.''.
SEC. 1153. PUBLIC ACCESS TO INFORMATION.
Section 2B of the Federal Reserve Act (12 U.S.C. 225b) is amended
by adding at the end the following:
``(c) Public Access to Information.--The Board shall place on its
home Internet website, a link entitled `Audit', which shall link to a
webpage that shall serve as a repository of information made available
to the public for a reasonable period of time, not less than 6 months
following the date of release of the relevant information, including--
``(1) the reports prepared by the Comptroller General under
section 714 of title 31, United States Code;
``(2) the annual financial statements prepared by an
independent auditor for the Board in accordance with section
11B;
``(3) the reports to the Committee on Banking, Housing, and
Urban Affairs of the Senate required under the third
undesignated paragraph of section 13 (relating to emergency
lending authority); and
``(4) such other information as the Board reasonably
believes is necessary or helpful to the public in understanding
the accounting, financial reporting, and internal controls of
the Board and the Federal reserve banks.''.
SEC. 1154. LIQUIDITY EVENT DETERMINATION.
(a) Determination and Written Recommendation.--
(1) Determination request.--The Secretary may request the
Corporation and the Board of Governors to determine whether a
liquidity event exists that warrants use of the guarantee
program authorized under section 1155.
(2) Requirements of determination.--Any determination
pursuant to paragraph (1) shall--
(A) be written; and
(B) contain an evaluation of the evidence that--
(i) a liquidity event exists;
(ii) failure to take action would have
serious adverse effects on financial stability
or economic conditions in the United States;
and
(iii) actions authorized under section 1155
are needed to avoid or mitigate potential
adverse effects on the United States financial
system or economic conditions.
(b) Procedures.--Notwithstanding any other provision of Federal or
State law, upon the determination of both the Corporation (upon a vote
of not fewer than \2/3\ of the members of the Corporation then serving)
and the Board of Governors (upon a vote of not fewer than \2/3\ of the
members of the Board of Governors then serving) under subsection (a)
that a liquidity event exists that warrants use of the guarantee
program authorized under section 1155, and with the written consent of
the Secretary--
(1) the Corporation shall take action in accordance with
section 1155(a); and
(2) the Secretary (in consultation with the President)
shall take action in accordance with section 1155(c).
(c) Documentation and Review.--
(1) Documentation.--The Secretary shall--
(A) maintain the written documentation of each
determination of the Corporation and the Board of
Governors under this section; and
(B) provide the documentation for review under
paragraph (2).
(2) GAO review.--The Comptroller General of the United
States shall review and report to Congress on any determination
of the Corporation and the Board of Governors under subsection
(a), including--
(A) the basis for the determination; and
(B) the likely effect of the actions taken.
(d) Report to Congress.--On the earlier of the date of a submission
made to Congress under section 1155(c), or within 30 days of the date
of a determination under subsection (a), the Secretary shall provide
written notice of the determination of the Corporation and the Board of
Governors to the Committee on Banking, Housing, and Urban Affairs of
the Senate and the Committee on Financial Services of the House of
Representatives, including a description of the basis for the
determination.
SEC. 1155. EMERGENCY FINANCIAL STABILIZATION.
(a) In General.--Upon the written determination of the Corporation
and the Board of Governors under section 1154, the Corporation shall
create a widely available program to guarantee obligations of solvent
insured depository institutions or solvent depository institution
holding companies (including any affiliates thereof) during times of
severe economic distress, except that a guarantee of obligations under
this section may not include the provision of equity in any form.
(b) Rulemaking and Terms and Conditions.--
(1) Policies and procedures.--As soon as is practicable
after the date of enactment of this Act, the Corporation shall
establish, by regulation, and in consultation with the
Secretary, policies and procedures governing the issuance of
guarantees authorized by this section. Such policies and
procedures may include a requirement of collateral as a
condition of any such guarantee.
(2) Terms and conditions.--The terms and conditions of any
guarantee program shall be established by the Corporation, with
the concurrence of the Secretary.
(c) Determination of Guaranteed Amount.--
(1) In general.--In connection with any program established
pursuant to subsection (a) and subject to paragraph (2) of this
subsection, the Secretary (in consultation with the President)
shall determine the maximum amount of debt outstanding that the
Corporation may guarantee under this section, and the President
may transmit to Congress a written report on the plan of the
Corporation to exercise the authority under this section to
issue guarantees up to that maximum amount. Upon the expiration
of the 5-calendar-day period beginning on the date on which
Congress receives the report on the plan of the Corporation,
the Corporation may exercise the authority under this section
to issue guarantees up to that specified maximum amount, unless
there is enacted, within that 5-calendar-day period, a joint
resolution disapproving such report, as provided in subsection
(d).
(2) Additional debt guarantee authority.--If the Secretary
(in consultation with the President) determines, after a
submission to Congress under paragraph (1), that the maximum
guarantee amount should be raised, and the Council concurs with
that determination, the President may transmit to Congress a
written report on the plan of the Corporation to exercise the
authority under this section to issue guarantees up to the
increased maximum debt guarantee amount. Upon the expiration of
the 5-calendar-day period beginning on the date on which
Congress receives the report on the plan of the Corporation,
the Corporation may exercise the authority under this section
to issue guarantees up to that specified maximum amount, unless
there is enacted, within that 5-calendar-day period, a joint
resolution disapproving such report, as provided in subsection
(d).
(d) Joint Resolution.--
(1) Fast track consideration in house of representatives.--
(A) Contents of joint resolution.--For purposes of
this section, the term ``joint resolution'' means only
a joint resolution--
(i) that is introduced not later than 3
calendar days after the date on which the
report of the Secretary referred to in section
1154(d) is received by Congress;
(ii) that does not have a preamble;
(iii) the title of which is as follows:
``Joint resolution relating to the disapproval
of a plan to guarantee obligations under
section 1155 of the Restoring American
Financial Stability Act of 2010''; and
(iv) the matter after the resolving clause
of which is as follows: ``That Congress
disapproves the obligation of any amount
described in section 1155(c) of the Restoring
American Financial Stability Act of 2010.''.
(B) Reconvening.--Upon receipt of a report under
subsection (c), the Speaker, if the House of
Representatives would otherwise be adjourned, shall
notify the Members of the House of Representatives
that, pursuant to this section, the House of
Representatives shall convene not later than the second
calendar day after the date of receipt of such report.
(C) Reporting and discharge.--Any committee of the
House of Representatives to which a joint resolution is
referred shall report it to the House of
Representatives not later than 4 calendar days after
the date of receipt of the report under subsection (c).
If a committee fails to report the 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.
(D) Proceeding to consideration.--After each
committee authorized to consider a joint resolution
reports it to the House of Representatives or has been
discharged from its consideration, it shall be in
order, not later than the 5th day after Congress
receives the report under subsection (c), to move to
proceed to consider the joint resolution in the House
of Representatives. All points of order against the
motion are waived. Such a motion shall not be in order
after the House of Representatives has disposed of a
motion to proceed on the joint resolution. The previous
question shall be considered as ordered on the motion
to its adoption without intervening motion. The motion
shall not be debatable. A motion to reconsider the vote
by which the motion is disposed of shall not be in
order.
(E) Consideration.--The joint resolution shall be
considered as read. All points of order against the
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 2 hours of debate equally
divided and controlled by the proponent and an
opponent. A motion to reconsider the vote on passage of
the joint resolution shall not be in order.
(2) Fast track consideration in senate.--
(A) Reconvening.--Upon receipt of a report under
subsection (c), if the Senate has adjourned or recessed
for more than 2 days, the majority leader of the
Senate, after consultation with the minority leader of
the Senate, shall notify the Members of the Senate
that, pursuant to this section, the Senate shall
convene not later than the second calendar day after
receipt of such message.
(B) Placement on calendar.--Upon introduction in
the Senate, the joint resolution shall be placed
immediately on the calendar.
(C) Floor consideration.--
(i) In general.--Notwithstanding Rule XXII
of the Standing Rules of the Senate, it is in
order at any time during the period beginning
on the 4th day after the date on which Congress
receives a report under subsection (c), and
ending on the 5th day after the date on which
Congress receives a report under subsection (c)
(even though a previous motion to the same
effect has been disagreed to) to move to
proceed to the consideration of the joint
resolution, and all points of order against the
joint resolution (and against consideration of
the joint resolution) are waived. The motion to
proceed is not debatable. The motion is not
subject to a motion to postpone. A motion to
reconsider the vote by which the motion is
agreed to or disagreed to shall not be in
order. If a motion to proceed to the
consideration of the resolution is agreed to,
the joint resolution shall remain the
unfinished business until disposed of.
(ii) Debate.--Debate on the joint
resolution, and on all debatable motions and
appeals in connection therewith, shall be
limited to not more than 10 hours, which shall
be divided equally between the majority and
minority leaders or their designees. A motion
further to limit debate is in order and not
debatable. An amendment to, or a motion to
postpone, or a motion to proceed to the
consideration of other business, or a motion to
recommit the joint resolution is not in order.
(iii) Vote on passage.--The vote on passage
shall occur immediately following the
conclusion of the debate on the joint
resolution, and a single quorum call at the
conclusion of the debate if requested in
accordance with the rules of the Senate.
(iv) Rulings of the chair on procedure.--
Appeals from the decisions of the Chair
relating to the application of the rules of the
Senate, as the case may be, to the procedure
relating to a joint resolution shall be decided
without debate.
(3) Rules 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 a joint resolution of
the House receiving the resolution--
(I) the procedure in that House
shall be the same as if no joint
resolution had been received from the
other House; but
(II) the vote on passage shall be
on the joint resolution of the other
House.
(B) Treatment of joint resolution of other house.--
If one House fails to introduce or consider a joint
resolution under this section, the joint resolution of
the other House shall be entitled to expedited floor
procedures under this section.
(C) Treatment of companion measures.--If, following
passage of the joint resolution in the Senate, the
Senate then receives the companion measure from the
House of Representatives, the companion measure shall
not be debatable.
(D) Consideration after passage.--
(i) In general.--If Congress passes a joint
resolution, the period beginning on the date
the President is presented with the joint
resolution and ending on the date the President
takes action with respect to the joint
resolution shall be disregarded in computing
the 5-day period described in subsection (c).
(ii) Vetoes.--If the President vetoes the
joint resolution--
(I) the period beginning on the
date the President vetoes the joint
resolution and ending on the date the
Congress receives the veto message with
respect to the joint resolution shall
be disregarded in computing the 5-day
period described in subsection (c); and
(II) debate on a veto message in
the Senate under this section shall be
1 hour equally divided between the
majority and minority leaders or their
designees.
(E) Rules of house of representatives and senate.--
This subsection is 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) Funding.--
(1) Fees and other charges.--The Corporation shall charge
fees and other assessments to all participants in the program
established pursuant to this section, in such amounts as are
necessary to offset projected losses and administrative
expenses, including amounts borrowed pursuant to paragraph (3),
and such amounts shall be available to the Corporation.
(2) Excess funds.--If, at the conclusion of the program
established under this section, there are any excess funds
collected from the fees associated with such program, the funds
shall be deposited in the General Fund of the Treasury.
(3) Authority of corporation.--The Corporation--
(A) may borrow funds from the Secretary of the
Treasury and issue obligations of the Corporation to
the Secretary for amounts borrowed, and the amounts
borrowed shall be available to the Corporation for
purposes of carrying out a program established pursuant
to this section, including the payment of reasonable
costs of administering the program, and the obligations
issued shall be repaid in full with interest through
fees and charges paid by participants in accordance
with paragraphs (1) and (4), as applicable; and
(B) may not borrow funds from the Deposit Insurance
Fund established pursuant to section 11(a)(4) of the
Federal Deposit Insurance Act.
(4) Backup special assessments.--To the extent that the
funds collected pursuant to paragraph (1) are insufficient to
cover any losses or expenses, including amounts borrowed
pursuant to paragraph (3), arising from a program established
pursuant to this section, the Corporation shall impose a
special assessment solely on participants in the program, in
amounts necessary to address such insufficiency, and which
shall be available to the Corporation to cover such losses or
expenses.
(5) Authority of the secretary.--The Secretary may purchase
any obligations issued under paragraph (3)(A). For such
purpose, the Secretary may use the proceeds of the sale of any
securities issued under chapter 31 of title 31, United States
Code, and the purposes for which securities may be issued under
that chapter 31 are extended to include such purchases, and the
amount of any securities issued under that chapter 31 for such
purpose shall be treated in the same manner as securities
issued under section 208(n)(3)(B).
(f) Rule of Construction.--For purposes of this section, a
guarantee of deposits held by insured depository institutions shall not
be treated as a debt guarantee program.
(g) Definitions.--For purposes of this section, the following
definitions shall apply:
(1) Company.--The term ``company'' means any entity other
than a natural person that is incorporated or organized under
Federal law or the laws of any State.
(2) Depository institution holding company.--The term
``depository institution holding company'' has the same meaning
as in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(3) Liquidity event.--The term ``liquidity event'' means--
(A) a reduction in the usual ability of financial
market participants--
(i) to sell a type of financial asset,
without a significant reduction in price; or
(ii) to borrow using that type of asset as
collateral without a significant increase in
margin; or
(B) a significant reduction in the usual ability of
financial and nonfinancial market participants to
obtain unsecured credit.
(4) Solvent.--The term ``solvent'' means that the value of
the assets of an entity exceed its obligations to creditors.
SEC. 1156. ADDITIONAL RELATED AMENDMENTS.
(a) Suspension of Parallel Federal Deposit Insurance Act
Authority.--Effective upon the date of enactment of this section, the
Corporation may not exercise its authority under section 13(c)(4)(G)(i)
of the Federal Deposit Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) to
establish any widely available debt guarantee program for which section
1155 would provide authority.
(b) Mitigation.--Section 13(c)(4)(G)(i) of the Federal Deposit
Insurance Act (12 U.S.C. 1823(c)(4)(G)(i)) is amended by striking
``such effects.'' and inserting ``such effects, provided the insured
depository institution has been placed in receivership.''.
(c) Effect of Default on an FDIC Guarantee.--If an insured
depository institution or depository institution holding company (as
those terms are defined in section 3 of the Federal Deposit Insurance
Act) participating in a program under section 1155, or any participant
in a debt guarantee program established pursuant to section
13(c)(4)(G)(i) of the Federal Deposit Insurance Act defaults on any
obligation guaranteed by the Corporation after the date of enactment of
this Act, the Corporation shall--
(1) appoint itself as receiver for the insured depository
institution that defaults; and
(2) with respect to any other participating company that is
not an insured depository institution that defaults--
(A) require--
(i) consideration of whether a
determination shall be made, as provided in
section 202 to resolve the company under
section 203; and
(ii) the company to file a petition for
bankruptcy under section 301 of title 11,
United States Code, if the Corporation is not
appointed receiver pursuant to section 203
within 30 days of the date of default; or
(B) file a petition for involuntary bankruptcy on
behalf of the company under section 303 of title 11,
United States Code.
SEC. 1157. FEDERAL RESERVE ACT AMENDMENTS ON FEDERAL RESERVE BANK
GOVERNANCE.
The Federal Reserve Act (12 U.S.C. 221 et seq.) is amended in
section 4 by adding at the end the following:
``(25) Selection of the president of the federal reserve
bank of new york.--Notwithstanding any other provision of this
section, after the date of enactment of the Restoring American
Financial Stability Act of 2010, the president of the Federal
Reserve Bank of New York shall be appointed by the President,
by and with the advice and consent of the Senate, for terms of
5 years.
``(26) Limitation on eligibility to vote for or serve as a
federal reserve bank director.--Notwithstanding any other
provision of this section, after the date of enactment of the
Restoring American Financial Stability Act of 2010, no company,
or subsidiary or affiliate of a company that is supervised by
the Board, may vote for members of the board of directors of a
Federal reserve bank, and no past or current officer, director,
or employee of such company, or subsidiary or affiliate of such
company, may serve as a member of the board of directors of a
Federal reserve bank.''.
SEC. 1158. AMENDMENTS TO THE FEDERAL RESERVE ACT RELATING TO
SUPERVISION AND REGULATION POLICY.
(a) Establishment of the Position of Vice Chairman for
Supervision.--
(1) Position established.--The second undesignated
paragraph of section 10 of the Federal Reserve Act (12 U.S.C.
242) (relating to the Chairman and Vice Chairman of the Board)
is amended by striking the third sentence and inserting the
following: ``Of the persons thus appointed, 1 shall be
designated by the President, by and with the advice and consent
of the Senate, to serve as Chairman of the Board for a term of
4 years, and 2 shall be designated by the President, by and
with the advice and consent of the Senate, to serve as Vice
Chairmen of the Board, each for a term of 4 years, 1 of whom
shall serve in the absence of the Chairman, as provided in the
fourth undesignated paragraph of this section, and 1 of whom
shall be designated Vice Chairman for Supervision. The Vice
Chairman for Supervision shall develop policy recommendations
for the Board regarding supervision and regulation of
depository institution holding companies and other financial
firms supervised by the Board, and shall oversee the
supervision and regulation of such firms.''.
(2) Effective date.--The amendment made by subsection (a)
takes effect on the date of enactment of this title and applies
to individuals who are designated by the President on or after
that date to serve as Vice Chairman of Supervision.
(b) Financial Stability as Board Function.--Section 10 of the
Federal Reserve Act (12 U.S.C. 241) is amended by adding at the end the
following:
``(11) Financial stability function.--The Board of
Governors shall identify, measure, monitor, and mitigate risks
to the financial stability of the United States.''.
(c) Appearances Before Congress.--Section 10 of the Federal Reserve
Act (12 U.S.C. 241) is amended by adding at the end the following:
``(12) Appearances before congress.--The Vice Chairman for
Supervision shall appear before the Committee on Banking,
Housing, and Urban Affairs of the Senate and the Committee on
Financial Services of the House of Representatives and at semi-
annual hearings regarding the efforts, activities, objectives,
and plans of the Board with respect to the conduct of
supervision and regulation of depository institution holding
companies and other financial firms supervised by the Board.''.
(d) Board Responsibility To Set Supervision and Regulatory
Policy.--Section 11 of the Federal Reserve Act (12 U.S.C. 248)
(relating to enumerated powers of the Board) is amended by adding at
the end of subsection (k) (relating to delegation) the following: ``The
Board of Governors may not delegate to a Federal reserve bank its
functions for the establishment of policies for the supervision and
regulation of depository institution holding companies and other
financial firms supervised by the Board of Governors.''.
TITLE XII--IMPROVING ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS
SECTION 1201. SHORT TITLE.
This title may be cited as the ``Improving Access to Mainstream
Financial Institutions Act of 2010''.
SEC. 1202. PURPOSE.
The purpose of this title is to encourage initiatives for financial
products and services that are appropriate and accessible for millions
of Americans who are not fully incorporated into the financial
mainstream.
SEC. 1203. DEFINITIONS.
In this title, the following definitions shall apply:
(1) Account.--The term ``account'' means an agreement
between an individual and an eligible entity under which the
individual obtains from or through the entity 1 or more banking
products and services, and includes a deposit account, a
savings account (including a money market savings account), an
account for a closed-end loan, and other products or services,
as the Secretary deems appropriate.
(2) Community development financial institution.--The term
``community development financial institution'' has the same
meaning as in section 103(5) of the Community Development
Banking and Financial Institutions Act of 1994 (12 U.S.C.
4702(5)).
(3) Eligible entity.--The term ``eligible entity'' means--
(A) an organization described in section 501(c)(3)
of the Internal Revenue Code of 1986, and exempt from
tax under section 501(a) of such Code;
(B) a federally insured depository institution;
(C) a community development financial institution;
(D) a State, local, or tribal government entity; or
(E) a partnership or other joint venture comprised
of 1 or more of the entities described in subparagraphs
(A) through (D), in accordance with regulations
prescribed by the Secretary under this title.
(4) Federally insured depository institution.--The term
``federally insured depository institution'' means any insured
depository institution (as that term is defined in section 3 of
the Federal Deposit Insurance Act (12 U.S.C. 1813)) and any
insured credit union (as that term is defined in section 101 of
the Federal Credit Union Act (12 U.S.C. 1752)).
(5) Payday loan.--The term ``payday loan'' means any
transaction in which a small cash advance is made to a consumer
in exchange for--
(A) the personal check or share draft of the
consumer, in the amount of the advance plus a fee,
where presentment or negotiation of such check or share
draft is deferred by agreement of the parties until a
designated future date; or
(B) the authorization of the consumer to debit the
transaction account or share draft account of the
consumer, in the amount of the advance plus a fee,
where such account will be debited on or after a
designated future date.
SEC. 1204. EXPANDED ACCESS TO MAINSTREAM FINANCIAL INSTITUTIONS.
(a) In General.--The Secretary is authorized to establish a
multiyear program of grants, cooperative agreements, financial agency
agreements, and similar contracts or undertakings to promote
initiatives designed--
(1) to enable low- and moderate-income individuals to
establish one or more accounts in a federally insured
depository institution that are appropriate to meet the
financial needs of such individuals; and
(2) to improve access to the provision of accounts, on
reasonable terms, for low- and moderate-income individuals.
(b) Program Eligibility and Activities.--
(1) In general.--The Secretary shall restrict participation
in any program established under subsection (a) to an eligible
entity. Subject to regulations prescribed by the Secretary
under this title, 1 or more eligible entities may participate
in 1 or several programs established under subsection (a).
(2) Account activities.--Subject to regulations prescribed
by the Secretary, an eligible entity may, in participating in a
program established under subsection (a), offer or provide to
low- and moderate-income individuals products and services
relating to accounts, including--
(A) small-dollar value loans; and
(B) financial education and counseling relating to
conducting transactions in and managing accounts.
SEC. 1205. LOW-COST ALTERNATIVES TO PAYDAY LOANS.
(a) Grants Authorized.--The Secretary is authorized to establish
multiyear demonstration programs by means of grants, cooperative
agreements, financial agency agreements, and similar contracts or
undertakings, with eligible entities to provide low-cost, small loans
to consumers that will provide alternatives to more costly payday
loans.
(b) Terms and Conditions.--
(1) In general.--Loans under this section shall be made on
terms and conditions, and pursuant to lending practices, that
are reasonable for consumers.
(2) Financial literacy and education opportunities.--
(A) In general.--Each eligible entity awarded a
grant under this section shall promote and take
appropriate steps to ensure the provision of financial
literacy and education opportunities, such as relevant
counseling services, educational courses, or wealth
building programs, to each consumer provided with a
loan pursuant to this section.
(B) Authority to expand access.--As part of the
grants, agreements, and undertakings established under
this section, the Secretary may implement reasonable
measures or programs designed to expand access to
financial literacy and education opportunities,
including relevant counseling services, educational
courses, or wealth building programs to be provided to
individuals who obtain loans from eligible entities
under this section.
SEC. 1206. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.
The Community Development Banking and Financial Institutions Act of
1994 (12 U.S.C. 4701 et seq.) is amended by adding at the end the
following:
``SEC. 122. GRANTS TO ESTABLISH LOAN-LOSS RESERVE FUNDS.
``(a) Purposes.--The purposes of this section are--
``(1) to make financial assistance available from the Fund
in order to help community development financial institutions
defray the costs of operating small dollar loan programs, by
providing the amounts necessary for such institutions to
establish their own loan loss reserve funds to mitigate some of
the losses on such small dollar loan programs; and
``(2) to encourage community development financial
institutions to establish and maintain small dollar loan
programs that would help give consumers access to mainstream
financial institutions and combat payday lending.
``(b) Grants.--
``(1) Loan-loss reserve fund grants.--The Fund shall make
grants to community development financial institutions or to
any partnership between such community development financial
institutions and any other federally insured depository
institution with a primary mission to serve targeted investment
areas, as such areas are defined under section 103(16), to
enable such institutions or any partnership of such
institutions to establish a loan-loss reserve fund in order to
defray the costs of a small dollar loan program established or
maintained by such institution.
``(2) Matching requirement.--A community development
financial institution or any partnership of institutions
established pursuant to paragraph (1) shall provide non-Federal
matching funds in an amount equal to 50 percent of the amount
of any grant received under this section.
``(3) Use of funds.--Any grant amounts received by a
community development financial institution or any partnership
between or among such institutions under paragraph (1)--
``(A) may not be used by such institution to
provide direct loans to consumers;
``(B) may be used by such institution to help
recapture a portion or all of a defaulted loan made
under the small dollar loan program of such
institution; and
``(C) may be used to designate and utilize a fiscal
agent for services normally provided by such an agent.
``(4) Technical assistance grants.--The Fund shall make
technical assistance grants to community development financial
institutions or any partnership between or among such
institutions to support and maintain a small dollar loan
program. Any grant amounts received under this paragraph may be
used for technology, staff support, and other costs associated
with establishing a small dollar loan program.
``(c) Definitions.--For purposes of this section--
``(1) the term `consumer reporting agency that compiles and
maintains files on consumers on a nationwide basis' has the
same meaning given such term in section 603(p) of the Fair
Credit Reporting Act (15 U.S.C. 1681a(p)); and
``(2) the term `small dollar loan program' means a loan
program wherein a community development financial institution
or any partnership between or among such institutions offers
loans to consumers that--
``(A) are made in amounts not exceeding $2,500;
``(B) must be repaid in installments;
``(C) have no pre-payment penalty;
``(D) the institution has to report payments
regarding the loan to at least 1 of the consumer
reporting agencies that compiles and maintains files on
consumers on a nationwide basis; and
``(E) meet any other affordability requirements as
may be established by the Administrator.''.
SEC. 1207. PROCEDURAL PROVISIONS.
An eligible entity desiring to participate in a program or obtain a
grant under this title shall submit an application to the Secretary, in
such form and containing such information as the Secretary may require.
SEC. 1208. AUTHORIZATION OF APPROPRIATIONS.
(a) Authorization to the Secretary.--There are authorized to be
appropriated to the Secretary, such sums as are necessary to both
administer and fund the programs and projects authorized by this title,
to remain available until expended.
(b) Authorization to the Fund.--There is authorized to be
appropriated to the Fund for each fiscal year beginning in fiscal year
2010, an amount equal to the amount of the administrative costs of the
Fund for the operation of the grant program established under this
title.
SEC. 1209. REGULATIONS.
(a) In General.--The Secretary is authorized to promulgate
regulations to implement and administer the grant programs and
undertakings authorized by this title.
(b) Regulatory Authority.--Regulations prescribed under this
section may contain such classifications, differentiations, or other
provisions, and may provide for such adjustments and exceptions for any
class of grant programs, undertakings, or eligible entities, as, in the
judgment of the Secretary, are necessary or proper to effectuate the
purposes of this title, to prevent circumvention or evasion of this
title, or to facilitate compliance with this title.
SEC. 1210. EVALUATION AND REPORTS TO CONGRESS.
For each fiscal year in which a program or project is carried out
under this Title, the Secretary shall submit a report to the Committee
on Banking, Housing, and Urban Affairs of the Senate and the Committee
on Financial Services of the House of Representatives containing a
description of the activities funded, amounts distributed, and
measurable results, as appropriate and available.
Calendar No. 349
111th CONGRESS
2d Session
S. 3217
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A BILL
To promote the financial stability of the United States by improving
accountability and transparency in the financial system, to end ``too
big to fail'', to protect the American taxpayer by ending bailouts, to
protect consumers from abusive financial services practices, and for
other purposes.
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April 15, 2010
Read twice and placed on the calendar