[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2714 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 2714
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 HOUSE OF REPRESENTATIVES
April 19, 2023
Ms. Kaptur (for herself, Ms. Norton, Ms. Omar, Ms. Pingree, Ms. Wild,
Ms. Tlaib, Mr. Pocan, and Mrs. Watson Coleman) introduced the following
bill; which was referred to the Committee on Financial Services
_______________________________________________________________________
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
2023''.
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) is amended by adding at the end the following new
subsection:
``(bb) 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
the enactment of the Return to Prudent Banking Act of
2023, 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 the enactment of the Return to Prudent Banking Act
of 2023, 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
2023, 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, the
terms `broker' and `dealer' have the same meanings as in
section 3(a) of the Securities Exchange Act of 1934 and the
terms `investment adviser' and `investment company' have the
meaning given such terms under the Investment Advisers Act of
1940 and the Investment Company Act of 1940, 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 the enactment of
the Gramm-Leach-Bliley Act) shall continue to apply to
subsection (bb) 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, 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(bb) 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,
any affiliation by the bank holding company which is
not permitted for a bank holding company 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 Board of Governors of
the Federal Reserve System, 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
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 of Governors of the Federal
Reserve System may extend the 2-year period referred to
in subparagraph (A) above 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, but no such extensions shall in the
aggregate exceed 1 year.
(3) Technical and conforming amendments.--
(A) Section 2 of the Bank Holding Company Act of
1956 (12 U.S.C. 1841) is amended by striking subsection
(p).
(B) Section 5(c) of the Bank Holding Company Act of
1956 (12 U.S.C. 1844(c)) is amended--
(i) by striking paragraphs (3) and (4); and
(ii) by redesignating paragraph (5) as
paragraph (3).
(C) Section 5 of the Bank Holding Company Act of
1956 (12 U.S.C. 1844) is amended by striking subsection
(g).
(D) The Federal Deposit Insurance Act (12 U.S.C.
1811 et seq.) is amended by striking section 45.
(E) Subtitle B of title I of the Gramm-Leach-Bliley
Act is amended by striking section 114 (12 U.S.C.
1828a) and section 115 (12 U.S.C. 1820a).
(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 the enactment of this Act,
such affiliation 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 Comptroller of the
Currency, 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 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) above 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, but no
such extensions shall in the aggregate exceed 1 year.
(3) Technical and conforming amendment.--
(A) 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) The Federal Deposit Insurance Act is amended by
striking section 46 (12 U.S.C. 1831w).
(4) 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.--Subsection (a) of
section 206 of the Gramm-Leach-Bliley Act (15 U.S.C. 78c note) is
amended--
(1) by inserting ``and'' after the semicolon at the end of
paragraph (4);
(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 such 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 the
congress.--Subsection (j) of section 4 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(bb) 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 2023, 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 THE 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 makes a determination or an
extension under subparagraph (B) or (C) of paragraph (2) or (3) of
section 18(bb) 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, 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 the Congress under
subsection (a) shall contain a detailed description of the basis for
the determination or extension.
<all>