[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 985 Introduced in Senate (IS)]

113th CONGRESS
  1st Session
                                 S. 985

 To repeal certain provisions of the Gramm-Leach-Bliley Act and revive 
the separation between commercial banking and the securities business, 
   in the manner provided in the Banking Act of 1933, the so-called 
            ``Glass-Steagall Act'', and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                              May 16, 2013

  Mr. Harkin introduced the following bill; which was read twice and 
    referred to the Committee on Banking, Housing, and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
 To repeal certain provisions of the Gramm-Leach-Bliley Act and revive 
the separation between commercial banking and the securities business, 
   in the manner provided in the Banking Act of 1933, the so-called 
            ``Glass-Steagall Act'', 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 ``Return to Prudent Banking Act of 
2013''.

SEC. 2. GLASS-STEAGALL REVIVED.

    (a) Wall Between Commercial Banks and Securities Activities 
Reestablished.--Section 18 of the Federal Deposit Insurance Act (12 
U.S.C. 1828), as amended by section 615(a) of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act, is amended by adding at the 
end the following new subsection:
    ``(aa) Limitations on Security Affiliations.--
            ``(1) Prohibition on affiliation between insured depository 
        institutions and investment banks or securities firms.--An 
        insured depository institution may not be or become an 
        affiliate of any broker or dealer, any investment adviser, any 
        investment company, or any other person engaged principally in 
        the issue, flotation, underwriting, public sale, or 
        distribution at wholesale or retail or through syndicate 
        participation of stocks, bonds, debentures, notes, or other 
        securities.
            ``(2) Prohibition on officers, directors and employees of 
        securities firms service on boards of depository 
        institutions.--
                    ``(A) In general.--An individual who is an officer, 
                director, partner, or employee of any broker or dealer, 
                any investment adviser, any investment company, or any 
                other person engaged principally in the issue, 
                flotation, underwriting, public sale, or distribution 
                at wholesale or retail or through syndicate 
                participation of stocks, bonds, debentures, notes, or 
                other securities may not serve at the same time as an 
                officer, director, employee, or other institution-
                affiliated party of any insured depository institution.
                    ``(B) Exception.--Subparagraph (A) shall not apply 
                with respect to service by any individual which is 
                otherwise prohibited under such subparagraph if the 
                appropriate Federal banking agency determines, by 
                regulation with respect to a limited number of cases, 
                that service by such individual as an officer, 
                director, employee, or other institution-affiliated 
                party of any insured depository institution would not 
                unduly influence the investment policies of the 
                depository institution or the advice the institution 
                provides to customers.
                    ``(C) Termination of service.--Subject to a 
                determination under subparagraph (B), any individual 
                described in subparagraph (A) who, as of the date of 
                enactment of the Return to Prudent Banking Act of 2013, 
                is serving as an officer, director, employee, or other 
                institution-affiliated party of any insured depository 
                institution shall terminate such service as soon as 
                practicable after such date of enactment and no later 
                than the end of the 60-day period beginning on such 
                date.
            ``(3) Termination of existing affiliation.--
                    ``(A) Orderly wind-down of existing affiliation.--
                Any affiliation of an insured depository institution 
                with any broker or dealer, any investment adviser, any 
                investment company, or any other person, as of the date 
                of enactment of the Return to Prudent Banking Act of 
                2013, which is prohibited under paragraph (1) shall be 
                terminated as soon as practicable and in any event no 
                later than the end of the 2-year period beginning on 
                such date of enactment.
                    ``(B) Early termination.--The appropriate Federal 
                banking agency, after opportunity for hearing, may 
                terminate, at any time, the authority conferred by the 
                preceding subparagraph to continue any affiliation 
                subject to such subparagraph until the end of the 
                period referred to in such subparagraph if the agency 
                determines, having due regard for the purposes of this 
                subsection and the Return to Prudent Banking Act of 
                2013, that such action is necessary to prevent undue 
                concentration of resources, decreased or unfair 
                competition, conflicts of interest, or unsound banking 
                practices and is in the public interest.
                    ``(C) Extension.--Subject to a determination under 
                subparagraph (B), an appropriate Federal banking agency 
                may extend the 2-year period referred to in 
                subparagraph (A) from time to time as to any particular 
                insured depository institution for not more than 6 
                months at a time, if, in the judgment of the agency, 
                such an extension would not be detrimental to the 
                public interest, but no such extensions shall in the 
                aggregate exceed 1 year.
            ``(4) Definitions.--For purposes of this subsection--
                    ``(A) the terms `broker' and `dealer' have the same 
                meanings as in section 3(a) of the Securities Exchange 
                Act of 1934 (15 U.S.C. 78c(a)); and
                    ``(B) the terms `investment adviser' and 
                `investment company' have the same meanings as in 
                section 202 of the Investment Advisers Act of 1940 (15 
                U.S.C. 80b-2) and section 3 of the Investment Company 
                Act of 1940 (15 U.S.C. 80a-3), respectively.''.
    (b) Prohibition on Banking Activities by Securities Firms 
Clarified.--Section 21 of the Banking Act of 1933 (12 U.S.C. 378) is 
amended by adding at the end the following new subsection:
    ``(c) Business of Receiving Deposits.--For purposes of this 
section, the term `business of receiving deposits' includes the 
establishment and maintenance of any transaction account (as defined in 
section 19(b)(1)(C) of the Federal Reserve Act).''.
    (c) Continued Applicability of ICI vs. Camp.--
            (1) In general.--The Congress ratifies the interpretation 
        of the paragraph designated the ``Seventh'' of section 5136 of 
        the Revised Statutes of the United States (12 U.S.C. 24, as 
        amended by section 16 of the Banking Act of 1933 and subsequent 
        amendments) and section 21 of the Banking Act of 1933 (12 
        U.S.C. 378) by the Supreme Court of the United States in the 
        case of Investment Company Institute v. Camp (401 U.S. 617 et 
        seq. (1971)) with regard to the permissible activities of banks 
        and securities firms, except to the extent expressly prescribed 
        otherwise by this section.
            (2) Applicability of reasoning.--The reasoning of the 
        Supreme Court of the United States in the case referred to in 
        paragraph (1) with respect to sections 20 and 32 of the Banking 
        Act of 1933 (as in effect prior to the date of enactment of the 
        Gramm-Leach-Bliley Act) shall continue to apply to subsection 
        (aa) of section 18 of the Federal Deposit Insurance Act (as 
        added by subsection (a) of this section) except to the extent 
        the scope and application of such subsection as enacted exceed 
        the scope and application of such sections 20 and 32.
            (3) Limitation on agency interpretation or judicial 
        construction.--No appropriate Federal banking agency, as 
        defined in section 3 of the Federal Deposit Insurance Act, by 
        regulation, order, interpretation, or other action, and no 
        court within the United States may construe the paragraph 
        designated the ``Seventh'' of section 5136 of the Revised 
        Statutes of the United States (12 U.S.C. 24, as amended by 
        section 16 of the Banking Act of 1933 and subsequent 
        amendments), section 21 of the Banking Act of 1933, or section 
        18(aa) of the Federal Deposit Insurance Act more narrowly than 
        the reasoning of the Supreme Court of the United States in the 
        case of Investment Company Institute v. Camp (401 U.S. 617 et 
        seq. (1971)) as to the construction and the purposes of such 
        provisions.

SEC. 3. REPEAL OF GRAMM-LEACH-BLILEY ACT PROVISIONS.

    (a) Financial Holding Company.--
            (1) In general.--Section 4 of the Bank Holding Company Act 
        of 1956 (12 U.S.C. 1843) is amended by striking subsections 
        (k), (l), (m), (n), and (o).
            (2) Transition.--
                    (A) Orderly wind-down of existing affiliation.--In 
                the case of a bank holding company which, pursuant to 
                the amendments made by paragraph (1), is no longer 
                authorized to control or be affiliated with any entity 
                that was permissible for a financial holding company as 
                of the date of enactment of this Act, any affiliation 
                by the bank holding company which is not permitted for 
                a bank holding company shall be terminated as soon as 
                is practicable, and in no event later than the end of 
                the 2-year period beginning on that date of enactment.
                    (B) Early termination.--The Board of Governors of 
                the Federal Reserve System (in this Act referred to as 
                the ``Board''), after opportunity for hearing, may 
                terminate, at any time, the authority conferred by 
                subparagraph (A) to continue any affiliation subject to 
                such subparagraph until the end of the period referred 
                to in such subparagraph, if the Board determines, 
                having due regard to the purposes of this Act, that 
                such action is necessary to prevent undue concentration 
                of resources, decreased or unfair competition, 
                conflicts of interest, or unsound banking practices, 
                and is in the public interest.
                    (C) Extension.--Subject to a determination under 
                subparagraph (B), the Board may extend the 2-year 
                period referred to in subparagraph (A) from time to 
                time as to any particular bank holding company for not 
                more than 6 months at a time, if, in the judgment of 
                the Board, such an extension would not be detrimental 
                to the public interest, except that no such extensions 
                shall in the aggregate exceed 1 year.
            (3) Technical and conforming amendments.--
                    (A) Bank holding company act of 1956.--The Bank 
                Holding Company Act of 1956 (12 U.S.C. 1841 et seq.) is 
                amended--
                            (i) in section 2 (12 U.S.C. 1841)--
                                    (I) by striking subsection (p); and
                                    (II) by redesignating subsection 
                                (q) as subsection (p);
                            (ii) in section 5 (12 U.S.C. 1844)--
                                    (I) in subsection (c)--
                                            (aa) in paragraph (2), by 
                                        striking subparagraph (E); and
                                            (bb) by striking paragraphs 
                                        (3), (4), and (5); and
                                    (II) by striking subsection (g); 
                                and
                            (iii) by striking section 10A (12 U.S.C. 
                        1848a).
                    (B)  Federal deposit insurance act.--The Federal 
                Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
                amended by striking section 45 (12 U.S.C. 1831v) and 
                inserting the following:

``SEC. 45. [REPEALED].''.

                    (C) Gramm-Leach-Bliley act.--Subtitle B of title I 
                of the Gramm-Leach-Bliley Act is amended--
                            (i) by striking section 114 (12 U.S.C. 
                        1828a) and inserting the following:

``SEC. 14. [REPEALED].'';

                        and
                            (ii) by striking section 115 (12 U.S.C. 
                        1820a) and inserting the following:

``SEC. 15. [REPEALED].''.

    (b) Financial Subsidiaries Repealed.--
            (1) In general.--Section 5136A of the Revised Statutes of 
        the United States (12 U.S.C. 24a) is amended to read as 
        follows:

``SEC. 5136A. [REPEALED].''.

            (2) Transition.--
                    (A) Orderly wind-down of existing affiliation.--In 
                the case of a national bank which, pursuant to the 
                amendments made by paragraph (1), is no longer 
                authorized to control or be affiliated with a financial 
                subsidiary as of the date of enactment of this Act, 
                such affiliation shall be terminated as soon as is 
                practicable, and in no event later than the end of the 
                2-year period beginning on that date of enactment.
                    (B) Early termination.--The Comptroller of the 
                Currency, after opportunity for hearing, may terminate, 
                at any time, the authority conferred by subparagraph 
                (A) to continue any affiliation subject to such 
                subparagraph until the end of the period referred to in 
                such subparagraph, if the Comptroller determines, 
                having due regard for the purposes of this Act, that 
                such action is necessary to prevent undue concentration 
                of resources, decreased or unfair competition, 
                conflicts of interest, or unsound banking practices, 
                and is in the public interest.
                    (C) Extension.--Subject to a determination under 
                subparagraph (B), the Comptroller of the Currency may 
                extend the 2-year period referred to in subparagraph 
                (A) from time to time as to any particular national 
                bank for not more than 6 months at a time, if, in the 
                judgment of the Comptroller, such an extension would 
                not be detrimental to the public interest, except that 
                no such extensions shall in the aggregate exceed 1 
                year.
            (3) Technical and conforming amendments.--
                    (A) Federal reserve act.--The 20th undesignated 
                paragraph of section 9 of the Federal Reserve Act (12 
                U.S.C. 335) is amended by striking the last sentence.
                    (B) Federal deposit insurance act.--The Federal 
                Deposit Insurance Act (12 U.S.C. 1811 et seq.) is 
                amended by striking section 46 (12 U.S.C. 1831w) and 
                inserting the following:

``SEC. 46. [REPEALED].''.

                    (C) Clerical amendment.--The table of sections for 
                chapter one of title LXII of the Revised Statutes of 
                the United States is amended by striking the item 
                relating to section 5136A.
    (c) Definition of Broker.--Section 3(a)(4)(B) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(4)(B)) is amended--
            (1) by striking clauses (i), (iii), (v), (vii), (x), and 
        (xi); and
            (2) by redesignating clauses (ii), (iv), (vi), (viii), and 
        (ix) as clauses (i), (ii), (iii), (iv), and (v), respectively.
    (d) Definition of Dealer.--Section 3(a)(5)(C) of the Securities 
Exchange Act of 1934 (15 U.S.C. 78c(a)(5)(C)) is amended--
            (1) by striking clauses (i) and (iii); and
            (2) by redesignating clauses (ii) and (iv) as clauses (i) 
        and (ii), respectively.
    (e) Definition of Identified Banking Product.--Section 206(a) of 
the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) is amended--
            (1) in paragraph (4), by inserting ``and'' after the 
        semicolon at the end;
            (2) in paragraph (5)(B)(ii), by striking ``; or'' and 
        inserting a period; and
            (3) by striking paragraph (6) and all that follows through 
        the end of the subsection.
    (f) Definition of Activities Closely Related to Banking.--
            (1) In general.--Section 4(c)(8) of the Bank Holding 
        Company Act of 1956 (12 U.S.C. 1843(c)(8)) is amended by 
        striking ``the day before the date of the enactment of the 
        Gramm-Leach-Bliley Act'' and inserting ``January 1, 1970''.
            (2) Provision allowing for exceptions after report to 
        congress.--Section 4(j) of the Bank Holding Company Act of 1956 
        (12 U.S.C. 1843(j)) is amended to read as follows:
    ``(j) Approval for Certain Post-1970 Subsection (c)(8) 
Activities.--
            ``(1) In general.--Notwithstanding the limitation of the 
        January 1, 1970, approval deadline in subsection (c)(8), the 
        Board may determine an activity to be so closely related to 
        banking as to be a proper incident thereto for purposes of such 
        subsection, subject to the requirements of this subsection and 
        such terms and conditions as the Board may require.
            ``(2) General standards.--In making any determination under 
        paragraph (1), the Board shall consider whether performance of 
        the activity by a bank holding company or a subsidiary of such 
        company can reasonably be expected to result in a violation of 
        section 18(aa) of the Federal Deposit Insurance Act, section 21 
        of the Banking Act of 1933, or the spirit of section 2(c) of 
        the Return to Prudent Banking Act of 2013, and other possible 
        adverse effects, such as undue concentration of resources, 
        decreased or unfair competition, conflicts of interests, or 
        unsound banking practices.
            ``(3) Report and wait.--No determination of the Board under 
        paragraph (1) may take effect before the end of the 180-day 
        period beginning on the date by which notice of the 
        determination has been submitted to both Houses of the Congress 
        together with a detailed explanation of the activities to which 
        the determination relates and the basis for the determination, 
        unless before the end of such period, such activities have been 
        approved by an Act of Congress.''.
    (g) Repeal of Provision Relating to Foreign Banks Filing as 
Financial Holding Companies.--Section 8(c) of the International Banking 
Act of 1978 (12 U.S.C. 3106(c)) is amended by striking paragraph (3).

SEC. 4. REPORTS TO CONGRESS.

    (a) Reports Required.--Each time the Board of Governors of the 
Federal Reserve System, the Comptroller of the Currency, or another 
appropriate Federal banking agency (as defined in section 3 of the 
Federal Deposit Insurance Act) makes a determination or an extension 
under subparagraph (B) or (C) of paragraph (2) or (3) of section 18(aa) 
of the Federal Deposit Insurance Act (as added by section 2(a)) or 
subparagraph (B) or (C) of subsection (a)(2) or (b)(2) of section 3 of 
this Act, as the case may be, the Board, Comptroller, or agency shall 
promptly submit a report of such determination or extension to the 
Congress.
    (b) Contents.--Each report submitted to Congress under subsection 
(a) shall contain a detailed description of the basis for the 
determination or extension.
                                 <all>