[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3241 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3241

To provide for a safe, accountable, fair, and efficient banking system, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             April 21, 2010

 Mr. Brown of Ohio (for himself, Mr. Kaufman, Mr. Casey, Mr. Merkley, 
 Mr. Whitehouse, and Mr. Harkin) introduced the following bill; which 
 was read twice and referred to the Committee on Banking, Housing, and 
                             Urban Affairs

_______________________________________________________________________

                                 A BILL


 
To provide for a safe, accountable, fair, and efficient banking system, 
                        and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Safe, Accountable, Fair, and 
Efficient Banking Act of 2010'' or the ``SAFE Banking Act of 2010''.

SEC. 2. DEFINITIONS.

    (a) In General.--As used in this Act--
            (1) the term ``appropriate Federal regulator'' means--
                    (A) the Board of Governors of the Federal Reserve 
                System (in this Act referred to as the ``Board'');
                    (B) the Comptroller General of the United States 
                (in this Act referred to as the ``Comptroller''); or
                    (C) the Federal Deposit Insurance Corporation (in 
                this Act referred to as the ``Corporation'');
            (2) the term ``average total consolidated assets'' has the 
        same meaning as in part 225 of title 12, Code of Federal 
        Regulations, as in effect on the date of enactment of this Act, 
        or any successor thereto;
            (3) the term ``FDIC-assessed deposits'' means the 
        assessment base, as computed under part 327 of title 12, Code 
        of Federal Regulations, as in effect on the date of enactment 
        of this Act, or any successor thereto;
            (4) the term ``financial company'' means any nonbank 
        financial company that is supervised by the Board;
            (5) the term ``liabilities'' equals a financial company's 
        total assets less tier 1 capital;
            (6) the term ``nondeposit liabilities'' means the total 
        assets of a bank holding company, less tier 1 capital, less 
        FDIC-assessed deposits; and
            (7) the term ``tier 1 capital'' has the same meaning as in 
        part 225 of title 12, Code of Federal Regulations, as in effect 
        on the date of enactment of this Act, or any successor thereto.
    (b) Nonbank Financial Company Definitions.--
            (1) 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--
                    (A) incorporated or organized in a country other 
                than the United States; and
                    (B) 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).
            (2) 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) that is--
                    (A) incorporated or organized under the laws of the 
                United States or any State; and
                    (B) 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).
            (3) Nonbank financial company.--The term ``nonbank 
        financial company'' means a U.S. nonbank financial company and 
        a foreign nonbank financial company.

SEC. 3. DEPOSIT CONCENTRATION LIMIT.

    Section 3(d) of the Bank Holding Company Act of 1956 (12 U.S.C. 
1842(d)) is amended--
            (1) in paragraph (2), by striking subparagraph (A) and 
        inserting the following:
                    ``(A) Nationwide concentration limits.--No bank 
                holding company may hold more than 10 percent of the 
                total amount of deposits of insured depository 
                institutions in the United States.''; and
            (2) by striking paragraph (5) and inserting the following:
            ``(5) Enforced compliance.--The Board shall require any 
        bank holding company having a deposit concentration in 
        violation of this subsection to sell or otherwise transfer 
        assets to unaffiliated firms to bring the company into 
        compliance with this subsection.''.

SEC. 4. LEVERAGE RATIO AND SIZE REQUIREMENTS FOR BANK HOLDING 
              COMPANIES.

    The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is 
amended by inserting after section 5 the following:

``SEC. 5A. LIMITS ON LEVERAGE AND SIZE.

    ``(a) Leverage Ratio Requirements for Bank Holding Companies and 
Financial Companies.--
            ``(1) Leverage ratio.--No bank holding company or financial 
        company may maintain tier 1 capital in an amount equal to less 
        than 6 percent of average total consolidated assets.
            ``(2) Balance sheet leverage ratio.--No bank holding 
        company or financial company may maintain less than 6 percent 
        of tier 1 capital for all outstanding balance sheet 
        liabilities, as determined under section 13(m) of the 
        Securities Exchange Act of 1934 (15 U.S.C. 78m(m)).
            ``(3) Exemptions.--
                    ``(A) In general.--The Board may adjust the 
                leverage ratio requirements provided in paragraph (1) 
                or (2), for any class of institutions, based upon the 
                size or activity of such class of institutions. No 
                adjustment made under this subparagraph may allow an 
                institution to carry less capital than provided in 
                paragraph (1) or (2).
                    ``(B) Adjustments.--Consistent with this 
                subsection, the Board may adjust, by rule, the 
                definitions of the terms `leverage ratio' and `balance 
                sheet leverage ratio' to harmonize such ratios with 
                official international agreements regarding capital 
                standards, only if the Board determines that the 
                international capital standards are commensurate with 
                the credit, market, operational, or other risks posed 
                by the bank holding companies or financial companies to 
                which the international agreements regarding capital 
                standards apply.
                    ``(C) Authority of other regulators.--
                            ``(i) In general.--The appropriate Federal 
                        regulator may, in a manner consistent with this 
                        subsection, grant any bank holding company an 
                        emergency temporary exemption from the ratio 
                        requirements provided in paragraph (1) or (2), 
                        where necessary to prevent an imminent threat 
                        to the financial stability of the United 
                        States.
                            ``(ii) Publication required.--Any exemption 
                        granted under this subparagraph shall be 
                        published in the Federal Register within a 
                        reasonable period after the date on which such 
                        exemption is granted, not to exceed 90 days, 
                        and such publication shall provide--
                                    ``(I) the name of the bank holding 
                                company or financial company being 
                                granted an exemption;
                                    ``(II) the reason for the 
                                exemption; and
                                    ``(III) the plan of the appropriate 
                                Federal regulator detailing the manner 
                                by which the bank holding company shall 
                                be brought into compliance with 
                                paragraphs (1) and (2).
            ``(4) Leverage ratio requirements for operating 
        subsidiaries of bank holding companies and financial 
        companies.--Notwithstanding any other provision of law 
        applicable to insured depository institutions, the Board shall, 
        within 1 year of the date of enactment of the SAFE Banking Act 
        of 2010, promulgate regulations establishing a leverage ratio 
        and a balance sheet leverage ratio, in a manner consistent with 
        paragraphs (1) and (2), for all operating subsidiaries of bank 
        holding companies and financial companies.
            ``(5) Prompt corrective action.--
                    ``(A) Authorities.--The Board shall require any 
                bank holding company or financial company that is in 
                violation of paragraph (1) or (2) to raise capital, 
                sell or otherwise transfer assets or off-balance sheet 
                items to unaffiliated firms, or impose conditions on 
                the manner in which the bank holding company conducts 1 
                or more activities to bring the company into compliance 
                with paragraphs (1) and (2).
                    ``(B) Corrective action plan.--The Board shall, not 
                later than 60 days after determining that a bank 
                holding company or financial company is in violation of 
                paragraph (1) or (2), present to the members of the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services of the 
                House of Representatives a plan detailing the manner by 
                which the bank holding company or financial company 
                shall be brought into compliance with the applicable 
                provision of law.
                    ``(C) Reports to congress.--
                            ``(i) Written reports.--The Board shall 
                        provide to the members of the Committee on 
                        Banking, Housing, and Urban Affairs of the 
                        Senate and the Committee on Financial Services 
                        of the House of Representatives periodic 
                        reports for each 60-day period during which a 
                        corrective action plan required by subparagraph 
                        (B) has not been fulfilled.
                            ``(ii) Testimony.--The Board shall provide 
                        testimony to the Committee on Banking, Housing, 
                        and Urban Affairs of the Senate and the 
                        Committee on Financial Services of the House of 
                        Representatives for each 90-day period that a 
                        corrective action plan required by subparagraph 
                        (B) has not been fulfilled.
    ``(b) Limits on Nondeposit Liabilities for Bank Holding Companies 
and Financial Companies.--
            ``(1) Bank holding companies.--
                    ``(A) Limit on nondeposit liabilities for bank 
                holding companies.--No bank holding company may possess 
                nondeposit liabilities exceeding 2 percent of the 
                annual gross domestic product of the United States.
                    ``(B) Determination of gross domestic product.--The 
                annual gross domestic product of the United States 
                shall be determined for purposes of subparagraph (A) 
                using the average of such product over the 16 calendar 
                quarters, as calculated by the Bureau of Economic 
                Analysis of the Department of Commerce, most recently 
                completed as of the time of the determination.
                    ``(C) Off-balance-sheet liabilities.--The 
                computation of the limit under this paragraph shall 
                take into account off-balance-sheet liabilities.
                    ``(D) Treatment of insurance companies.--
                Notwithstanding the liability limit established in this 
                section, the Board may set a separate liability limit 
                with respect to certain bank holding companies 
                primarily engaged in the business of insurance, as the 
                Board deems necessary in order to provide for 
                consistent and equitable treatment of such 
                institutions. In establishing such separate liability 
                limits for insurance companies, for any insurance 
                company with any subsidiary regulated by a State 
                insurance regulator, the Board shall consult the 
                appropriate State insurance regulator.
                    ``(E) Treatment of foreign deposits.--
                Notwithstanding the definition of the term `nondeposit 
                liabilities' established in this section, the Board may 
                exclude from its calculation of nondeposit liabilities 
                any foreign and other deposits not covered by the 
                definition of the term `FDIC-assessed deposits', if the 
                Board deems such action necessary to ensure the 
                consistent and equitable treatment of institutions with 
                international operations.
            ``(2) Financial companies.--
                    ``(A) Limit on nondeposit liabilities for financial 
                companies.--No financial company may possess nondeposit 
                liabilities exceeding 3 percent of the annual gross 
                domestic product of the United States.
                    ``(B) Determination of gross domestic product.--The 
                annual gross domestic product of the United States 
                shall be determined for purposes of subparagraph (A) 
                using the average of such product over the 16 calendar 
                quarters, as calculated by the Bureau of Economic 
                Analysis of the Department of Commerce, most recently 
                completed as of the time of the determination.
                    ``(C) Off-balance-sheet liabilities.--The 
                computation of the limit under this paragraph shall 
                take into account off-balance-sheet liabilities.
                    ``(D) Treatment of insurance companies.--
                Notwithstanding the liability limit established by this 
                paragraph, the Board may set a separate liability limit 
                with respect to insurance companies or other financial 
                companies, as the Board determines necessary in order 
                to provide for consistent and equitable treatment of 
                such institutions. In establishing such separate 
                liability limits for insurance companies, for any 
                insurance company with any subsidiary regulated by a 
                State insurance regulator, the Board shall consult with 
                the appropriate State insurance regulator.
                    ``(E) Treatment of foreign deposits.--
                Notwithstanding the definition of the term `nondeposit 
                liabilities' established in this section, the Board may 
                exclude from its calculation of nondeposit liabilities 
                any foreign and other deposits not covered by the 
                definition of the term `FDIC-assessed deposits', if the 
                Board deems such action necessary to ensure the 
                consistent and equitable treatment of institutions with 
                international operations.
            ``(3) Prompt corrective action.--
                    ``(A) Authorities.--The Board shall require any 
                bank holding company or financial company that is in 
                violation of a provision of paragraph (1) or (2), as 
                applicable, to sell or otherwise transfer assets or 
                off-balance-sheet items to unaffiliated firms, to 
                terminate 1 or more activities, or to impose conditions 
                on the manner in which the bank holding company or 
                financial company conducts 1 or more activities to 
                bring the company into compliance with paragraphs (1) 
                or (2), as applicable.
                    ``(B) Corrective action plan.--The Board shall, not 
                later than 60 days after determining that a bank 
                holding company or financial company is in violation of 
                paragraph (1) or (2), present to the members of the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate and the Committee on Financial Services of the 
                House of Representatives a plan detailing the manner by 
                which the bank holding company or financial company 
                shall be brought into compliance with the applicable 
                provision.
                    ``(C) Reports to congress.--
                            ``(i) Written reports.--The Board shall 
                        provide to the members of the Committee on 
                        Banking, Housing, and Urban Affairs of the 
                        Senate and the Committee on Financial Services 
                        of the House of Representatives periodic 
                        reports for each 60-day period during which a 
                        corrective action plan required by subparagraph 
                        (B) has not been fulfilled.
                            ``(ii) Testimony.--The Board shall provide 
                        testimony to the Committee on Banking, Housing, 
                        and Urban Affairs of the Senate and the 
                        Committee on Financial Services of the House of 
                        Representatives for each 120-day period during 
                        which a corrective action plan required by 
                        subparagraph (B) has not been fulfilled.
    ``(c) Definitions.--As used in this section--
            ``(1) the term `appropriate Federal regulator' means--
                    ``(A) the Board of Governors of the Federal Reserve 
                System (in this Act referred to as the `Board');
                    ``(B) the Comptroller General of the United States 
                (in this Act referred to as the `Comptroller'); or
                    ``(C) the Federal Deposit Insurance Corporation (in 
                this Act referred to as the `Corporation');
            ``(2) the term `average total consolidated assets' has the 
        same meaning as in part 225 of title 12, Code of Federal 
        Regulations, as in effect on the date of enactment of this Act, 
        or any successor thereto;
            ``(3) the term `FDIC-assessed deposits' means the 
        assessment base, as computed under part 327 of title 12, Code 
        of Federal Regulations, as in effect on the date of enactment 
        of this Act, or any successor thereto;
            ``(4) the term `financial company' means any nonbank 
        financial company that is supervised by the Board;
            ``(5) the term `liabilities' equals a financial company's 
        total assets less tier 1 capital;
            ``(6) the term `nondeposit liabilities' means the total 
        assets of a bank holding company, less tier 1 capital, less 
        FDIC-assessed deposits;
            ``(7) 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--
                    ``(A) incorporated or organized in a country other 
                than the United States; and
                    ``(B) 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);
            ``(8) the term `U.S. nonbank financial company' means a 
        company (other than a bank holding company or a subsidiary 
        thereof) that is--
                    ``(A) incorporated or organized under the laws of 
                the United States or any State; and
                    ``(B) 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);
            ``(9) the term `nonbank financial company' means a U.S. 
        nonbank financial company and a foreign nonbank financial 
        company; and
            ``(10) the term `tier 1 capital' has the same meaning as in 
        part 225 of title 12, Code of Federal Regulations, as in effect 
        on the date of enactment of this section, or any successor 
        thereto.''.

SEC. 5. CAPITAL ASSESSMENT PROGRAM.

    The Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is 
amended by inserting after section 7 the following new section:

``SEC. 7A. CAPITAL ASSESSMENT PROGRAM.

    ``(a) Annual Assessments.--Beginning 1 year after the date of 
enactment of the SAFE Banking Act of 2010, and annually thereafter, the 
Board shall conduct a capital assessment to estimate losses, revenues, 
and reserve needs for bank holding companies and financial companies.
    ``(b) Reports.--The Board shall provide a report on the results of 
the capital assessment program under this section to the Secretary, the 
members of the Committee on Banking, Housing, and Urban Affairs of the 
Senate, and the members of the Committee on Financial Services of the 
House of Representatives.''.

SEC. 6. AMENDMENT TO THE SECURITIES AND EXCHANGE ACT.

    Section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) 
is amended by adding at the end the following new subsection:
    ``(m) Standard Balance Sheet Calculation for Reports.--
            ``(1) Establishment of standard balance sheet reporting.--
        Not later than 1 year after the date of enactment of the SAFE 
        Banking Act of 2010, the Commission, or a standard setter 
        designated by and under the oversight of the Commission, shall 
        issue a rule requiring that each issuer of securities required 
        to file reports under this section record all of its assets and 
        liabilities on its balance sheets. The recorded amount of 
        assets and liabilities shall reflect a reasonable assessment by 
        the issuer of the most likely outcomes, given currently 
        available information. Such issuers shall record all financings 
        of assets for which the issuer has more than minimal economic 
        risks or rewards.
            ``(2) Exclusion for indeterminate liabilities.--If an 
        issuer required to file reports under this section cannot 
        determine the amount of a particular liability, for purposes of 
        paragraph (1), such issuer may exclude that liability from its 
        balance sheet only if it discloses an explanation of--
                    ``(A) the nature of the liability and purpose for 
                incurring it;
                    ``(B) the most likely and maximum loss that the 
                issuer could incur from the liability;
                    ``(C) whether there is any recourse to the issuer 
                by another party and, if so, under what conditions such 
                recourse could occur; and
                    ``(D) whether the issuer has any continuing 
                involvement with an asset financed by the liability or 
                any beneficial interest therein.
            ``(3) Rulemaking.--The Commission shall promulgate rules to 
        ensure compliance with this subsection, including enforcement 
        by the Commission and civil liability under the Securities Act 
        of 1933 and this title.''.

SEC. 7. EFFECTIVE DATE.

    (a) In General.--This Act and the amendments made by this Act shall 
take effect upon the date of enactment of this Act.
    (b) Allowance for Bank Holding Companies and Financial Companies 
Not in Compliance at Date of Enactment.--Any institution that is in 
violation of--
            (1) the deposit concentration limit in section 3(d)(2)(A) 
        of the Bank Holding Act of 1956, as amended by this Act, as of 
        the date of enactment of this Act, shall bring itself into 
        compliance with that limit not later than 1 year after the date 
        of enactment of this Act;
            (2) the leverage ratios in section 5A of the Bank Holding 
        Act of 1956, as amended by this Act, as of the date of 
        enactment of this Act, shall bring itself into compliance with 
        those ratios, not later than 1 year after the date of enactment 
        of this Act; and
            (3) the limits on nondeposit liabilities in section 7A of 
        the Bank Holding Company Act of 1956, as added by this Act, as 
        of the date of enactment of this Act, shall bring itself into 
        compliance with those limits, not later than 3 years after the 
        date of enactment of this Act.
                                 <all>