[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2497 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 2497

 To amend the Federal Deposit Insurance Act to convert certain insured 
                    State banks into national banks.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 26, 2023

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

_______________________________________________________________________

                                 A BILL


 
 To amend the Federal Deposit Insurance Act to convert certain insured 
                    State banks into national banks.

    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 ``Bank Failure Prevention Act''.

SEC. 2. CONVERSION OF INSURED STATE BANK WITH TOTAL CONSOLIDATED ASSETS 
              EQUAL TO OR GREATER THAN $100,000,000,000 INTO A NATIONAL 
              BANK.

    (a) In General.--Section 24 of Federal Deposit Insurance Act (12 
U.S.C. 1831a) is amended by adding at the end the following:
    ``(k) Automatic Conversion to a National Banking Association.--
            ``(1) Definitions.--In this subsection:
                    ``(A) Average total consolidated assets.--The term 
                `average total consolidated assets' means the average 
                of total consolidated assets for the four most recent 
                calendar quarters or, if the insured State bank has not 
                reported total consolidated assets for each of the four 
                most recent calendar quarters, the total consolidated 
                assets for the most recent calendar quarter or average 
                of the most recent calendar quarters, as applicable.
                    ``(B) Covered insured state bank.--The term 
                ``covered insured State bank'' means an insured State 
                bank with average total consolidated assets equal to or 
                greater than $100,000,000,000.
            ``(2) Conversion.--
                    ``(A) In general.--By operation of law, a covered 
                insured State bank shall convert to and become a 
                national banking association on the date that is 180 
                days after the end of the quarter in which the insured 
                State bank became a covered insured State bank. The 
                Comptroller of the Currency shall issue a certificate 
                of organization to the association on such date. The 
                requirements and restrictions on the conversion of a 
                State Bank or Savings Association contained in Section 
                5154 of the Revised Statutes of the United States (12 
                U.S.C. 35) do not apply to conversions under this 
                section. A covered insured State bank may continue to 
                operate any branch or agency that the covered insured 
                State bank operated on the date on which the 
                Comptroller of the Currency issues the certificate of 
                organization. The Comptroller of the Currency may, in 
                the Comptroller's discretion and subject to such terms 
                and conditions as the Comptroller may prescribe, permit 
                such covered insured State bank to retain and carry at 
                a value determined by the Comptroller such of the 
                assets of such converting bank as do not conform to the 
                legal requirements relative to assets acquired and held 
                by national banking associations. The Comptroller of 
                the Currency may extend or accelerate any compliance 
                date of this section if the Comptroller determines that 
                such extension or acceleration is appropriate. In 
                determining whether an extension or acceleration is 
                appropriate, the Comptroller will consider the effect 
                of the modification on financial stability, the period 
                of time for which the modification would be necessary 
                to facilitate compliance with this section, and the 
                actions the covered insured State bank is taking to 
                come into compliance with this section.
                    ``(B) Rights and duties.--When the covered insured 
                State bank has received its certificate of organization 
                from the Comptroller of the Currency, such bank shall 
                be considered a national bank and supervised and 
                regulated as such, and the bank and all its 
                stockholders, officers, and employees shall have the 
                same powers and privileges and shall be subject to the 
                same duties, liabilities, and regulations, in all 
                respects, as shall have been prescribed by the Federal 
                Reserve Act (12 U.S.C. 221 et seq.) and the National 
                Banking Act for associations originally organized as 
                national banking associations.
                    ``(C) Notice.--A covered insured State bank shall 
                submit a notice to the Comptroller of the Currency and 
                the appropriate Federal banking agency within 60 days 
                of becoming a covered insured State bank. The notice 
                shall contain--
                            ``(i) the date on which the insured State 
                        bank became a covered insured State bank;
                            ``(ii) the date on which the covered 
                        insured State bank will convert to a national 
                        banking association; and
                            ``(iii) the name to be assumed by such 
                        association following conversion, which shall 
                        include the word `national'.
            ``(3) Transitions.--
                    ``(A) No transition for certain insured state 
                banks.--An insured State bank that would be a covered 
                insured State bank immediately prior to December 31, 
                2023, shall be considered to have become a covered 
                insured State bank on January 1, 2024.
                    ``(B) Orderly transition.--Following receipt of the 
                notice under subsection (k)(2)(C), the appropriate 
                Federal banking agency shall provide to the Comptroller 
                of the Currency the covered insured State bank's 
                reports of condition and other relevant financial and 
                supervisory information, as requested by the 
                Comptroller.
            ``(4) Rulemaking.--The Comptroller of the Currency, after 
        consulting with the Board of Governors of the Federal Reserve 
        System and the Federal Deposit Insurance Corporation, shall 
        issue rules to carry out this section that--
                    ``(A) establish streamlined standards and 
                procedures that clearly identify required documentation 
                and timelines for compliance with applicable law; and
                    ``(B) require a covered insured State bank 
                automatically converting under subsection (k)(2) to 
                identify activities and investments, whether conducted 
                by the covered insured State bank or its affiliates, 
                that--
                            ``(i) do not conform to the requirements 
                        for activities and investments of a national 
                        bank; and
                            ``(ii) are held by the covered insured 
                        State bank or its affiliates on the date on 
                        which the covered State bank submits the notice 
                        pursuant to subsection (k)(2)(A);
                    ``(C) establish--
                            ``(i) a transition process for bringing the 
                        activities and investments described in 
                        paragraph (B) into conformance with the 
                        requirements for a national bank under 
                        applicable law; and
                            ``(ii) procedures for allowing the covered 
                        insured State bank to submit to the Comptroller 
                        of the Currency an application to continue to 
                        hold activities and investments described in 
                        paragraph (B) after conversion, which may be 
                        approved or denied by the Comptroller in his 
                        discretion; and
                    ``(D) the Comptroller of the Currency determines 
                necessary in the interests of safety and soundness.''.
    (b) Effective Date.--The amendments made by this section shall take 
effect on December 31, 2023.
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